Benefits Available Through the Cyprus “60 Day” Tax Residency Rule and a Criteria Change for “Employment Income Exemption”

Background to the “60 Day” Tax Residency Rule

In July 2017, the Cyprus Parliament voted for an amendment to the then criteria used to determine Cyprus tax residency. In addition to the 183 day rule, a second test was introduced in relation to an individual’s tax position in Cyprus: the 60 Day Tax Residency Rule.

  • The “183 day rule” applies to individuals who have physically resided in Cyprus for more than 183 days during one calendar year.
  • In addition to this, a second test was implemented whereby an individual can become Cyprus tax resident in 60 days. This rule is applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction.

Since the implementation of the 60 day tax rule, a number of individuals have relocated to Cyprus to take advantage of the various tax benefits that are available.

Criteria to be Met for an Individual to Meet the “60 Day” Residency Rule

The “60 day rule” applies to individuals who in the relevant tax year:

  • reside in Cyprus for at least 60 days;
  • operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus. Individuals must also have a residential property in Cyprus which they own or rent;
  • are not tax resident in any other country;
  • do not reside in any other single country for a period exceeding 183 days in aggregate.

Overview – Cyprus

Cyprus has positioned itself well, as a country of choice for both individuals and corporations, through the availability of various tax incentives and benefits. The numerous tax incentives offered has seen a steady flow of EU and non-EU nationals establishing their business operations in Cyprus. In addition, individuals find Cyprus a tax efficient location to structure their personal tax positions, by taking advantage of flexible tax resident rules and the non-domicile tax regime.

As an EU member state, Cyprus offers a pleasant climate, adequate infrastructure, and a convenient geographical location. There are two main airports which provide frequent flights to most European cities, as well as several international destinations.

Days Spent In and Out of Cyprus

For the purpose of the rule, days “in” and “out” of Cyprus are defined as:

  • the day of departure from Cyprus counts as a day out of Cyprus;
  • the day of arrival in Cyprus counts as a day in Cyprus;
  • arrival in Cyprus and departure on the same day counts as a day in Cyprus;
  • departure from Cyprus followed by a return on the same day counts as a day out of Cyprus.

What are the Advantages of Being a Cyprus Tax Resident?

Non-Domicile Status

The non-domicile tax regime is particularly interesting for individuals whose main source of income is either dividend or interest income, as these sources of income will not be taxable in Cyprus. In addition, individuals can take advantage of the exemption from taxation of capital gains (other than on the sale of immoveable property in Cyprus).

Employment Income Exemption

On 26 July 2022, the long-anticipated enhancement of this tax incentive for individuals took place.

  • The new provisions allow for a 50% exemption from taxation, for income in relation to first time employment in Cyprus, for individuals with annual remuneration over 55,000. The previous remuneration threshold had been €100,000.

This exemption is available for a period of 17 years.

Exemptions on Income from Employment Outside Cyprus

Individuals who are employed outside of Cyprus for more than 90 days aggregate in a tax year, by a non-Cyprus tax resident employer or foreign permanent establishment of a Cyprus tax resident employer, are exempt from income tax on this income.

Additional Information

For additional information about the attractive 60 Day Tax Residency Rule for individuals moving to Cyprus, please contact Robert Homemadvice.cyprus@dixcart.com.

Options and Steps for the Portuguese Golden Visa Residence by Investment Programme

The Golden Visa Residence by Investment Programme was introduced in 2012 in Portugal, and is a five-year Residence Permit Programme, after the first residency card has been issued, for non-EU nationals. Portugal is a full member of the EU, and therefore successful applicants of the Golden Visa Residence by Investment Programme benefit from visa-free access to Europe’s Schengen Area.

The permit requires a low physical presence requirement with an average stay of just seven days a year, or fourteen days in a period of two years in Portugal, over the five-year period. Benefit of the programme include the right to live, work and study in Portugal, with the key benefit of obtaining citizenship at the end of the program and the entitlement to European citizenship.

Portugal has, in recent years, extended its excellent reputation, with many discovering this beautiful Mediterranean region in Europe.

It is considered one of the world’s most globalised and peaceful nations, with a high quality of life. It has been ranked highly on several index rankings (including that of education and living), and offers a warm climate, superb cuisine, and a relatively low cost of living.

Portugal is a place that families want to move to and where businesses can expand and grow, with the forecast Portuguese growth rate expected to exceed the European average.

Step 1: Hire a Legal Advisor

The Golden Visa programme is a relatively complex visa that requires an expert with sufficient experience and knowledge of the programme. Things to consider when selecting a legal advisor are experience in the market specifically in the Golden Visa programme, and the track history of the firm.

Once a legal advisor is appointed, they will assist you in hiring a tax representative, the opening of a Portuguese bank account, and will explore the different investment programs options available in Portugal with you.

Step 2: Choose an Investment Programme

The investment options available under the Golden Visa programme are a capital transfer, a property acquisition, or investment into a business.

  • Capital Transfer

The options available in relation to a capital transfer are:

  1. A capital transfer of €1.5 million into a Portuguese bank account or an approved investment
  2. €500,000 for the acquisition of investment or venture capital fund units committed to the capitalisation of companies incorporated under Portuguese law, with a maturity of at least five years and with at least 60% of the investment portfolio in companies with a registered office in the national territory of Portugal
  3. €500,000 for research activities of public or private entities that are part of the national scientific and technological system (€400,000 in a low population density area*)
  4. €250,000 in support of artistic production or in the recovery or maintenance of national cultural heritage (€200,000 in a low population density area*)

Property Acquisition

The two options in terms of property acquisition are:

  1. 350,000 minimum real estate purchase for the refurbishment of residential properties older than 30 years or in an area of urban regeneration, including the cost of renovations (residential property is limited to designated interior areas), (€280,000 in a low population density area*)

*A low population density area is defined as less than 100 inhabitants per km², or with a GDP per capita lower than 75% of the national average.

Business

The options for the establishment of a business are:

  1. Creation of a minimum of ten new jobs (eight new jobs in a low population density area*)
  2. €500,000 for the incorporation or increase of the share capital of a company that is registered in Portugal, creating, or maintaining a minimum of five permanent jobs for a period of three years

Step 3: Legal Formalities

The next step is preparing all of the necessary information to be submitted to SEF (Portuguese Border and Immigration Service). Some specific documents will be requested by your legal advisor, depending on the type of investment that is chosen, together with other documents, including criminal record details and tax number of the country of origin.

Step 4: Final Steps

Once all of the documents have been provided to your legal advisor, these are submitted to SEF for acceptance. Once accepted, you will be notified to schedule a biometric appointment at SEF, and after this procedure has been completed, will be followed by a residence card which represents the golden visa.

Renewals need to take place every two years, with documentation being updated and biometric appointments to take place in Portugal.

Requirements

The following criteria are applicable for the golden visa programme:

  • Minimum average seven day spend in Portugal per year, over the five year period, after the concession and until the first renewal
  • Minimum fourteen day spend in Portugal for the period of two years between renewals
  • Maintain the investment for a five year period, after receipt of the residency card

Advantages

After the five year residency programme is completed, the investor can keep renewing the temporary residency card as long as wanted while keeping the investment, apply for permanent residency in Portugal where a five year residency card will be issued, or apply for Portuguese citizenship and get a Portuguese passport.

For the second two options, it is mandatory to pass a A.2 level Portuguese exam. 

Tax Consequences

The tax consequences for each investment option vary depending on the investment programme selected. Please refer to the following articles which include more details regarding the tax consequences that need to be considered:

Additional Information

If you require additional information regarding the Golden Visa Programme, including the investment options available and the next steps to take, please contact Lionel de Freitas at the Dixcart office in Portugal: advice.portugal@dixcart.com 

Malta’s New Start-up Residence Programme

Malta has introduced a New Start-up Residence Programme

At the 2-day “Start-In-Malta Festival” in October 2022, Malta Residence Agency announced a new residence programme: the Malta Start-Up Residence Programme.

  • This new visa will allow non-European nationals to relocate and live in Malta, by establishing an innovative start-up.

The programme allows founders/co-founders to apply for a 3-year residency permit, together with their immediate family, and the company to apply for 4 additional permits for Key Employees.  

The Hon. Miriam Dalli (Minister for the Environment, Energy and Enterprise) stated “we want to be at the forefront of cutting edge technology innovation, research & development“.

Highlights of the new Start-Up Residence Visa

  • Fast and efficient application process
  • Founders/Co Founders receive a 3-year permit that can be potentially renewed for another 5 years (it is possible to include immediate family members in the application)
  • Founders/Co Founders may apply for permanent residency after residing in Malta for 5 years
  • The Start-up company can also apply for residence permits for up to 4 Key employees (of which they will need to satisfy the requirements of the KEI)
  • Key Employees receive a 3-year residence permit that can be renewed for another 3 years (it is possible to include immediate family members in the application)
  • Key Employees may apply for long term residency after completing 5 years in Malta

Salient Points:

  • It is expected that the successful applicants will reside in Malta and make Malta their permanent residence and therefore there is a minimum stay requirement of 183 days per year

Additional Information

For further information on the new Start-up Visa, please do not hesitate to contact Henno Kotze: advice.malta@dixcart.com at the Dixcart office, in Malta or your usual Dixcart contact.

Key Employee Initiative – Fast-track Work Permit in Malta for Non-EU Highly-Skilled Workers

What is the Key Employee Initiative?

The Key Employee Initiative (KEI) provides a fast-track work permit for highly specialised Third-Country Nationals (TCNs), who are employed in Malta.

The scheme enables work permits to be issued to key prospective employees, no longer than 5 working days from the date of application, under normal circumstances.

Third-Country Nationals

Third-Country Nationals require a single work permit to be able to obtain residence and be employed in Malta. This is because TCNs are not members of the EU or EFTA, and are therefore not able to move across borders, in the EU, without the proper documentation. 

However, TCNs who are high-skilled workers, are provided with a fast-track work permit service by the Key Employee Initiative. Under normal circumstances, the scheme will issue work permits in not more than 5 days, as detailed above. In contrast non highly specialised TCNs must wait for at least a couple of months.

Who is Defined as a Highly Skilled Worker?

Highly-skilled workers include individuals who possess advanced technical, academic and interpersonal skills. They usually flourish in the areas of; problem-solving, leadership, system improvement and creativity. Examples of highly-skilled workers include; university professors, engineers, biotech scientists, business directors, and IT experts. 

Criteria

Malta’s Key Employee Initiative (KEI), is available to highly technical or managerial professionals with the relevant qualifications and experience for the job they are applying for.

Eligible highly-skilled workers are required to meet the following requirements: 

  • Have valid travel documents 
  • Receive an annual gross salary of at least €30,000 
  • Be in possession of certified copies of qualifications and necessary work experience 
  • The employer must declare that the individual has the necessary credentials for the assigned role

Benefits:

The following benefits are available through Malta’s Key Employee Initiative:

  • The KEI is a fast-track version of the standard single work permit application, with applications being approved in just 5 days.
  • Applications can be submitted online, without the applicant needing to be present in Malta.
  • Approved applicants are issued with a residence permit valid for 1 year. This  can be renewed, subject to the presentation of a valid definite or indefinite contract, and an original ‘annual tax declaration form’, stamped by the Maltese Inland Revenue Department.
  • Visa-free travel within the 26 Schengen Area Countries, by virtue of the Maltese residence card. This is limited to a maximum of 90 days every 180 days.

Family Members of Work Permit Holders

Non-EU nationals who have been legally residing in Malta for over a year (in specific circumstances this may be reduced), are eligible to apply for the ‘reunification’ of family members. This includes spouses over the age of 21 and children under the age of 18.

Long-term Residents

Long-term residence status may be granted to persons legally residing in Malta for a continuous 5 year period.

A successful application requires; proof of continuous residence prior to the application date, and the ability to show stable and regular income of a stipulated amount. Dixcart can provide details of the other requirements, which include the need to have health insurance and attendance of a language and culture course.

Tax Treatment

  • Tax is charged at progressive rates (capped at a maximum of 35%), on Malta sourced income and capital gains, and on foreign source income (excluding foreign source capital gains), that is remitted to Malta.
  • No tax is chargeable on foreign sourced income that is not remitted to Malta.
  • Capital gains are tax-exempt in Malta, even if they are remitted to Malta.
  • Bank interest earned in Malta can be liable to withholding tax at 15%.
  • Long term residence permit holders are not entitled to benefit from the remittance basis of taxation and will be taxed on their worldwide income in Malta.

Case Study

Dixcart Malta provided advice to a UK citizen who was still living in the UK. An important benefit of the Key Employee Initiative is that it is possible to start the  process before the relevant individual has even arrived in Malta.

This highly-skilled professional, in the ICT industry, secured his position at a Maltese employer and decided to relocate to the island once he received the ‘Approval in Principal Letter’, confirming that his application met all of the requirements and had been successful.

After being provided with all of the essential documents, Dixcart Malta made the application, on behalf of the Employee and Employer and submitted all of the forms and evidence of experience, qualifications, and health insurance, to the Authorities. In addition, we even helped to find an apartment for the newcomer.

After receiving a final decision, the KEI had 90 days to relocate to Malta.

Another Set of Circumstances

Dixcart Malta can also provide support services, relating to the Key Employee Initiative, for TCN Employees and local Employers. There may be situations where positions cannot be filled by the local labour market and where suitable TCNs can fulfil the job in the EU with a fast-track Malta work permit, rather than the company remain with vacant positions.

Additional Information

For further information on the Key Employee Initiative, please do not hesitate to contact Henno Kotze: advice.malta@dixcart.com at the Dixcart office, in Malta or your usual Dixcart contact.

Why the Portuguese D2 Visa, known as the Entrepreneur or Business Visa, is the “New Golden Visa”

Why Portugal?

Portugal is currently a topic of conversation, across the world, for several reasons. It is more than just the sunny weather, low cost of living, great food, variety of world winning wines and charming people, that everyone is speaking about.

The reason is simple: Portugal is a place people actually want to live and can see the possibility of raising a family and doing business in. A combination of factors now encourages leading entrepreneurs to establish and grow their companies in Portugal.

Portugal- A Few Facts and Figures

Portugal is projected to exceed the European economic growth forecasts, at least until 2024. It has been ranked as one of the best places to live according to the Global Peace Index (currently ranking 6th on the 2022 Global Peace Index), offers very good healthcare according to the Health Care Index (with an average life expectancy of 82.47 years in 2022), and is ranked highly from an education point of view.

Traditional Portuguese Universities have become “Top Ranking” International Universities, the  “Universidade Católica Portuguesa” and “Nova SBE” were included as two of the best universities in the world by the British newspaper, The Financial Times, in 2018.

It is without a doubt a place that ticks the boxes when choosing a place to live.

Portugal’s Golden Visa – Evolution

The Golden Visa program became increasingly popular after its introduction, and attracted world attention to Portugal. The world came to learn about Portugal and having the Golden Visa, as essentially a plan B; not having to move to Portugal to be eligible, but keeping it as a potential second option for the future if things do not work out where individuals currently live, people have now shifted their attention to plan A; making a permanent move to work and live in Portugal.

Of course, moving to Portugal requires more than just a visa and there needs to be economic reasons  to do so. It is becoming rapidly apparent that the economic potential is vast and powerful in Portugal, especially when taking into account that it is a small European country on the tip of the western continent.

The D2 Visa – Becoming ‘Golden’

The D2 visa is the real Golden Visa, as it not only allows you to benefit from living in Portugal, with unlimited access to the Schengen area, but provides the opportunity to benefit from access to one of Europe’s best places to establish a business, by living there.

Portugal has become known as the California or Silicon Valley of Europe. Successful global tech events such as the Web Summit have now taken place in Lisbon for several years running – testament to the fact that it is a place that is finding the right people with the right mindset.

The D2 visa is essentially an entrepreneurial visa.

D2 Visa: The Criteria

Requirements include the following:

  • Be a non-EU national
  • Have sufficient funds to support yourself during your stay in Portugal
  • Incorporate a Portuguese (or Madeiran) company
  • Prepare a business plan
  • Hold a clean criminal record
  • Be willing to reside for more than 183 consecutive days in Portugal (or not be absent from Portugal for more than 8 non-consecutive months in any single calendar year)
  • Show proof of a place to live in Portugal
  • Be willing to become a fiscal resident in Portugal

Why Should You Reach out To Dixcart?

We are celebrating our 50th anniversary this year, with Dixcart having had a presence in the Portuguese market, for over 30 years. We have thus dealt with many structures and arrangements from start to finish, working with international investors and families from many corners of the earth. As a trusted service provider, we look forward to welcoming you as a client.

In addition to assisting entrepreneurs to select the most appropriate legal route to structure their activities in Portugal, Dixcart also provides:

  • A complete range of services relating to the incorporation of a company and its day-to-day obligations; from bookkeeping through to tax compliance.
  • Assistance to entrepreneurs and their families in relocating to Portugal and in obtaining the necessary residence permits.

Additional Information

If you require additional information regarding the D2 visa and the types of company and tax frameworks available in Portugal and/or the types of visa and residence options, please contact Lionel de Freitas at the Dixcart office in Portugal at: advice.portugal@dixcart.com 

A Review of the Residency Routes Available in Malta

Background

Malta, without doubt, is one of the countries with the greatest number of residency routes; there is a programme for everyone.

Located in the Mediterranean, just south of Sicily, Malta offers all of the advantages of being a full member of the EU and Schengen Member States, has English as one of its two official languages, and a climate many chase all year round. Malta is also very well connected with several international airlines, including: British Airways, Lufthansa, Emirates, Qatar, Turkish Airlines, Ryanair, EasyJet, WizzAir and Swiss, which fly into and out of Malta almost daily.

Its location in the centre of the Mediterranean has historically given it great strategic importance as a naval base, with a succession of powers having contested and ruled the islands. Most of the foreign influences have left some sort of mark on the country’s ancient history.

Malta’s economy has enjoyed large growth since joining the EU and the forward thinking Government actively encourages new business sectors and technologies.

Malta Residence Programmes

Malta is unique in that it offers nine residence programmes to meet different individual circumstances.

Some are appropriate for non-EU individuals, whilst others provide an incentive for EU residents to move to Malta.

These programmes include those offering individuals a fast and efficient way to obtain a European permanent residence permit and visa-free travel within the Schengen Area, as well as another programme designed for third country nationals to legally reside in Malta but maintain their current job remotely. An additional regime is targeted towards professionals earning over a certain amount each year and offering a flat tax of 15%, and finally, there is a programme for those who have retired.

  • It should be noted that none of the Malta residence programmes have  language test requirements.

The Nine Malta Residence Programmes

Here is a quick breakdown:

  • Malta Permanent Residence Programme – open to all third country, non-EEA, and non-Swiss nationals with a stable income and sufficient financial resources.
  • Malta Start-Up Programme – this new visa allows non-European nationals to relocate and live in Malta, by establishing an innovative start-up. founders and/or co-founders of the start-up can apply for a 3-year residency permit, together with their immediate family, and the company to apply for 4 additional permits for Key Employees.  
  • Malta Residence Programme – available to EU, EEA, and Swiss nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000.
  • Malta Global Residence Programme – available to non-EU nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000.
  • Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment – a residence programme for foreign individuals and their families who contribute to the economic development of Malta, which can lead to citizenship.
  • Malta Key Employee Initiative – a fast-track work permit application programme, applicable to managerial and/or highly-technical professionals with relevant qualifications or adequate experience relating to a specific job.
  • The Malta Highly Qualified Persons Programme – available to EU nationals for 5 years (may be renewed up to 2 times, 15 years in total), and non-EU nationals for 4 years (may be renewed up to 2 times, 12 years in total). This programme is targeted at professional individuals earning more than €81,457 per annum and seeking to work in Malta in certain industries.
  • Qualifying Employment in Innovation & Creativity Scheme – targeted towards professional individuals earning over €52,000 per annum and employed in Malta on a contractual basis at a qualifying employer.
  • Digital Nomad Residence Permit – targeted at individuals who wish to maintain their current job in another country, but legally reside in Malta and work remotely.
  • Malta Retirement Programme – available to individuals whose main source of income is their pensions, paying an annual minimum tax of €7,500.

The Remittance Basis of Taxation

To make life even more enjoyable, Malta offers tax benefit to expatriates on some of the residence programme such as the Remittance Basis of Taxation

Individuals on the certain residence programmes in Malta that are resident non-domiciled individual is only taxed on Malta source income and certain gains arising in Malta. They are not taxed on non-Malta source income not remitted to Malta and are not taxed on capital gains, even if this income is remitted to Malta.

Additional Information and Assistance

Dixcart can assist in providing advice as to which programme would be most appropriate for each individual or family.

We can also; organise visits to Malta, make the application for the relevant Maltese residence programme, assist with property searches and purchases, and provide a comprehensive range of individual and professional commercial services once relocation has taken place.

For further information about moving to Malta please contact Henno Kotze:

advice.malta@dixcart.com.

What are the Advantages of Portugal’s Non-Habitual Resident Regime?

Background

Portugal’s Non-Habitual Resident Regime (NHR) attracts thousands of new residents to Portugal, by offering competitive tax rates, and in the right circumstances, full tax exemptions on certain foreign income, for ten years.

Visa Opportunities in Portugal

Portugal is an attractive and popular location. Not only is it undoubtedly a beautiful country, offering an attractive lifestyle and way of life, it also offers a temporary residence visa for digital nomads, which freelancers and entrepreneurs often take advantage of, and the popular Golden Visa and the Non-Habitual Resident (NHR) programme, which when combined together, offer an interesting route for individuals to move to Portugal and enjoy very agreeable tax advantages once they relocate.

Relevance of Golden Visa and the Non-habitual Residents Regime

Portugal’s Golden Visa is less important for EU citizens, as they already have the right to live in Portugal without formal immigration or investment requirements needing to be met, but the buzz and energy in Portugal has sparked interest amongst many.

Portugal is currently attracting the affluent, as well as a wide range of other individuals, through the favourable tax regime: the NHR, which is a major motivator for both EU and non-EU citizens. 

The Non-Habitual Resident Regime Explained

NHR lasts for 10 years and is available to EU and non-EU citizens who become tax resident in Portugal, provided they have not been resident in Portugal for the previous 5 years.

Individuals can enjoy non-habitual status, whereby income derived from employment or independent individual services, from a domestic (Portuguese) source, is taxed at a special flat rate of 20%, provided the income is from high value-added activities or are of a scientific, artistic, or technical nature.

A tax exemption may apply to income derived from a foreign source.

Criteria to Meet NHR Status

The following criteria must be met:

  • The right to reside in Portugal, either by being an EU/EEA/Swiss citizen, or through schemes such as the Golden Visa programme.
  • Must not have been resident in Portugal within the last five Portuguese tax years.
  • Must not have been a Portuguese tax resident in the five years prior to taking up residence in Portugal.
  • The individual must have a place to live in Portugal, this could be the rental of a modest apartment.
  • To apply for NHR, a fiscal representative, such as Dixcart, needs to be appointed in Portugal.

Additional Information

If you would like more information, and/or would like to instruct Dixcart to act as your fiscal representative, please get in touch today: advice.portugal@dixcart.com.

Cyprus – Attractive Lifestyle and Tax Benefits

Cyprus Lifestyle and Tax Benefits

Why choose Cyprus for relocation purposes?

Surrounded by the bright blue waters of the Mediterranean Sea, Cyprus has always been an enticing location for high-net-worth individuals considering relocation. It is a member of the EU and therefore well positioned for those who seek global mobility and ease of travel across Europe, as well as the Middle East and Africa.

English is widely spoken in Cyprus, having been part of the Roman Empire and a British colony for many years, however traditions run deep through the island’s villages, with each enjoying a variety of cultural influences to share with newcomers.

Cyprus has a Mediterranean climate. Whilst small, the island is an archaeological and natural haven, with stunning seaside villages and beaches. It is also home to a large community of expats who have relocated to Cyprus to enjoy the benefits that the island, and the tax regime offers.

Cyprus offers the following lifestyle benefits:

  • A Mediterranean lifestyle and peaceful, friendly community
  • A good work-life balance
  • Excellent transport links
  • A diverse range of amenities
  • Low cost of living
  • Excellent private and state healthcare sectors
  • A large expat community
  • A high quality of education, there is the option for private education (English curriculum) or public education, as well as several international Universities located on the island
  • Attractive tax benefits.

Cyprus Offers a Range of Interesting Tax Incentives for Individuals

Many high-net-worth individuals relocate to Cyprus due to its advantageous non-domicile tax regime, whereby individuals who were not previously tax resident can apply for non-domicile status.

Cypriot non-domiciles benefit from a zero rate of tax on; interest, dividends, and capital gains (apart from capital gains derived from the sale of immovable property in Cyprus), and capital sums received from pension, provident and insurance funds.

These zero tax benefits are enjoyed even if the income has a Cyprus source or is remitted to Cyprus. There are several other tax advantages, including a low rate of tax on foreign pensions, and there are no wealth or inheritance taxes in Cyprus.

Options for Relocating: Permanent Residence and Temporary Residence Permits

Individuals wishing to move to Cyprus can apply for a Permanent Residence Permit which is useful as a means to ease travel to EU countries and organise business activities in Europe.

Applicants must make an investment of at least €300,000 in one of the investment categories required under the programme, and prove they have an annual income of at least €30,000 (which can be from pensions, overseas employment, interest on fixed deposits, or rental income from abroad). If they choose to reside in Cyprus for seven years, in any ten-calendar year period, they may be eligible to apply for Cyprus citizenship by naturalisation.

Alternatively, a temporary residence permit can be obtained by establishing a foreign investment company (FIC). Through this kind of international company, work permits can be obtained for relevant employees, and residence permits for them and family members. Another key advantage is, again, that after residing for seven years in Cyprus, within any ten-calendar year period, third country nationals can apply for Cyprus citizenship.

Moving to Cyprus to take up Employment

It is common for high-net-worth individuals to relocate to Cyprus for employment purposes. If the Permanent Residence Permit is not the right route for you and/or your family, Cyprus offers several alternate ways to live and work in Cyprus:

  • Business Facilitation Unit: visas for highly skilled third country nationals – the Ministry of Finance announced in 2022, that they are introducing the Business Facilitation Unit to assist highly skilled third country employees with a minimum gross salary of €2,500 per month, to gain work permits in Cyprus. These permits will last up to three years.
  • Digital Nomad visa: non-EU nationals who are self-employed, salaried, or on a freelance basis can apply for the right to live and work in Cyprus remotely, for up to one year. The visa can be renewed for another two years.

Why Relocate to Cyprus for Work?

Personal taxation benefits:

  • A tax exemption, of 50% of employment income, is available to an individual employed in Cyprus who was resident outside of Cyprus before he/she commenced employment in Cyprus. The exemption applies for a period of seventeen years starting from the first year of employment in Cyprus, provided that employment income exceeds €55,000 per year.
  • Cyprus has more than 65 tax treaties that provide for zero or reduced withholding tax rates on; dividends, interest, royalties, and pensions received from abroad. In addition lump sums received as a retirement gratuity, are exempt from tax.
  • A Cypriot tax resident receiving pension income from abroad, can choose to be taxed at a flat rate of 5%, on amounts exceeding €3,420 per year.

Starting a Business in Cyprus as a Means of Relocation

The reputation of Cyprus as an international financial centre has grown significantly over recent years. Cyprus is an attractive jurisdiction for trading and holding companies and offers a number of tax incentives.

In order to encourage new businesses to the island, Cyprus offers two temporary visa routes as a means for individuals to live and work in Cyprus:

  • Establishing a Cyprus Foreign Investment Company (FIC): individuals can establish an international company which can employ non-EU nationals in Cyprus. Such a company can obtain work permits for relevant employees and residence permits for them and their family members. A key advantage is that after seven years, third country nationals can apply for Cyprus Citizenship.
  • Establishment of a small and medium sized Innovative Enterprise (Start-up visa): this scheme allows entrepreneurs (individuals or a team), from countries outside the EU and outside the EEA, to enter, reside and work in Cyprus in order to; establish, operate, and develop a start-up business. This visa is available for one year, with the option to renew for another year.

Corporate Tax Benefits:

  • Cypriot companies enjoy a 12.5% rate of tax on trading, and a zero rate of capital gains tax. In addition, Cyprus tax resident companies and Cyprus permanent establishments (PEs), of non-Cyprus tax resident companies, are entitled to a Notional Interest Deduction (NID), on the injection of new equity used to generate taxable income.
  • NID is deducted from taxable income. It cannot exceed 80% of the taxable income, as calculated prior to the Notional Interest Deduction, arising from the new equity. A company could achieve an effective tax rate as low as 2.50% (income tax rate 12.50% x 20%).

Get in Touch

For additional information about the attractive tax regime for individuals moving to  Cyprus, or information regarding relocating there, please contact: advice.cyprus@dixcart.com.

Movement of Millionaires During 2022

According to New World Wealth who compiled the data for the Henley Global Citizens Report, a projected 88,000 of the world’s millionaires will move to a new country by the end of the year.

High-net-worth individuals (HNWIs) with a net worth of over US$1 million are extremely mobile following the Covid-19 pandemic, as well as the current war in Ukraine which is having global repercussions. Due to the lockdown and travel restrictions from Covid-19, there are no specific reports for 2020 and 2021 but as restrictions have now eased, momentum is gaining as relocation has become front of mind for many of the ultra-rich.

It will come as no surprise that Russia and Ukraine are projected to see some of the biggest emigration numbers, by the end of 2022. Andrew Amoils, the head of research at New World Wealth stated in the report that “Russia [is] haemorrhaging millionaires […] Affluent individuals have been emigrating from Russia in steadily rising numbers every year over the past decade, an early warning sign of the current problems the country is facing”. Russia is projected to see 15% of their HNWIs moving (projected 15,000).

However, it is Ukraine that is expected to suffer the greatest loss of HNWIs as a proportion of its population – a huge 42% of its HNWIs, could leave by the end of 2022; a predicted net loss of 2,800 millionaires.

China and India are also predicted to see their millionaire populations relocate. General wealth growth in China has been slowly declining in the past few years, which could lead to China seeing its most damaging year yet.

India on the other hand is not so concerning. Predicted figures are suggesting that India will see approximately 8,000 HNWIs migrate during 2022, however there is also a suggestion that those who have relocated in the past, are returning. In the next few years, we would not be surprised if the HNWI population in India rises substantially, which will then make it one of the biggest growing wealth markets at that time.

The UAE

During 2022, the UAE is expected to draw in the largest inflow of HNWIs, with approximately 4,000 millionaires from; Russia, India, Africa, and the Middle East moving to the country. The UAE has been known as a ‘millionaire magnet’ for many years; it has a robust international business hub, sits at the top amongst the world’s most competitive tax systems, and offers a luxury lifestyle from education, leisure activities, shopping, and hospitality, to its top-end real estate sector. With the UAE predicted to surpass the US this year, the US is rapidly losing its appeal as a haven for the world’s wealthiest.

Australia

In second place sits Australia – approximately 3,500 HNWIs will move to Oz before the end of 2022 (and according to the New World Wealth, 80,000 millionaires have already relocated in the last two decades). It is one of the largest countries in the world, rich in natural resources and fertile land, and has a thriving economy.

Singapore

Singapore is a favoured location, mainly for the rest of Asia. Emerging as Asia’s top wealth management centre, this makes sense. A net inflow of approximately 2,800 HNWIs is expected to find a home in this prosperous country.

Israel

Israel sits closely behind, with large numbers of HNWIs from the UK, France and Russia set to move there; approximately 2,500 during the year.

Switzerland

But it is Switzerland we are keeping our eye on. Even though Switzerland is not part of the EU, it is within the Schengen area, and has always been an elite jurisdiction in which to settle down. Switzerland is projected to attract a net inflow of around 2,200 in 2022.

It has always featured amongst the top most attractive countries for high-net-worth individuals to live, being one of the world’s wealthiest countries and known for its impartiality and neutrality. In 2021 Geneva was listed as one of the wealthiest cities in the world with the total wealth held in the city amounting to US$875 billion.

Portugal

A consistent favourite, fuelled by the ‘Golden visa’ of Golden visas. Over the last decade, Portugal has seen HNWIs, wealthy entrepreneurs and ultra-rich investors from around the globe, predominantly from Turkey, South Africa, and South America, but also most recently from the US, relocate to its sunny shores. With the current hype around digital nomadism and the D7 visa, the younger generation of HNW families are setting up shop in Lisbon. An expected inflow of 1,300 HNWIs is expected in Portugal in 2022.

Greece

More and more HNWIs are relocating to Greece and applying for its Golden visa programme, with millionaires from Turkey, Russia, Ukraine, and China all favouriting the country. Greece is expected to see around 1,200 HNWIs apply in 2022. Dixcart has already seen interest, especially around the opportunities that are presented by obtaining a Greek residence permit but becoming tax resident in Cyprus and benefiting from the Cypriot non-dom tax regime.

Malta

Whilst just outside the top 10 list of countries gaining millionaires in 2022, Malta still has an important spot. Approximately 300 millionaires are expected to move to Malta in 2022, joining at least 2 billionaires already registered on the island.

In terms of wealth growth, the island currently has one of the fastest growing markets, with its strong economic performance in recent years being driven by its shift towards fast-growing services such as; finance, e-gaming and tourism, and its citizenship by naturalisation programme which has brought substantial new wealth to the island.

Summary

“Countries that draw wealthy individuals and families to migrate to their shores tend to be robust, with low crime rates, competitive tax rates, and attractive business opportunities,” Amoils has stated.

Dixcart Domiciles offers specialist advice regarding various residence programmes around the world. 

We can help you discover the different countries around the world that offer attractive residence and/or citizenship programmes and those that might suit you and your family best, and provide advice on a number of tax efficient solutions that might be available.

Get in touch

If you are considering relocating and would like to speak to an adviser to find out which programme and/or country best suits you and your family’s needs, please contact us: advice@dixcart-domiciles.com.

Why is the Isle of Man a Jurisdiction of Choice

In this short article we cover some of the most attractive reasons for individuals and companies to setup or move to the Isle of Man. We’ll be looking at:

But before getting into the benefits, it might be helpful to tell you a bit more about the island and its background.

A Short Modern-Day History of the Isle of Man

During the Victorian era, the Isle of Man represented an opportunity for British families to escape to their very own Treasure Island – only, with somewhat less pirates than Robert Louis Stevenson imagined. The development of key transport links such as regular steamship crossings, on-island steam engines and streetcars etc. made navigating to the jewel of the Irish Sea all the more attractive.

By the turn of the 20th century the Isle of Man had become a thriving tourist destination, sold in the posters of days gone by as ‘Pleasure Island’ and a place to go ‘For Happy Holidays’. It is not hard to imagine why the idyllic island, with its rolling hills, sandy beaches and world class entertainment, represented a first choice for those looking to escape the hustle and bustle of a modernising Britain. The Isle of Man provided a convenient, exciting, safe and rewarding place for those who ‘do like to be beside the seaside’.

However, during the second half of the 20th century, the Isle of Man simply couldn’t compete with the draw of low cost excursions to the continent and beyond. Thus, the island’s tourism sector declined. That is, save for the (semi)constant that has persisted (World Wars or COVID-19 permitting) – The Isle of Man TT Races – one of the world’s oldest and most prestigious motorcycle road racing events.

Today, the TT Races take place over multiple laps of an approx. 37 mile course and have run for well over a century; the current fastest average speed over the 37 miles is over 135mph and reaches a top speed of almost 200mph. To give an idea of scale, the Island’s resident population is approximately 85k, and in 2019 46,174 visitors came for the TT Races.

In the latter part of the 20th century to this day, the Island has developed a flourishing financial services sector – delivering professional services to clients and advisers across the world. This has been made possible by the island’s self-governing status as a crown dependency – setting its own legal and tax regime.

In more recent years, the Island has pivoted again to develop beyond financial and professional services, with strong engineering, telecoms and software development, e-gaming and digital currency sectors, and more besides.

Why do Business on the Isle of Man?

A truly business-friendly government, ultra-modern telecoms services, transport links to all major UK and Irish business centres and very attractive rates of taxation, make the Isle of Man an ideal destination for all businesses and professionals alike.

Businesses can benefit from Corporate rates such as:

  • Most types of business are taxed @ 0%
  • Banking business taxed @ 10%
  • Retail businesses with profits of £500,000+ are taxed @ 10%
  • Income derived from Isle of Man land/property is taxed @ 20%
  • No withholding tax on most dividend and interest payments

In addition to the obvious pecuniary benefits, the island also has a deep pool of well-educated expert workers, fantastic grants from the government to both encourage new businesses and provide vocational training and many working groups and associations in direct contact with local government.

Where relocating to the island is not physically possible, there are various options available to businesses wishing to be established on the Isle of Man and avail of the local tax and legal environment. Such activity requires qualified tax advice and the assistance of a Trust and Corporate Service Provider, such as Dixcart. Please feel free to get in touch to find out more in this regard.

Why you should move to the Isle of Man?

For individuals seeking to immigrate to the Island, there are of course attractive rates of personal taxation, including:

  • Higher Rate of Income Tax @ 20%
  • Income Tax Capped @ £200,000 of Contribution
  • 0% Capital Gains Tax
  • 0% Dividend Tax
  • 0% Inheritance Tax

Further, if you are coming from the UK, the NI records are maintained in both jurisdictions and there is a reciprocal agreement in place so that both records are taken into consideration for certain benefits. State pension is however separate i.e. contributions in the IOM/UK only relate to IOM/UK state pension.

Key employees can also gain further benefits; for the first 3 years of employment, eligible employees will only pay income tax, tax on rental income and tax on benefits in kind – all other sources of income are free of Isle of Man taxes during this period.

But there is so much more: the blend of country and town living, huge number of activities on your doorstep, warm and welcoming community, high rates of employment, low rates of crime, great schools and healthcare, an average commute of 20 minutes and much, much more – in many respects the island is very much what you make it.

Furthermore, unlike some crown dependencies, the Isle of Man has an open property market, which means that those seeking to live and work on the island are free to purchase property at the same rate as local buyers. Property is far more affordable than in other comparable jurisdictions, like Jersey or Guernsey. In addition, there is no Stamp Duty or Land Tax.

Whether starting your career or moving with your family to take that dream job, the Isle of Man is a very rewarding place to be. You can register on the Locate IM’s talent pool, which has been developed to help people looking to relocate to the Isle of Man find employment opportunities as easily as possible. This is a free Government service that can be found here.

How to Move to the Isle of Man – Immigration Routes

The Isle of Man Government offer various visa routes for individuals seeking to relocate, using a blend of UK and Isle of Man processes, which include:

  • Ancestral Visa – This route is dependent on the applicant having British ancestry no further back than grandparent. It is open to British Commonwealth, British Overseas and British Overseas Territories Citizens, along with British Nationals (Overseas) and Citizens of Zimbabwe. You can find out more here.
  • Isle of Man Worker Migrant Routes – there are four routes currently available:
  • Business Migrant Routes – There are two routes:

Locate IM have produced a series of case studies that give great insight into people’s experiences with relocating to the Isle of Man. Here are two very different but equally inspiring stories – Pippa’s Story and Michael’s Story and this great video made in conjunction with a couple who moved to the island to work in the accountancy sector (anon).

Happily Ever After – How Dixcart can help

In many ways, the island can still be advertised as a convenient, exciting, safe and rewarding destination for business, professionals and their families to relocate. Whether it is assistance with creating a start-up or redomiciling your existing company, Dixcart Management (IOM) Ltd are well placed to assist. Further, where you are seeking to immigrate to the Island on your own or with your family, with our extensive network of contacts, we will be able to make appropriate introductions.

Locate IM have produced the following video, which we hope peaks your interests:

Get in touch

If you require further information regarding moving to the Isle of Man and how we can assist, please feel free to get in touch with Team at Dixcart via advice.iom@dixcart.com

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