Category: Corporate Services

Introduction

If you are considering establishing a business in the UK, ensuring the compliance and administrative elements are setup at an early stage is crucial, to allow the business to grow efficiently.

Similarly, when any move of residence to a new jurisdiction takes place, a thorough review of how a family’s wealth is held, needs to be undertaken, in order to avoid any potentially costly errors. This should take place before the move has occurred.

This Article details the main checklists of items that you need to take into consideration. Dixcart in the UK has extensive expertise in assisting individuals and families to set up businesses and to move to the UK and can guide you through the process and actions that you need to take: advice.uk@dixcart.com

1. Compliance Checklist for a New UK Business

• Immigration: unless you are looking to only employ workers already with the right to work in the UK, you may need to consider business related visas, such as a sponsor license or sole representative visa.
• Employment contracts: all employees will need to have an employment contract compliant with UK employment laws.  Many businesses will also need to prepare staff handbooks and other policies.
• Payroll: UK income tax rules, benefits-in-kind, pension auto-enrolment, employer’s liability insurance, all need to be understood and implemented correctly.  Administering a UK compliant payroll can be complex. 
• Book-keeping, management reporting, statutory accounting and audits: well- maintained accounting records will help provide information for considered decision-making and financing, and will ensure that you remain compliant with Companies House and HMRC.
• VAT: registering for VAT and filing, in compliance with requirements, will help ensure there will be no unexpected surprises and, if dealt with promptly, can help with early-stage cash-flow. 
• Commercial contracts: whether an agreement with a; vendor, supplier, service provider or customer, a well prepared and robust contract will help protect your business and ensure it is well placed for any future exit strategy. 
• Premises: whilst many businesses are operating more and more online, many will require office or warehousing space.  Whether renting or purchasing space we can assist. We also have a Dixcart Business Centre in the UK, which may be helpful if a serviced office is needed, with professional accounting and legal services being available, in the same building.  

2. Matters to Consider Prior to Moving to the UK

As indicated at the start of this Article, it is important that families evaluate  arrangements, including tax and succession matters, well ahead of any move. A practical list of some of the factors that should be taken into consideration is detailed below.

Practical matters:

• Travel documents (visas)
• Formal enrolment in country/jurisdiction of ‘arrival’, including communication with tax authorities, healthcare and schooling.

Taxation matters:

• Confirm the arrangements that affect heirs and family in other countries.
• Plan for the optimal timing of loss of tax residence, and any exit charges.
• Consider any action that needs to be taken to ensure assets are held in the  optimal way, prior to moving. Leaving this until after arrival can result in unexpected and large tax bills that could have been avoided.
• Plan the timing of disposals and acquisitions, to ensure the best possible tax outcome.
• Consider establishing new banking arrangements to segregate income and gains.

Succession and inheritance:

• Confirm which laws govern succession and if a choice of different jurisdiction law is available.
• Confirm whether marital/family laws are affected and whether a choice of different jurisdiction law is available.
• Review estate planning documents (wills, succession, and prenuptial documents), and consider the interaction of wills, appropriate for different jurisdictions.
• Consider the use of trusts for estate planning, not forgetting that the timing of the settlement of trusts could be key to the taxation outcome.

Implications of transferring physical wealth:

• Family heirlooms, jewellery, works of art, aircraft, cars and yachts: can they be transferred, are import duties applicable?

Gifts and Donations:

• Confirm whether gifts or donations should be executed, in advance of acquiring the new residency.

Ongoing Matters to be Reviewed at Least Annually

There are a series of important reviews, that should be taken at least annually, to take into account both changes in personal circumstances and the law:

• Review of estate planning documents. These include wills, succession and prenuptial documents.
• Review of trusts arrangements, structures, and bank accounts.
• Review of any changes to tax laws and the implications in relation to existing agreements and structures.

How can Dixcart Help?

Dixcart can assist with:

• Establishment, management and on-going corporate compliance
• Pre-arrival and departure tax planning.
• Advice and assistance with visas for residence in the UK.
• Accounting, legal and taxation advice.

Additional Information

If you would like to discuss planning, for the potential setting up of a business in the UK or move of location to the UK, please contact Peter Robertson or Paul Webb, at the Dixcart office in the UK: advice.uk@dixcart.com.

It is now May 2023 and the deadline of 31 January 2023, for the registration of overseas entities with property interests in the UK, with Companies House has passed, with no announcement of any further extension. An estimated 13,000 relevant overseas entities had not registered by the deadline, approximately 40% of the total.

All overseas entities that do not register on the Register of Overseas Entities, can face a fine of up to £2,500 per day and potential criminal charges.

Unless the registration process has been dealt with and the information is up to date, it will now no longer be possible for Overseas Entities to buy, charge, sell or lease property (for more than seven years).

If you are involved in any property transaction involving a UK Overseas Entity, you need to take appropriate action now to make sure that any registrations are completed.

What is the Register of Oversea Entities (ROE)?

The ROE is operated by Companies House, and registers information relating to overseas entities who own/ ill own property or are tenants of leases (for a term of over 7 years). The information held on the ROE includes, most importantly, the beneficial owners of the overseas entity or in the absence of such, the managing officers.

In order to register on the ROE, the Overseas Entity (OE) must have their information verified by a UK regulated ‘relevant person’ (as defined in the Money Laundering Regulations), this person can be a solicitor, accountant, or registered agent. Once successfully registered, Companies House provide an Overseas Entity ID Number which will be used by the Land Registry in property dealings.

A closer look at the consequences of failing to register:

An overseas entity that fails to register with Companies House and provide the required information on its beneficial owners will not be registered as the legal owner and will, therefore, be unable to sell or lease the land, or create a charge over it (other than in limited circumstances).

The overseas entity and its officers will also be liable to civil and criminal penalties for failing to register. Such penalties include:

• daily fines
• prison sentences for managing officers.
• limits on the ability to deal with the land (see below).

How will non-compliance be policed at the Land Registry?

The Land Registry is obliged to enter a restriction on the title to any UK land where it is satisfied the registered proprietor is an overseas entity registered on or after 1 January 1999.

The restriction will broadly prohibit the registration of any:

• transfer
• lease for a term of more than seven years from the date of the grant
• charge, unless the overseas entity has fulfilled its registration requirements or is exempt at the date of such disposition.
• An overseas entity purchasing UK land will be unable to be registered as proprietor of that land without demonstrating to the Land Registry that they have complied with the registration requirements (by producing an overseas entity ID).

Summary

It is now more important than ever, if you are involved in any property transaction involving a UK Overseas Entity, that you take appropriate action now, in order to avoid fines and/or potential criminal charges.

If you think you may need to register your overseas entity, please get in touch with the Dixcart office in the UK who will be able to assist you throughout the process: advice.uk@dixcart.com

Overview

Malta has become a popular choice for an increasing number of multinational groups seeking an efficient holding structure. In the article below we examine the Participation Holding Exemption and how it could be of benefit to you, should you consider setting up a Holding Company in Malta.

What is the Maltese Company Participation Holding Exemption?

Participation Holding Exemption is a tax exemption available to Maltese companies that hold more than 5% of the shares or voting rights in a foreign company. Under this exemption, dividends received from the subsidiary company are not subject to taxation in Malta.  

Malta’s participation exemption relieves 100% of the tax on both the dividends derived from a participating holding and on gains derived from the transfer thereof. This exemption is designed to encourage Maltese companies to invest in foreign companies and to promote Malta as an attractive location for holding company structures.

Participating Holding: Definition

 A participating holding is where a company resident in Malta holds equity shares in another entity and the former:

a. Holds directly at least 5% of the equity shares in a company, and this confers an entitlement to at least two of the following rights:

i.    Right to vote;

ii.   Right to profits available on distribution;

iii.  Right to assets available for distribution on a winding up; OR

b.  Is an equity shareholder and is entitled to purchase the balance of the equity shares or has the right of first refusal to purchase such shares or is entitled to sit as, or appoint, a director on the Board; OR

c.  Is an equity shareholder who holds an investment of a minimum €1.164 million (or the equivalent sum in another currency), and such investment is held for an uninterrupted period of at least 183 days; or the company can hold the shares or units for the development of its own business, and the holding is not held as trading stock for the purpose of a trade.

For a holding in a company to be a participating holding, such a holding must be an equity holding. The holding must not be in a company holding, directly or indirectly, immovable property situated in Malta, subject to a few minor exclusions.

Other Criteria

With respect to dividends, the Participation Exemption is applicable if the entity in which the participating holding is held:

1. Is resident or incorporated in a country or territory which forms part of the European Union; OR
2. Is subject to tax at a rate of at least 15%; OR
3. Has 50% or less of its income derived from passive interest or royalties; OR
4. Is not a portfolio investment and has been subject to tax at a rate of at least 5%.

Tax Refunds for Participating Holding Entities

Where the participating holding relates to a non-resident company, an alternative to Malta’s participation exemption is a full 100% refund. The respective dividends and capital gains will be taxed in Malta, subject to double tax relief, however, on  dividend distribution, the shareholders are entitled to a full refund (100%) of the tax paid by the distributing company.

In summary, even when Malta’s participation exemption is not available, Maltese tax may be eliminated through application of the 100% refund.

Domestic Transfers

Malta’s Participation Exemption also applies with respect to gains derived from the transfer of a participating holding in a company resident in Malta. Dividends from companies ‘resident’ in Malta, whether participating holdings or otherwise, are not subject to any further taxation in Malta in view of the full imputation system. For further information please speak to Dixcart: advice.malta@dixcart.com

Sale of Shares in a Malta Company by Non-Residents

Any gains or profits derived by non-residents on a disposal of shares or securities in a company resident in Malta are exempt from tax in Malta, provided:

• The company does not have, directly or indirectly, any rights with regards to immovable property situated in Malta, and
• the beneficial owner of the gain or profit is not resident in Malta, and
• The company is not owned and controlled, directly or indirectly by, nor acts on behalf of an individual/s ordinarily resident and domiciled in Malta.

Additional Benefits Enjoyed by Maltese Companies

Malta does not levy withholding taxes on outbound dividends, interest, royalties and liquidation proceeds.

Maltese holding companies also benefit from the application of all EU directives as well as Malta’s extensive network of double taxation agreements.

Dixcart in Malta

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

Do you have a business in Cyprus and are you looking for accounting services?

Cyprus companies: Accounting, Annual General Meeting and Annual Return Requirements

• Under the Cyprus Companies Law, the directors of every company are responsible for the bookkeeping necessary for the preparation of the financial statements of the company that need to be filed with the Registrar of Companies. The financial statements are accompanied by the Management Report. Newly formed companies do not have to submit financial documents for the first year of activity, but the documents must be registered at the Registrar of Companies within 18 months of the date of incorporation.

• Under the Cyprus Companies Law, all companies must have their financial statements audited and signed by a Cyprus registered auditor.

• Companies with subsidiaries need to present consolidated financial statements.

• Cyprus companies must hold an Annual General Meeting (AGM) every year and no more than 15 months should lapse between the first AGM and the subsequent one.

Tax Obligations of Cyprus Companies

Cyprus Companies, for tax purposes, are identified as tax resident or non-tax resident. A company, irrespective of where it is registered, is taxed only if it is a tax resident of Cyprus.

A Cyprus company is tax resident in Cyprus if the management and control is in Cyprus, regardless as to whether the company is also registered in Cyprus. Generally, tax resident companies are taxed at 12.5% of their business profit.

• All companies have a default year-end of 31^st December, but may elect another date. Companies must file an income tax return and financial statements within 12 months of their year-end.

How Can Dixcart Help?

Dixcart can assist with the accounting process and help ensure that the process is as simple and timely as possible.

We are also experienced in liaising with the chosen auditor and can suggest a number of competent auditors, if required.

Please speak to Katrien de Poorter, at our office in Cyprus: advice.cyprus@dixcart.com

Malta Enterprise currently offers a variety of diverse funding options, aimed at developing and enhancing small to medium sized businesses on the island. In this article we focus on the Soft Loan. It is designed to support existing businesses to; accelerate plans to establish new products, enter a new geographic market, address environmental concerns, and/or digitise processes.

Companies that meet the requirements can benefit from a Soft Loan covering part of the funding requirements, up to €1,000,000.

How Does it Work?

An eligible undertaking may be supported through a soft loan to:

a) facilitate a development or expansion project based on a business plan to develop a new product or enter a new geographic market

b) address environmental issues such as; water usage, water treatment, waste treatment, reduction, and reuse

c) optimise business processes through digitalisation and advanced technologies

d) projects aimed to achieve a high level of sustainability

Supported projects must have an implementation period which is not longer than eighteen months and the loan may cover up to 75% of the costs related to the proposed project, including the; procurement of assets, wage costs, know-how and other non-recurring costs.

Details About the Loan

It is important to note that the loan is by way of collateral, secured by a special ‘hypothec’ covering at least fifty percent (50%) of the loan amount. The loan amount cannot exceed:

a) €1,000,000maximum fundingthat must be repaid over a five year term. For organisations involved in road freight transport, the maximum funding is €500,000.

b) Alternatively, if the loan is to be re-paid over ten years, the maximum funding is €500,000, or €250,000 for organisations involved in road freight transport.

Interest Rate

Malta Enterprise charges a very competitive rate of interest that is not lower than 0.5%, established after considering the project and the prevailing European Central Bank reference rate.

The amount not covered by the loan issued by Malta Enterprise, must be financed through a loan issued through a commercial bank and/or through the reserves of the organisation, or other funds considered to be the organisation’s own funds, which must be specifically allocated to the project and deposited with a Commercial Bank.

The loan is repayable within a period of five years, or ten years as outlined above, and Malta Enterprise may agree a moratorium of a maximum twenty-four months for the loan to the relevant organisation, as long as the repayment remains scheduled to be completed within the five or ten year period, as applicable.

Additional Assistance in Malta

This support measure can be combined with the other assistance, such as: The Research and Development Grant: https://www.dixcart.com/setting-up-a-company-in-the-eu-malta-funding-solutions/

How Can We Help You?

Dixcart Malta have a wealth of experience across financial services, offering legal and regulatory compliance insight and helping to implement transformational technology and organisational change. 

Our team of professionals can assist you with the application process and make recommendations with regards to the funding being proposed, as well as preparing the relevant paperwork to ensure a smooth and seamless process, to obtain the relevant finance required.

We will guide you each step of the way and detail the specific criteria required, depending on the activity of the company.

Additional Information

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

Action Still Needed

The Deadline Has Passed – Action Still Needed

The deadline of 31 January 2023, for the registration of overseas entities with property interests in the UK, with Companies House has now past.

An estimated 13,000 relevant overseas entities had not registered by the deadline, approximately 40% of the total. 

Considerable work needs to be committed to the verification process, before an application for registration can be made.  

In addition, overseas entities that owned a qualifying estate on February 28, 2022 and have subsequently disposed of their interest, are also caught by the rules.

A summary is listed below. For comprehensive detail, please see our previous article here.

Who needs to register?

The beneficial owner of any overseas entity (being a corporate body, partnership or other legal person) governed by the laws of a country or territory outside of the United Kingdom that owns, leases or disposes of qualifying real estate.

Submission of information and verification

The register is a digital service with information submitted in English.

Before any application for first registration or later updating applications/rectifications and amendments can take place, the information will be subject to formal verification by a relevant person.

Broadly, a relevant person includes an independent legal professional, financial institutions, auditors, estate agents, auction platforms etc. 

Once the information has been verified the relevant person will need to confirm to the  Companies House Registrar that it has completed verification in accordance with the new Act and regulations and provide a  statement complying with Part 2 (5) of The Register of Overseas Entities (VPI) Regulations 2022.  If the relevant entity has made no relevant dispositions between 28 February 2022 and the date the application is made, the application must state this.

The information itself must be retained by the relevant person for a period of 5 years.

What happens once registration is accepted?

Companies House then publish the identity on a public register and assign a unique Overseas Entity ID. The name of the relevant entity and their agent will be available to the public on the Companies House website. The Overseas Entity ID will be required by the Land Registry before it registers any dealings relating to real estate in England & Wales.

The 2022 Act requires registered entities to update their information annually.

Secondary legislation allows individuals to be able to protect some of their information from public disclosure in limited circumstances (if it can be shown that an individual, or the people they reside, with will be at serious risk of violence or intimidation).

Failure to comply with registration and/or within the time limits imposed?

In England and Wales a person guilty of an offence is liable on summary conviction to a daily fine of up to £2,500 or unlimited fines and a prison sentence of up to 5 years. Failure to register will also prevent any dealings with the real estate in question.

What can Dixcart do to help you?

We can keep you up to date of the latest developments, assist and advise you on your obligations and aid in collecting the required information.

We can also verify the required information for you and make the application for registration to Companies House and communicate the unique Overseas Entity ID number to you as well as process annual returns.

Additional Measures in the Future

Following the introduction of the  Economic Crime (Transparency and Enforcement) 2022 Act (“ECTE ACT”), which came into force on 01 August 2022, the UK Government is now seeking further measures with the introduction of the Economic Crime and Corporate Transparency Bill, which is already past Committee stage in the House of Commons. 

The register of overseas entities will be amended to maintain consistency with changes intended to the Companies Act 2006.

Amongst the other far reaching and significant changes intended by the Bill are:

• reforms to Companies House including the introduction of identity verification for all new and existing registered company directors
• reforms to prevent the abuse of limited partnerships by tightening registration requirements and increasing transparency
• additional powers to seize and recover suspected criminal crypto assets by boosting criminal confiscation powers
• reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime
• new intelligence gathering powers for law enforcement and removal of nugatory burdens on business.

Additional Information

If you have any questions or think you may need to register your overseas entity, please get in touch with the Dixcart office in the UK: advice.uk@dixcart.com.

Why Use Guernsey?

Guernsey is a premier international financial centre with an enviable reputation and excellent standards. The Island is also one of the leading jurisdictions providing international corporate and private client services and has developed as a base from which internationally mobile families can organise their worldwide affairs through family office arrangements.

Factors contributing to and enhancing the status of this jurisdiction include:

• A general rate of tax payable by Guernsey companies of zero*.

*Generally, the rate of corporation tax payable by a Guernsey company is 0%.

There are certain limited exceptions when a 10% or 20% rate of tax apply. Please contact the Dixcart office in Guernsey, for further details: advice.guernsey@dixcart.com.

• There are no wealth taxes, no inheritance taxes, no withholding taxes on dividends, no capital gains taxes and no VAT.
• For Guernsey resident individual tax payers there is a maximum tax charge of £260,000 on their worldwide income.
• Individuals relocating to the Island can effectively elect to pay tax on their Guernsey source income only, capped at £150,000, or on their worldwide income capped (as detailed above) at £300,000.
• The Companies (Guernsey) Law 2008, the Trusts (Guernsey) Law 2007 and the Foundations (Guernsey) Law 2012, reflect Guernsey’s commitment to providing a modern statutory basis and increased flexibility for companies and individuals using the jurisdiction of Guernsey. The laws also reflect the importance placed on corporate governance.
• Guernsey’s Economic Substance regime was approved by the EU Code of Conduct Group and endorsed by the OECD Forum on Harmful Tax Practices in 2019.
• A Guernsey Foundation is the only entity of this type globally that offers potential for disenfranchised beneficiaries.
• Guernsey is home to more non-UK entities listed on the London Stock Exchange (LSE) markets than any other jurisdiction globally. LSE data shows that at the end of December 2020 there were 102 Guernsey-incorporated entities listed across its various markets.
• Legislative and fiscal independence mean that the Island responds quickly to the needs of business. In addition the continuity achieved through the democratically elected parliament, without political parties, helps deliver political and economic stability.
• A wide range of internationally respected business sectors: banking, fund management and administration, investment, insurance and fiduciary. To meet the needs of these professional sectors, a highly skilled workforce has developed in Guernsey.
• 2REG, the Guernsey aviation registry offers a number of tax and commercial efficiencies for the registration of private and, off-lease, commercial aircraft.

Formation of Companies in Guernsey

General information is detailed below outlining the formation and regulation of companies in Guernsey, as embodied in the Companies (Guernsey) Law 2008.

1. Incorporation

Incorporation can normally be effected within twenty four hours.

     2. Minimum Capitalisation

There are no minimum or maximum capital requirements. Bearer shares are not permitted.

     3. Directors/Company Secretary

The minimum number of directors is one. There are no residency requirements for either directors or secretaries.

     4. Registered Office/Registered Agent

The registered office must be in Guernsey. A registered agent needs to be appointed, and must be licensed by the Guernsey Financial Services Commission.

     5. Annual General Meeting

Members can elect not to hold an Annual General Meeting by Waiver Resolution (requiring a 90% majority).

     6. Annual Validation

Each Guernsey company must complete an Annual Validation, disclosing information as at 31^st December of each year. The Annual Validation must be delivered to the Registry by 31^st January of the following year.

     7. Audit

Members can elect for the company to be exempt from the obligation to have an audit by Waiver Resolution (requiring a 90% majority).

     8. Accounts

There is no requirement to file accounts. However, proper books of account must be maintained and sufficient records must be kept in Guernsey to ascertain the financial position of the company at no greater than six monthly intervals.

     9. Taxation

Resident corporations are liable to tax on their worldwide income. Non-resident corporations are subject to Guernsey tax on their Guernsey-source income.

Companies pay income tax at the current standard rate of 0% on taxable income; however, income derived from certain businesses may be taxable at a 10% or 20% rate.

Income derived from the following business is taxable at 10%:

• Banking business.
• Domestic insurance business.
• Insurance intermediary business.
• Insurance management business.
• Custody services business.
• Licensed fund administration business.
• Regulated investment management services to individual clients (excluding collective investment schemes).
• Operating an investment exchange.
• Compliance and other related activities provided to regulated financial services businesses.
• Operating an aircraft registry.

‘Banking business’ is broadly defined as income that arises as a result of the provision of credit facilities by any type of company and the utilisation of customer deposits. Income derived from licensed fiduciaries (with regulated activities), licensed insurers (in respect of domestic business), licensed insurance intermediaries, and licensed insurance managers is also taxable at 10%.

Income derived from the exploitation of property located in Guernsey or received by a publicly regulated utility company is subject to tax at a higher rate of 20%. In addition, income from retail businesses carried on in Guernsey where taxable profits exceed 500,000 British pounds sterling (GBP) and income derived from the importation and/or supply of hydrocarbon oil and gas are also taxed at 20%.

Finally, income derived from the cultivation of cannabis plants and income from the use of those cultivated cannabis plants or parts of those cultivated cannabis plants or licensed production of controlled drugs is taxable at 20%.

If you would like additional information regarding the formation of companies in Guernsey and the fees that Dixcart charge, please contact: advice.guernsey@dixcart.com

Dixcart Trust Corporation Limited has a Full Fiduciary Licence granted by the Guernsey Financial Services Commission