Category: General

Dixcart Malta has prepared a summary of the assistance that the government has made available to Maltese businesses, at this challenging time. It is split into several categories to make it as easy as possible to follow. 

Prohibition of Non-essential Retail, Services, and Mass Gatherings

One of the measures introduced by the Maltese government to avoid the spread of Coronavirus, was the prohibition of people working together to supply non-essential retail and other services, as well as any mass gatherings. 

Deferral of Tax Payments

• A two-month deferral for businesses, including the self-employed, to pay: Provisional Tax, VAT and National Insurance Contribution on salaries.
• This applies to taxes owed, until the end of April 2020. All tax forms must be submitted to meet normal deadlines. The incentive is primarily aimed, but not limited to, the tourism and hospitality, entertainment, transport, and manufacturing sectors.  Businesses will still collect National Insurance on their employees’ wages, but will retain these, for the duration of the deferral.
• These deferrals are estimated to improve the liquidity of businesses by €700 million. At the end of April 2020, the government will review a possible extension of these tax deferral measures, depending on the prevailing economic conditions.

Banking and Further Liquidity Measures

• €900 million has provided in bank guarantees, for companies requesting operational loans. These loans will enjoy low interest rates and longer repayment periods. This will be financed by grants from the National Development and Social Fund, and a number of EU funds.
• A three month moratorium from banks, for the repayment of business and personal loans. This will alleviate the burden of bank loans for ALL individuals and businesses in this challenging period.

Facilitating ‘Teleworking’ Activities

• Employers and self-employed individuals investing in technology that enables working from home, can claim to partially cover the costs of this investment.
• Claims are limited to a maximum of €500 per individual being enabled to work from home, or €4,000 for the total project. The grant will cover 45% of the eligible cost. To be eligible, costs have to be incurred between 15th of February and 8th May 2020.
• In order to be eligible, the employee should not have had a means of working from home, prior to the 15th of February 2020. All of the costs must have been incurred after this date. These measure only apply to full-time employees. 

Covid-19 Wage Supplement

• Full-time employees of businesses and self-employed individuals, operating in sectors that have suffered drastically due to the COVID-19 pandemic, or have had to temporarily suspend operations on the order of the Superintendent of Public Health, as listed on Malta Enterprise’s website, will be entitled to up to five days’ salary a month, equivalent to a maximum €800 per month, to be financed by the Maltese Government. Part-time employees will be eligible to a maximum €500 per month.
• Full-time employees of businesses in other adversely affected sectors, will be entitled to one days’ salary per week, up to a maximum of €160 per month, or a maximum of €100 per month for part-time employees. For businesses located in Gozo, this increases to two days’ salary per week, equivalent to a maximum €320 per month for full-time employees, and €200 per month for part-time employees.
• Self-employed individuals in adversely affected sectors who have employees, will be entitled to two days’ salary per week, equivalent to a maximum €320 per month.
• Self-employed individuals located in Gozo, in adversely affected sectors, will be entitled to 2 days’ salary per week equivalent to a maximum €320 per month. This increases to 3 days’ salary, equivalent to a maximum €480 per month, for self-employed individuals who employ staff. The relevant employees will be entitled to two days’ salary per week.

Social Measures

• Parents who both work in the private sector, where there is a need for one of the parents to stay at home to take care of school-aged children, will receive a direct payment of €166.15 per week if working full-time, or €103.85 per week if working part-time, provided that they cannot carry out their job responsibilities by working from home. This measure also applies to single parent families who have school-aged children.
• Individuals classified as disabled, who work in the private sector and are registered with Jobsplus, may opt to stay home for health and safety reasons and will receive a direct payment of €166.15 per week if working full-time, or €103.85 per week if working part-time.
• Employees who have had their full-time employment terminated as of 9th March 2020, as a result of the COVID-19 pandemic, will be eligible for Contributory Unemployment Benefit, and will receive a direct payment of €166.15 per week, if work was full-time, or €103.85 per week if work was part-time.
• The government will increase rent subsidies for individuals whose jobs have been terminated.

Quarantine Leave

• A grant of €350 per employee to businesses (including the self-employed) that have full-time employees on mandatory quarantine leave, is available.  The grant is also available to full time self-employed persons who have to undergo mandatory quarantine.
• This grant is also available to members of staff who have had to quarantine themselves, due to contact with individuals who may have contracted Covid-19, and they either live in the same household or working in the same place of work as the potentially infected individuals.
• This grant is only available for full-time employees. 

Employment of Third Country Nationals

• National Agency Jobsplus, will assist third country nationals living in Malta to find an alternative job, if their job has been terminated, as a result of Covid-19.
• Only applications from highly skilled, new third country nationals will be accepted.
• Companies who terminate an active employment contract for a third country national, will not be able to recruit other third country nationals, in the future. 

Assistance

The Dixcart office in Malta has professionals that can assist your business to apply for appropriate financial assistance, at this challenging time.  If you are already a client, please speak to your usual Dixcart contact, or alternatively, please email: advice.malta@dixcart.com.

The UK continues to be a favoured place for technology start-up companies, with 2019 investment growth, outpacing that of both China and the US.

According to the Government backed ‘Tech Nation Dealroom’, British technology start-ups raised $13.2 billion in 2019, an increase of 44% compared to 2018.

Eric Schmidt, who was the Chief Executive Chairman of Google for six years to 2017, stated; “Britain is a particularly good platform to do global things. There’s enough ‘Unicorns’ (that is start-ups worth $1billion) here that the system will generate enough learning to continue to generate more capital. Markets are accessible. You have a real asset here. Don’t screw it up.” 

Sarl Blevin, co-founder of Lovefilms said; “The secular wave of technology is so huge, its beyond Brexit. If you look at the numbers since the country voted ‘leave’ in 2016, every year there has been a record: more money has gone into the sector, more jobs have been created.” 

Dixcart Comment

When individuals or companies invest in the UK, whether in tech companies or otherwise, amongst the factors that they take into account, will undoubtedly be the tax implications.

The UK is extremely competitive, with key factors including:

• Its low rate of corporation tax: currently 19%.
• Significant tax credits for research and development.
• No withholding tax on dividends.
• No capital gains tax on gains made by non-UK residents on the disposal of shares held in UK companies (other than real estate companies).
• Income tax and capital gains tax reliefs for UK resident ‘seed’ investors.

Other reasons why the UK is an attractive jurisdiction:

• A stable legal and regulatory environment.
• Transparent, flexible corporate law and governance that makes it easy to do business.
• The top-rated major European economy for attracting talent with one of the largest labour forces in Europe, and lower labour costs than Italy, France or Germany.
• An encouragement of innovation as well as opportunities for entrepreneurs and employees to move to the UK, please see: IN629: UK Immigration – A Summary of Key Changes 2019.
• A large network of experienced professional advisers.

Further Information

Any one of our professionals at the Dixcart office in the UK, would be delighted to explain more – as to why the UK is an attractive location for companies, the tax benefits, and the opportunities available to innovators in terms of re-locating to the UK.

Please contact: advice.uk@dixcart.com.

Charalambos Pittas, the Managing Director of Dixcart Cyprus, is delighted to announce that the Dixcart office in Cyprus moved to its new premises in Limassol, during the first week of December 2019.

 Substantial red-tape and two sets of Planning Permissions had to be navigated, as well as a number of complications in relation to the electricity supply. A few grey hairs were gained.

The Dixcart floor is fully operational while the outside areas are still under completion and are expected to be finalised by the end of February. The building comprises three floors (approximately 600sqm). One floor is being used by Dixcart and the other two for serviced offices. We will therefore be launching a Cyprus Dixcart Business Centre, to add to the other five Dixcart Business Centres.

The building has a little bit of history to it, being built in 1958 by a Cypriot  Lawyer who practised in the UK. At the time of building, most of the materials were brought from the UK including fireplaces and wooden floors. Unfortunately it was not possible to maintain the original wooden floors as a result of damage over the years.

In the late 50’s to early 70’s, Limassol was not a main town in Cyprus and the street in which the building is located was most likely one of the main roads leading to the port. It was only after the Turkish invasion in 1974 that Limassol began to grow as a city.

Every effort has been made to preserve the original architecture of the building. The only major amendment, apart from the outside, was the construction of a new staircase to enable better access to the three floors. A full, but sympathetic renovation was required internally, to modernise the facilities and infrastructure.

With this investment, Dixcart is able to continue its growth and provide clients with a comprehensive range of business support services. The Cyprus Dixcart Business Centre offers 2-8 desk rooms and a full range of ancillary services are available to assist with the business needs of clients.

We look forward to you visiting us at our new premises – just let us know when you might be in Cyprus: advice.cyprus@dixcart.com

The Maltese Income Tax Act exempts royalties, advances and similar payments arising from copyright, from tax. 

Exemption in Respect of Certain Copyright Income

The income tax exemption with respect to royalties received from certain types of ‘copyrightable’ intellectual property, in relation to; books, film scripts, music and art.

The Income Tax Act exempts royalties, advances and similar income arising from:

• Patents, in respect of inventions;
• Copyright;
• Trademarks.

This exemption applies whether the royalties are obtained in the course of a trade, business, profession, vocation or otherwise. They are subject to meeting the terms, conditions and approvals established in relevant Maltese subsidiary legislation.

Intellectual Property Companies 

Whilst the tax exemption is undoubtedly good news for artists, who receive royalties for their work, it is also a very positive development for Intellectual Property companies which are tax resident in Malta, or which are looking to re-locate to Malta.

Royalties from qualifying patents and from qualifying copyright are both exempt from income tax in Malta, whilst non-qualifying royalties may still benefit from low effective tax rates. IP companies can apply for the Maltese Patent Box Deduction, which allows taxpayers that exploit qualifying IP to deduct their expenses related to such IP.

In an international context, the measures above, combined with Malta’s network of Double Taxation Treaties and access to the various EU directives, present interesting opportunities for taxpayers owning copyright and patents.

What Constitutes ‘Copyrightable’ Material?

The Income Tax Act does not, to date, define royalties that derive from copyright, but the Copyright Act lists the following, as eligible for copyright, subject to certain conditions and exclusions:

• Artistic work;
• Audiovisual work;
• Databases;
• Literary work;
• Musical work.

The Copyright Act further defines artistic work as including:

• Paintings, drawings, etchings, lithographs, woodcuts, engravings and prints;
• Maps, plans, diagrams and three-dimensional works relating to geography, science or topography;
• Sculpture;
• Photographs not featured in audiovisual;
• Architecture in the form of buildings or models;
• Artistic craftsmanship, including pictorial fabric collages and works of applied handicraft and industrial art. 

Additional Information

The registering of IP in Malta, can present an attractive proposition, please contact the Dixcart office in Malta: advice.malta@dixcart.com for further information, or your usual Dixcart contact.

Background

The EU Council’s ‘base erosion and profit shifting’ (BEPS) action plan defines the requirements to be met, by jurisdictions wishing to maintain low tax regimes for businesses undertaking ‘specified’ activities, in order to demonstrate that they have sufficient substance in that particular jurisdiction.

Requirements include; ‘core income generating activities’ must take place in the jurisdiction in question, with adequate expenditure and staff in that jurisdiction proportionate to the level of activity carried out there. In addition, measures must be in place for the jurisdiction to enforce any non-compliance to the rules.

Reporting

On 31 October 2019, the OECD released guidance regarding the spontaneous exchange of information by zero or nominal tax jurisdictions. As part of BEPS Action 5, as from 2020, low-tax jurisdictions will have to ‘spontaneously exchange’ information. Guidelines have been published to clarify key definitions, specify timelines relating to the information exchanges and detail the context of the international legal framework.

Relevant Activities

Companies undertaking the following relevant activities are subject to economic substance requirements:

• Banking
• Distribution and service centres
• Finance and leasing
• Fund management
• Headquarters
• Holding Companies
• Insurance
• Intellectual property holding
• Shipping

Guernsey and the Isle of Man

Guernsey and the Isle of Man were on the original OECD list of low tax jurisdictions and both are now compliant with the standards for substantial activity legislation, having introduced new laws in 2018.

Guidance Notes: Guernsey and the Isle of Man

The States of Guernsey and the Isle of Man Government issued additional Guidance Notes on 26 April 2019.

Key points to note include:

• Each resident company, undertaking a relevant activity, is expected to hold at least one board meeting per annum in the jurisdiction of residence of the company. In addition the board must meet in the jurisdiction at an adequate frequency, given the level of decision making required. When more than one meeting is held, the majority of such meetings should be held in that jurisdiction. During such meetings, there must be a quorum of the Board physically present in the jurisdiction. This is to help ensure that the relevant activity is ‘directed and managed’ in, for example, Guernsey or the Isle of Man.
• The ‘core income generating activity’ must be performed in the jurisdiction of residence for the company.
• If there is a failure to meet the economic substance requirements, sanctions will include exchange of information with competent authorities in other jurisdictions. Current wording of the existing legislation in Guernsey and the Isle of Man is that the information will only be exchanged where the parent of the particular company or the beneficial owners are resident in the EU. It is anticipated that the current laws will be amended and extended beyond the existing EU obligation.

Additional Information

Each of the Dixcart offices are familiar with the economic substance requirements in their particular jurisdiction.

Dixcart Business Centres act as Start-up hubs for companies as they offer high quality serviced offices and a range of professional services to assist clients to establish a business: https://dixcartbc.com/

Our Guernsey and Isle of Man offices are fully conversant with the ‘substance’ legislation and the implications within their respective jurisdiction.

For further information please speak to your usual Dixcart contact or to our Guernsey or Isle of Man office: advice.guernsey@dixcart.com or advice.iom@dixcart.com

Full Fiduciary Licence granted by the Guernsey Financial Services Commission

Guernsey Registered Company: 6512

 

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

Background

A new legislative initiative in Malta means that it is now possible to grow and process cannabis (marijuana) in Malta, as long as it is for medical use. This presents an opportunity for entrepreneurs and investors.

Due to its geographical position Malta is also conveniently placed, as a potential distribution hub for medical cannabis.

Entities need to apply to produce and/or process medicinal cannabis in Malta and must comply with the legal criteria as specified in ‘The Production of Cannabis for Medicinal Use Act 2019’.

The Law in Malta

No cultivation, importation or processing of cannabis, no production of any products intended for medicinal use and no trade in cannabis can be conducted in Malta, prior to obtaining the necessary approvals, authorisations, licences and, or permits as required by or under the applicable Maltese laws.

What Requirements Must the Entity Meet?

The applicant must prepare the following documentation and submit the items to Malta Enterprise (ME):

• A Business Plan – in the form of an Income Statement, Balance Sheet and a Cash Flow for the first three years of operation, with appropriate supporting documentation and appendices;
• Due Diligence – details to include the shareholding structure and information regarding the beneficial owner. The shareholding structure cannot be changed in the future, without prior approval by ME;
• The experience of the shareholders must be detailed and this is regarded as of particular importance.

The applicant must then obtain a ‘Letter of Intent’ from Malta Enterprise (ME) and ensure full compliance with the provisions of the Production of Cannabis for Medicinal Use Act, and any international obligations, resulting from a treaty that Malta may from time to time be party to.

Following Receipt of the ‘Letter of Intent’

When the project is approved, ME will issue the ‘Letter of Intent’ and the organisation can start to liaise with the Malta Medicines Authority to obtain the relevant licence.

ME may allocate land to the organisation, in one of Malta’s Industrial Parks, if required.

Moving forward, the relevant organisations producing or processing the cannabis, must at all time fully comply with the regulations relating to the production of medical products, as specified in the Malta Medicines Act.

The manufacturing process in Malta, must generate the final product that can then be sold directly to pharmacies.

The export of any goods, which require further manufacture, is not permitted.

Relevant Research and Development should generally also take place in Malta.

Additional Information

Dixcart can provide advice to companies seeking to produce and/or process medicinal cannabis in Malta and can supply additional information regarding related corporate and residence issues.

For further information please contact the Dixcart office in Malta:  advice.malta@dixcart.com or speak to your usual Dixcart contact.

Background

The Maltese Government is committed to promoting the film production sector and cash rebates can be claimed, as a financial incentive, to the growing Audio-visual Industry in Malta.

What Rebates are Available?

• Starting from January 2019, qualifying companies can receive a maximum 40% cash rebate for film production in Malta.

The cash rebates are rebates on the expenses in Malta, and are available at three different levels: 30%, 35% and 40%.

The level of rebate is dependent on the cultural test which includes consideration of such factors as how much of the production is filmed outside in Malta and how recognisable Malta is as the location.

Eligibility Criteria

To be eligible for this scheme the following criteria must be met:

• The production must be carried out by a ‘Qualifying Company’, responsible for all of the activities involved in making a ‘Qualifying Production’ and having access to full financial information in relation to the total production worldwide. There can only be one Qualifying Company with respect to each Qualifying Production.
• A Qualifying Production means an audio-visual work that must be partially or wholly carried out in Malta and processed to commercial release standards, for international distribution for cinema and international telecast (including VOD/SVOD platforms) and is categorised as follows:

1. Feature film;
2. Television production (including a film, a series or mini-series including pilots);
3. Creative documentary;
4. Reality programmes (scripted/unscripted);
5. Game shows.

• The minimum spend in Malta must be €100,000 and the total budget must exceed €200,000.
• The Qualifying Company must take a cultural test. This is to ensure that the audio-visual work is considered to be a cultural product and that it makes a valid contribution in terms of creative expression and culture through the development of production capability skills in the audio-visual sector in Malta.
• Companies need to use a registered Production Service Company for coordination of the production.

Additional Tax Benefits

Qualifying companies can also qualify for tax credits.

This is in addition to the Maltese corporate tax imputation system which, for non-Maltese resident shareholders, results in an effective Maltese tax rate of 5% on active profit, used to pay dividends, and 10% on passive income.

This makes Malta a very attractive destination for the audio-visual industry.

Additional Information

Dixcart can assist with advice on this matter and other related corporate and residency issues in Malta For further assistance please contact us on advice.malta@dixcart.com or speak to your usual Dixcart contact.