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.
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.
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. Whatever the reason is, it is crucial to research and plan ahead, as much as possible.
Residence programmes vary in what they offer and, depending on the country, there are differences regarding how to apply, the time period that residence is valid for, what the benefits are, tax obligations, and how to apply for citizenship.
For individuals considering an alternative country of residence, the most important decision is where they and their family would like to live. It is critical that clients consider the long-term objectives for themselves, and their families, before applying for a particular residence (and/or citizenship programme), to help ensure that the decision is right for now, and in the future.
The main question is: where would you and your family most like to live? The second, and almost equally important question is – what are you hoping to achieve?
CYPRUS
Cyprus has rapidly become one of Europe’s top hotspots for expatriates. If you are considering relocating, and are a bit of a sun-chaser, Cyprus should be top of your list. The island offers a warm climate, good infrastructure, convenient geographic location, membership of the EU, tax advantages for companies, and incentives for individuals. Cyprus also offers an excellent private healthcare sector, a high quality of education, a peaceful and friendly community, and a low cost of living.
On top of that, individuals are drawn to the island due to its advantageous non-domicile tax regime, whereby Cypriot non-domiciliaries benefit from a zero rate of tax on interest and dividends. These zero tax benefits are enjoyed even if the income has a Cyprus source or is remitted to Cyprus. There are several other tax advantages, including a low rate of tax on foreign pensions, and there are no wealth or inheritance taxes in Cyprus.
Individuals wishing to move to Cyprus can apply for a Permanent Residence Permit which is useful as a means to ease travel to EU countries and organise business activities in Europe. Applicants can make an investment of at least €300,000 in one of the investment categories required under the programme, and prove they have an annual income of at least €30,000 (which can be from pensions, overseas employment, interest on fixed deposits, or rental income from abroad) in order to apply for permanent residence. If they choose to reside in Cyprus for seven years, in any ten-calendar year period, they may be eligible to apply for Cyprus citizenship by naturalisation.
Alternatively, a temporary residence permit can be obtained by establishing a foreign investment company (FIC). This kind of international company can obtain work permits for relevant employees and residence permits for family members. Again, a key advantage is that after residing for seven years in Cyprus, within any ten-calendar year period, third country nationals can apply for Cyprus citizenship.
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 seamless.
Malta is unique in that it offers 8 residence programmes to meet different individual circumstances. Some are appropriate for non-EU individuals while others provide an incentive for EU residents to move to Malta. From the Malta Permanent Residence Programme, which offers a fast and efficient way for individuals to obtain a European permanent residence permit and visa-free travel within the Schengen Area, the Digital Nomad Residence Permit for third country individuals to legally reside in Malta but maintain their current job remotely, the Highly Qualified Person’s Programme, targeted towards attracting professional individuals earning over a certain amount each year offering a flat tax of 15%, to Malta’s Retirement Programme. It should be noted that none of the Malta residence programmes have any language test requirements – the Malta Government has thought of everyone.
Malta Permanent Residence Programme – open to all third country, non-EEA, and non-Swiss nationals with a stable income and sufficient financial resources.
Malta Residence Programme – available to EU, EEA, and Swiss nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000
Malta Global Residence Programme – available to non-EU nationals offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000
Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment – a residence programme for foreign individuals and their families, who contribute to the economic development of Malta, which can lead to citizenship
Malta Key Employee Initiative – is a fast track work permit application programme, applicable to managerial and/or highly-technical professionals with relevant qualifications or adequate experience relating to a specific job.
The Malta Highly Qualified Persons Programme – available to EU nationals for five years (may be renewed up to 2 times, 15 years in total) and non-EU nationals for four years (may be renewed up to 2 times, 12 years in total). This programme is targeted at professional individuals earning more than €86,938 in 2021, and seeking to work in Malta in certain industries
The Qualifying Employment in Innovation & Creativity Scheme – targeted towardsprofessional individuals earning over €52,000 per annum and employed in Malta on a contractual basis at a qualifying employer.
Digital Nomad Residence Permit – targeted at individuals who wish to maintain their current job in another country, but legally reside in Malta and work remotely.
Malta Retirement Programme – available to individuals whose main source of income is their pensions, paying an annual minimum tax of €7,500
To make life even more enjoyable Malta offers tax benefits to expatriates and the attractive Remittance Basis of Taxation, whereby a resident non-domiciled individual is only taxed on foreign income, if this income is remitted to Malta or is earned or arises in Malta.
Portugal, as a destination to relocate to, has been top of the list for several years now, with individuals attracted by the lifestyle, the Non-Habitual Resident Tax Regime, and the Golden Visa residency programme. Despite not being on the Mediterranean, it is partially considered a member state of the Mediterranean region (along with France, Italy and Spain), with a Mediterranean climate of hot, dry summers and humid, cool winters, and a generally hilly landscape.
Portugal’s Golden Visa is the perfect route to Portugal’s golden shores. Due to its flexibility and numerous benefits, this programme has proven to be one of the most popular programmes in Europe – providing the perfect solution for non-EU citizens, investors, and families looking for Portugal residency, plus the option to apply for citizenship after 6 years if that is the long-term objective.
With changes soon approaching at the end of 2021, there has been a rapid uptake of more applicants in the last few months. Forthcoming changes include Golden Visa investors not being able to purchase properties in high-density areas such as Lisbon, Oporto, and the Algarve, which opens up greater opportunities for investors in Portugal. Alternatively, there are very attractive advantages in any one of the other non-real estate routes (more information can be found here).
Portugal also offers a Non-Habitual Residents Programme to individuals who become tax resident in Portugal. This allows them to enjoy a special personal tax exemption on almost all foreign source income, and a 20% tax rate for employment and/or self-employment income, sourced from Portugal, over a 10-year period.
Last but not least, following on from the restrictions caused by the pandemic and the significant increase of people no longer working in an office, Portugal offers a temporary residence visa that can be used by freelancers and entrepreneurs, which digital nomads can take advantage of. The local government in Madeira has launched the ‘Madeira Digital Nomads’ project, to attract foreign professionals to the island. Those taking advantage of this initiative can live in the nomad village in Ponta do Sol, in villas or hotel accommodation and enjoy free; wi-fi, co-working stations, and specific events.
The Golden Visa may seem less important for EU citizens, as they already have a right to live in Portugal without formal immigration or investment being required, but the NHR has proved to be a major motivator for both EU and non-EU citizens looking to relocate.
If you require additional information regarding moving to Cyprus, Malta, or Portugal, or would like to speak to an adviser to find out which programme and/or country best suits you and your family’s needs, we have staff located in each jurisdiction, to answer your questions:
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:
Was born in the UK; and/or
Has a UK domicile of origin; and
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 31st December 2020.
These changes consist of:
The HQPS has been extended for five years.
No changes to the scheme will now be made until 31st of December 2025. Some variations to the scheme might potentially be made to HQPS, for relevant employment in Malta that commences between 31st of December 2026 and 31st 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:
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
“Don’t worry, I never spend more than 90 days in the UK”.
This test for UK tax residence was replaced with a statutory residence test, but it is still commonly believed that the above statement is correct.
It is not and, whilst in many cases, the test might result in an individual triggering UK tax residency without expecting it, in many other circumstances, they might have been limiting themselves to the wrong number of days.
For anyone renting or buying property in the UK and starting to spend more and more time in the UK, they should seek advice to be clear what their day pattern in the UK should or can be.
This note considers a couple who have not previously been tax resident in the UK. For more information about correctly losing UK tax residence, please see – Tax Residence Planning Opportunities – Case Studies and How To Get it Right. It also does not consider immigration but more information on how Dixcart can assist with UK Immigration can be found here – Dixcart Immigration.
Case Study
Mr Overseas has lived in Europe his whole life. Having sold his successful overseas business a number of years ago, he took early retirement. He is not married.
Having retired, he wants to spend more time in the UK as he has nephews and nieces whom he enjoys seeing more of.
He also feels that the UK real estate market might be a good investment, so he purchases an apartment that he lives in when he is here. It is empty the rest of the time.
Thinking he is doing some clever tax planning, he chooses to limit his days in the UK to 85-89 days, because everyone tells him that if he stays in the UK for fewer than 90 days, he won’t become tax resident.
Mr O Should Take Some Advice!
The part of the UK statutory resident test (Test) relevant to him is part 3, the Connecting Factors. In the first year he starts spending time in the UK, he does not have a tax resident family member, he has not exceeded 90 days in the UK in either of the two previous tax years, and he does not work in the UK for more than 40 days each tax year. He does have available accommodation though, so he has just one Connecting Factor. In the first year, he could spend up to 182 days in the UK without becoming UK tax resident, double what he had originally thought.
In the second year, he would still have available accommodation but also now would have spent more than 90 days in one of the previous two tax years. His day limit is now 120 days, still more than the “90 days rule” he had been told about.
Once he discovers this, he starts spending up to 115-119 days in the UK
However – The Rules Need Constant Review
As Mr O is now spending more time in the UK, he meets someone special and gets married. He also gets bored of early retirement and starts a consulting role for most of the days he is in the UK.
Thinking that he has now taken his UK tax advice about residence, he doesn’t think to check it again.
Mr O now has a tax resident spouse, he works for more than 40 days in the UK, he has spent more than 90 days in the UK in at least one of the last two previous tax years and he still has available accommodation.
His tax circumstances have changed dramatically and, in fact, if he wants to still remain non-resident in the UK, his day count would be capped at 45 days!
There is still planning to do though as he might be able to claim the remittance basis as a non-domiciled individual, and, like the residence rules, “Don’t Get it Wrong!” – UK Remittance Basis of Taxation – Don’t Get it Wrong.
Summary and Additional Information
Whilst Mr O’s circumstances shifted during the course of this case study, it is interesting to note that at no point in time was Mr O’s day count cap at 90 days, despite the common belief that those are the rules for UK residence.
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 properly claimed at the right time.
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 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 provide assistance with more complex legal and tax matters.
The new Malta Nomad Residence Permit, enables individuals to maintain their current job in another country, whilst they legally reside in Malta.
Malta Nomad Residence Permit – Eligibility for Third Country Individuals
To be eligible for this Permit, an individual must be able to work remotely and independently of his/her location, and needs to use telecommunication technologies.
Malta has already welcomed a number of 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 one year and can be renewed at the discretion of Residency Malta, as long as the individual still meets the criteria.
If the third-country applicant for the digital nomad permit wants to stay less than a year in Malta, he/she will receive a National Visa for the duration of the stay, rather than a residence card.
Criteria
Applicants for the Nomad Residence Permit must:
Prove they can work remotely using telecommunication technologies.
Be third country nationals.
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.
Earn a monthly income of €3,500 gross of tax. If there are additional family members, they will each have to satisfy the income requirements as specified by the Agency Policy.
In addition to the above, applicants must also:
Possess a valid travel document.
Have health insurance, which covers all risks in Malta.
Have a valid contract of property rental or property purchase.
Pass a background verification check.
Application Process
The applicant must complete all of the documents required by the Residency Malta Agency.
After submitting all of the documents digitally, the individual will receive instructions for payment of a €300 administrative fee, for each applicant.
The application will then be reviewed by the Agency and other Maltese Authorities, who will contact the individual by email, when the process is complete.
Finally, the applicant will need to submit biometric data for the Nomad Residence Permit or National Visa, and the process will then be concluded.
Additional Information
If you require any further information regarding the Nomad Residence Permit, please contact Jonathan Vassallo at the Dixcart office in Malta: advice.malta@dixcart.com, or speak to your usual Dixcart contact.
Dixcart Management Malta Limited Licence Number: AKM-DIXC
Malta offers 9 residence programmes to meet different individual circumstances. Some are appropriate for non-EU individuals while others provide an incentive for EU residents to move to Malta.
The residence programmes and the tax benefits they can provide for individuals, where relevant, are detailed below.
Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment
‘Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment’ is Available to EU/EEA and Non-EU Passport Holders and provides foreign individuals and their families, who contribute to the economic development of Malta, a route to becoming citizens of Malta.
Applicants can opt for residence in Malta, leading to citizenship choosing between two options:
application after three years of residence in Malta, for a lower contribution fee; OR
application for citizenship after one year of residence in Malta.
To be able to apply for Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment, an applicant needs to make a direct investment to the Maltese economy, make a donation, and hold a residential property.
Exceptional Services Requirements
Direct Investment
Applicants, who can prove residency status in Malta for 36 months prior to the naturalization, are required to make a direct investment of €600,000 whilst applicants who prove a residency status in Malta for at least 12 months are required to make an exceptional direct investment of €750,000.
If the applicant is accompanied by qualifying dependants, a further investment of €50,000 per dependant is to be made.
An applicant cannot apply for a certificate of citizenship by naturalisation for exceptional services, before he/she has proved that he/she has become a resident of Malta for the minimum period required.
Philanthropic Donation
Prior to the issue of a certificate of Maltese citizenship, the applicant must donate a minimum €10,000 to a registered philanthropic, cultural, sport, scientific, animal welfare or artistic non-governmental organisation or society, or as otherwise approved by the Agency.
Property Investment
Once an applicant is approved and prior to the issue of a certificate of Maltese citizenship, the application must either purchase or rent residential property in Malta. If the applicant opts to purchase a property, an investment of at least €700,000 must be made. An applicant may alternatively take a lease on a residential immovable property in Malta, for a minimum annual rent of €16,000. The applicant must retain the property for at least 5 years from the date of the issue of the certificate of Maltese citizenship.
Tax Advantages Available to Individuals
Individuals will be taxed on Malta source income and certain gains arising in Malta. They will not be taxed on non-Malta source income not remitted to Malta, or Capital remitted to Malta. In addition, they will not be taxed on capital gains even if this income is remitted to Malta.
MALTA PERMANENT RESIDENCE
The Malta Permanent Residence programme 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 of the programme are still being met. There are two options with regards to this programme:
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.
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 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.
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.
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 the regime.
HIGHLY QUALIFIED PERSONS PROGRAMME
The Highly Qualified Persons Scheme is directed towards professional individuals earning over €86,938 per annum (basis year 2021), employed in Malta on a contractual basis.
This scheme is open to EU nationals for five years (may be extended 2 times – 15 years in total) and to non-EU nationals for four 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.
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 five-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%.
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.
The Qualifying Employment in Innovation & Creativity Scheme
The scheme 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.
The scheme is 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%).
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:
Prove they can work remotely using telecommunication technologies
Be third country nationals.
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.
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 programme would be most appropriate for each individual or family. We can also organise visits to Malta, make the application for the relevant Maltese residence programme, assist with property searches and purchases, and provide a comprehensive range of individual and professional commercial services once relocation has taken place.
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
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.
Until recently, the Malta Retirement Programme was only available to applicants from EU, EEA, or Switzerland. It is now available to EU and non-EU nationals and is designed to attract individuals who are not in employment but instead are in receipt of a pension as their regular source of income.
Individuals taking advantage of the Malta Retirement Programme, can hold a non-executive position on the board of a company, resident in Malta. They would, however, be prohibited from being employed by the company in any capacity. Such individuals can also be engaged in activities related to an institution, trust or foundation of a public nature, that is involved in philanthropic, educational, or research and development activities in Malta.
Benefits of the Malta Retirement Programme
In addition to the lifestyle benefits of living on a Mediterranean island, which enjoys more than 300 days of sunshine per year, individuals benefiting from the Malta Retirement Programme are granted a special tax status.
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%.
Who May Apply?
Applicants who meet the following criteria are eligible to apply for the Malta Retirement Programme:
Non-Maltese nationals.
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 rented for a minimum of €9,600 annually in Malta or €8,750 annually in Gozo or south Malta. Applicants renting the property must take out the lease for a minimum period of 12 months, and a copy of the lease contract needs to be submitted with the application.
The pension which is received in Malta must constitute at least 75% of the beneficiary’s chargeable income. This means that the beneficiary can only earn up to 25% of his/her total chargeable income from any non-executive post(s), as referred to above.
Applicants must have Global Health Insurance and provide evidence that they can maintain this for an indefinite period.
The applicant must not be domiciled in Malta and should have no intention of becoming domiciled in Malta, within the next 5 years. Domicile means the country where you officially have a permanent home or have a substantial connection with. You can have more than one residence, but only one domicile.
Applicants must reside in Malta for a minimum of 90 days in each calendar year, averaged over any five-year period.
The applicant must not reside in another jurisdiction for more than 183 days in any one calendar year during the period that they benefit from the Malta Retirement Programme.
Special Carer
A ‘special carer’ is an individual who has been providing substantial and regular, curative or rehabilitative health care services to the beneficiary or his/her dependants, for at least three years prior to an application for special tax status, under the Malta Retirement Programme.
A special carer may reside in Malta with the beneficiary, in the qualifying property.
Where the care has not been provided for a minimum period of three years, but has been provided on a regular basis for a long and established period, the Commissioner in Malta may assess that this criteria has been met. It is important that the provision of such services is formalised by a contract of service.
A special carer would be subject to tax in Malta, at the standard progressive rates and is precluded from benefiting from the 15% tax rate. The special carer must register with the relevant tax authorities in Malta.
Applying to the Malta Retirement Programme
An Authorised Registered Mandatory in Malta must apply to the Commissioner of the Inland Revenue on behalf of an applicant. This is to ensure that the individual enjoys the special tax status as provided in the programme. A non-refundable administrative fee of €2,500 is payable to the Government on application.
Dixcart Management Malta Limited is an Authorised Registered Mandatory.
Individuals with special tax status are required to submit an annual return to the Commissioner of the Inland Revenue, with evidence that they have met the specified criteria.
