Category: General

The Covid-19 Pandemic

2020 is going to be a year remembered for the challenging pandemic, which has had a huge impact on people’s well-being, both health wise and financially.

On a positive note, people are appreciating the ‘simple’ things in life and there is a heightened attitude of looking out for and assisting others, particularly those falling into the vulnerable category.

Most Governments have taken sympathetic measures to support their health services and to try to keep business functioning during the challenging circumstances.

Measures taken in the Jurisdictions where Dixcart has Offices

Please see below a summary of the support measures being taken in the eight key jurisdictions where Dixcart has an office. This is by no means a comprehensive summary, rather an outline of some of the innovative measures being taken and is only relevant at the time of publication.

Cyprus

• Suspension of the collection of loan instalments and interest until the end of 2020.
• Central Bank of Cyprus guidelines to banks to provide short-term liquidity facilities, for up to 12 months, at preferential terms (interest rate and other charges). A maximum amount, to be available of double the annual payroll cost, or 25% of the entity’s most recent annual turnover.
• Special plan for a ‘Full Suspension of Business or Partial Suspension of Operations’ – payment of a Special Unemployment Benefit to private sector employees.
• Special Self-Employed Benefit, a similar concept to the above payment.
• ‘Child Care Special Leave Allowance’ to be awarded to working parents who are responsible for the care of children up to 15 years of age and / or children with disabilities of any age and due to the nature of their work cannot work from home.

 Guernsey

• As of 19 March, a requirement was imposed on all persons arriving in the Bailiwick from anywhere in the world (including, for the avoidance of doubt, Jersey and the United Kingdom), to self-isolate for 14 days on arrival. This is a legal requirement, and failure to comply is a criminal offence.
• Testing and contact tracing have formed a major part of the response strategy. Guernsey has employed a high rate of testing, several times more per capita than many other jurisdictions.
• Deferral of payment of Social Security contributions for both Quarter 1 (due mid-April), and Quarter 2 (due mid-July).
• ‘Coronavirus Payroll Co-Funding Scheme’ – the Government will pay employees an amount equivalent to Guernsey’s minimum wage. For a 35-hour week, this figure equates to a gross figure of £298. The States of Guernsey will meet 80% of this figure (i.e. £238 per week based on a 35-hour week). Employers must make up the remaining 20%.
• ‘Small Businesses and Self-employed Grant’ – the amount payable will be a flat sum of £3,000.
• A loan guarantee scheme to enable further financial support for trading businesses with a turnover of less than £10m.
• Commencement of phased relaxation of lockdown rules with businesses and workers for certain types of business able to operate from 25 April 2020, if public health requirements on social distancing and hygiene are met.
• There is a weekly national ‘clap’ for the National Health Service, at 20.00 (GMT), every Thursday evening. Individuals and families stand outside their homes (preserving social distancing), or at their open windows and clap to show appreciation for healthcare workers and carers.

Isle of Man

• As of 6am on Friday 27 March 2020, the Isle of Man’s borders closed to passengers, until further notice. The only exception is the return of Manx residents from overseas. 
• To help viable businesses that have been affected to retain staff, a wage support package is available for 12 weeks, to provide businesses with a flat rate contribution of £280 per week for every full-time equivalent staff member.   
• ‘Business Adaptation Grant’ – £3.5m is being made available to support businesses looking to evolve. 50% of any costs will be met, that can be shown to be involved in the adaptation of a business, as a result of changing market conditions due to the Coronavirus outbreak – the business must also have a viable business plan going forward
• A range of support measure are available from Manx Utilities Authority, Manx Telecom, Sure, and Manx Gas, for individuals who are being affected.

 Malta

• A two-month deferral for businesses, including the self-employed, to pay: Provisional Tax, VAT and National Insurance Contribution on salaries.
• €900 million has been provided in bank guarantees, for companies requesting operational loans. These loans will enjoy low interest rates and longer repayment periods.
• Employers and self-employed individuals investing in technology that enables working from home, can claim to partially cover the costs of this investment.
• Full-time employees of businesses and self-employed individuals, operating in sectors that have suffered drastically due to the COVID-19 pandemic, 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.
• The government has increase rent subsidies for individuals whose jobs have been terminated.
• Companies that operate in adversely affected sectors and have suffered 25% loss in turnover will be entitled to one days’ salary per week equivalent to €160 per month per member of staff.

 Portugal

• The Portuguese Government declared a State of Emergency on March 18 and it is currently in place until 2 May 2020.
• A mandatory restriction on movement and measures relating to social isolation have been put in place.
• Commercial passenger flights are not permitted during the State of Emergency, except for emergency or repatriation purposes. Individuals cannot cross between Spain and Portugal for leisure or tourist purposes.
• As at the end of April, Social Security Lay-off Payments have been approved for over 40,000 companies. The average amount to be paid is €422 per employee per month.

St Kitts & Nevis

• St Kitts and Nevis closed their borders and imposed a State of Emergency from Saturday 28^th March 2020 for a period of three weeks.  However, this was then extended for a further period of six months from the date of expiry of the first State of Emergency.  
• During this period citizens and residents have been subject to various degrees of curfew.  For the first three weeks, emergency regulations meant that there was a 24-hour home curfew, where households were mandated to stay within their own dwellings. During this time, a short period, twice a week was assigned for essential shopping and banking.  During this period, there was extensive business disruption, such as the Companies Registry and most Government being closed.
• During the second State of Emergency, curfew conditions have so far been lightened.  Citizens and residents now have four days per week in which they may leave their dwellings during the day. The nighttime curfew remains in place seven nights per week.
• Business disruption is now lessening, Government Departments are now opening and operating on a limited basis. 

 Switzerland

• On March 25 the Swiss Government extended entry restrictions to all Schengen and non-Schengen states except Swiss nationals and foreigners with Swiss permits.
• Salaries for the month of March are guaranteed, although in some cases there might be delays.
• In total the government has set aside around CHF62 billion to support the economy. On April 3, it announced it was doubling the amount of emergency loans available to struggling companies to CHF40 billion ($41 billion). It has since presented a plan to offer additional loans of up to CHF154 million for start-up companies.
• A grant to cover 80% of wages (up to CHF 12,350 per month), for employees who are not working due to the impact of Coronavirus but are retained on the payroll. This will be backdated to 1^stMarch 2020 and will be open for a maximum one-year period.
• The self-employed will be assisted for 2 months. They will receive CHF 5,880 maximum per month, backdated to 17 March 2020.
• Since the beginning of the crisis, Switzerland has increased testing for the coronavirus to achieve one of the highest per capita rates.
• A three-step easing of emergency lockdown measures began on April 27. With protection measures for staff and customers, hair stylists, beauticians and physiotherapists can re-open their doors, along with florists and garden/DIY stores. Dental and medical centres can offer non-urgent care. Bars, restaurants, museums, libraries and markets will reopen on 11 May.
• The ban on gatherings of more than five people remains in place.

UK

• As of the end of April, the British Government has announced that a phased and gradual easing of lockdown restrictions will take place, starting May 2020.
• A grant to cover 80% of wages (up to £2,500 per month), for employees who are not working due to the impact of Coronavirus but are retained on the payroll. This will be backdated to 1^stMarch 2020 and was open initially for a three-month period, now extended to 30^th June 2020.
• No business will have to pay any VAT from the third week in March 2020, until mid-June. The payment will be deferred, and businesses will have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
• The Coronavirus Business Interruption Loan Scheme (CBILS) was launched on Monday 23^rdMarch 2020. Loans will be delivered by lenders that partner with the British Business Bank, including all of the major banks. The lender will receive a guarantee of 80% of the loan amount from the government. The loan will be interest free for the first 12 months.
• No ‘rates’ will payable to local authorities for the 2020-2021 tax year, for any business in the retail, hospitality or leisure sectors.
• There is a weekly national ‘clap’ for the National Health Service, at 20.00 (GMT), every Thursday evening. Individuals and families stand outside their homes (preserving social distancing), or at their open windows and clap to show appreciation for healthcare workers and carers. It is a moving experience.

 Assistance

All of the Dixcart offices are fully operational.

Each office can provide you with an update on the status in their particular jurisdiction and can give advice in terms of applying for appropriate financial assistance. Please speak to you usual Dixcart contact or alternatively email: advice@dixcart.com.

The UK Government has introduced a far-reaching package of assistance for UK businesses and the self-employed. This package has been enhanced whilst the pandemic is evolving.

This package of assistance for UK businesses, is applicable even if the business is owned from abroad.

The UK Government assistance, outlined below, is a summary and reflects the measures in place as of: 07.04.2020. Please contact the Dixcart office in the UK for more detailed information and for advice as to how to claim the available assistance: advice.uk@dixcart.com.

Coronavirus Job Retention Scheme

• Available to any size of business (including charities), in any sector.
• A grant to cover 80% of wages (up to £2,500 per month), for employees who are not working due to the impact of Coronavirus but are retained on the payroll.
• For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%.
• It must be a UK employer with a UK bank account.
• The employer can also claim Employer’s National Insurance and Employer’s Auto Enrolment, minimum contributions, on the furloughed salary up to the maximum of £2,500 per month.
• Should businesses wish to top up the salaries they can.
• This will be backdated to 1^stMarch 2020 and will be open initially for a three month period.
• It was originally announced that ‘Employees taken on after 1^st March 2020, are excluded from the scheme’, but on the 15^th April this was changed to the 19^th March. As long as the employee was on the payroll as at 19^th March, that individual can be furloughed and included in the claim.
• There is no limit on the funding available to the scheme.
• To claim the grant businesses should designate affected employees as ‘furloughed workers’ and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
• To qualify for the payment, an employee must be furloughed for a minimum of three weeks.  They can then come off furlough.  This means that employers cannot rotate staff weekly between furlough and non-furlough.

VAT

• No business will have to pay any VAT from the third week in March 2020, until mid-June.
• The payment will be deferred, and businesses will have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
• The deferral applies automatically and businesses do not need to apply for it.
• If a business pays by Direct Debit then it is their responsibility to cancel the direct debit  with HMRC to prevent payment being taken.

Coronavirus Business Interruption Loan Scheme (CBILS)

• This scheme was launched on Monday 23^rdMarch 2020.
• Loans will be delivered by lenders that partner with the British Business Bank, including all of the major banks. The lender will receive a guarantee of 80% of the loan amount from the government. The loan will be interest free for the first 12 months.
• These loans are intended to support cash strapped small and medium sized business during the crisis. They are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million.
• The borrower remains liable for 100% of the debt.

Coronavirus Corporate Finance Facility

• The Bank of England has set up a scheme to finance working capital by purchasing debt from larger business ‘making a material contribution to the UK economy’.
• Businesses do not need to have previously issued debt in order to participate.
• The scheme will operate for at least 12 months.

Help for Self-Employed Individuals

Dixcart have drafted a separate Article specifically for the self-employed, if you would like this information please email: advice.uk@dixcart.com

HMRC Time to Pay

• HMRC’s ‘Time to Pay’ scheme can enable firms and individuals in temporary financial distress, as a result of Covid-19, to delay payment of outstanding tax liabilities.
• If there is PAYE to pay, this can be deferred.  There does not seem to be a consistent message from HMRC, but they seem to be accepting deferral for the next 3 months. To be certain, call them to agree this quoting your PAYE reference number.

Business Rates Holidays and Cash Grants

• No rates payable for the 2020-2021 tax year, for any business in the retail, hospitality or leisure sectors.
• The list of businesses eligible for relief was expanded on the 25^thMarch 2020.  Retail, leisure, and hospitality properties, that will have been forced to close, as a result of the COVID-19 restriction measures, are eligible for the relief.
• In those sectors, if your rateable value is between £15K and £51k, you will also receive a cash grant of up to £25,000 per property.
• Any business which receives small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from the £3,000, announced in the 11 March 2020 Budget).

Assistance

The Dixcart office in the UK has accountants, tax advisers and lawyers that can assist your business to apply for financial assistance, at this challenging time. Please phone speak to your usual Dixcart contact or to the Dixcart office in the UK: advice.uk@dixcart.com.

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.

Further information can be found in the following Articles:

IN561 Key Aspects – Economic Substance Requirements For Guernsey

IN562 New Substance Requirements For Isle Of Man Companies – Effective 1 January 2019 

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.