Little update: Tax refund was transfered to me 10 days after my tax payment (including weekends + transfer times). Total tax leakage company + private pretty much spot 5% + 5k expat tax + approx 10-12k for two companies upkeep, books, filings etc. Cyprus or the stress with any of those real offshores does not even remotely compare imo unless you do something really shady.
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Recommendation Malta or Cyprus?
- Thread starter devnull
- Start date
I had a similar experience this year but last year was waiting exactly 6 months to get the refund, so it is inconsistent. Just don't take it for granted next year.
@jackfrost please share your views on following.
Gibraltar holding company - 100% Shares owned by me and I am the sole director
Malta Trading company - 100% Shares owned by Gibraltar holding company and I am the sole director of Malta trading company.
Myself - Personaly tax resident in Malta and holding non-dom status
Consider that Malta trading company made a profit, paid corporate tax at 35% and a divided is paid out to Gibraltar holding company. Even the IRS refunded the 6/7 tax to the Gibraltar holding company
as it is the sole owner of Malta trading company.
Now the real issue.
1) Where is the tax residency of Gibraltar holding company? [According to Malta rules, a foreign incorporated company managed from Malta is treated as tax resident in Malta. ]
2) CFC rules also kick in [ an entity in which a Maltese resident taxpayer alone or together with its associated enterprises holds a direct or indirect participation of more than 50% of the voting rights, or owns directly or indirectly, more than 50% of the capital or is entitled to receive more than 50% of the profits of that entity, and
the actual corporate tax paid by the entity is lower than the difference between the tax that would have been charged on the entity under the ITA and the actual foreign corporate tax paid.]
What I understand is that non-dom's don't have to pay taxes on foreign income if it remains outside of Malta ( Income >35K EUR / 5000EUR minimum tax).
But in our case the income received by Gibraltar holding company is of passive in nature and is sourced from Malta.Also,Gibraltar holding company is tax resident in Malta due to "place of management rules"; Which means the whole profit of Gibraltar holding company is taxable in Malta as personal income.
Gibraltar holding company - 100% Shares owned by me and I am the sole director
Malta Trading company - 100% Shares owned by Gibraltar holding company and I am the sole director of Malta trading company.
Myself - Personaly tax resident in Malta and holding non-dom status
Consider that Malta trading company made a profit, paid corporate tax at 35% and a divided is paid out to Gibraltar holding company. Even the IRS refunded the 6/7 tax to the Gibraltar holding company
as it is the sole owner of Malta trading company.
Now the real issue.
1) Where is the tax residency of Gibraltar holding company? [According to Malta rules, a foreign incorporated company managed from Malta is treated as tax resident in Malta. ]
2) CFC rules also kick in [ an entity in which a Maltese resident taxpayer alone or together with its associated enterprises holds a direct or indirect participation of more than 50% of the voting rights, or owns directly or indirectly, more than 50% of the capital or is entitled to receive more than 50% of the profits of that entity, and
the actual corporate tax paid by the entity is lower than the difference between the tax that would have been charged on the entity under the ITA and the actual foreign corporate tax paid.]
What I understand is that non-dom's don't have to pay taxes on foreign income if it remains outside of Malta ( Income >35K EUR / 5000EUR minimum tax).
But in our case the income received by Gibraltar holding company is of passive in nature and is sourced from Malta.Also,Gibraltar holding company is tax resident in Malta due to "place of management rules"; Which means the whole profit of Gibraltar holding company is taxable in Malta as personal income.
have you timed it all to last minute (which you should do) and waited for tax payment until you got the refund confirmation?
Yes, every single time as advised by my accountant - I am waiting until 1-2 weeks prior to tax payment deadline. 2 years ago I was waiting 4 months to get a refund, last year 6 months. This year less than 2 weeks, which came as surprise to me. In my almost 10 year experience the timeframe to get a tax refund has varied greatly!
I believe @jackfrost was talking about the tax refund approval letter, not the payment deadline. They are two different things, and often months (or years ... in some case) apart.
I used to do it "the right way" and my record was waiting for 1.5 years for my first refund, and just shy of a year for the second one.
Then my advisor recommended me to stall the tax payment until the refund application is approved, which I started doing. Sure, you'll be paying interest on the late payment, but at least in my case, the interest has always been well worth the additional liquidity gained.
Yes you do NOT pay until you actually get the confirmation of the tax refund. Usually your accountant will get that by email from the revenue office. They should know each other...
After you have received the refund confirmation - you pay. So for 2018 - you would have - for the June 2020 deadline tax payment deadline - filed for the refund a few months back e.g., received the refund confirmation and after that paid taxes for 2019.
The crucial part is you do not pay according to the tax deadline but after having received the refund confirmation letter already for that tax payment...
After you have received the refund confirmation - you pay. So for 2018 - you would have - for the June 2020 deadline tax payment deadline - filed for the refund a few months back e.g., received the refund confirmation and after that paid taxes for 2019.
The crucial part is you do not pay according to the tax deadline but after having received the refund confirmation letter already for that tax payment...
I don't know what are the penalties for not paying corporate tax on time. I have never missed the payment deadline and I was never advised by my accountant to miss it on purpose. These things just take time with the authorities. My accountant always prepare tax refund claims several months before payment deadline.
There is 18 months period for tax payment e.g. financial year end December 2020, you have to pay tax by 30 June 2021 and wait for the tax refund, which as I said vary from 2 weeks to 6 months in my experience. For businesses that do not have liquidity problems, you are essentially cut off from this "tax" money for at least 18 months best case scenario. Unless you take a loan from the company (which you have to repay), it is a "dead" money sitting on the account waiting for tax to be paid. Perhaps some "advanced dividends" can be paid out but I don't know what are the potential risks associated with this procedure (in case of company profits lower than predicted) and whether it is allowed in Malta. I would need to check that.
I am not going to be very liked on here so will try and keep it passive, I know a lot about those jurisdictions, it's just not that simple and I can tell you 80-95% of what is being said is either wrong or missing the point, try Czech or Hungary, they will serve hosting better, stay away from the core countries like UK, Netherlands, they are going downhill fast and not coming back up. You can judge it by incorporation cost, under $100 and they will make your life miserable, somewhere in the $500-$1,000 range is what you want and usually Eastern Europe serves those, Cyprus and Malta are $1,000s incorporation and then you need to have specific requirements, gaming, banking, but hosting is not one of them, this is 2020, what worked in 2010-2019 is no longer valid!
constructive discussion is what this is all about
can you elaborate further on your last sentence?
No one ever does hence why I don't participate in forums, just came by here looking for something specific, found it, and thought would just give a little back, this is how a good society should work, the problem is those environments have already "gone" since 2018 and over the coming years the public are going to catch up to the fact, this is how it always has, is, and will work, reacting to things a few knew, a few prepared for, and a few actioned years ahead. All G7 especially cities are going to become hell holes going forward, I already was talking to the smart money moving out of New York, London, even old money I was talking to were moving out of Monaco since 2018, my view what triggered you is yes, Netherlands is a bit of an odd one, it will fail in some ways and work in others, if you are an expat due to how the economy is structured it will fail, a local likely neutral as the other surrounding countries start failing, the devil is always in the detail. I work at a slightly different level to anyone else on here, what I explain today will happen in the years hence, and for myself and a few others I know already actioned a few years before, this is our lull before the storm no one knows, or accepts being the same result, is now coming, if you want to know where the G7 cities are going look back at Cyprus 2012-2013, that will be the model used, because it worked!
Not quite sure what that has to do with the taxation system at the moment but ...
On another note as for the tax refunds.
2020 has brought a change into the system that apparently for some companies the 35% corporate tax has not to be paid but is directly calculated against the possible 6/7th refunds so that you would only pay the 5% and not 35 and get 30 back.
Dont have details yet though:
"New rules (see Legal Notice 110 of 2019) a Malta company which elects to be treated as part of a fiscal unit (formed of one holding company and at least one or more trading companies) will not be obliged to pay the full 35% income tax, of which subsequently 6/7 could be regularly claimed back by its shareholders (Tax Refund)."
On another note as for the tax refunds.
2020 has brought a change into the system that apparently for some companies the 35% corporate tax has not to be paid but is directly calculated against the possible 6/7th refunds so that you would only pay the 5% and not 35 and get 30 back.
Dont have details yet though:
"New rules (see Legal Notice 110 of 2019) a Malta company which elects to be treated as part of a fiscal unit (formed of one holding company and at least one or more trading companies) will not be obliged to pay the full 35% income tax, of which subsequently 6/7 could be regularly claimed back by its shareholders (Tax Refund)."
constructive discussion is what this is all about
It's not a discussion, it is already in progress but if you want to ask some questions more than happy to point in the right direction, a reset occurred a the highest levels of society which is now starting to filter down, actually more a double-down but to everyone else it would look like a reset, the simplest form is the way the public worked during 2008-2019, then in 2020 flipped and now every technique they used and built it to their thought process will actually cause any mistake, where they used those techniques to offset to, will cause it to magnify, the key here is to work together as the world does everything in its power to push everyone apart, and the latter is happening at an alarming rate from social to business.
Unfortunately it never does, the entire process is to make sure that everything is so perfectly opaque that any "deeming" can and will be whatever anyone wants it to be, for example in capital cities they have wealth liquidity where you can take paintings, gold, cars, and create instant liquidity to service "deemed" liabilities which have a 30day window. The principle is that it will take years to resolve and so most will run out of time, capital, patience, skill, thereby losing that asset, capital, in to the economy, I know some of the wealthiest families in the world this happened to, in that case measured over a decade, that process is now coming to the "masses", the moment someone explains but "5% now not 6%" are looking at the cents on the ground. The fact is the entire process has to be a miserably time consuming and complex process for the other party as possible, or as cheap and effective as possible for you, worrying about 1% differential is you making it miserably time consuming and complex for yourself, as the world is on its knees looking at the ground today, anyone who wants to move forward needs to start looking up, and in this case hosting via a Malta company and doubly so in Cyprus, unless there is a very specific business case with an incredibly high return on investment , is simply, stupid.
"Maybe we shoud rather ask, what are you ..."
The famous "we", very good, no that would be you, people always speak from their own perspective in life, for the mods, I was a little surprised, was going to happily pay for access but turned out it was open, you may want to consider fully closed going forward as people are willing to pay for factual knowledge and experience and will remove some of the more opinion based commentary, this who area is going to be an important subject as capital controls start coming in to play. As with everything in life, you have to lead from the top and maybe those snippets will set people on a more friendly path than the one society is currently sending them down, on a final note I do have this ability to tap in to the unconscious mind and either trigger confusion, or anger, usually both in sequence as they try to balance out why their conscious mind is so far out of whack with their unconscious mind, weak minds for you, spellcheck, they really are limitless!
The famous "we", very good, no that would be you, people always speak from their own perspective in life, for the mods, I was a little surprised, was going to happily pay for access but turned out it was open, you may want to consider fully closed going forward as people are willing to pay for factual knowledge and experience and will remove some of the more opinion based commentary, this who area is going to be an important subject as capital controls start coming in to play. As with everything in life, you have to lead from the top and maybe those snippets will set people on a more friendly path than the one society is currently sending them down, on a final note I do have this ability to tap in to the unconscious mind and either trigger confusion, or anger, usually both in sequence as they try to balance out why their conscious mind is so far out of whack with their unconscious mind, weak minds for you, spellcheck, they really are limitless!
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