Category: Residency

A move of residence can provide opportunities to review your affairs and holding structures. There may well be potential to implement wealth preservation and inheritance provisions, and advantageous strategic investment structures.

Every jurisdiction is different. There will always be some specific items to consider before relocating and taking bespoke professional advice at an early stage will always be the right thing to do. Carefully considered pre-exit and pre-arrival planning is essential to ensure a smooth and efficient move.

Please see below a comprehensive checklist that every individual and their family need to consider before relocating.

PRIOR TO ARRIVAL IN NEW COUNTRY

Consider Practical Issues	Travel documents (visas) Formal enrolment in country/jurisdiction of ‘arrival’, including communication with tax authorities, healthcare, schooling, etc.
Succession and Inheritance	Confirm which laws govern succession and whether a choice of different jurisdiction law is available. Confirm whether marital/family laws are affected and whether a choice of different jurisdiction law is available. Review estate planning documents (wills, succession, and prenuptial documents) and consider the interaction of wills, appropriate for different jurisdictions.
Implications of Transferring Physical Wealth	Family heirlooms, jewellery and works of art (possible ban on export or right of first refusal, etc.). Are import duties applicable?
Before Exit	Confirm arrangements that affect heirs and family that remain behind. Optimal timing of loss of tax residence and exit charges. Consider establishing new banking arrangements to segregate income and gains, if this is relevant to the new residence regime.
Before Arrival	Seek early tax advice from a professional advisor. Take advantage of any special tax regimes that are available. Review if there are any changes to controlled foreign company rules and what the effects may be. Ensure that previously established companies, trusts, life insurance policies, etc. are compliant.
Gifts and Donations	Confirm whether gifts or donations should be executed in advance of acquiring a new residency.
ONGOING	Annual review of estate planning documents (wills, succession, and prenuptial documents). Annual review of trusts arrangements, structures, and bank accounts. Annual review of any changes to tax laws and implications in relation to existing agreements and structures.

There are many reasons why individuals and their families choose to take up residence in another country. They may wish to start a new life elsewhere, in a more attractive and relaxing environment, or they may find the greater political and economic stability that another country offers, of appeal.

For individuals considering an alternative country of residence, the most important decision is where you and your family would like to live. It is critical that clients consider the long-term objectives for themselves and their family before applying for a particular residence to help make sure that the decision is right for now and in the future.

If you would like to talk to one of our experts, please contact: advice.domiciles@dixvcart.com. Alternatively, please contact your usual Dixcart contact.

‘Digital nomadism’ has never been so topical.

Over recent years the concept of remote working has become an every day reality. Technology has improved and the way the workplace is structured is changing; a new culture of working from home is being adopted by a lot of companies, especially as a result of the Covid-19 pandemic and stay-at-home requirements enforced by many countries around the world. 

There are numerous countries around the world offering Digital Nomad visas. Three of the most popular countries are; Cyprus, Malta, and Portugal – here is why.

CYPRUS

From January 2022, Cyprus is launching a Digital Nomad Visa for non-EU nationals wishing to work remotely for employers/clients based outside of Cyprus. Individuals who are self-employed, salaried, or on a freelance basis, can apply for the right to live and work in Cyprus.

Individuals who apply for the Cyprus Digital Nomad visa will have the right to stay in Cyprus for a period of up to 1 year. They can renew the visa for another 2 years, if required.

Cyprus is an attractive destination for individuals; it is a member of the EU, located in the eastern Mediterranean Sea and enjoys over 320 days of sunshine per year, it offers the warmest climate in Europe, has a good infrastructure and a convenient geographic location for internationally mobile individuals – it is easily accessible from in Europe, Asia, and Africa.

The population of Cyprus is approximately 1.2 million, with 180,000 foreign nationals living in Cyprus. It offers an excellent private healthcare sector, a low cost of living, and a friendly expat community.

As an incentive to attract and retain highly-skilled and highly-paid expats to Cyprus, foreign workers (for example, non-dom tax residents), do not need to pay taxes on international dividends, ‘passive’ interest income, or profit from the sale of securities.

In addition, individuals who were not previously resident in Cyprus, but who take up residence in Cyprus for work purposes, and earn over €100,000 per annum, are entitled to the following tax benefit:

• 50% of employment income earned in Cyprus is exempt from income tax for a period of 10 years.

However, the proposal for 2022 (the relevant legislation has not yet been implemented) is to allow an income tax exemption of 50% to new resident employees with income of €55.000.

MALTA

Malta has introduced a Nomad Residence Permit which enables individuals to maintain their current job in another country whilst they legally reside in Malta. The permit is targeted at non-EU remote workers and entitles them to reside in Malta for 1 year. After this, the visa can be renewed.

Malta offers the climate, the relaxed lifestyle and rich history to make living in Malta a real pleasure. Located in the Mediterranean, just south of Sicily, Malta offers all of the advantage of being a full member of the EU and Schengen Member States, has English as one of its two official languages, and a climate many chase all year round. Malta is also very well connected with most of the international airlines, which makes travel to and from Malta easy.

Since joining the EU and due to the forward-thinking Government actively encourages new business sectors and technologies, Malta’s economy has enjoyed large growth in recent years.

With a population of about 540,000 over an area of 316 square kilometres, Malta is already home to many expats and EU digital nomads. This community of ‘nomads’, enjoys Malta’s climate and lifestyle, and have already begun to interact with people with similar ideas, to add value to the community.

The Nomad Residence Permit in Malta opens up this opportunity to third country citizens, who would usually need a visa to travel to Malta. This permit lasts for 1 year and can be renewed at the discretion of Residency Malta, as long as the individual still meets the criteria.

Applicants for the Nomad Residence Permit must prove they can:

• Work remotely using telecommunication technologies, or
• Work for an employer registered in a foreign country and have a contract for this work, or
• Perform business activities for a company registered in a foreign country (and be a partner/shareholder of that company), or
• Offer freelance or consulting services, mainly to customers whose permanent establishment is in a foreign country, or
• Earn a monthly income of €3,500 gross of tax.

One of the biggest advantages of relocating to Malta is the remittance basis of taxation. Malta non-domiciled individuals are taxed on Malta source income and certain gains arising in Malta but are not taxed on non-Malta source income not remitted to Malta. In addition, they are not taxed on capital gains, even if this income is remitted to Malta.

PORTUGAL

Portugal’s temporary residence visa is particularly popular with freelancers and entrepreneurs; it is an independent workers and entrepreneurs visa available to individuals for 1 year. After this it can be renewed for up to 5 years. After 5 years, individuals have the option to apply for permanent residency in Portugal if they wish.

Portugal is located in the southwest of mainland Europe and is easily accessible in terms of travel to and from the rest of the world, which makes it very popular with international mobile individuals. The two islands of the Azores and Madeira are also autonomous regions of Portugal and, like the mainland, offers fantastic weather, a relaxed lifestyle, cosmopolitan cities, and stunning coastlines.

The Portuguese government is very aware of Portugal’s reputation as an international hub for digital nomads and, in response, launched a ‘Madeira Digital Nomads’ project, to attract foreign professionals to the island. Those taking advantage of this initiative can live in the Digital Nomad village in Ponta do Sol which boasts both villa or hotel accommodation, free wi-fi, coworking stations and regular social events.

For individuals who wish to live and work in Portugal, for example in Lisbon, Porto, or along the coast of the Algarve, there is also a large and established community to interact with. Lisbon is teeming with digital nomads, and Porto is the second most popular spot.

Portugal is an attractive and popular location – not only for digital nomads to move to – but for a large variety of individuals, in many different circumstances. Not only is it a beautiful country, offering an attractive lifestyle, but it also offers the popular Non-Habitual Residents programme (NHR), which allows individuals moving to Portugal to enjoy tax advantages once they re-locate here.

This has proven to be a major motivator for both EU and non-EU citizens. Provided they have not been resident in Portugal for the previous 5 years, they can enjoy non-habitual status for 10 years, whereby income derived from employment or independent personal services (from a domestic source) is taxed at a special flat rate of 20% provided the income is from high value-added activities or a scientific, artistic, or technical nature. In addition, a tax exemption might also apply to income derived from a foreign source.

Summary

Digital nomad visas and temporary residence permits have made travelling the world and working, easy and enjoyable. They provide new opportunities to individuals who can work remotely and independently of their location but continue to remain legally employed by their current employer. If you would like more information on applying for a Digital Nomad visa, please contact:

• Katrien de Poorter in our Cyprus office: advice.cyprus@dixcart.com
• Jonathan Vassallo in our Malta office: advice.malta@dixcart.com
• Catarina Sardinha in our Portugal offices (Lisbon and Madeira): advice.portugal@dixcart.com

Alternatively, please contact your usual Dixcart contact.

Dixcart Management Malta Limited Licence Number: AKM-DIXC

Background

Many foreigners move to Switzerland for its high quality of life, outdoor lifestyle, excellent working conditions and business opportunities.

A central location within Europe with a high standard of living, as well as connections to over 200 international locations via regular international flights, also make Switzerland an attractive location.

Many of the world’s largest multi-nationals and international organisations have their headquarters in Switzerland.

Switzerland is not part of the EU but one of 26 countries making up the ‘Schengen’ area. Together with Iceland, Liechtenstein and Norway, Switzerland forms the European Free Trade Association (EFTA).

Residence

Foreign nationals are allowed to stay in Switzerland as tourists, without registration, for up to three months.

After three months, anyone planning to stay in Switzerland must obtain a work and/or residence permit, and formally register with the Swiss authorities.

When applying for Swiss work and/or residence permits, different regulations apply to EU and EFTA nationals, compared to other nationals.

EU/EFTA Nationals

EU/EFTA – Working

EU/EFTA nationals enjoy priority access to the labour market.

Should an EU/EFTA citizen want to live and work in Switzerland, they can freely enter the country but will require a work permit.

The individual will need to find a job and the employer must register the employment, before the individual can actually start to work.

The procedure is made easier if the new resident forms a Swiss company and is employed by it.

EU/EFTA – Not Working

The process is relatively straightforward for EU/EFTA nationals wanting to live, but not work, in Switzerland.

They must fulfil the following criteria:

• Have sufficient financial resources to live in Switzerland and to ensure that they will not become dependent on Swiss welfare.
• Take out Swiss health and accident insurance.

Non-EU/EFTA Nationals

Non-EU/EFTA – Working

Third country nationals are allowed to enter the Swiss labour market if they are appropriately qualified, for example managers, specialists and those with higher educational qualifications.

The employer needs to apply to the Swiss authorities for a work visa, while the employee applies for an entry visa from their home country. The work visa will allow the individual to live and work in Switzerland.

Again, this procedure is made easier if the new resident forms a Swiss company and is employed by it.

Non-EU/EFTA – Not Working

Non-EU/EFTA nationals, without gainful employment are divided into two categories:

1. Older than 55;

• Must apply for a Swiss residence permit through a Swiss consulate/embassy from their current country of residence.
• Provide proof of adequate financial resources to support their life in Switzerland.
• Take out Swiss health and accident insurance.
• Demonstrate a close connection to Switzerland (for example: frequent trips, family members living in the country, past residency or ownership of real estate in Switzerland).
• Abstain from gainful employment activity in Switzerland and abroad.

• Under 55;
• A residence permit will be approved on the basis of “predominant cantonal interest”. This generally equates to paying tax on deemed (or actual) annual income, of between CHF 400,000 and CHF 1,000,000. The precise amount of deemed annual income depends on a number of factors, including the specific canton in which the individual lives.

Taxation

Standard Taxation

Each canton sets its own tax rates and generally imposes the following taxes; income, net wealth, real estate, inheritance and gift tax. The specific tax rate varies by canton and is between 21% and 46%.

In Switzerland, the transfer of assets, on death, to a spouse, children and/or grandchildren is exempt from gift and inheritance tax, in most cantons.

Capital gains are generally tax free, except in the case of real estate. The sale of company shares is one of the assets, that is exempt from capital gains tax.

Lump Sum Taxation

Lump sum taxation is a special tax status, available to resident non-Swiss nationals, without gainful employment in Switzerland.

The taxpayer’s lifestyle expenses are used as a tax base instead of their global income and wealth. This means that it is not necessary to report effective global earnings and assets.

Once the tax base has been determined and agreed with the tax authorities, it will be subject to the standard tax rate relevant in that particular canton.

It is possible for an individual to have gainful employment outside Switzerland and to take advantage of Swiss lump-sum taxation. Activities relating to the administration of private assets in Switzerland can also be undertaken.

Additional Information

If you would like additional information regarding moving to Switzerland, please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com

Background

UK tax resident, non-domiciled, individuals who are taxed on the remittance basis, are not required to pay UK income tax and/or UK capital gains tax on foreign income and gains, as long as these are not remitted to the UK.

It is, however, crucial to ensure that this tax benefit is properly claimed.  Failure to do so  means that any planning undertaken by the individual might be ineffective and he/she might still be taxed in the UK, on a worldwide ‘arising’ basis.

For more information on domicile, residence and the effective use of the remittance basis please see Information Note 253.

Claiming the Remittance Basis

Taxation under the remittance basis in most cases is not automatic.

An eligible individual must elect this basis of taxation on his/her UK self assessment tax return.

If this election does not take place, the individual will be taxed on the ‘arising’ basis.

How to Claim the Remittance Basis on a UK Self Assessment Tax Return

The taxpayer must claim the remittance basis in the appropriate section of his UK self assessment tax return.

Exceptions: When You Do Not Need To Claim

In the following two limited circumstances, individuals are automatically taxed on the remittance basis without making a claim (but can ‘opt out’ of this basis of taxation if they wish to do so):

• Total unremitted foreign income and gains for the tax year is less than £2,000; OR
• For the relevant tax year:

• • they have no UK income or gains other than up to £100 of taxed investment income; AND
  • they remit no income or gains to the UK; AND
  • either they are under the age of 18 OR have been UK resident in no more than six of the last nine tax years.

What Does this Mean?

Mr Non-Dom moved to the UK on 6 April 2021.  Prior to moving to the UK he researched “uk resident non-doms” online and read that he should be able to live in the UK on the remittance basis of taxation.

He therefore realised that if monies from the £1,000,000 bank account that he already held outside  the UK were remitted to the UK, these monies would be tax free.  He also realised that £10,000 of interest and £20,000 of rental income that he had received from an investment property outside of the UK would also benefit from the remittance basis and not be taxed in the UK.

He did not feel he had a UK tax liability and therefore did not correspond at all with Her Majesty’s Revenue &  Customs.

He did not formally claim the remittance basis and therefore the full £30,000 of non-UK income (interest and rental) was taxable, in the UK.  Had he properly claimed the remittance basis, none of it would have been taxable. The tax cost was significantly higher than the cost of filing a tax return.

Summary and Additional Information

The remittance basis of taxation, which is available for non-UK domiciled individuals, can be a very attractive and tax efficient position, but it is crucial that it is properly planned for and formally claimed.

If you require additional information on this topic, further guidance regarding your possible entitlement to use the remittance basis of taxation, and how to properly claim it, please contact your usual Dixcart adviser or speak to Paul Webb or Peter Robertson in the UK office: advice.uk@dixcart.com.

Background

UK tax resident, non-domiciled, individuals who are claiming the remittance basis of taxation, do not pay UK tax on foreign income and gains, as long as these are not remitted to the UK.

It is, however, crucial to ensure that this tax benefit is properly planned for and claimed. For more information regarding formally claiming the remittance basis, please see Information Note 498 .

Failure to plan properly, before arriving in the UK and becoming UK tax resident, could mean that the benefits available are lost and an unwelcome letter from HM Revenue & Customs (HMRC) might be received.

Case Study

To clearly highlight the risks of not taking the right advice, at the right time, please see a case study below regarding an individual moving to the UK.

• 1 March 2021 (Day 1)

Mr and Mrs Non-dom decide to leave their current home in Australia and move to the UK during the summer of 2021, so that their two minor children can start school early in September 2021. 

They speak to their Australian tax adviser and make sure that they carry out local tax planning in preparation for leaving Australia.  They have been told by a friend, who had already moved the previous year, that “as they are not originally from the UK, they will be taxed on the ‘remittance basis’, and therefore their non-UK source income will not be taxed in the UK”.

They are pleased as they believe this means:

Assumed: NONE of the following would be taxed in the UK:

• Income from the rental property they have in Australia; and
• Dividends (from their large share portfolio) held in a Hong Kong bank; and
• Interest of the equivalent of £2 million cash savings, currently sitting on long-term deposit (until the summer of 2020), at the same Hong Kong bank as above.

At this point, they do not seek any UK tax advice. 

What a shame! 

• 10 August 2021 (Day 2)

Having arranged the correct visas, they move to the UK ready for the new school term. 

They had £50,000 of cash in an Australian current account, that they now remit to their new UK bank account.  They use this for rent and living expenses.

• 10 August 2022

Having lived in the UK for a year, and with the children now well settled in school, they decide that they will be staying in the UK until such time as both children have completed their education.  They therefore decide to purchase a house.

Since Day 2, they have continued to receive rental income from their Australian rental property, as well as from the family home that they left behind. This income has been paid into an Australian bank account.

The dividend income has carried on being received into the Hong Kong bank account. The long-term deposit of £2million, plus accrued interest, has expired and this income is now earning very little interest in the Hong Kong current account.  They therefore decide to put these monies back on deposit for a further three years.

• They need £1million to buy the new home in the UK, along with a further £250,000 for stamp duty, renovation costs and school fees.

They therefore sell the rental property in Australia.  The sale proceeds of £1.1million (which includes £100,000 capital gain), are placed in the same Australian bank account as the rental income.  Their dividend income, held in the Hong Kong bank account total £150,000.  They decide to remit the money in both of these accounts to the UK, in order to purchase the property.

• 10 April 2023

Mr and Mrs Non-dom awake one morning to find a brown envelope, sitting ominously on their doorstep, from the UK tax authority, HMRC.

That afternoon, they visit a local chartered accountant who has the rather difficult task of informing the couple that they owe £28,000 of UK capital gains tax and more than £300,000 in income tax.  This could partially be reduced by double tax relief, but there would still be a substantial unnecessary tax liability. On top of this, they were late filing their UK tax returns for the tax year 2021/2022 and have therefore also incurred fines and penalties.

Turn Back Time: The Potential Positive Effects of Good Planning

The above unfortunate chain of events started on Day 1, in March 2021.

The outcome could have been so different and could have resulted in a UK tax liability of ZERO.

When Mr and Mrs Non-dom heard about the ‘remittance basis’ from a friend and looked up some articles online, they should have taken advice from a UK adviser, as well as taking advice from their Australian tax advisor.

The UK tax advisor would have told them:

• They would become tax resident in the UK from 6 April 2021 (having moved to the UK on 10 August 2021), and would therefore have been liable to file a tax return by 31 January 2023 and pay any taxes due; and
• On Day 1, they should have instructed their Australian bank to pay new rental income into a new bank account (with the same bank); and
• On Day 1, they should have instructed the Hong Kong bank to keep dividend income and interest from that cash deposit, in new separate accounts; and
• When they sold the Australian rental property, they should not have remitted this income to the UK.

Instead, they should have remitted £1,250,000 of the £2million, from their original cash savings, to purchase their new home in the UK and to cover the stamp duty, renovation costs and school fees. 

• Had they taken the final step detailed above, they would have retained the same value of investments in Australia and Hong Kong as if they had not taken the UK advice. 
• However, they would have remitted capital that they had PRIOR to becoming UK tax resident, which would NOT therefore have been taxable.

The steps recommended above, are not complicated, and many international banks are capable of implementing this account segregation for their UK resident clients.

Summary and Additional Information

The remittance basis of taxation, which is available for non-UK domiciled individuals, can be a very attractive and tax efficient position, but it is crucial that it is properly planned for and formally claimed.  Mr and Mrs Non-dom did not take appropriate UK advice and paid the price.

If you require additional information on this topic, further guidance regarding your possible entitlement to use the UK remittance basis of taxation, and how to properly claim it, please contact your usual Dixcart adviser or speak to Paul Webb or Peter Robertson in the UK office: advice.uk@dixcart.com.

Dixcart UK, is a combined accounting, legal, tax and immigration firm.  We are well placed to provide these services to international groups and families with members in the UK. The combined expertise that we provide, from one building, means that we work efficiently and coordinate a variety of professional advisers, which is key for families and businesses with cross-border activities.

By working as one professional team, the information we obtain from providing one service, can be shared appropriately with other members of the team, so that you do not need to have the same conversation twice!  We are ideally placed to assist in situations as detailed in the case study above. We can provide cost effective individual and company administration services and also offer in-house expertise to aid with more complex legal and tax matters.

Important Considerations – Formerly Domiciled Residents

Background

When individuals are thinking of returning to live in the UK, there are a number of important matters they should consider before they move back to the UK.

This article focuses on Formerly Domiciled Residents (FDRs), who are non-UK domiciled under general law, but are deemed to be domiciled in the UK for taxation purposes.

Formerly Domiciled Residents and Liability to UK Tax

Anyone born in the UK with a UK domicile of origin will always be an FDR if they resume residence in the UK, irrespective of how many years they have lived abroad or whether they have any connections to the UK.

These individuals will pay UK tax on their worldwide income and capital gains, on the same basis as taxpayers who are UK domiciled under general law. Any potential tax advantages which might have been obtained by these individuals, by reason of their UK non-domiciled status, are therefore removed.

Who is a FDR?

A formerly domiciled resident (FDR), is a non-UK domiciled individual who:

1. Was born in the UK; and/or
2. Has a UK domicile of origin; and
3. Is UK resident for the tax year.

Deemed UK domicile is triggered on 6 April in a tax year of UK residence,even if this year is a ‘split’ year under the statutory residence test (SRT).

An individual normally acquires a domicile of origin from their father at birth, or from their mother, if the parents were not married. This is not necessarily the country in which that individual was born.

If an individual does not meet any of the automatic overseas tests but does meet one of the automatic UK tests, or the sufficient ties test, they will be considered a UK resident.

UK Inheritance Tax and Trusts

Assuming an individual meets the above FDR criteria and was resident in the UK in at least one of the two previous tax years, prior to the year in which any Inheritance Tax (IHT) charge arises, property settled into a trust, when they were not domiciled in the UK, cannot be excluded for the purposes of IHT. 

This could have severe consequences with the Trust falling into the ‘Ten Yearly and Exit Charge Regime’. If the Settlor (or his spouse or civil partner) has retained a benefit, the ‘Gift with Reservation of Benefit’ provisions will apply, and a charge to tax on the death of the Settlor will be imposed. Please speak to Dixcart UK, if you would like more details regarding either potential consequence.

It is also important to seek professional advice to understand how specific individuals and clients might be affected and any action that might need to be taken before individuals become UK resident.

Summary

An individual’s domicile status is a fundamental factor in determining his/her liability to UK tax. It also has implications for other branches of the law.

UK Non-domiciled Individuals and Planning

Careful planning and consideration must be taken in order to take advantage of potential tax exemptions, reliefs and protection from inheritance tax which can be obtained by UK non-domiciled individuals.

Due to HMRC’s increased investigations into the tax affairs of UK non-domiciled individuals,   a robust defence should be prepared, in the event of any challenge from HMRC. Professionals at Dixcart UK can help you prepare a ‘domicile review’, to provide evidence of your intentions, supported by the facts. This can be particularly useful in situations where enquiries are opened by HMRC after death.

Contact Details

If you require additional information on this topic and further guidance regarding your domicile status, please contact your usual Dixcart adviser or speak to Paul Webb or Peter Robertson in the UK office: advice.uk@dixcart.com

Highly Qualified Persons Scheme – A Need for Additional Highly Qualified Individuals in Certain Sectors

Since joining the EU in 2004, Malta has been modernising its economy. It is becoming recognized as a high functioning, low cost, and well-regulated jurisdiction with an underlying theme being the availability of trained staff thanks to Malta’s high investment in education and training. The expansion of the financial, aviation and gaming sectors, since Malta joined the EU, and the associated increase in demand for technical skills has in recent years however, highlighted the need for additional highly qualified workers. There is a need to attract individuals with sufficient existing knowledge to Malta, particularly in these sectors of; financial services, gaming, aviation and the associated support services. The Highly Qualified Persons scheme was introduced to attract these individuals.

The objective of the Highly Qualified Persons Rules (SL 123.126), was the creation of a programme to attract highly qualified persons to occupy ‘eligible office’, with companies licensed and/or recognized by the Competent Authority regulating the specific sector.

Benefits of the Highly Qualified Persons Scheme

The scheme is targeted at professional individuals, earning more than €86,938 in 2021, and seeking to work in Malta.

• The qualifying individual’s tax is set at a highly competitive flat rate of 15%, with any income earned over and above €5,000,000 being tax exempt.

The standard alternative in Malta, would be to pay income tax on a sliding scale, with a current maximum rate of 35%.

2021 Update of the HQPS in Malta

Changes were recently introduced in 2021 and were made retrospective as from 31^st  December 2020.

These changes consist of:

• The HQPS has been extended for five years.

No changes to the scheme will now be made until 31^st of December 2025. Some variations to the scheme might potentially be made to HQPS, for relevant employment in Malta that commences between 31^st of December 2026 and 31^st of December 2030.

• Individuals enjoying HQPS now have two different extension options, depending on their nationality: five years for EEA and Swiss nationals, and four years for third-countries nationals.

Definition of an ‘Eligible Office’

‘Eligible office’ in the financial, gaming, aviation and associated supporting services sectors, including any organisation holding an air operator’s certificate,  is defined as employment in one of the following positions:

• Actuarial Professional

• Aviation Continuing Airworthiness Manager

• Aviation Flight Operations Manager

• Aviation Ground Operations Manager

• Aviation Training Manager

• Chief Executive Officer

• Chief Financial Officer

• Chief Commercial Officer

• Chief Insurance Technical Officer

• Chief Investment Officer

• Chief Operations Officer; (including Aviation Accountable Manager)

• Chief Risk Officer; (including Fraud and Investigations Officer)

• Chief Technology Officer

• Chief Underwriting Officer

• Head of Investor Relations

• Head of Marketing; (including Head of Distribution Channels)

• Head of Research and Development; (including Search Engine Optimisation and Systems Architecture)

• Odds Compiler Specialist

• Portfolio Manager

• Senior Analyst; (including Structuring Professional)

• Senior Trader/Trader

Other Applicable Criteria

In addition to individuals having a qualifying position, as detailed above,  individuals must also meet the following criteria:

• The applicant’s income must be derived from an ‘eligible office’, and must be subject to income tax in Malta.
• The applicant’s employment contract must be subject to Maltese Law and is for the purpose of genuine and effective work in Malta. This must be demonstrated to the satisfaction of the Maltese Authorities.
• The applicant needs to provide proof to the authorities that he/she has appropriate professional qualifications, and has at least five years’ professional experience.
• The applicant must not have benefitted from any other deductions available to ‘Investment Service Expatriates’, as detailed in the terms of Article 6 of the Income Tax Act.
• All salary payments and expenses must be fully disclosed to the authorities.
• The applicant must prove to the authorities that:
• He/she is in receipt of sufficient resources to maintain himself/herself and members of his/her family, without recourse to public funds.
• He/she resides in accommodation regarded as normal for a comparable family in Malta, which meets the general health and safety standards in force in Malta.
• He/she is in possession of a valid travel document.
• He/she possesses sufficient health insurance for himself/herself and members of his/her family.
• He/she is not domiciled in Malta.

Summary

In the right circumstances, the Highly Qualified Persons Scheme provides taxation advantages for professional high net worth individuals who want to move to Malta and work on a contractual basis there.

Additional Information

If you would like further information regarding the Highly Qualified Persons Scheme and opportunities available through Malta, please speak to Jonathan Vassallo: advice.malta@dixcart.com, at the Dixcart office in Malta or your usual Dixcart contact.

Dixcart Management Malta Limited Licence Number: AKM-DIXC

Background

Malta offers a variety of routes to residency. Some are appropriate for non-EU individuals while others provide an incentive for EU residents to move to Malta.

The residence options and the tax benefits they can provide for individuals, where relevant, are detailed below.

1. Malta Permanent Residence

Malta Permanent Residence is available to non-EU individuals and enables them to reside indefinitely in Malta.

Successful applicants receive Permanent Maltese residence immediately and a 5 year residence card. The card is renewed every 5 years if the requirements are still being met. There are two options with regards to this route:

Option 1: Rent a property and pay the full contribution:

• Pay the €40,000 non-refundable administrative fee; AND
• Rent a property with a minimum of €12,000 per year (€10,000 if the property is situated in Gozo or the south of Malta); AND,
• Pay the full Government contribution of €58,000; AND
• Make a donation of €2,000 to a local philanthropic, cultural, scientific, artistic, sport or animal welfare NGO registered with the Commissioner of Voluntary Organisations.

Option 2: Purchase a property and pay a reduced contribution:

• Pay the €40,000 non-refundable administrative fee; AND
• Purchase a property with a minimum value of €350,000 (€300,000 if the property is situated in Gozo or the south of Malta); AND,
• Pay the reduced Government contribution of €28,000; AND
• Make a donation of €2,000 to a local philanthropic, cultural, scientific, artistic, sport or animal welfare NGO registered with the Commissioner of Voluntary Organisations.

It is possible to include up to 4 generations in one application if it can be proven that the additional applicants are principally dependant on the main applicant.

An additional Government Contribution of €7,500 is required for each additional adult dependant (excluding the spouse) included in the application.

Applicants must show capital assets of not less than €500,000, out of which a minimum of €150,000 must be financial assets.

2. Global Residence Programme

The Global Residence Programme entitles non-EU nationals to obtain a special Malta Tax Status and Maltese residence permit through a minimum investment in property in Malta.

Successful applicants can relocate to Malta if they choose to do so. They also have the right to travel to any country within the Schengen Zone of countries without the need for an additional visa(s). There is no minimum day stay requirement, however successful applicants may not reside in any other jurisdiction for more than 183 days per year.

To qualify, an individual must purchase property costing a minimum of €275,000 or pay a minimum of €9,600 per annum in rent. If the property is in Gozo or the south of Malta the minimum property value is €250,000 or €220,000 respectively, or a minimum rent payment of €8,750 per annum is required. In addition, an applicant must not spend more than 183 days in any other jurisdiction in any single calendar year.

• Tax Advantages Available to Individuals – Global Residence Programme

A flat rate of 15% tax is charged on foreign income remitted to Malta, with a minimum amount of €15,000 tax payable per annum (income arising in Malta is taxed at a flat rate of 35%). This applies to income from the applicant, his/her spouse and any dependants jointly.

Foreign source income not remitted to Malta is not taxed in Malta.

Individuals may also be able to claim double taxation relief under the regime.

3. The Malta Residence Programme

The Malta Residence Programme entitles EU nationals to obtain a special Malta Tax Status and Maltese residence permit through a minimum investment in property in Malta.

To qualify for the scheme an individual must purchase property costing a minimum of €275,000 or pay a minimum of €9,600 per annum in rent. If the property is in Gozo or the south of Malta the minimum property value is €250,000 or €220,000 respectively, or a minimum rent payment of €8,750 per annum is required. In addition, an applicant must not spend more than 183 days in any other jurisdiction in any single calendar year.

There is no minimum day stay requirement, however successful applicants may not reside in any other jurisdiction for more than 183 days per year.

• Tax Advantages Available to Individuals –The Malta Residence Programme

A flat rate of 15% tax is charged on foreign income remitted to Malta, with a minimum amount of €15,000 tax payable per annum (income arising in Malta is taxed at a flat rate of 35%). This applies to income from the applicant, his/her spouse and any dependants jointly.

Foreign source income not remitted to Malta is not taxed in Malta.

Individuals may also be able to claim double taxation relief under this route.

4. Highly Qualified Persons Programme

The Highly Qualified Persons Programme is directed towards professional individuals earning over €86,938 per annum (basis year 2021), employed in Malta on a contractual basis.

This route is open to EU nationals for 5 years (may be extended 2 times – 15 years in total) and to non-EU nationals for 4 years (may be extended 2 times – 12 years in total. A list of qualifying positions is available on request.

• Tax Advantages Available to Individuals – Highly Qualified Persons Programme

Income tax is set at a flat rate of 15% for qualifying individuals (instead of paying income tax on an ascending scale with a current maximum top rate of 35%).

No tax is payable on income earned over €5,000,000 relating to an employment contract for any one individual.

5. Retirement Programme

The Malta Retirement Programme is available to EU and non-EU nationals whose main source of income is their pension.

An individual must own or rent a property in Malta as his/her principal place of residence in the world. The minimum value of the property must be €275,000 in Malta or €220,000 in Gozo or south Malta; alternatively, property must be leased for a minimum of €9,600 annually in Malta or €8,750 annually in Gozo or south Malta.

In addition, there is a requirement for an applicant to reside in Malta for a minimum of 90 days each calendar year, averaged over any 5-year period. Individuals must not reside in any other jurisdiction for more than 183 days in any calendar year during which they benefit from the Malta Retirement Programme.

• Tax Advantages Available to Individuals – The Retirement Programme

An attractive flat rate of 15% tax is charged on a pension remitted to Malta. The minimum amount of tax payable is €7,500 per annum for the beneficiary and €500 per annum for each dependant.

Income that arises in Malta is taxed at a flat rate of 35%.

6. Key Employee Initiative

Malta’s ‘Key Employee Initiative’ is available to non-EU passport holders and is applicable to managerial and/or highly technical professionals with relevant qualifications or adequate experience relating to a specific job.

Successful applicants receive a fast-track work/residence permit, which is valid for one year. This can be renewed annually.

Applicants must provide proof and the following information to the ‘Expatriates Unit’:

• Annual gross salary of at least €30,000 per annum.
• Certified copies of relevant qualifications warrant or proof of appropriate work experience. Declaration by the employer stating that the applicant has the necessary credentials to perform the required duties.

• Tax Advantages Available to Individuals

The standard Remittance Basis of Taxation apply. Individuals that intend to stay in Malta for some considerable time but do not intend to permanently establish themselves in Malta, will be classified as resident but not domiciled in Malta. Income earned in Malta is taxed on a progressive scale with a maximum rate of 35%. Non-Malta sourced income not remitted to Malta or Capital remitted to Malta are not taxed.

7. The Qualifying Employment in Innovation & Creativity

This route is targeted towards certain professional individuals earning over €52,000 per annum and employed in Malta by a qualifying employer on a contractual basis. The applicant can be a national of any country.

This routeis available for a consecutive period of not more than 3 years.

• Tax Advantages Available to Individuals

Income tax is set at a flat rate of 15% for qualifying individuals (instead of paying income tax on an ascending scale with a current maximum top rate of 35%).

8. Nomad Residence Permit

The Malta Nomad Residence Permit enables third country individuals to maintain their current job in another country, whilst they legally reside in Malta. The permit can be for a period of between 6 and 12 months. If a 12 month permit is issued then the individual will receive a residence card which allow for visa-free travel throughout the Schengen Member States. The permit may be renewed at the discretion of the agency.

Applicants for the Nomad Residence Permit must:

1. Prove they can work remotely using telecommunication technologies
2. Be third country nationals.
3. Prove they work in any of the following categories:
   • Work for an employer registered in a foreign country and have a contract for this work, or
   • Perform business activities for a company registered in a foreign country, and be a partner/shareholder of said company, or
   • Offer freelance or consulting services, mainly to customers whose permanent establishment is in a foreign country, and have supporting contracts to verify this.
4. Earn a monthly income of €2,700 gross of tax. If there are additional family members, they will each have to satisfy the income requirements as specified by the Agency Policy.

• Tax Advantages Available to Individuals

Successful applicants will not be taxed on their income as the income will be taxed in their home country.

How Can Dixcart Assist?

Dixcart can assist in providing advice as to which route would be most appropriate for each individual or family. We can also organise visits to Malta, submit the application , assist with property searches and purchases, and provide a comprehensive range of individual and professional commercial services once relocation has taken place.

Additional Information

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

Dixcart Management Malta Limited Licence Number: AKM-DIXC

Why Switzerland?

There are many reasons why Switzerland is a desirable country to live in.

• A high standard of living with excellent working conditions and business opportunities.
• Beautiful scenery and an active outdoor lifestyle.
• A central location within Europe, with flight connections to over 200 international locations.

Non-Swiss nationals are allowed to stay in Switzerland as tourists, without registration, for up to three months. After three months, anyone planning to stay in Switzerland must obtain a work and/or residence permit, and formally register with the Swiss authorities.

How to Become a Legal Swiss Resident

There are two alternative routes to become a Swiss resident:

• By working in Switzerland
• Through the Swiss ‘Lump Sum System of Taxation’

Working in Switzerland

The acquisition of a Swiss work permit allows a non-Swiss national to become a Swiss resident.

There are three ways to be entitled to work in Switzerland:

• Being hired by an existing Swiss company.
• Forming a Swiss company and become a director or an employee of the company.
• Investing in a Swiss company and become a director or an employee of the company.

When applying to work in Switzerland and/or for residence permits, different regulations apply to EU/EFTA nationals, compared to nationals of other countries.

It is a straightforward process for EU/EFTA citizens as they enjoy priority access to the labour market in Switzerland.

Non-EU/EFTA nationals can work in Switzerland as long as the are appropriately qualified, for example managers or specialists and/or with higher education qualifications.

An alternative route is for non-Swiss nationals to form a Swiss company and obtain a residence permit in Switzerland. Relevant individuals must be employed by the company that they establish in Switzerland.

Non-EU/EFTA businesses need to create jobs and business opportunities in Switzerland, as specified by each particular canton.

Lump Sum Taxation

A non-Swiss national, who does not work in Switzerland, can apply for Swiss residency under the system of ‘Lump Sum Taxation’.

• The taxpayer’s lifestyle expenses are used as a tax base instead of his/her global income and wealth. There is no report of global earnings and assets.

Once the tax base has been determined and agreed with the tax authorities, it will be subject to the standard tax rate relevant in that particular canton.

Work activities outside Switzerland are permitted. Activities relating to the administration of private assets in Switzerland can also be undertaken.

Third country nationals (non-EU/EFTA), may be required to pay a higher lump-sum tax on the basis of “predominant cantonal interest”. This will depend on a number of factors and varies case by case.

How can an Individual Become a Swiss Citizen?

• An EU or non-EU/EFTA national must have lived in Switzerland for at least 10 years, to be able to apply for a Swiss passport.
• However, if an EU or non-EU/EFTA national is the spouse of a Swiss national, they need only to have lived in Switzerland for 5 years.

Additional Information

If you require additional information regarding moving to and living in Switzerland, or have any other questions about this jurisdiction, please contact Christine Breitler or Thierry Groppi at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.