Category: Corporate Services

Equity incentive plans have grown in popularity in recent years as they provide a fantastic mechanism for motivating employees, retaining talent and aligning the interests of the workforce and Shareholders. While these plans are particularly beneficial for global corporations with a dispersed workforce, they are equally effective for larger companies seeking to incentivise employees and drive long-term success.

This guide provides an overview of equity incentive planning, exploring how such plans can be structured and managed to meet the needs of large businesses, regardless of their geographical scope.

Understanding Equity Incentive Plans

Equity incentive plans are designed to offer employees shares or share options as part of their compensation package. Early plans were used by publicly listed companies to reward executives through Long-Term Incentive Plans (LTIPs).

In more recent times, the data shows that the scope of such incentive schemes has expanded not only to unlisted companies but are also increasingly established for the benefit of the wider workforce. Equity incentive plans are now widely adopted by private companies across various industries.

The core objective of equity incentive plans is to attract and retain talent while incentivising behaviours that contribute to the sustainable growth of the business. By granting employees a stake in the company, these plans foster a sense of ownership, aligning employee actions with the long-term goals of the organisation.

Key Benefits of Equity Incentive Plans

Alignment of Interests

Offering equity ensures that employees’ interests are closely aligned with those of shareholders, encouraging decisions and actions that enhance the company’s value and long-term profitability.

Talent Acquisition & Retention

Equity-based compensation is a compelling component of a competitive remuneration package, helping companies to attract high-calibre professionals. Conversely, not providing equity incentives can make securing the best team more difficult and place a premium on other elements of the remuneration package. Employees with a vested interest in the company’s success are also more likely to stay, supporting succession planning and business continuity. Therefore, equity incentives can form an important part of the businesses long-term strategy.

Culture & Values

Equity incentives can be strategically used to shape corporate culture by promoting behaviours that align with the company’s values and long-term objectives, such as innovation, collaboration, sustainability and risk tolerances. In this way, the business can ensure that only behaviour and actions aligned with the agreed strategy are rewarded accordingly.

Structuring Equity Incentive Plans

To facilitate equity incentives, companies can choose from a variety of structures. Two common structures utilised to manage the transference and administration of equity are Employee Benefit Trusts (EBTs) or Employee Ownership Trusts (EOTs).

EOTs are a unique type of EBT and a method of transferring more than 50% of the company’s ownership to all eligible employees. This vehicle has a more niche appeal and as such, we will not cover EOTs here – although we have produced a comprehensive article on EOTs for your review if you would like to learn more.

Other types of EBT can also have complex rules but allow for more flexibility than EOTs. For example, in terms of the amount and types of shares made available. Therefore, EBTs have a more universal appeal when it comes to establishing an equity incentive plan.

The Role of Employee Benefit Trusts (EBTs)

An Employee Benefit Trust (EBT) is established by a company to manage and provide various benefits to its employees. These benefits can include share options or awards, but also bonuses, pensions, and other incentives aimed at improving employee welfare and aligning their interests with those of the company. For our purposes, we will purely focus on EBTs used for equity incentive arrangements.

EBTs are particularly advantageous for companies that want to offer equity incentives across various employee levels, from executives to the wider workforce.

EBTs are typically structured through Discretionary Trusts, which allow companies to customise the allocation of benefits, ensuring they align with the broader strategic goals of the business. The Trustees hold the shares on behalf of the Beneficiaries, managing the joiners and leavers buying and selling their interests. The rules governing the equity incentive plan are typically outlined in a combination of the Trust Deed and various agreements and/or policies, e.g. employment contracts, share agreements, or specific equity incentive plan rules.

EBTs can also hold and manage (or ‘warehouse’) unallocated shares, which can be used to support future vesting events, such as restructuring efforts, or preparations for a public listing.

Choosing the Right Trustee for Your EBT

When setting up an EBT, companies must decide whether to appoint Lay Trustees—who are typically internal stakeholders such as directors or employees—or Professional Trustees, who are external Trust management experts.

Lay Trustees

Internal Trustees can bring valuable insights into the company’s operations but may face challenges such as conflicts of interest and a lack of Trust governance expertise. Balancing their primary responsibilities with their Trustee duties can also lead to inefficiencies.

Professional Trustees

Professional Trustees offer independence, objectivity, and specialised knowledge in Trust governance and regulatory compliance. By focusing exclusively on Trust management, they eliminate potential conflicts of interest and ensure that the EBT is administered in the best interest of the Beneficiaries.

Why Choose an Isle of Man Professional Trustee?

The Isle of Man is a globally recognised financial centre, known for its robust regulatory environment and stability. This makes it an ideal jurisdiction for managing complex Trust arrangements like EBTs. Trustees must be licensed under the Isle of Man Financial Services Authority and adhere to high standards, ensuring that your EBT is managed with the utmost professionalism and compliance.

How Dixcart Can Support Your Equity Incentive Plan

With over 35 years of experience in managing complex Trust arrangements and employee share ownership structures, Dixcart is well-positioned to assist growing companies in implementing effective equity incentive plans. Our team in the Isle of Man offers tailored Trustee services that align with your business’s long-term objectives, enhancing your incentive strategies and supporting their success.

Get in Touch

For more information on how Dixcart’s Professional Trustee services can enhance your equity incentive planning, please contact Paul Harvey at Dixcart: advice.iom@dixcart.com.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

While many are aware of the fact that Malta offers a pleasant climate, a charming lifestyle, a business-friendly environment and an attractive tax regime, fewer are aware that eligible businesses might benefit from a suite of financial incentives to further enhance their offering, which positions Malta as an appealing destination for many companies. This article will explore the various support measures available for Maltese businesses in detail.

Organisations offering Support to Companies

Malta Enterprise

Malta Enterprise is the Maltese Government agency tasked with economic development. They offer the following support measures:

• Startup Finance targets startups that have not yet distributed profits and provides assistance through repayable advances (interest rate set at 2% plus ECB rate) of up to €1 million for innovative startups. Assistance may be used to cover payroll costs, tangible and intangible assets, procurement of materials and specialised technical services.

• The R&D Grant aims to boost Industrial Research and Experimental Development by providing financial assistance in the form of cash grants and/or tax credits. It is available to Limited Liability Companies (LLCs), partnerships, and cooperatives and provides 25% of eligible expenditure for experimental development and 50% of eligible costs for industrial research.

• Micro Invest providestax credits to start-ups, family businesses, and self-employed individuals to innovate and drive economic development.

The assistance is in the form of tax credits ranging from 45% to 65% of eligible expenditure, capped at €50,000 over three years. Eligible expenditures include increase in wage costs that exceed 3%, expenses related to furbishing, refurbishing, and upgrading of Business Premises, investment costs, acquisition of motor vehicles and certification costs incurred for attaining certifications relevant to their business.

• The Business Development incentive supports the setting up of new ventures, businesses expansions, environmental activities and employment of workers with disabilities. Assistance  is in the form of grants, cash assistance, and tax credits up to €300,000 per single undertaking over a rolling period of three years, capped at 75% of the costs approved.

Fondi.eu

Fondi.eu is a Maltese Government initiative aimed at managing the EU funds available, while ensuring maximum transparency and information in relation to the funds.

• Digitalise your Business is an initiative targeted to enterprises of all sizes and sectors willing to digitalise their activities. Funding is capped at €10,000 for micro businesses and €120,000 for other enterprises per digitalisation investment in digital technologies for each operation in both cases. This measure covers, among others, expenses for e-commerce websites, hardware purchases and software upgrades, digital infrastructure development, training and skill costs, consultancy services.

• Start-up Enhance provides grants to micro and small companies to help them overcome initial financial hurdles. It covers 50% of eligible costs, along with a minimum of €10,000 and a maximum of €400,000 per operation. Expenditures on equipment, plants, and machinery, including ancillary items necessary for start-up operations, as well as expenses related to the rent of a workspace may also be eligible.

• The Business Report for SMEs consists of a grant to help medium-sized enterprises to identify opportunities, mitigate risks, and optimise their operations. The support is a €4,000 grant to cover 80% of eligible costs (expenses related to obtaining a comprehensive business plan and conducting process and system reviews).

• The measure SME Enhance is available in two frameworks, both of which aim at enhancing productivity and sustainability of micro and small-to-medium enterprises. Eligible expenditures are those related to equipment, plant, machinery and, in some cases, also ancillary costs. Funding can reach up to €500,000 provided that certain criteria are met.

Malta Development Bank (MDB)

The Malta Development Bank (MDB) is a project fully owned, financed and launched by the Government of Malta. It supports the following measures:

• Guaranteed Co-lending Scheme, targeted to SMEs seeking financial assistance during economic hardship. It provides businesses with additional financing (loan with reduced interest) during economic challenges, to retain employees and invest in growth. Loans may range from €750,000 up to €10,000,000.

• The SME Guarantee Scheme offers an easier way for SMEs to access affordable finance, simulating economic activity and fostering growth.

This support measure guarantees up to 80% of a loan, provides flexible loan amounts (from €10,000 to €750,000) and extended loan terms (to a maximum of ten years).

Almost all the above-mentioned support measures give particular importance to Gozo, Malta’s sister island. In many cases, companies located in Gozo may benefit of higher capping and/or higher aid intensity.

Dixcart in Malta

The Dixcart office in Malta has professionals that can assist your business applying for appropriate financial assistance. For further information on company incentives and how to obtain them, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

This article is intended to provide general information on company incentives available in Malta as of the publication date. Policies and regulations may evolve, and readers should seek up-to-date advice from industry experts or official resources.

Einführung

Guernsey ist ein führendes Finanzdienstleistungszentrum. Mit seinem ausgezeichneten Ruf und den lokalen Rechts- und Buchhaltungsressourcen ist es zunehmend zu einer beliebten Gerichtsbarkeit für die Gründung eines Unternehmens geworden.

In diesem Hinweis skizzieren wir die wichtigsten Fakten und Schritte im Zusammenhang mit der Gründung eines neuen Unternehmens in Guernsey.

Warum ein Unternehmen in Guernsey gründen?

• Besteuerung – Der allgemeine Steuersatz für ein Unternehmen in Guernsey beträgt 0 % (es gelten einige Ausnahmen, bitte kontaktieren Sie uns für weitere Informationen)
• Selbständige Rechtspersönlichkeit – bietet Vermögensschutz, der dazu beitragen kann, das persönliche Vermögen eines Aktionärs vor den Verbindlichkeiten des Unternehmens abzuschirmen
• Schnelle Gründung – sobald alle erforderlichen Informationen bei Dixcart eingegangen sind, können wir die Gründung innerhalb von vierundzwanzig Stunden veranlassen
• Hervorragender Ruf und lokale Ressourcen – es gibt eine Vielzahl professioneller Wirtschaftsprüfungs- und Anwaltskanzleien, die sich für den reibungslosen Betrieb eines Unternehmens auf Guernsey eignen. Darüber hinaus genießt die Gerichtsbarkeit weltweit hohes Ansehen und einen ausgezeichneten Ruf und wird von Dritteirichtungen wie Banken und Kreditgebern anerkannt.

Welche Unternehmensarten gibt es in Guernsey

Es gibt verschiedene Optionen, die auf die spezifischen Anforderungen jedes Kunden zugeschnitten sind, wenn es darum geht, ein Unternehmen auf Guernsey zu gründen. Dazu gehören:

• Gesellschaft mit beschränkter Haftung (bei der die Haftung der Gesellschafter durch Anteile oder Bürgschaften beschränkt ist)
• Gesellschaft mit unbeschränkter Haftung, bei der der Gesellschafter für alle Schulden des Unternehmens haftet
• Zellgesellschaft: (i) eine geschützte Zellgesellschaft (Protected Cell Company, PCC), bei den Vermögenswerten und Verbindlichkeiten in separate Zellen aufgeteilt und voneinander getrennt werden, wobei bei einer PCC jede Zelle keine eigene Rechtspersönlichkeit hat, oder (ii) eine eingetragene Zellgesellschaft, bei der jede Zelle separat eingetragen ist und eine eigene Rechtspersönlichkeit hat. Diese Arten von Unternehmen müssen von der Guernsey Financial Services Commission genehmigt werden.

Wer sind die Parteien eines Unternehmens in Guernsey

• Geschäftsleiter
  • Können Einzelpersonen oder Unternehmen sein
  • Mindestens 1
• Sekretär
  • Kann ernannt werden, diese Rolle ist jedoch optional
• Mitglieder
  • Auch als Aktionäre bekannt
• Wirtschaftlicher Eigentümer
  • Die Details müssen vom registrierten Vertreter aufbewahrt werden und einige Details werden an den Guernsey Registrar of Beneficial Ownership of Legal Persons weitergegeben. Es ist zu beachten, dass diese Informationen nach der geltenden Gesetzgebung nicht öffentlich zugänglich sind.

Wie gründet man ein Guernsey Unternehmen

1. Wählen Sie einen Firmennamen aus
2. Bestellen Sie einen registrierten Vertreter/Geschäftsleiter (Dixcart kann Sie bei diesen Aspekten unterstützen)
3. Stellen Sie dem Anbieter von Unternehmensdienstleistungen die erforderliche Due Diligence für alle Parteien des Unternehmens zur Verfügung
4. Überprüfen/entwerfen Sie die Unternehmenssatzung, wie z. B. der Gesellschaftsvertrag und die Satzung – das Guernsey-Register stellt Standardvorlagen für beide der Gesellschaftsvertrag und die Satzung zur Verfügung
5. Eintragung beim Guernsey Register durch einen Anbieter von Unternehmensdienstleistungen

Um ein Unternehmen gemäß dem Guernsey Unternehmensgesetz (Companies Law) von 2008 in seiner geänderten Fassung zu gründen, muss ein lizenzierter Unternehmensdienstleister einen Antrag beim Registerführer der Unternehmen von Guernsey stellen. Dieser Anbieter, der von der Finanzdienstleistungskommission von Guernsey als Treuhänder lizenziert ist, muss dem Antrag folgende Informationen beifügen:

• Der Gesellschaftsvertrag und die Satzung
• Die vollständigen Namen und Adressen der ersten Geschäftsleiter und Gründungsmitglieder
• Das anfängliche Aktienkapital oder die anfängliche Garantie (falls zutreffend)
• Die eingetragene Geschäftsadresse und der Name des ansässigen Vertreters, bei dem es sich entweder um einen Anbieter von Unternehmensdienstleistungen (z. B. Dixcart) oder einen in Guernsey ansässigen Direktor des zu gründenden Unternehmens handeln muss

Die Dixcart Trust Corporation Limited verfügt über eine von der Guernsey Financial Services Commission erteilte Volltreuhandlizenz und kann einen eingetragenen Vertreter/eingetragenen Firmensitz zusammen mit umfassenden Verwaltungsdienstleistungen bereitstellen, einschließlich der Bereitstellung lokaler Geschäftsleiter, die im Vorstand des zu gründenden Unternehmens sitzen.

Bitte wenden Sie sich an advice.guernsey@dixcart.com, um weitere Informationen zu erhalten und ein Antragsformular für die Gründung eines neuen Unternehmens auf Guernsey zu erhalten.

Under Guernsey Company Law a Guernsey company may only be incorporated by a licensed Corporate Service Provider on application to the Guernsey Registrar

In addition to incorporating Guernsey Companies for international clients, Dixcart Trust Corporation Limited (“Dixcart”) also assists Guernsey residents who wish to incorporate a local Guernsey Company.

This Article outlines the key facts and steps for incorporation of a Guernsey Company by a Guernsey Resident. The provision of services by Dixcart is dependent on all parties, including Directors and Shareholders, being ordinarily resident within the Bailiwick of Guernsey and on the risk profile of the activities of those parties and the proposed company.

Below is a list of actions the Guernsey Resident must take in order to provide the information required for Dixcart to make the application:

• Select a Company Name
• Appoint a Registered Agent / Directors
• Provide certified Passports and Utility Bills. These are required for each Director and Shareholder of the proposed company. Original documents may be brought to the Dixcart office for certification.
• The Guernsey Registry provides a Standard set of Memorandum & Articles of Association. Should the client wish to amend either of the standard formats then they must provide a copy of the amended documents,
• Confirm the activities of the company,
• Complete a Director’s declaration signifying the individuals acceptance of their appointment and confirming their eligibility to be appointed,
• All prospective Directors must be registered with the Guernsey Registry who will provide them with a Director’s ID number – should the applicant not already possess a Director’s ID number, then Dixcart can request this from the Guernsey Registry.

Additional services can also be provided by Dixcart which include the provision of the draft documents listed below. These documents are generally required for any subsequent applications made by the company:

• Initial Director’s minute
• AGM and Audit waiver resolutions
• Register of Directors
• Register of Shareholders
• Share Certificates

Please contact advice.guernsey@dixcart.com for further information and to receive an application form for the incorporation of a new local Guernsey company.

Dixcart Trust Corporation Limited has a Full Fiduciary License granted by the Guernsey Financial Services Commission and can provide local incorporation and full administration services including the provision of local directors to sit on the board of a company being incorporated.

Introduction

As the international corporate landscape changes, so do the various laws and regulations. Keeping pace with these changes can be difficult given each jurisdiction has their own quirks and specifics.

In this article we hope to clearly outline Cyprus’ Economic Substance requirements and highlight the importance of ensuring any Cyprus Tax Resident Company has sufficient Economic Substance.

Requirements

Quite simply, for a company to be considered tax resident in Cyprus and enjoy the various corporate tax benefits available as a Tax Resident Company, it must be managed and controlled in Cyprus.

Although the term “Management and Control” is not defined in the Cyprus Income Tax Legislation, there is a list of factors to consider when ensuring a company has economic substance and as a result can be considered a Cyprus Tax Resident Company.

The key areas of focus for demonstrating “Management and Control” in Cyprus are:

• The majority of the Board of Directors must be Cyprus residents. The directors should have effective management and control of the company, and make decisions concerning the company’s strategic and operational activities in Cyprus;
• Board meetings should be held in Cyprus as significant decisions need to be taken in Cyprus. This should be also reflected in the effective documentation;
• The directors of a Cyprus company must be qualified, have sufficient knowledge to make independent decisions and be able to demonstrate their role as decision-makers;
• The company secretary should be a Cyprus resident, which can either be an individual or a Cyprus-based company;
• The discussion and approval of the financial statements and audited accounts should take place in Cyprus;
• The company’s bank accounts must be operated and managed from within Cyprus;
• The company should maintain employees and a fully-fledged office in Cyprus, for day-to-day operational functions;
• Record keeping: Archiving books and records like minutes, company seal and share register should be kept in the Cyprus office;
• Books and accounting records should be kept in Cyprus.

What are the Benefits?

Not only will the company be considered tax resident and therefore eligible to enjoy the Cypriot corporate tax regime, ensuring the company has sufficient Economic Substance safeguards the structure of the company and facilitates the ease of on-going business.

Companies established in jurisdictions without substance requirements often struggle when it comes to opening bank accounts or with purchasing investments. This is because these countries often end up on Grey or even Black Lists.

With the implementation and adoption of the EU Directives and the guidance provided by OECD (Organisation for Economic Co-operation and Development), setting up a company in a jurisdiction that requires economic substance will ensure the new company meets the EU and OECD requirements and is less likely to be challenged by various global tax authorities.

As a result of the above we do not view Economic Substance requirements as a hurdle to be overcome. We see them as an advantage to those that wish to establish meaningful ties with Cyprus and the EU and structure their companies in a fully compliant manner.

How can Dixcart Help?

At Dixcart Management (Cyprus) Limited we are dedicated to developing value-adding and fully compliant solutions for our clients when establishing a Cyprus company. Under the new international regulatory environment, entities without sufficient economic substance have a substantial risk of facing challenges with tax authorities. As such, we only establish companies for our clients whereby we assure that the companies can meet the economic substance requirements.

To do this, we provide a full suite of services to those looking to set up a Cyprus company. From incorporation services to accounting and company secretarial services, we can assist you every step of the way in ensuring you have a bespoke and fully compliant solution.

If you are interested in establishing a Cyprus Company, we would be more than happy to discuss the relevant details with you, as well as the various tax incentives available. Please do not hesitate to contact us at: advice.cyprus@dixcart.com.

 

With effect from 1 January 2015, Cyprus tax resident companies and Cyprus permanent establishments (PEs) of non-Cyprus tax resident companies are entitled to a Notional Interest Deduction (NID) upon the contribution of New Equity employed in the production of taxable income. The new equity can be introduced in the form of paid-up share capital or share premium.

The NID was introduced mainly to harmonise the equity financing tax treatment with the debt financing tax treatment and to promote the capital- incentive investment in Cyprus. The NID is deductible in the same manner as for actual interest expense, but it does not trigger any accounting entries since it is a “notional” deduction.

The deduction is calculated as a percentage (reference rate) on the new equity. The relevant reference rate is the yield of the 10-year government bond (as of December 31 of the previous tax year) of the country where the funds (the new equity) are invested in the business of the company, plus a 5% premium.  

If the country where the new equity is employed lacks a 10-year government bond issued by December 31 of the relevant year, the reference rate will be the Cyprus government 10-year bond rate plus a 5% premium.

The NID is deducted from the taxable income of a company for as long as the new equity financing is used in its operations and produces taxable income. The deduction is subject to a number of conditions, including an 80% taxable-income limitation.

On March 7, 2024, the Cyprus Tax Department published the bond yield rates as of December 31, 2023, for a number of countries. These rates are to be used for the Notional Interest Deduction (NID) applicable to equity injected into Cyprus companies for 2024.

	31/12/2023	NID Reference Interest Rate 2024
Cyprus	3.25%	8.25%

Anti avoidance rules

A number of anti-avoidance provisions are included in the legislation, in order to ensure that there is no abuse of the new benefit granted, such us ‘’dressing up’’ old capital into new capital, claiming notional interest twice on the same funds through the use of multiple companies or where the arrangements introduce lack valid economic or commercial reasons.

The Commissioner may not authorize the granting of any allowance under the NID provisions, if he considers that actions or transactions have taken place without substantial economic or commercial purpose.

Example

A parent foreign company introduces equity in its Cyprus subsidiary and the Cyprus company used the equity to finance other associated foreign companies.

New equity introduced: €10m

Loans advanced: €10m

Interest rate charged: 10.00%

Cyprus 10-year government bond rate: 3.25 %

Income Tax at Cyprus Level

Interest / Taxable income: €10m*10% = €1.000.000

Notional interest deduction:

Lower of (3.25%+5%)*€10m = €825.000 and 80%* €1.000.000 = €800.000

Thus:

Taxable Income:	€1.000.0000
Notional Interest deduction:	(€800.000)
Net taxable income:	€200.000
Corporation tax @ 12.5%	€25.000
Effective tax rate:	2.50%

Introduction

Guernsey is a leading financial services centre. With its excellent reputation and local legal and accounting resources, it has increasingly become a popular jurisdiction in which to incorporate a company.

In this note, we outline the key facts and steps in relation to the incorporation of a new Guernsey Company.

Why incorporate a company in Guernsey?

• Taxation – A general rate of tax payable by a Guernsey company is 0% (some exceptions apply please contact us for further information)
• Separate legal personality – providing asset protection which can help to shield a shareholder’s personal assets from company liabilities
• Fast incorporation – once all required information has been received by Dixcart, we can arrange incorporation within twenty-four hours
• Strong reputation and local resources – there are a plethora of professional accounting and legal firms which lend themselves to the smooth running of a Guernsey company. In addition, the jurisdiction is well respected and has an excellent reputation globally and is well recognised by third party counterparts such as Banks and Lenders.

What are the types of Guernsey company

There are various options available to suit each clients’ specific requirements when looking to incorporate a Guernsey company which include:

• Limited liability company (where the shareholder(s) liability is limited by shares or guarantee)
• Unlimited liability company whereby the shareholder is liable to contribute to all of the debts of the company
• Cell company either; (i) a protected cell company (PCC) where assets and liabilities are segregated into separate cells and ring fenced from each other, for a PCC each cell does not have its own legal personality, or (ii) an incorporated cell company where each cell is separately incorporated and has individual legal personality. These types of companies must be approved by the Guernsey Financial Services Commission.

Who are the parties to a Guernsey company

• Directors
  • Can be individual or corporate
  • Minimum of 1
• Secretary
  • May be appointed but this role is optional
• Members
  • Also known as shareholders
• Beneficial Owner
  • The details of which must be kept by the registered agent and some details of which are shared with the Guernsey Registrar of Beneficial Ownership of Legal Persons. It should be noted that under present legislation this information is not publicly available.

How to incorporate a Guernsey company

1. Select a Company name
2. Appoint a Registered Agent / Directors (Dixcart can assist with these aspects)
3. Provide the required due diligence to the corporate services provider on all parties to the Company
4. Review / draft the company statutes such as memorandum and articles of incorporation – the Guernsey Registry do provide standard templates for both Memorandum and Articles
5. Incorporation with the Guernsey Registry by a corporate services provider

To incorporate a company under the Companies (Guernsey) Law 2008, as amended, a licensed corporate services provider must apply to the Registrar of Guernsey Companies. This provider, licensed as a fiduciary by the Guernsey Financial Services Commission, must include the following information in the application:

• The memorandum and articles of incorporation
• The full names and addresses of the first directors and founder member(s)
• The initial share capital or initial guarantee (if applicable)
• The registered office address and resident agent name which must be either a corporate services provider (i.e. Dixcart) or a Guernsey resident director of the company being incorporated

Dixcart Trust Corporation Limited has a Full Fiduciary License granted by the Guernsey Financial Services Commission and can provide registered agent / registered office together with full administration services including the provision of local directors to sit on the board of the company being incorporated.

Please contact advice.guernsey@dixcart.com for further information and to receive an application form for the incorporation of a new Guernsey company.

Portugal has emerged as a haven for entrepreneurs and established businesses alike with their government incentives for start-ups and businesses. To fuel this growth, the government offers a robust package of financial support, tax breaks, and regional perks. Let’s delve into the toolbox Portugal provides to jumpstart your venture and explore the Portuguese government incentives available for startups and businesses.

Key Requirements to access Government incentives for Start-ups and Businesses

Start-ups in Portugal are defined as:

• Those in operation for less than 10 years,
• Employing less than 250 employees,
• With an annual turnover of less than €50m,
• Not the result of transformation or split from a large company,
• No large company holding a majority direct or indirect stake in its capital,
• Has its headquarters or permanent representation office in Portugal (or employs at least 25 employees in Portugal), and
• Meets the following conditions cumulatively:
  • Innovation & Growth: The company must be deemed innovative with high growth potential or have R&D activities recognized by the National Agency of Innovation (“ANI” or Agência Nacional de Inovação).
  • Funding: At least one round of venture capital financing or contributions from business angels.
  • Government Funding: Have been granted funds from the Banco Português de Fomento, or funds managed by this entity, or by its subsidiaries, or from one of its equity or quasi-equity instruments.

Financial Incentives:

• Grants and Investment Funds: Several programs offer direct grants for innovation and development. Examples include the SI for Technological R&D and the SICE – Productive Innovation.
• Access to EU Subsidies and Grants: Portugal is a member of the EU and thus may have access to EU based subsidies and grants available.

Tax Advantages:

• R&D Tax Incentives: Portugal boasts a generous R&D tax credit system (SIFIDE). This program allows companies to deduct a significant portion of R&D expenditures, significantly reducing their tax burden.
• Corporate Income Tax Deductions: Start-ups benefit from a recent tax code update offering an additional deduction on their tax base for increases in eligible equity.
  • Start-ups in Portugal are subject to a 12.5% corporate income tax rate (in Mainland Portugal) or 8.75% (in Madeira) on the first €50,000 of taxable income (the exceeding amount will be taxed at a rate of 21% in Mainland Portugal or 14.7% in Madeira);
  • Madeira IBC: Start-ups may consider moving the operations into the Madeira International Business Centre which offers a corporate tax rate of 5% on permitted activities, provided certain substance criteria are met, such as a €75,000 investment and a permanent employee tax resident in the island of Madeira. Click here for more information.
• Patent Box Regime: Portugal’s Patent Box grants an 85% tax exemption on income derived from qualifying intellectual property (IP) like patents and copyrights. This incentivizes innovation and protects your intellectual assets.

Regional Support:

• Focus on Specific Areas: Portugal recognises the importance of regional development. Many areas offer additional tax breaks and subsidies, for businesses operating in specific sectors or locations.

Finding the Right Fit:

To navigate this extensive support system, it’s crucial to identify the programmes that best suit your company’s needs and location.

Additional Benefits to Incorporating in Portugal:

Portugal’s appeal extends beyond financial incentives. The country boasts a skilled and multilingual workforce, a streamlined business setup process, and a flourishing startup ecosystem.

Portugal boasts a high quality of life for its residents. Its vibrant ecosystems foster a thriving startup community, incubators and co-working spaces encouraging collaboration, networking, and ample access to resources. This supportive environment and attractive incentives offer a fertile ground for startups and businesses to thrive.

Portugal consistently ranks among the safest countries in the world, offering a peaceful and welcoming environment with stringent safety and security processes.

Lastly, the mediterranean weather, diverse landscapes, and rich cultural heritage provide an attractive living environment for entrepreneurs and their teams.

Taking the Next Steps:

When partnering with a service provider who has an international and local presence, you are able to leverage government programmes and explore reginal benefits to turn your entrepreneurial goals into a reality.

Consulting with professionals such as Dixcart, ensures you are maximising the advantages available to your start-up or business. Reach out to our experts in Dixcart Portugal for more information on taking the next steps: advice.portugal@dixcart.com

The financial services sector has been one of the pillars of the Maltese economy for over 30 years and has allowed Malta to establish itself as a reputable international financial centre.

The industry has grown at an average rate of 8.3% since 2010 and is currently the sixth largest economic sector in the country, contributing to 9.1% of its Gross Value Added. The Maltese economy is well diversified, and its growth forecast is the highest in the European Union, being the only European country with an expected growth above 4% for both 2024 and 2025.

One of the distinctive elements of Malta has always been innovation, especially legislative innovation. The jurisdiction has consistently managed to be able to target specific market niches, combining agility with a robust regulatory framework.

This approach, carried out through  constant activity, ensures that legislation is always at par with the new products available in a very fast-paced, technology-driven environment. This keeps Malta at the forefront of innovation in the financial services space.

A strategy crafted by the industry and fully backed by the Government

In line with this spirit, on 29 March 2023, the Malta Financial Services Advisory Council presented the Malta Strategy for Financial Services for the 10 years to come. The document indicates over 170 initiatives to be implemented in order for Malta to maintain and further strengthen its position as an international financial centre. Over 100 professionals contributed to the drafting of the document, which was endorsed by the government, who has a major role in creating the conditions to enable the financial services industry to continue to prosper in the future.

The long-term vision for Malta as a jurisdiction is to be “recognised as a competitive, secure and credible jurisdiction for financial services”. This is to be achieved through a combination of innovation, solid technology foundations and a nimble, yet robust and coherent regulatory framework.

The strategy identifies key drivers to support the vision, as well as six priorities that underpin each activity and are cross-sectorial, because they are to be applied in each of the 175 initiatives identified in the document.

The six priorities are:

1. Streamline regulation
2. Standardise payments
3. Consolidate identity
4. Modernise taxation
5. Reform financial law
6. Build talent

Four enablers to enhance competitiveness

The strategy also identifies four transformational initiatives to significantly change and innovate the way in which the financial services sector operates in the jurisdiction. These are:

1. Centralised identity management
2. Digital payments hub infrastructure
3. Regulatory process integration and digitisation
4. Law reform and harmonisation

The centralised identity management / due diligence portal is fundamental to reduce bureaucracy and speed up due diligence processes through the launch of a digital platform that is centralised, standardised and used by all parties. The aim of the measure is to promote the once-only principle, meaning that individuals and companies would only need to provide certain information or documentation to the relevant authorities once, ultimately improving efficiency, reducing costs, and leading to standardisation. Private entities such as banks, lawyers, and accountants will have authorised access to certified documentation, subject to the individual’s consent.

Payments are crucial for every financial system, therefore having a national digital payments hub infrastructure would lead to a modern, user-friendly system that allows for secure, multi-currency, instant payments for both individuals and corporates. The infrastructure must be supported by state-of-the-art technology to ensure good user-experience and, at the same time, maintains high levels of AML/CFT standards through in-built capabilities such as, but not limited to, Suspicious Transaction Reporting.

The integration and digitisation of the regulatory process will be crucial to address bureaucracy bottlenecks that can hinder the inflow of Foreign Direct Investment, the activities of local operators and also the regulators themselves. Even in this case, the objective is to streamline processes while maintaining the rigorous controls that the jurisdiction needs to reinforce its position in the international scenario.

The above-mentioned activities need to be complemented by a legal system that operates in a timely manner and has the adequate resources to ensure efficiency and competence when dealing with financial crimes such as money laundering, fraud and tax evasion. The strategy suggests the creation of a Task Force on Financial Services Law Reform to review and propose legislative amendments that address and improve current weaknesses.

The crucial role of the public sector in the implementation of the strategy is reaffirmed when the document identifies the actors responsible for the execution of the four transformational activities, which are mostly public entities such as government ministries, the Central Bank of Malta, the Malta Business Registry, the Malta Financial Services Authority, the Financial Intelligence Analysis Unit and the Commissioner for Revenue. All players have already started implementation and this underlines, once more, the commitment of the government to support the industry based on the indications provided by the industry itself and included in the strategy.

Keeping an eye on the international developments

The challenges to be faced are not only related to internal aspects and procedures. There are other factors, resulting from international trends, that affect all countries, and therefore each jurisdiction needs to tackle them from a domestic perspective, but keeping in mind their cross-border nature. The two most important factors are taxation and talent.

Taxation will always be one of the main elements taken into consideration in business decisions. The Government has already assured, on several occasions, that the corporate system will not be drastically changed and therefore the Maltese tax system will go through some revisions to stay in line with international developments but will also retain attractive elements to be as competitive as possible.

With regards to availability of talent, many would say that Malta is victim of its own success: years of economic growth, combined with a small population, have stressed the need for Malta to rely on foreign talent to support the economic growth. The country is on the path of simplifying the process of applying for work permits and ease the procedures for applicants to bring their immediate families. Clear and swift procedures would make the country much more attractive for expats. In parallel, long-term policies are currently being studied to upskill in Malta as many individuals as possible through specialised courses and programmes, to be offered not only by the University of Malta but also by professional bodies and related associations.

The execution of the strategy is a vital step to maintain a competitive offering at the international level, but its maximum effectiveness will only be reached through an effective communication outside Malta, since investors need to be informed about the significant efforts that the jurisdiction is doing to enhance its offering.

Conclusion

Staying competitive and in line with the various developments currently happening is crucial to allowing the industry to continue thriving, and Malta has a solid plan to continue offering excellent solutions in the financial services industry for the years to come.

Dixcart in Malta

The Dixcart office in Malta has a wealth of experience across financial services and offers legal and regulatory compliance insight. Our team of qualified Accountants and Lawyers are available to set up structures and help to manage them efficiently.

Additional Information

For further information about Maltese companies matters please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.