Malta 5% structure – reduce fixed cost and unshell (ATAD3) proof it

[MarkusCostigan]

What are the alternate options aside from Malta? In europe, Asia, Latin America and central America in your opinion? The advisor I spoke to said if its your capital, it's under private investment management, you are managing your own capital and generating income from it, the maltese law does not specify it clearly but capital gains generated outside malta for non dom is not taxed even if you bring it to your maltese bank account or definitely not taxed if kept outside malta in my opinion.

Obviously Malta has not really clarified the difference but as usual common sense applies (hold for more than 1 year? if not how many operations per year?)

Capital Gain must be "passive" ... Time and capital work for you rather than your ability and effort.

 

[PhantomOf ThePits]

What are the alternate options aside from Malta? In europe, Asia, Latin America and central America in your opinion? The advisor I spoke to said if its your capital, it's under private investment management, you are managing your own capital and generating income from it, the maltese law does not specify it clearly but capital gains generated outside malta for non dom is not taxed even if you bring it to your maltese bank account or definitely not taxed if kept outside malta in my opinion.

I dont know which advisor you spoke to.
But let them not simply give you an opinion, but let them show it in the tax code (which they cant).

There's a lot of advisors who dont know enough about that topic as day trading is very specific

Did you try Cyprus ? Monaco would be also an option if you are wealthy.

Cyprus can also be a problem if you trade actively -- depending on the underlyings.

There's a clear distinction between trading actively and cap gains in countries where cap gains are considered tax free.

And unfortunately lot of 'Bro Science' -- but if you trade big amounts, you may run in many jurisdictions into problems depending on your setup



Active trading is in many jurisdictions considered a business activity.
In Switzerland for example Cap Gains are tax free, but you can easily be considered a professional trader.
In that case you have to pay income tax as well in addition social charges for Employer/Employee and this can be very costly....

 

[A1988]

Obviously Malta has not really clarified the difference but as usual common sense applies (hold for more than 1 year? if not how many operations per year?)

Capital Gain must be "passive" ... Time and capital work for you rather than your ability and effort.

I trade futures everyday in the US, what if I don't take money in my maltese bank account? Like my broker sends the money to my bank account in a different country? I don't have to pay tax till I bring that money inside Malta right?

I dont know which advisor you spoke to.
But let them not simply give you an opinion, but let them show it in the tax code (which they cant).

There's a lot of advisors who dont know enough about that topic as day trading is very specific


Cyprus can also be a problem if you trade actively -- depending on the underlyings.

There's a clear distinction between trading actively and cap gains in countries where cap gains are considered tax free.

And unfortunately lot of 'Bro Science' -- but if you trade big amounts, you may run in many jurisdictions into problems depending on your setup



Active trading is in many jurisdictions considered a business activity.
In Switzerland for example Cap Gains are tax free, but you can easily be considered a professional trader.
In that case you have to pay income tax as well in addition social charges for Employer/Employee and this can be very costly....

Which is the best jurisdiction in your opinion for active trading?

 

[PhantomOf ThePits]

I trade futures everyday in the US, what if I don't take money in my maltese bank account? Like my broker sends the money to my bank account in a different country? I don't have to pay tax till I bring that money inside Malta right?


Which is the best jurisdiction in your opinion for active trading?

If you are resident in Malta, no matter where you transfer money to or even if you physically present in Malta, will trigger income taxes as a day trader.

 

[diro]

@PhantomOf ThePits do you live in Malta or have lived there?

 

[PhantomOf ThePits]

@PhantomOf ThePits do you live in Malta or have lived there?

@diro Yes moved there as back then, 2018, they told me that active trading is not an issue as long as I dont remit to Malta.

But the advisors I hired were wrong and I couldnt get tax ruling in addition.
Therefore risk was too high having to pay income tax on the profits and moved to UAE

 

[A1988]

@diro Yes moved there as back then, 2018, they told me that active trading is not an issue as long as I dont remit to Malta.

But the advisors I hired were wrong and I couldnt get tax ruling in addition.
Therefore risk was too high having to pay income tax on the profits and moved to UAE

UaE is good if you make around 200-300k euros a year, more than that it's 9% whether business or personal income.

 

[PhantomOf ThePits]

UaE is good if you make around 200-300k euros a year, more than that it's 9% whether business or personal income.

It depends how you structure it.
If you structure it properly with a fund, you can convert it to 0% taxes

 

[A1988]

It depends how you structure it.
If you structure it properly with a fund, you can convert it to 0% taxes

However you structure it, if you take more than 1m aed or equivalent, you are liable to pay corporate tax and register for corporate tax as an individual, I have verified it with multiple firms. There is no way around it.

 

[PhantomOf ThePits]

However you structure it, if you take more than 1m aed or equivalent, you are liable to pay corporate tax and register for corporate tax as an individual, I have verified it with multiple firms. There is no way around it.

@A1988 That would only be if you trade personally or through a corporate structure.

a cell under a fund umbrella structure

 

[A1988]

@A1988 That would only be if you trade personally or through a corporate structure.

However if you setup a cell under a fund umbrella structure and you are just receiving distributions, its another story.

How are you taking the distributions as? As dividends? Salary?

 

[PhantomOf ThePits]

How are you taking the distributions as? As dividends? Salary?

It goes a bit too far to discuss this on a forum.

Compare it a bit like you'd invest in a hedge fund and get irregular distributions from it.

 

[A1988]

It goes a bit too far to discuss this on a public forum.

Compare it a bit like you'd invest in a hedge fund and get irregular distributions from it.

I have verified it, and wanted to have my own hedge fund in UAE, since I was moving 7 figures, I spoke to a dear friend who is from kerala India and has stayed in UAE for all his life and doing taxes for more than 20 years, he said any money you move or make in any shape or form will be taxed at 9% over 1m aed.

I have lived in UAE for almost 10 years so I know what I am talking, I respect what you said to me about Malta since I am new there but UAE I am sure and whoever has given you this advise is wrong.

I have verified it, and wanted to have my own hedge fund in UAE, since I was moving 7 figures, I spoke to a dear friend who is from kerala India and has stayed in UAE for all his life and doing taxes for more than 20 years, he said any money you move or make in any shape or form will be taxed at 9% over 1m aed.

I have lived in UAE for almost 10 years so I know what I am talking, I respect what you said to me about Malta since I am new there but UAE I am sure and whoever has given you this advise is wrong.

UaE can be a good place to setup in difc but on a personal level not anymore

 

[PhantomOf ThePits]

I fully respect what you say and I'm in the same situation like you.
I lived in other tax favorable jurisdictions, but it was always the issue between cap gains and income tax risk balancing.

Thats why I initially moved to Malta and saw that as an active trader with big enough profits, it can become really tricky.
Because if it's really tax free, why didnt they want to give me a tax ruling? Would have been very easy for them if it is clear.

For the UAE, a clean, offshore hedge fund structure with enough substance - it's not a cheap setup though.

Me physically moving to some 2nd/3rd world country or to a small island like Cayman, is not an option for me.

Optimizing taxes is one thing, but having a place you enjoy living too is also very important in my opinion.

 

[JackAlabama]

I fully respect what you say and I'm in the same situation like you.
I lived in other tax favorable jurisdictions, but it was always the issue between cap gains and income tax risk balancing.

Thats why I initially moved to Malta and saw that as an active trader with big enough profits, it can become really tricky.
Because if it's really tax free, why didnt they want to give me a tax ruling? Would have been very easy for them if it is clear.

For the UAE, a clean, offshore hedge fund structure with enough substance - it's not a cheap setup though.

Me physically moving to some 2nd/3rd world country or to a small island like Cayman, is not an option for me.

Optimizing taxes is one thing, but having a place you enjoy living too is also very important in my opinion.

3d world seems the way. You dont have clarity either but they cant/wont duck you like the former "first" world.

 

[A1988]

I fully respect what you say and I'm in the same situation like you.
I lived in other tax favorable jurisdictions, but it was always the issue between cap gains and income tax risk balancing.

Thats why I initially moved to Malta and saw that as an active trader with big enough profits, it can become really tricky.
Because if it's really tax free, why didnt they want to give me a tax ruling? Would have been very easy for them if it is clear.

For the UAE, a clean, offshore hedge fund structure with enough substance - it's not a cheap setup though.

Me physically moving to some 2nd/3rd world country or to a small island like Cayman, is not an option for me.

Optimizing taxes is one thing, but having a place you enjoy living too is also very important in my opinion.

I agree with you, Dubai has everything. I moved out because of the war situation cooking and I was skeptical about brining up my daughters there nothing else, I am disappointed with Malta since my lawyer is telling me something else, the only clear option I have left is spain, which is great from a lifestyle perspective and for my daughters, atleast for 6 years and then we will see maybe or I am inclining towards malaysia.

 

[JackAlabama]

I agree with you, Dubai has everything. I moved out because of the war situation cooking and I was skeptical about brining up my daughters there nothing else, I am disappointed with Malta since my lawyer is telling me something else, the only clear option I have left is spain, which is great from a lifestyle perspective and for my daughter atleast for 6 years and then we will see maybe.

how can you make the beckham law work in spain? Do you have an arrangement for work?
In case of the beckham law, do wealth tax not apply?

Spain would be good option (unless taxes).

There are many in a similar situation including me (its 3d world for me, not always easy but once one gets the hang around it, one can have a relatively good life for affordable cost, however Id be up for smth like spain etc).

 

[A1988]

how can you make the beckham law work in spain? Do you have an arrangement for work?
In case of the beckham law, do wealth tax not apply?

Spain would be good option (unless taxes).

There are many in a similar situation including me (its 3d world for me, not always easy but once one gets the hang around it, one can have a relatively good life for affordable cost, however Id be up for smth like spain etc).

You are treated as a non resident for tax purposes for 6 years, any foreign income is not taxed and also not to be declared. Wealth tax is only applicable for assets in spain. But the only catch is you need to have a genuine activity in spain and you need to be the director of the company

You are treated as a non resident for tax purposes for 6 years, any foreign income is not taxed and also not to be declared. Wealth tax is only applicable for assets in spain. But the only catch is you need to have a genuine activity in spain and you need to be the director of the company

Another advantage is that no CFC rules apply which is great too.

 

[PhantomOf ThePits]

I agree with you, Dubai has everything. I moved out because of the war situation cooking and I was skeptical about brining up my daughters there nothing else, I am disappointed with Malta since my lawyer is telling me something else, the only clear option I have left is spain, which is great from a lifestyle perspective and for my daughters, atleast for 6 years and then we will see maybe or I am inclining towards malaysia.

I very much understand as our both situations are quite similar.

Over the last years I paid a fortune to 'advisors', but most of them still gave wrong advice and they're not even liable for it.
Day Trading is something they dont seem to understand and most tax laws were not made for it.

Spain with Beckham Law - I didnt look deeply into it myself as some friends wanted to move there and they ran into issues with the Spanish tax office (which seems to be quite nasty).
Main issue, as I understood, was that if you're the one 'performing' the trading, you may run into tax issues.

I'd love to that Spain Beckham law would work, but to be honest I think there are a lot of potential traps.

For Malta, ask your advisor if you can get a tax ruling from the Maltese CFR.
Tax rulings are usually done by declaring the tax office what you are planning to do and then get their opinion about the potential taxation.

The problem with EU countries what I see is that eventually they will apply exit taxes on unrealized profits like Scandi countries, Germany or Austria in a way already apply.




But, the main thing, specially when raising a family, is to optimize over many variables like quality of life (real life vs expat bubble in gated community), security, education options, how you like to live there and many other factors.


I'm since nearly a decade hopping between different jurisdictions, but I think its good one day to accept to pay reasonable taxes if you like to live there.
The times of legally paying 0% sooner or later will end if you want to live in a 1st/2nd world country.

3rd world countries will give you more time, but to be honest it's personally nothing for me to live a longer time in the ones I visited...

 

[JackAlabama]

You are treated as a non resident for tax purposes for 6 years, any foreign income is not taxed and also not to be declared. Wealth tax is only applicable for assets in spain. But the only catch is you need to have a genuine activity in spain and you need to be the director of the company

yeah and thats a real catch indeed. I would not wanna do anything genuine in Spain.