That sounds like a high risk idea. You’ll really want to talk this through with a German tax lawyer. Lots and lots of things can go wrong there.
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Recommendation Malta or Cyprus?
- Thread starter devnull
- Start date
That sounds like a high risk idea. You’ll really want to talk this through with a German tax lawyer. Lots and lots of things can go wrong there.
You're all talking about risks, so please enlighten me. What are the risks you've noticed which I didn't?
Secondly, why wouldn't I need to contact a Maltese tax lawyer instead of a German one?
You are creating lots of ties to Germany, especially when you rent real estate out to close relatives. Apart from anti-avoidance rules which I hope you have looked into (extended limited tax liability), you would have a structure that sounds very fishy and would invite extra scrutiny. It would be a logical conclusion to suspect you’re only moving on paper and trying to commit tax fraud. The Maltese certainly won’t protect you. Everything could of course be perfectly fine, what I am saying is you really, really need to make sure it is. Because the risk of an audit will be much higher. It would be completely different from leaving and properly severing all ties.
Because you would be avoiding German taxes. After all, that’s why you want to move, isn’t it? Countries like Germany or France or Italy don’t want their tax slaves to leave. So they have all sorts of rules in place to make your life as difficult as possible when you do.
Alright, let me be more precise. I'd fully cut all ties when moving to MT next year. From what I've learned so far, GER would no longer be able to either tax me in any way nor would they automatically get any informations about me/my company/taxes anymore since my permanent stay would be in MT. Right?
So next point is traveling for quite some time each year would not put me out of my MT tax advantages in any way as long as traveling would not exceed 6 months. Right, again? (I'm not even planning to get close to that amount of time traveling, just talking theoretically. That's why I mentioned "like 40 up to 60 days a year" as a vague number.)
Last thing I really wonder is whether I'd be able to invest in a holiday home/some real estate for family members back in GER without losing my tax advantages after a couple years passed already. Now this is where you put up a pretty good reason to not do this anytime soon since there is an extended limited tax liability which I wasn't aware of yet. However, I just searched it up and from what I've read so far, even if doing this I wouldn't lose my advantages in any way. All I need to be aware of is the income I'd get out of this would be taxed in GER and secondly, I might would need to start proving annually that most of the time I'm still living in MT. Is that right, too? Is that the only yet most important problem you're referring to? If I'd gift the real estate to my particular family members would it solve the problem?
Yes and no. I do look for low-tax countries I'd like to move to and live in for quite some time to save an incredible amount of taxes, yes. However, the tax savings are by no means the only reason I'll leave GER (will go into details if anyone asks me to; it's all personal reasons though).
Rental income in Germany will be covered by limited tax liability. But owning real estate will trigger extended limited tax liability. It means that especially certain kinds of passive income like stock market investments that otherwise wouldn’t be taxable in Germany, will remain taxable in Germany for ten years, or something. I would also assume that you will have to submit German tax returns for at least those ten years. I would think that if you gift the real estate to someone else, you can avoid the matter. Other rules that can trigger that is being a partner in a German company and a couple other thing. But I’m no expert on the matter. Please consult with an accountant or tax lawyer.
Yes, if you can prove that you spend more than 182 days in Malta, I can’t imagine anyone being able to dispute your Maltese tax residency. You could probably be gone more than that, too, but it wouldn’t be as clear.
You have to read the DTA signed by Germany and Malta (or ask a professional to do it for you) and read about the details, especially how taxes are split (exemption method vs. credit method). Typical risks would be that by keeping an abode in Germany (doesn’t have to owned by you, you don’t have to spend much time there, but it is available to you, you have a key and maybe keep some of your stuff there), you would remain German tax resident by domestic law. The DTA would move the tax residency to Malta because you spend more time there, but depending on the DTA, Germany could still tax your worldwide income and only give you credit for taxes paid elsewhere. I believe they do that with Switzerland and the UAE, for example. Countries like Germany have a lot of such rules to screw you over.
As you can see, this stuff is complex, and it would be complete madness to do it without assistance from a professional. I’m not talking consulting for thousands of euros, but a few hours with a professional going through all your affairs and explaining potential pitfalls. There are many tax lawyers and accountants who are specialized in helping people move abroad. Good luck.
Yes, if you can prove that you spend more than 182 days in Malta, I can’t imagine anyone being able to dispute your Maltese tax residency. You could probably be gone more than that, too, but it wouldn’t be as clear.
You have to read the DTA signed by Germany and Malta (or ask a professional to do it for you) and read about the details, especially how taxes are split (exemption method vs. credit method). Typical risks would be that by keeping an abode in Germany (doesn’t have to owned by you, you don’t have to spend much time there, but it is available to you, you have a key and maybe keep some of your stuff there), you would remain German tax resident by domestic law. The DTA would move the tax residency to Malta because you spend more time there, but depending on the DTA, Germany could still tax your worldwide income and only give you credit for taxes paid elsewhere. I believe they do that with Switzerland and the UAE, for example. Countries like Germany have a lot of such rules to screw you over.
As you can see, this stuff is complex, and it would be complete madness to do it without assistance from a professional. I’m not talking consulting for thousands of euros, but a few hours with a professional going through all your affairs and explaining potential pitfalls. There are many tax lawyers and accountants who are specialized in helping people move abroad. Good luck.
do you also have residence Malta no-dom?
please could you show me where to see them?
No, I’m not in Malta. Just google “country + permanent establishment”, but usually you would need to talk to a lawyer/accountant to find out how it is handled in practice.
I once met a German accountant at a conference. He told me that although Germany has strict CFC rules, he has never had a single case where CFC rules actually mattered. All cases came down to whether there was permanent establishment or not.
I once met a German accountant at a conference. He told me that although Germany has strict CFC rules, he has never had a single case where CFC rules actually mattered. All cases came down to whether there was permanent establishment or not.
as for the cfc rules its true nobody will really look at them until the point you are getting deep audited / the bored tax agent assigned to you looks at it a bit deeper and throws the book at you. also in germany nobody really does this unless talking very very high networth and larger company structures where it is as common as anywhere else.
so yeah they will use them when s**t hits the fan and with germany that can be any day for you. dont f**k with the finanzamt
so yeah they will use them when s**t hits the fan and with germany that can be any day for you. dont f**k with the finanzamt
CFC is simply a “catch-all” thing. You would usually be sufficiently fucked because of PE rules - so they wouldn’t have to consider CFC rules.
yes PE is what Germany usually attacks and its so broad what "could" be a PE that you are fucked either way.
PS: still need to check with the lawyers when back in MLA for written statement but as for the CFC rules in Malta and the classic Malta LTD + Gib/Cyp/etc Holding. Someone also pointed out which from my understanding is actually correct:
The holding in most cases would not even qualify for Maltese CFC rules as 1) controlling interest / passive-active income treshholds need to be met --AND-- less corporate tax paid because of the structure. This is not the case since you are paying corporate tax in Malta with the Malta LTD and the holding actually even gets tax credits with the dividend declaration etc. So in terms of receiving tax refunds and then as the holding UBO receiving the dividends from that tax free outside of Malta CFC has no bearing even without tax credits, remittance & co fuckery.
In general the CFC would only be relevant for the Maltese non-dom holding the outside holding but that second requirement would not be met in that case as the holding does not lessen any corporate tax in any kind of way.
PS: still need to check with the lawyers when back in MLA for written statement but as for the CFC rules in Malta and the classic Malta LTD + Gib/Cyp/etc Holding. Someone also pointed out which from my understanding is actually correct:
The holding in most cases would not even qualify for Maltese CFC rules as 1) controlling interest / passive-active income treshholds need to be met --AND-- less corporate tax paid because of the structure. This is not the case since you are paying corporate tax in Malta with the Malta LTD and the holding actually even gets tax credits with the dividend declaration etc. So in terms of receiving tax refunds and then as the holding UBO receiving the dividends from that tax free outside of Malta CFC has no bearing even without tax credits, remittance & co fuckery.
In general the CFC would only be relevant for the Maltese non-dom holding the outside holding but that second requirement would not be met in that case as the holding does not lessen any corporate tax in any kind of way.
Thank you so much for your help so far, guys!
I will contact some German/Maltese specialists today.
One more thing I want to make sure, instead of an EU Holding + MT LTD would a Seychelles Holding + MT LTD for the 5% taxation scheme be just as fine, too?
I will contact some German/Maltese specialists today.
One more thing I want to make sure, instead of an EU Holding + MT LTD would a Seychelles Holding + MT LTD for the 5% taxation scheme be just as fine, too?
In theory yes. In fact using Seychelles company for EU holding was a very popular solution. The problem is that EU has blacklisted Seychelles and some banks do not like that fact anymore e.g. Bank of Cyprus...
Alright, I got you. However, since the Seychelles IBC is just for the purpose of a Holding to receive the 30% tax return, this would not matter at all, would it? All that needs to be taken care of is to find a reliable bank account for the Seychelles IBC, right? There are quite some banks still who tolerate Seychelles corporations.
By the way, what are the reasons half of the forum loving CY corporations/banks so much? Like there's even a whole category for CY!
Cyprus holding is one of the best holding solutions in EU. Malta holding is good too. In fact you can have Malta trading and Malta holding and still benefit from 5% effective tax if UBO is non Malta resident.
It matters, because you are the UBO of the holding company. So if you open bank account for Malta company which holding company is from Seychelles, some banks don't like that anymore. But not all banks I guess.
If you don’t mind, please let us know how it goes/if they give you any new insight.
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