Category: General

Switzerland is a very attractive location to live and work in for many non-Swiss nationals.

Switzerland is a beautiful country with amazing scenery as well as a number of world-famous cities such as Bern, Geneva, Lausanne, and Zurich. It also offers an attractive tax regime for individuals as well as for companies, in the right circumstances.

Here is a summary of the benefits Switzerland has to offer businesses and individuals and why it is a popular jurisdiction for asset protection, residence and company establishment.

What does Switzerland Offer Businesses, Individuals and Families?

• Located in the centre of Europe
• Economic and political stability
• A well-respected jurisdiction with an excellent reputation
• Most ‘innovative’ country in the world for nine consecutive years
• Lengthy history of expertise in finance and business
• Premier destination for international investment and asset protection
• High regard for personal privacy and confidentiality
• Very good living and working conditions

Dixcart Trustees (Switzerland) SA has been providing trustee services for over fifteen years. We are a member of the Swiss Association of Trust Companies (SATC), and are registered with the ”Organisme de Surveillance des Instituts Financiers” (OSIF).

Who does Switzerland Appeal to, Internationally?

• International Headquarter Companies for Groups
• Substantial Trading Companies
• Large domestic and overseas Banks with expertise in open international capital markets
• Trusts and Private Trust Companies
• Family Offices
• Individuals seeking to redomicile within central Europe

Double Taxation Agreements (DTAs)

• Switzerland has over 100 DTAs
• Swiss companies benefit from the EU ParentSubsidiary Directive, a tax exemption for cross-border dividends paid between related companies in the EU (Switzerland is not in the EU, but is in the ‘Schengen area’)

Use of a Swiss Company as Trustee

• A Swiss company can act as Trustee or take another role in your family Trust to manage and administer your Trust in Switzerland
• Trusts are not subject to taxation in Switzerland
• The Settlor and Beneficiaries are not subject to taxation, as long as they are not resident in Switzerland
• Dixcart Trustees (Switzerland) SA has been providing trustee services for over fifteen years. We are a member of the Swiss Association of Trust Companies (SATC), and are registered with the ”Organisme de Surveillance des Instituts Financiers” (OSIF).

Moving to Switzerland

• Working: a work permit enables any individual to become Swiss resident (must have a job or form a company and be employed by it)
• Not working: straightforward for EU citizens. Non-EU citizens must be over the age of 55

Lump Sum System of Taxation

• Applicable on moving to Switzerland for the first time, or returning after a minimum ten year absence (no gainful employment in Switzerland, but can be employed in another country and can administer private assets in Switzerland)
• This particular taxation system is based on the taxpayer’s living expenses in Switzerland, NOT on worldwide income and assets
• The amount of living expenses on which income tax is based, varies from canton to canton, and is usually negotiated with the relevant tax authorities (in Geneva, a minimum taxable income of CHF400,000 is required)

The Dixcart Office in Switzerland

If you require any further information on moving to Switzerland or the establishment of a Swiss company for asset protection, please contact Christine Bretiler in our Swiss office: advice.switzerland@dixcart.com

Can foreigners buy property in the UK?

Yes. There is nothing stopping a non-UK resident individual or corporate body buying property in the UK (although an individual will need to be aged 18 years or above to own legal title to property and an overseas corporate entity must before acquiring a qualifying property firstly be registered at Companies House in compliance with the Economic Crime (Transparency and Enforcement) Act 2022).

Other than the above, different laws apply in Scotland and Northern Ireland as opposed to property in England and Wales.  We will focus below on property located in England and Wales. If you intend to purchase property in Scotland or Northern Ireland, please seek independent advice from a specialist in those areas.

The below guidance is focused on property located in England and Wales.

How do you begin your property search?

There are a number of online property search engines. Traditionally agencies either specialise in commercial or residential property but not both.  Start with a search engine to compare properties in your chosen city or other location and get in touch with the local agent advertising the property to arrange a viewing. Negotiating price below the price advertised is common.

Why is it important to view a property?

Once you find a property it is important to see it, carry out the usual pre-contract searches against it (a property solicitor or registered conveyancer will be able to assist you) or ask a surveyor to view it.  

The principle of caveat emptor (“let the buyer beware”) applies at common law. A buyer alone is responsible for checking a property. To purchase without carrying out a viewing or survey will in most cases be at the entire risk of the buyer. Sellers will normally not provide warranties or indemnities as to the suitability of the property. 

How do you finance the purchase?

The estate agent and any professionals involved in the sale will be interested to know how you intend on financing the purchase. This could be with cash, but the majority of property purchased in England and Wales is through a mortgage/property loan. There are no restrictions on foreigners securing a UK mortgage to help finance a purchase although you might encounter stricter requirements, the obligation to pay a larger deposit and higher interest rates.

What type of legal “estate” to the property are you intending on buying?

Generally, property is either sold with freehold title (you possess it absolutely) or leasehold title (borne out of freehold property which you possess for a number of years) – both are estates in land. A number of other legal interests and beneficial interests also exist but these are not covered here.

His Majesty’s Land Registry holds a register of all legal titles. If your offer price is accepted your legal advisor will review the relevant register of legal title for that property to see if the property you are buying is being sold subject to any incumbrances. Pre-contract enquiries will also normally be raised with the seller to ensure there are no over-riding third party interests in the property that may not have been obvious from your site visit.

If more than one purchaser wants to own the property, how will that property be held?

The legal title to property can be held by up to four legal owners. 

There may be tax advantages or disadvantages to how you decide to hold property as legal owner and whether that is by individuals or corporate entities or a combination of both. It is important to take independent tax advice at an early stage. 

Where the property is intended to be held by co-owners, consider whether the legal title should be held by the co-owners as “joint tenants” (the beneficial ownership of each pass on death to the other co-owners) or as “tenants in common” (the beneficial share owned, passes on death to their estate or dealt with under their will).

What happens next?

You have found a property and your offer price has been accepted and you have decided who will hold the legal title to the property. What happens next?

You will need to instruct a solicitor or conveyancer to carry out the relevant due diligence, raise enquiries, carry out the usual pre-contract searches and advise you on potential tax liability. You will need to pass the usual “know your client” due diligence before the legal work gets underway so be prepared to locate the relevant documents needed for the usual money laundering and other checks.

When purchasing a freehold or leasehold subject to a premium, a contract is usually drafted and negotiated between the parties. Once it is agreed, the contract is “exchanged” at which point a deposit is paid to the seller’s solicitor (usually around 5 to 10% of the purchase price). Once a contract is exchanged both parties are bound to perform the contract (sell and buy) pursuant to the terms of the contract.  “Completion” of the transaction happens on a date set out in the contract and is typically a month later but can be sooner or much later, depending on whether the contract is subject to conditions being satisfied.

Upon completion of the transfer of freehold or long leasehold property, the balance of the purchase price will become payable. For new short leases of both commercial and residential properties, once the new lease is dated, the matter has completed and the landlord will send the new tenant an invoice for rent, service charges and insurance as per the terms of the lease.

The buyers’/tenants’ solicitor will need to make an application to His Majesty’s Land Registry to register the transfer/new lease. The legal title will not pass until the registration is complete. 

What taxes need to be considered when taking a leasehold title or a freehold title?

The tax treatment from owning a freehold or leasehold in the UK will largely be dependent on why the individual or corporate entity holds the property.  A purchaser may buy or lease a property to reside in, occupy premises to conduct their own trade from, own to develop in order to realise a rental income or buy as an investment to develop and sell on for a profit.  Different taxes apply at each stage so it is important to speak with a tax specialist early on, depending on what plans you have for the property. 

One tax that is payable within 14 days of completion of a lease or property transfer in England  (unless one of the limited reliefs or an exemption applies) is stamp duty land tax (“SDLT”).

For residential properties see the following rates below. However, a surcharge of an additional 3% is payable on top if the purchaser already owns property elsewhere:

Property or lease premium or transfer value	SDLT rate
Up to £250,000	Zero
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

When buying a new leasehold property, any premium will be subject to tax under the above. However, if the total rent over the life of the lease (known as the ‘net present value’) is more than the SDLT threshold (currently £250,000), you’ll pay SDLT at 1% on the portion over £250,000. This does not apply to existing (‘assigned’) leases.

If you’re not present in the UK for at least 183 days (6 months) during the 12 months before your purchase, you are ‘not a UK resident’ for the purposes of SDLT. You will usually pay a 2% surcharge if you’re buying a residential property in England or Northern Ireland. For more information on this, please read our article: Overseas buyers thinking of purchasing a residential property in England or Northern Ireland in 2021?

On commercial property or mixed-use property, you will pay SDLT on increasing portions of the property price when you pay £150,000 or more. For a freehold transfer of commercial land, you will pay SDLT at the following rates:

Property or lease premium or transfer value	SDLT rate
Up to £150,000	Zero
The next £100,000 (the portion from £150,001 to £250,000)	2%
The remaining amount (the portion above £250,000)	5%

When you buy a new non-residential or mixed use leasehold property you pay SDLT on both the purchase price of the lease and purchase price of the lease and the value of the annual rent you pay (the ‘net present value’). These are calculated separately then added together. The above referred to surcharges also apply.

Your tax professional or lawyer will be able to calculate your SDLT liability according to the rates that apply at the time of your purchase or lease.

Other useful links:

• https://www.gov.uk/government/publications/how-to-buy-a-home/how-to-buy
• https://www.gov.uk/government/publications/how-to-lease/how-to-lease
• https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
• https://www.dixcartuk.com/five-years-have-passed-since-the-uk-government-set-out-its-intention-to-create-a-public-register-of-the-beneficial-ownership-of-overseas-entities-uk-assets-progress/
• https://www.dixcartuk.com/register-of-overseas-entities-a-comprehensive-guide-to-the-new-registration-requirements-for-overseas-owners-of-uk-property/
• https://www.dixcartuk.com/pre-arrival-uk-tax-planning-for-non-uk-domiciled-individuals/

For more information or guidance on how to buy property, structure your business to save tax, tax considerations in the UK, incorporating outside the UK, business immigration or any other aspect of relocating or investing in the UK please contact us at advice.uk@dixcart.com.

In this short article we cover some of the reasons why individuals and companies set up or move to Nevis. We will be looking at:

• A Short Modern-Day History of Nevis
• Nevis Laws
• Dixcart Nevis Services
• Why set up a structure in Nevis?
• Why you should move to Nevis?
• Citizenship By Investment
• Happily Ever After – How Dixcart can help

A Short Modern-Day History of Nevis

First things first, a question we often get asked when we embark on trips: Where is Nevis?

Nevis is the smaller of the 2 islands comprising the Federation of Saint Kitts and Nevis in the Caribbean. It is easily accessible with direct flights from London, Miami, Puerto Rico, Canada and New York, amongst others, to St Kitts. Followed by a short hop of four kilometres through The Narrows over to Nevis via water taxi. The population of Nevis is only 11,000 and that of St Kitts is 53,000.

Once you step off the water taxi and onto Nevis you are greeted by the warm air, sunshine on your back and will see the Nevis peak looming above you, an inactive volcano located in the centre of the island, which those more active visitors can choose to climb using tree roots and ropes to assist.

There is also a rich wildlife population with a higher concentration of Green Monkeys than people across the two islands, although they are considered to be pests as they demolish any hard grown crops. You will also see donkeys roaming freely around the island along with livestock such as goats and sheep. The sea life is not to be missed too where you may spot a stunning display of fish, sea turtles and different types of rays.

Nevis was the birthplace of Alexander Hamilton, one of the founding Fathers of America who was born on Nevis in 1757 and Lord Horatio Nelson, one of Britain’s most famous admirals, also used Nevis as a base of operations in the mid 1780’s and married a Nevisian, as the local people are known.

Nevis continued to be part of the British colonial holdings until 1967 when it achieved Associated Statehood with St. Kitts. In 1983, Nevis became part of an independent nation and formed part of the sovereign democratic state of St. Christopher and Nevis. It has the unique constitutional arrangement of being part of the Federal Parliament whilst having a separate parliament and its own Nevis Island Administration headed by a Premier.

Nevis Laws

The basis of the Federation’s law is the common law of England, but since independence it has been supplemented by newer legislation, specifically in the corporate, commercial and financial areas. The Nevis Trust law was originally based on a hybrid of the Guernsey Trust Law and Cook Islands Trust law, taking the best from each jurisdiction and has been subsequently refined, most recently in 2016.

The Federation’s Constitution provides sovereign rights to Nevis in that it can enact its own laws which are separate and distinct from those of St Kitts and the Federation. In 1984, Nevis established its international business sector with the enactment of the Nevis Business Corporation Ordinance. Subsequent to this international business in Nevis has grown steadily and now encompasses International Business Companies, Limited Liability Companies, Registered Trusts and Multiform Foundations. St Kitts and Nevis also offers a Citizenship By Investment Programme which enables people to invest into the Federation and receive a St Kitts and Nevis passport.

Dixcart Nevis Services

The office of Dixcart Management Nevis is located on the West of the island looking out over Gallows Bay.

We are proud to offer a friendly, bespoke, proactive and prompt service to our clients with our aim to respond to every query and question within 24 hours.

Our areas of expertise include:

• Company formation and registered agent and registered office services
• Migration of entities into Nevis from alternative jurisdictions
• Estate Planning including Trust and Foundation creation and administration
• Asset Protection
• Citizenship by Investment Applications
• Family Office Services

Why Set up a Structure in Nevis?

Nevis is fast becoming a preferred Caribbean jurisdiction to set up an offshore structure as it offers additional benefits not found elsewhere.

Structuring offshore can be utilised to mitigate taxes, to take advantage of asset protection laws, and succession planning. The benefits of Nevis are outlined in more detail as follows:

• Increased Confidentiality – There is no beneficial ownership register in Nevis, public or private, or plan to introduce one and Ultimate Beneficial Owner information is kept confidential by the registered agent. Similarly there is no searchable register of Directors, as was recently introduced in BVI.

• Asset Protection – Nevis trusts and foundations benefit from unique asset protection laws. If a creditor wishes to bring an action against one of these structures, they must first submit a bond of $100,000 for a Trust, or $50,000 for a Foundation, to the Nevis Minister of Finance before the court will consider the action. There is a 2 year statute of limitations period for trusts and 1 year for foundations, within which a creditor must bring an action, with all proceedings being held privately ‘in camera,’ (in the judge’s chambers).

• An Additional Security Aspect – foreign judgements are not recognised, therefore even if a judgement has been awarded in another jurisdiction, any civil action must be brought anew in the Courts of the Federation.

• Agility – There are agile structuring options; an entity formed in another jurisdiction may easily redomicile to Nevis including existing Trusts, Companies and Foundations, and not only can those entities migrate to Nevis, those existing entities can also be transformed into a Nevis Foundation to maintain continuity. 

• Flexibility – With cutting edge and flexible foundation legislation, a Nevis Multiform Foundation can take or change its form to be a Trust Foundation, a Company Foundation, a Partnership Foundation or a Traditional Foundation and can ‘chop and change’ its form throughout its life to adjust dynamically to Client’s needs.

• And finally, we Must Not Forget the Friendly Tax Environment – there is no income tax, capital gains tax, estate tax, inheritance tax or gift tax within Nevis. There is however a slight tax quirk for Nevis companies, more detail can be provided by contacting the Dixcart Nevis Team: advice.nevis@dixcart.com.

Why You Should Move to Nevis

Aside from the white sandy beaches, the warm and sunny climate and friendly people, Nevis boasts a number of delicious eateries, relaxed beach bars, a selection of schools and a full service hospital.

There are plenty of activities to take part in, these include; water sports, sailing, fishing, horseback riding, yoga, hiking and quad biking and there are regular events scheduled throughout the year including the Mango Festival, the annual Channel Swim between St Kitts and Nevis, ‘Culturama’, the Nevis Marathon, Nevis Triathlon and Annual Sea Turtle Experience.

Citizenship By Investment

The St Kitts and Nevis Citizenship By Investment Program is the longest running Caribbean program and has recently undergone some changes and announced some limited time benefits. See our recent article: (Enhanced Benefits St Kitts & Nevis Citizenship By Investment Programme: Limited Time Period) for details of these.

There are two main options to obtain a St Kitts and Nevis passport under this program, these are the donation route; donating a set sum, currently US$125,000, to the Government’s Sustainable Growth Fund, or the real estate route; by investing a minimum US$200,000 in an approved development or purchasing a private home for a minimum of US$400,000.

Happily Ever After – How Dixcart Can Help

So what are you waiting for? Contact us today to arrange a video call to discuss your options and hear why we love this Caribbean gem so much: advice.nevis@dixcart.com

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A New Campaign

A new campaign was launched by the UK tax regulator (HMRC), in September 2022, aimed at overseas entities that may not have met UK tax obligations in relation to the UK property that they own.

HMRC have stated that it has reviewed data, from HM Land Registry in England and Wales and other sources, to identify companies who may need to make disclosures for; non-resident corporate rental income, annual tax on enveloped dwellings (ATED), the transfer of assets abroad (ToAA) legislation, non-resident capital gains tax (NRCGT), and, finally, income tax under the transactions in land rules.

What is Taking Place?

Depending on the circumstances, companies will receive letters, accompanied by a ‘certificate of tax position’, recommending that they ask connected UK-resident individuals to re-examine their personal tax affairs, in the light of relevant anti-avoidance provisions.

Since 2019, ‘certificates of tax position’ have been issued to UK residents who receive offshore income.

The certificates typically require a declaration of the recipients’ offshore tax compliance position within 30 days. HMRC has previously noted that taxpayers are not legally obliged to return the certificate, which could expose them to criminal prosecution, if they make an incorrect declaration.

Standard advice to taxpayers is that they should consider very carefully whether they return the certificate or not, regardless of whether they have irregularities to disclose or not.

The Letters

One of the letters concerns undisclosed income received by non-resident corporate landlords and liability to ATED, where applicable.

This will also prompt UK-resident individuals who have any interest in the income or capital of a non-resident landlord, whether directly or indirectly, to consider their position as they may fall within the scope of the UK’s ToAA anti-avoidance legislation meaning that the income of the non-resident company can be attributed to them.

The letter recommends that any such individuals should seek professional advice to ensure their affairs are up-to-date.

An alternative letter is being sent to non-resident companies that have made a disposal of UK residential property between 6 April 2015 and 5 April 2019, without filing a non-resident capital gains tax (NRCGT) return.

Disposals of UK residential property by non-resident companies were subject to NRCGT between 6 April 2015 and 5 April 2019. Where the company purchased a property before April 2015 and the whole gain has not been charged to NRCGT, that part of any gain not charged, may be attributable to the participants in the company.

Such corporates may also be liable to pay UK tax on rental profits, as well as income tax under the transactions in land rules and ATED.

The Need for Professional Advice

We strongly recommend that UK-resident individual participants in these companies should seek professional advice, from a firm such as Dixcart UK, to ensure that their matters are up to date.

The Register of Overseas Entities

This new focus coincides with introduction of the new Register of Overseas Entities (ROE), that came into force on 01 August 2022.

Criminal offences may be committed for non-compliance, with the requirement for overseas entities to register certain details (including those of the beneficial owners) to Companies House. 

Please see below the Dixcart article on this topic:

A Comprehensive Guide to the New Registration Requirements for Overseas Owners of UK Property

Additional information

If you have any questions and/or would like advice regarding non-resident status and the obligations in relation to tax on UK property, please speak to Paul Webb: at the Dixcart office in the UK: advice.uk@dixcart.com

Alternatively, if you have any queries regarding the UK public register of beneficial ownership of overseas entities, please speak to Kuldip Matharoo at: advice@dixcartlegal.com

In October 2021, the Cyprus Government announced an ‘action plan’ to attract additional companies to operate and/or expand their activities in Cyprus.

The action plan is certainly forward-looking and innovative in terms of the further measures to be introduced, to attract companies and individuals to move to Cyprus.

Timing

The action plan will be implemented from January 1^st 2022, except where new legislation is required, as in the case of the three points below. The aim is for the relevant legislation to be submitted to the House of Representatives by the end of December, and to be approved in the first quarter of 2022.

• Extension of the tax exemption that applies to employees in the Republic.
• Increased tax deduction (in addition to the existing one) for research and development expenses.
• Application to gain Cypriot citizenship, after having spent five of the previous ten years in Cyprus.

1.Business Facilitation Unit: Visas for Highly Skilled Third Country Nationals

The Ministry of Finance announced the introduction of the Business Facilitation Unit that will assist highly skilled third country employees, with a minimum gross salary of €2,500 per month, to gain work permits. Such individuals are required to present a university degree, or equivalent qualification, or certificate.

The maximum quota of work permits for third-country nationals per company, is set at 70% of all employees, over a period of five years. Permits will be issued within one month of application and will last up to three years. The spouses of such employees will also have access to the country’s labour market.

2.Digital Nomad Visa

Eligibility

Via the Digital Nomad Visa Programme, non-EU nationals active as self-employed, salaried or on a freelance basis can apply for the right to live and work in Cyprus. Applicants must work remotely using information technology and communicate remotely with clients and employers outside Cyprus.

Residence status

A Digital Nomad has the right to stay in Cyprus for a period of up to one year, with the right to renew for another two years. If they reside in the Republic for a period that in total exceeds 183 days within the same tax year, they are then considered tax resident in Cyprus.

During the stay in Cyprus, the spouse or partner of the Digital Nomad and any minor family members are not allowed to undertake dependent work or to engage in any kind of paid activity in the country.

Digital Nomads must have; salaries of at least €3,500 per month, medical coverage, and a clean criminal record from their country of residence.

3.Extension of the tax exemption that applies to foreign employees in the Republic and reduction of the threshold

There is a tax exemption of 50% to new and existing employees relocating/relocated to Cyprus (with the requirement that they were not Cyprus residents during the previous 10 years) with employment remuneration of €55.000 and above.

The exemption is valid for a period of 17 years from the year of employment.

4.Increased tax deduction for research and development expenses

Research and development expenses will be subject to an increased discount.

Eligible research and development expenses will be deducted from taxable income equivalent to 120% of the actual expenditure.

Please note that the relevant legislation is still to be submitted and approved.

5.Application for acquisition of Cypriot citizenship

The option will be available to apply for Cypriot citizenship after a period of five years of residence and work in the Republic of Cyprus, instead of the seven years that was applicable before.

Please note that the relevant legislation is still to be submitted and approved.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Time to take action now

Since the introduction of the Economic Crime (Transparency and Enforcement) Act 2022 earlier this year, we have been waiting for signs of when the new Register of Overseas Entities would be introduced.

• The government have announced that the new register of overseas entities (ROE) will come into force at 9am on 1 August 2022.

As criminal offences may be committed for non-compliance with the requirement for overseas entities to register certain details (including those of the beneficial owners) to Companies House, it is time to take action now. 

Below, we explain what has changed, who you need to identify, what information is required to enable you to register and how we can help you.

What has changed since the enactment of the Economic Crime (Transparency and Enforcement) Act 2022?

The three new statutory instruments have been introduced:

• The Register of Overseas Entities (VPI) Regs 2022
• The Land Registration (Amendment) Rules 2022
• The Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022

In essence, an overseas entity will need to gather evidence and information required under the 2022 Act and forward this to an independent verification officer in the UK. The verification officer will then submit an application to Companies House to add the relevant entity to the register which will generate a unique Overseas Entity ID code.

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.

For the purposes of the Economic Crime (Transparency and Enforcement) Act 2022 a beneficial owner could be:  

What are the timelines from when the register goes live?

• Overseas entities who already own qualifying property in the UK (excluding Northern Ireland where different rules apply) acquired at any time on or  after 1 January 1999 will have 6 months from the date the register becomes live to register with Companies House.  
• Overseas entities acquiring freehold property or a lease granted for 7 years or more in the UK will be required to register with Companies House as soon as the register becomes live.
• Overseas entities that have disposed of qualifying property (by sale of a freehold or the grant or assignment of a lease with 7 or more years in term or the grant of a legal charge) between 28 February 2022 and 6 months from the date the register goes live.

What information is required before registration can take place at Companies House?

Schedule 1 of the Economic Crime (Transparency and Enforcement) Act 2022 sets out the required information needed in order to register the beneficial interest at Companies House as per the below table.

An overseas entity may give an information notice to any person that it knows, or has reasonable cause to believe, is a registrable beneficial owner in relation to the entity.

The notice will require the person to whom it is given to state whether or not they are a registerable beneficial owner (and then provide the information above). The overseas entity may also give a person an information notice if it knows or has reasonable cause to believe that the person knows the identity of a person who is a registrable beneficial owner in relation to the overseas entity, any other beneficial owner in relation to the overseas entity, a person likely to have knowledge of the identity of a person falling into either of the first two categories.

It is an offence for the person served either notice not to; respond or to give false or make reckless statements. The person, subject to a summary conviction may face subsequent imprisonment.

The Secretary of State also has powers to require an overseas entity to apply for registration within a period of 6 months of the date of the notice. Again, sanctions apply for non-compliance.

In addition to the above, the overseas entity must also deliver one of the following three statements regarding its registerable beneficial owner and provide the relevant evidence to back up the statement as follows:

If either statement 2 or 3 above applies, then further information is required as to the “managing officer” (a director, manager, secretary). Part 4 of Sch 1 of the 2022 Act requires the additional following information to be provided in relation to the managing officer:

Who submits the information and how?

The register will be a digital service with information to be submitted in English.

Before any application for first registration or later updating applications/rectifications and amendments can take place, the information above will be subject to formal verification by a relevant person (being one falling within section 3 and 8 of The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017). Broadly, a relevant person will include 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 is to be retained by the relevant person for a period of 5 years.

What happens once registration is accepted?

Companies House will 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 with 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 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 we do to help you?

We appreciate the above information is a bit of a mine-field especially as we are expecting further amendments to the legislation in the next few weeks.

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. If you require, 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 information

If you have any questions and/or would like advice on the UK public register of beneficial ownership of overseas entities, please speak to Kuldip Matharoo in the Dixcart office in the UK: advice.uk@dixcart.com

Five years have passed since the UK government set out its intention to create a public register of the beneficial ownership of “overseas entities’” UK assets – progress was slow to say the least with Brexit and then the pandemic slowing progress further.  The recent invasion of the Ukraine by Russia saw the government expedite that intention and the new  Economic Crime (Transparency and Enforcement) Act  2022 (“the ECA”) received royal assent on the 15 March 2022.

What is an “overseas entity”?

To understand the ECA we need to understand that it is an addition to a raft of historical measures seeking to impose financial or coercive measures on overseas legal entities to identify, control, change or stop them from behaving criminally. The ECA seeks to identify the ultimate foreign beneficial owner(s) on a public register even if that owner tries to hide behind a complex structure of shell companies.

Any corporate body including a partnership that is governed by the law of a country or a territory outside of the United Kingdom will be caught under the new rules. This will include  those holding more than 25% of the shares or voting rights in the entity. If this test cannot be satisfied then the ECA looks to any beneficial foreign owner who nonetheless exercises significant control over the relevant entity (or has the right to do so), including those with the right to remove (or appoint) a majority of the board of directors.

What does the new ECA do and when will you need to comply by?

There are three main parts to the ECA:

Part 1  – establishes a new register of foreign owners of UK property, which will be held at Companies House and will be retrospective, in that it will (subject to a few limited exceptions) include all property purchases in England & Wales since 1999 (2014 for Scotland). 

Foreigners looking to buy UK property will have 6 months, from the date of acquisition of freehold or leasehold land with over 7 years to run, to comply with the new rules. 

In practice, it is unlikely the Land Registry will register an overseas entity as owner of a UK property until it has registered its beneficial ownership at Companies House first. 

Those  who already own UK property will have six months from the date of the ECA’s commencement to either apply for registration or dispose of their property.  However, overseas entities trying to sell their UK property to get around the new rules, will not be allowed to without being registered first. Would-be sellers of property between 28 February 2022 and the date of full implementation of the new register are obliged to submit their details for registration.

Part 2 –  makes wide ranging amendments to powers under the unexplained wealth order (or UWO) regime –  a mechanism designed to confiscate the proceeds of crime, using civil rather than criminal powers pursuant to section 1 of the Criminal Finances Act 2017 (CFA 2017). This includes giving authorities the ability to apply for interim freezing orders.

Part 3 – strengthens provisions about sanctions. Fines of up to £2,500 per day can be levied against those who break the new rules, including criminal penalties for non-compliance of up to 5 years.  Even where no monetary fine is imposed, the Office of Financial Sanctions will be empowered to publicly identify companies and individuals that it suspects to have breached financial sanction rules.

Further guidance and action

Bearing in mind the speed at which the UK government rushed the ECA through,  further guidance from government and regulators regarding how and when entities should report is expected imminently. 

In practical terms there is a lot to do and only time will tell whether Companies House and the Land Registry will cope with the deluge of applications.

To learn more

To learn more, please see:

https://www.legislation.gov.uk/ukpga/2022/10/contents/enacted

https://www.gov.uk/government/news/new-measures-to-tackle-corrupt-elites-and-dirty-money-become-law

Additional information

Dixcart Legal can assist with property related enquiries in the UK. If you have any questions about this article or require any further information, please contact Kuldip Matharoo or Peter Robertson: advice.uk@dixcart.com.

What is it about Portugal, other than the great food and weather, that everyone is talking about? You may have heard that Portugal has become a hotspot for millennials wishing to embark on a business venture start-up, or it is where crypto traders are now relocating to, or the fact that companies like Google and Amazon are setting up offices in the acclaimed ‘Florida’ of Europe.

Tax Advantages for Individuals

The buzz and energy in Portugal has sparked interest in many and for various reasons – Portugal is currently attracting the affluent, as well as a wide range of other individuals, through their favourable tax regime.

Individuals may be exempt from foreign income, or taxed at a flat rate of 20% for income earned in Portugal, for a period of 10 consecutive years. Those wishing to be eligible for this regime; the non-habitual resident regime (NHR), need to register specifically for this regime to be entitled to the tax related benefits. It is definitely  worth using a tax specialist, such as Dixcart Portugal to assist as the regime can be quite complex.

The main criteria are; an individual becomes Portuguese tax resident and has not been a Portuguese tax resident for any of the previous five years, and his/her income must be earned from a high value-added activity or is of a scientific, artistic or technical nature.

Benefits Offered by the International Business Centre of Madeira

The Portuguese island of Madeira has famously been acclaimed as one of the best islands in the world due to its natural beauty. It has won awards for several consecutive years up to 2021, namely; “Europe’s Leading Island Destination” and “World’s Leading Island Destination”. It also boasts an attractive international shipping registry, regarded as among the highest in the world. Efficient tax structures are also available for shipping companies and crew members.

This autonomous Portuguese island presents numerous opportunities – the International Business Centre of Madeira (IBC) allows for the registration of companies where income from international or online activities is taxed at a flat rate of 5%, provided certain criteria are met such as having a full time employee employed in Madeira and making a specified initial investment into the company. Companies wishing to register outside this framework are taxed at rates ranging from 11.7% to 14.7% . Companies registered in the IBC also have access to all of the double taxation agreements entered into by Portugal and have full access to the EU single market.

Incorporating Companies in Portugal

Companies also consider Portugal as a location to create an efficient tax structure, by making use of the participation regime. This regime means that companies may be exempt from dividend tax, provided certain conditions are met.

The conditions include the shareholder; holding at least 10% of the shares (the shareholdings in question must have been held, uninterruptedly, during the year prior to the distribution), and not being tax resident in a country considered to be a tax haven by Portugal. In addition, there must be no distribution of income in the first year of operation.

Although it is becoming harder, it is still possible for companies to find an affordable place to rent (or even purchase) as office space. Over the last decade, popular areas of Lisbon and Porto have however seen incremental price escalations as a result of the increased attention Portugal has received.

Why Are Individuals Moving to Portugal?

The recent popularity of Portugal is also witnessed in the tourist sector. Many individuals have moved onto relocate, after visiting. The streets of Lisbon and Porto are culturally rich with traditions that the country boasts proudly of. It is not hard to understand why tourists are in love with these cities! From the trams in Lisbon to the port wine in Porto.

D7 and D2 Visas

Through the introduction of various visas by the Portuguese government, it has become possible for almost anyone to come to Portugal, and apply for a residence permit.

Individuals are typically applying for D7 or digital nomad related visas, essentially a visa for those earning passive and/or independent income, and able to support themselves. This income can be for example from: property rentals, financial investments, profits and dividends from a company, copyright, etc.

Others, who are more entrepreneurially wired and wishing to venture to Portugal, are applying for a D2 visa. Those who can benefit are self-employed individuals or individuals who intend to set up or buy a company in Portugal. This visa  requires a business plan to be submitted to the Portuguese authorities, amongst other criteria.

The country has shifted gear in ensuring the right calibre of people are moving to this jurisdiction and it is clear that there are many opportunities in this country situated in the far West tip of Europe.

Golden Visa Program

Those wishing to keep Portugal as an option for relocation purposes, can register for the Golden Visa program. It is a quick way for foreign investors from non-EU countries to obtain a valid permanent residence permit in Portugal, and also allows them to travel freely in most European countries (Schengen Area).

Since inception of this program, over 17,000 family members have benefited from the Portuguese Golden Visa. The program has specific investment criteria – the most popular in recent times has been an investment in a fund to the value of €500,000. The program has been so successful that the Portuguese government has raised the limit, from the previous minimum of €350,000.

The stay requirements in Portugal are minimal, with an average of only 7 days stay per annum, over a 5 year period, unlike the other visas which require you to make a permanent move to Portugal.

Summary

As you can see from the above, there is more than just the crispy custard tarts and more than 300 days of sun that Portugal has to ‘shout’ about.

The reasons many are relocating to Portugal are numerous – with each person having their own story and set of circumstances.

Dixcart Assistance

Dixcart has assisted many families and businesses to relocate to various parts of the world, including Portugal.

Please reach out to Dixcart Portugal should you have any questions: advice@portugal.com.

We appreciate that better decisions can often be made with a professional adviser by your side.

Over the past few years, there has been an increase in customers buying goods and services using digital platforms and this has accelerated during the pandemic. This article will cover exactly what cryptoassets are and the tax treatment, in the UK, for both individuals and businesses.

What are Cryptoassets?

Cryptoassets, also known as ‘tokens’ or ‘cryptocurrencies’, are cryptographically secured digital representations of value or contractual rights that can be:-

• Transferred
• Stored
• Traded electronically

There are numerous types of cryptoassets and they each work in different ways. The main 4 types of cryptoasset that you may encounter are as follows:

• Exchange tokens – Intended to be used as a means of payment and this includes the most well-known token, the bitcoin.
• Utility tokens – This provides the holder with access to particular goods or services on a platform. This is usually where a business will issue tokens and commit to accepting the tokens as payment for particular goods or services.
• Security tokens – This provides the holder with particular rights or interests in a business, such as ownership or entitlement to a share in future profits.
• Stable coins – These tokens minimise volatility as they are aligned to something that is considered to have a stable value, such as precious metals.

How the UK Tax Authorities Treat Cryptoassets

The tax treatment of all types of tokens is dependent on the nature and use of the tokens. It is not based on the definition of the token. HMRC does not consider a cryptoasset to be currency or money.

Tax Treatment of Cryptoassets for Individuals

Income Tax Treatment

Cryptoasset activity must be recognised as a trading activity for income tax rules to apply. To determine if a trading activity has taken place, HMRC will apply a series of tests known as ‘The Badges of Trade’. Any profits from this activity will be subject to income tax at an individual’s marginal rates (20%, 40% and 45%). There will also be Class 2 and 4 National Insurance due at the current rates applicable.

Capital Gains Tax Treatment

Where the transactions in cryptoassets are regarded as a personal investment, then they should be treated as a chargeable asset for Capital Gains Tax (‘CGT’) purposes. Any gain realised on a cryptoasset bought and subsequently sold, is subject to CGT at the current rate of 10% for a basic rate taxpayer and 20% for a higher rate taxpayer. Losses realised in the same way, can only be relieved against capital gains chargeable to CGT.

Non-Domiciled Individuals

The nature of cryptoassets is that they are decentralised, digital in nature and do not have a physical location. Determining the location or ‘situs’ of an asset is therefore important for UK resident, non-domiciled individuals, as it can change the tax consequences.

HMRC guidance has stated that the location of a cryptoasset is wherever the beneficial owner is resident. If the cryptoasset owner is resident in the UK, then the cryptoasset may also be located in the UK.

There is a need to watch out for the circumstances in which a UK resident, non-UK domiciled individual purchases cryptoassets using their untaxed foreign income or gains. They may have remitted those funds into the UK and triggered a tax liability on acquisition. If the individual then disposes of the cryptoasset and makes a gain, then the gain may also be taxable in the UK, without the benefit of the remittance basis of taxation.

Tax Treatment of Cryptoassets for Companies

Numerous transactions in cryptoassets by a company will invariably be regarded as trading for tax purposes. These profits will be subject to corporation tax at the current rate applicable (currently 19% for 2021 financial year). Any losses arising from cryptoassets are dealt with in the same manner as a trading loss.

However, if a business is not trading in cryptoassets, any profits will be treated as a chargeable gain for the company. The calculation of the gain would follow the pooling rules which also apply to shares and securities.

How Can Dixcart Help?

We are aware that HMRC are showing an increasing interest in cryptoassets and a planned ‘nudge letter’ campaign will reportedly target UK taxpayers who may have failed to properly pay tax on their cryptoassets. 

HMRC are now armed with data gathered from cryptoasset exchanges and other sources, meaning that investigations into the UK tax affairs of crypto investors are likely to be imminent. 

Any taxpayers who receive a ‘nudge letter’, or who may generally be concerned about their tax position, in respect of cryptoassets, should contact Paul Webb in  the Dixcart office in the UK: advice.uk@dixcart.com as soon as possible to discuss the position.

The Dixcart Tax Team in the UK office is a busy department, largely due to the fact that many of the vehicles and individuals to whom we provide advice, have a UK element and/or assets in the UK.

The three members of the UK Tax Team, we are introducing you to today are; Paul Webb, Karen Dyerson and Ravi Lal.

Tax Advice

Prior to many decisions being taken, they should be considered and evaluated with a thorough knowledge of the potential tax implications

Advice to UK and non-UK domiciliaries on; inheritance tax, UK property ownership matters, and ongoing UK residence tax status, are important aspects of individual tax planning.

Corporates also need expertise regarding tax efficient UK share schemes, the tax aspects of mergers and acquisitions and working with maximising the tax relief available under the UK R&D and Patent Box regimes.

Paul Webb

paul.webb@dixcart.com

Director

CTA ATT BSc (Econ)

After gaining an honours degree in Economics, Paul Webb qualified as a member of the Chartered Institute of Taxation in 2001. Paul has a broad base of tax knowledge and advises both clients and other tax practitioners, both in the UK and around the world.

Paul joined the Dixcart Group in February 2013 and is based at the Dixcart office in the UK. He uses his extensive technical knowledge to help a varied portfolio of clients deal with their tax obligations in an efficient manner.

Paul was made a Director of Dixcart International Limited in 2014 and heads up the tax department in the UK. When travel is permitted he regularly travels to India, and extensively within the UK.

His main areas of expertise are; UK corporation tax, UK personal tax, and domestic and international tax structuring. He works alongside the Dixcart Immigration Department to assist non-UK domiciliaries and their families during their planning for a move to the UK, or when making an investment into the UK. Once in the UK, he advises internationally mobile individuals regarding the use of the UK remittance basis of taxation.

Paul also provides expertise to UK and non-UK domiciliaries on inheritance tax planning, UK property ownership matters, and ongoing UK residence tax status, if needed.

He invariably works with clients from the very early stages of tax planning and subsequently manages ongoing tax matters across the following years.

In recent years, Paul has been involved in establishing tax efficient UK share schemes, advising clients on the tax aspects of mergers and acquisitions and working with clients to maximise the tax relief available under the UK R&D and Patent Box regimes.

Karen and Ravi work closely with Paul and provide tax advice to both corporate and individual clients. They are both experienced professionals and assist on various tax matters such as corporation tax and R&D for businesses and income tax, capital gains tax and inheritance tax for individuals.

Karen is a member of theAssociation of Tax Technicians and has been qualified for over 25 years.

Ravi worked for a top 15 UK accountancy firm prior to joining Dixcart, working in all aspects of tax compliance including self-assessment, corporation tax, tax planning, P11Ds, PSA and ATED.

Additional Information

If you have a question regarding UK tax obligations, further guidance regarding your possible entitlement to use the UK remittance basis of taxation, or have a question in relation to UK corporate tax, please contact Paul Webb: advice.uk@dixcart.com.