Recommendation Malta or Cyprus?

#141
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Not fully accurate, there are exceptions:
"The CFC rule shall not find application in relation to an entity or permanent establishment:
  1. with accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000; or
  2. of which the accounting profits amount to no more that 10% of its operating costs in the tax period."
Sources:
https://www2.deloitte.com/mt/en/pag...AD-implemented-into-Maltese-domestic-law.htmlhttps://www.ey.com/Publication/vwLU... implement EU ATAD and NID rules approved.pdf
So as long as the company doesn't generate profits of more than 750K EUR and non-trading income of more than 75K EUR it falls outside CFC scope.
 
#142
May I ask which agencies did tell you this?

However, I read so too, but I couldn't find out if Maltas CFC update applies only to companies or to both companies and personal non-doms. I may need to ask my consultants about this.

Nonetheless, be sure every single country who falls for the CFC rules once will by then constantly tighten the regulations.

Like I just said, if I'm not mistaken they started with ATAD 1 but will apply to ATAD 2 soon, too. So be sure the regulations will be tightened sooner or later.

Anyways, I'm planning on a profit way more than that so it wouldn't be possible for me to make use of the advantages anyways.
 
#144
JustAnotherNomad said:
@CuriousUser So how much tax will you be paying under your setup? 5% CIT and personal income tax only on what you remit to Malta?
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Yes exactly!

There are 2 different ways, one of them will result in the 6/7 taxation thing (slow way) and then there's a newer way so you don't have to pay those taxes upfront (fast way). Following the fast way, you basically don't pay those 6/7 taxes at all, instead you'll just have to pay the 5% directly. I've asked my consultants about this and am waiting for a response now so that I can tell you which setup would result in which of those ways.

But yeah, you got me. Those setups mentioned above enable you to legally save as many taxes as possible in the EU - both company and personal-wise.
 
Reactions: John Andrews and Marzio
#146
1nomad said:
No, I didn't, but as far I know if you are non-dom, your foreign company is considered as non-dom too
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Guys, will really suggest you to dig into the definition of the "place of management". Because as far as I recall it, it should be to the place the Directors (Board) meetings take place. So if you as a Director goes to Gibraltar once a year to participate in board meeting, you should be able to claim that the "place of management" is Gibraltar.

If you can't travel there, you can dial in for the meeting to the Gibraltar Registered office (if your company has a company secretary, they should be able to assist with that. just make sure that you are not in Malta that day (go to Sicily for a day) the meeting shall be recorded as taking place from Gibraltar.

some read in this respect: Management and Control in Malta Companies | Chetcuti Cauchi Malta
 
#147
marzio said:
This is interesting. Keep us posted.
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I just got the response about both strategies! So let me make it short but clear.

Option 1 (slow way): establishing one Malta LTD as the operating business and one UK LP as the Holding. This is probably the way 95% of all people know and use. Positive thing about this setup is it's cheaper than option 2. Negative thing is you'll have to wait up to 12 months to get the 6/7 tax refund - you can watch the first pages of this thread and find other people complaining about long waiting times for tax refunds!

Option 2 (fast way): establishing one Malta LTD as the operating business, one Malta Holding and one UK LP as the main Holding. There have been many changes in 2019(+), one of them actually allows setups like this to avoid the 6/7 tax refund but to pay the 5% effective tax rate directly. Like I already mentioned, this way is pretty new so only people use it yet or even know about it. Negative thing about this setup is higher costs and more connections to watch over. Positive thing is you won't have to wait for the tax refund and will be way more flexible with your money.

I'm not sure yet which way I'll go, so I'd love to hear your opinions about this matter. I tend to prefer option 2 since being more flexible with money - especially in times like this - is a pretty damn good argument. However, I f*cking hate having additional businesses, bank accounts or pretty much anything that's actually unnecessary.
 
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#149
JustAnotherNomad said:
I always thought you can go with option 1, then simply not pay the 35% until the very last moment (after the official deadline?). Then you get the refund a short time later.
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I haven't found any reliable source for this yet (besides this forum), so do you have any? I've read something about having to pay additional fees when passing the deadline, which numbers are we talking about here?

No matter the country, I rather don't screw with governments and their deadlines.
 
#153
JustAnotherNomad said:
I always thought you can go with option 1, then simply not pay the 35% until the very last moment (after the official deadline?). Then you get the refund a short time later.
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Normally you have 18 months to pay income tax. So if your financial year run from 1st Jan until 31st December 2020 it means you have to pay tax until 30 June 2022. I always pay like 2 weeks before deadline, but my tax refund experience vary from 2 weeks to 6 months. Last year it was exactly 6 months. This year less than 2 weeks.

If you have fairly liquid, profitable and predictable business, the only problem is that for 18 months 35% tax amount is sitting on the account to be paid. Perhaps some advanced interim dividends could be paid (out of future predicted profits) but you have to be sure to have this tax money for the deadline. However the Covid showed nothing can be entirely predictable, so what if you paid yourself interim dividends from the tax money but the business did not bring profits to meet the deadline payment requirements...
 
#154
I asked my consultant about this matter and he pretty much replied like you. I didn't have in mind there is 18 months to pay income tax, which is the reason I will go for the classical setup of 2 companies!

You will be the owner of the UK LP and the UK LP will be the owner of the Malta LTD. That's called a 'Holding' if I'm not completely out of my mind right now.
Same with the second option. Again you'll be the owner of the UK LP which holds the Malta 'Holding' which holds the Malta LTD. Same tax benefits (effective rate of 5%) but instead of having to wait up to 12 months for a tax refund of 6/7 (30%) you'll just have to pay 5% directly and don't need to wait for s**t to return.
 
#155
Schemes like this are legal loopholes which have worked for many years. Like one user said earlier, I think @Martin Everson mentioned it, islands like the UK, Ireland (even though Ireland closed the Double-Irish-Dutch-Sandwich for the majority this year), Malta, Cyprus and others won't ever close their loopholes since it would kill their whole economy. I've just read about a statistical research stating that roughly 90% of Malta and 80% of Cyprus are financed by companies using schemes like this.
 
#156
Mate, tell it to the governments tolerating or even enabling those schemes on purpose. I'm just one out of hundreds of thousands people making use of it. Even though other EU countries complain about the above mentioned EU tax heavens, they still tolerate all of them. It's all legal and that's all that matters.

Sure, as time goes by there will always be changes to the system. Malta, Cyprus and others are by no means exceptions, don't get me wrong. But for now, there is absolutely nothing to it; the EU knows it, the governments know it, the people know it. As long as you play the tax avoidance game instead of the tax evasion game, you will have nothing to be worried about.
 
#157

I don't understand how does holding A + holding B + MT trading mitigate the waiting time for tax refund. In such case things should work as usual: MT trading pay 35% tax, holding B get 6/7 tax return and another holding A gets dividends from the holding B that got a refund.
 
#158
My consultant mentioned it's due to some changes in 2019 ("LN 110.2019"), I can't tell how it's working exactly because I didn't ask for more details. If you really want me to, I will ask my consultant about this. For me personally it doesn't matter anymore since I already made a choice to go for the classical setup.

I still don't see the problem you're referring to. He's doing it the same way thousands of companies do it right now. And there is nothing wrong to it; like I said those loopholes were created on purpose and they won't even be considered to shut down in the near future.
 
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#159
There you go. Just look what I've found here. The circle is about to be closing.
 
#160

Your right. btw CfR would not even ask you as your lawyer as part of DAC6 since 1 July 2020 would have reported the crossborder structure arrangement already. You would just get a tax bill for unpaid taxes for such a non-genuine arrangement . It's far simpler to get a letter of confirmation from CfR for such an arrangement in advance of doing it or stay well away from rolling the dice or blaming a tax advisor servicing you from the back of a malta barber shop.

https://www.offshorecorptalk.com/th...eporting-comes-into-effect-1-july-2020.29711/
 
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