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

[A1988]

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...

I agree with you, in spain the only important thing is having a genuine activity, rest you can have a lux fund and take dividends tax free or any capital gain outside spain will not be taxed nor needs to be declared in the tax return.

Well noted about Malta, I will speak to my advisor at the earliest and resolve this big issue.

As far as dubai is concerned, just be careful with your setup, it's a whole different s**t we are talking about if one gets into any legal issues there. All the best.

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

I agree, i am trying to explore what realistic options we have on earth other than migrating to Mars and paying zero taxes.

 

[A1988]

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

What are the options amongst 2nd/ 3rd world countries??? I have just started a new thread to solve this issue.

 

[JackAlabama]

What are the options amongst 2nd/ 3rd world countries??? I have just started a new thread to solve this issue.

basically all Pick the one you like the most and which fits you, learn the hang around there and enjoy life.

 

[A1988]

basically all Pick the one you like the most and which fits you, learn the hang around there and enjoy life.

LOL, I am basically clueless, can you suggest some places you are inclined towards?

 

[JackAlabama]

LOL, I am basically clueless, can you suggest some places you are inclined towards?

wont help much since im not you. largely depends on my mood, but the regions are africa, some latin american ones and southeast asia.

 

[A1988]

wont help much since im not you. largely depends on my mood, but the regions are africa, some latin american ones and southeast asia.

In south east Asia I believe Malaysia is the only country which does not tax foreign income and in africa i guess its only mauritius, in Latin America I believe it's paraguay and uruguay

 

[meir13]

In south east Asia I believe Malaysia is the only country which does not tax foreign income and in africa i guess its only mauritius, in Latin America I believe it's paraguay and uruguay

Africa no tax no foreign income also available in Namibia and Malawi. Plus Philippines in Asia for non citizens.

 

[A1988]

Africa no tax no foreign income also available in Namibia and Malawi. Plus Philippines in Asia for non citizens.

Thanks for the info

 

[uplana]

In Switzerland for example Cap Gains are tax free, but you can easily be considered a professional trader.

If you trade as a private person and only in stocks and crypto, but not do any day trading, would you be considered professional?

Would you could do the same just as a holding company in Switzerland which only hold stocks and crypto and trade it only say once a month?

 

[PhantomOf ThePits]

If you trade as a private person and only in stocks and crypto, but not do any day trading, would you be considered professional?

Would you could do the same just as a holding company in Switzerland which only hold stocks and crypto and trade it only say once a month?

@uplana

It depends very much on the canton.
Some cantons you may be considered a 'gewerbsmaessiger Wertschriftenhaendler' if you use leverage or derivatives for speculation (instead of only for hedging),
some other cantons they may consider how much money you make with another, non trading related job.
Some cantons check how many trades you do per month

Mostly they evaluate also your intention if its your only job to trade or the scale -- if you make 100k with your job but 500k with stocks (even though not day-trading, but more than handful trades per month), you may run into to be considered professional.

If you're considered professional, you need to pay income taxes on your profits as well as around 10% social charges on top.
Depending on the cantons and how much money you make, this can make quite a difference.
Example for 500k in Zug you pay 20% income tax vs Geneva 40% (both in addition around 10% social charges for active trading)


A way around that is to create a GmbH/AG company in a low tax canton like Zug/Schwyz/Lucerne and trade with that and pay corp tax in low 10s.
And then, depending if you take out your money via salary or dividends, you're total tax leakage may be around 25% all-in.


Setting up a company vs private trading depends very much on the individual case, canton, how much money you make, how active you are and also very much who in the Swiss tax office is looking at your case.....


Google for topic 'gewerbsmaessiger Wertschriftenhaendler'

 

[uplana]

I already own a AG in Zug with 3 million CHF paid in share capital where I'm the director and shareholder, so that would be fine.

Compared to Malta which is the topic of this thread, which destination is better?

 

[Borg]

Hi everyone,

The topic has been partly covered here and there already and I am trying to gather the bits and pieces. I am opening the thread because others are facing the same challenge and it will be good to have the situation in Malta and possible solutions up to date.

I have a 3-tier structure of Trading LTD (MT), Holding LTD (MT) and Scottish LP (UK).
The LP is necessary because I am residing full time in Malta, managing the LTDs.

I see some great risk in residing in Malta and using 5% holding structure since the local tax authority can easily re-qualify the taxation of dividend payments from the operating company.
Overall, what is the benefit of Malta compared to ordinary offshore havens? What advantage does it give for the exorbitant fees for secretarial and audits?

 

[burden]

I agree with @Borg and his questions which I would like to know if possible? I have not heard anything bad about Malta as a destination for a forex or stock trader yet.

 

[PhantomOf ThePits]

Usually a Maltese Trading Company with a CY or Gib Holding as 100% owner makes it difficult to onboard with several brokers and bank accounts to on/off ramp.

Depending on how much money you trade or how active you are, other structures may be more beneficial.
But keep in mind the CFC rules, like you're the director/owner of an offshore structure, will create tax liabilities in lots of jurisdictions (even NonDom countries like Malta if you dont have enough substance abroad.

I already own a AG in Zug with 3 million CHF paid in share capital where I'm the director and shareholder, so that would be fine.

Compared to Malta which is the topic of this thread, which destination is better?

Depending what your other income from your other business vs your trading income is, this may not be an issue for you if you're not so active.

Best is, speak with the Steueramt of your residence canton through your Treuhaender and try to get a Tax Ruling -- then you're on the safe side for your individual case

 

[A1988]

As someone who has his foot in Malta and has spent several thousands in legal advise, maltese tax authorities are looking more into local source income, there is a component of private asset management which you can say that you are managing your own capital and pay your minimum tax of 5k euros for non dom status and exemption from foreign source income and you are fine, formation of companies for trading is a different issue and you are opening a can of worms in terms of PE and CFC.

Malta is attractive from a location standpoint and away from Russia and Ukraine and Israel gaza issue, being in the EU and euros as currency and english being one of the main language, again I am comparing it with other EU countries then Malta is hard to beat and weather is a big plus. The downsides is heavy traffic and it's a small island.

If Malta was like Spain, Germany and Italy then there would be no hedge funds incorporated in Malta.

Again, I have never heard from anyone who has non dom status in malta and is being aggressively audited and chased by the Maltese tax authorities, doing things by law and paying your minimum tax of 5k euros and keeping a low profile is always best no matter where you live and most importantly covering your bases in terms of grey areas and legal uncertainty.

 

[A1988]

Again, it's a different issue where some people just don't want to pay anything and these are the people who get into trouble with the tax authorities, if you are trading in the US and living in malta with your capital, you pay your fair share of 5k euros minimum tax, I don't see you are breaking any law, certain interpretations are provided by certain law firms because if you don't form a company then how will they make money?

Again, if anyone has any source to prove that an active trader trading in non maltese exchanges from Malta has been challenged by the Maltese tax authorities claiming it is active income and not capital gains then please provide proof, that can be interesting.

 

[Borg]

Again, it's a different issue where some people just don't want to pay anything and these are the people who get into trouble with the tax authorities, if you are trading in the US and living in malta with your capital, you pay your fair share of 5k euros minimum tax, I don't see you are breaking any law, certain interpretations are provided by certain law firms because if you don't form a company then how will they make money?

Again, if anyone has any source to prove that an active trader trading in non maltese exchanges from Malta has been challenged by the Maltese tax authorities claiming it is active income and not capital gains then please provide proof, that can be interesting.

Just one remark regarding the non-dom status, there is no mention of that in any laws in Malta. Instead, they use remittance basis for your income, i.e. smth that was not remitted to Malta should not be taxed there. Overall, it is not possible to qualify somehow for non-dom status, you can only think of yourself as having one. And than you would need to prove that in the case of any problems with tax authorities. Given that Malta is in the EU, any issues with their authorities put you in quite uncomfortable position across the whole Europe IMHO.