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Where to live with max 0-5% total tax
- Thread starter aceupsleeve
- Start date
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- residency
Yes
No. Very little will happen if you use non-CRS banks etc. But it is better to be honest and not to store up problems for the future and just pay the 5k tax.
P.s Showing you paid tax somewhere may become more and more important in the futures sadly.
Aren't those estonian's CFC rules? Since you are maltese non-dom shouldn't you care about maltese CFC rules?
I think most of the problem comes with POEM and not CFC rules. If you own and manage a company in Estonia or Romania or whatever from Malta, you should trigger these rules.
But according to their tax government it shouldn't be an issue (they replied like this via email)
Interesting. They replied that they don't enforce POEM, or you had special circumstances?
Martin, i verified before posting.
Take a look: those are Estonia CFC rules and those are Maltese CFC rules.
The 750K limit / 75K passive income limit are for Estonian CFC.
Can you be more specific?
I asked directly to the Maltese government about this issue, this is what they answered
Attachments
This was my question, however regarding pass-thru companies like the LLP UK or LLC us i still have doubts it can work, because yes you can own and manage them as they said, but you will be then theoretically subject to the local normal tax rate, as this income is considered personal. So what i understand here is that there are no issues to own a manage a company located abroad but better to choose an ltd (UK, Bulgaria, Romania, Estonian, etc) and it should work just fine.
What do you think about it guys?
I asked the same in Cyprus to some local accountants but i had no clear answer (i did the same in Malta and they told me different things so i decided to ask myself to their government)
Attachments
Amazing!
That's true but in their answer they talked about "income arising outside Malta" so maybe it could be worth double checking with them asking specifically if a non-dom could manage a transparent entity like UK LLP and his taxation be limited to 5K annually if foreing income > 35K.
A company incorporated outside of Malta is considered to be resident in Malta only if its place of effective management and control is in Malta. As a general rule, ‘the place of effective management’ is defined as the place where the key management and commercial decisions that are necessary for the conduct of the company’s business are in substance made.
Therefore, a company which is incorporated in Malta is considered to be resident and domiciled in Malta, while a company which is incorporated outside Malta but has its control and management in Malta will be considered as resident but not domiciled in Malta.
Companies which are resident but not domiciled (or vice versa) in Malta are subject to tax in Malta on all income and chargeable gains arising in Malta, and on income arising outside Malta which is remitted back to Malta.
Source
I have no idea why you keep questioning me.
https://www2.deloitte.com/mt/en/pag...AD-implemented-into-Maltese-domestic-law.html
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CFC rule
In terms of the ATAD Implementation Regulations, the CFC rule shall find application where the following conditions are met:- control test (in case of an entity): the taxpayer by itself, 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 capital or is entitled to receive more than 50% of the profits of that entity; and
- low-taxation test: the actual corporate tax paid by the entity/permanent establishment is less than 50% of the tax that would have been ‘charged’ on the entity or permanent establishment in terms of the ITA.
The CFC rule shall not find application in relation to an entity or permanent establishment:
- with accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000; or
- of which the accounting profits amount to no more that 10% of its operating costs in the tax period.
Even the PWC link you posted stated this but didn't give the figures:
"CFCs whose profits fall within certain minimum thresholds are excluded from the application of this regulation"
In fact just google "malta CFC 750,000". Maybe they all have it wrong then
.Even stated below etc:
https://www.dmeurope.eu/blog/controlled-foreign-company-cfc-malta-eu-atad/
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Exceptions to the rule
A CFC that satisfies the following criteria would not be charged to tax in Malta:
- CFC with accounting profits of no more than €750,000, AND non-trading income of no more than €75,000; OR
- CFC of which the accounting profits amount to no more than ten per cent (10%) of its operating costs for the tax period, Provided that the operating costs may not include the cost of goods sold outside the country where the CFC is resident for tax purposes AND payments to associated enterprises.
Can someone explain what does it means a non trading income of no more than 75,000€? Trading stocks or is something else?I have no idea why you keep questioning me.
https://www2.deloitte.com/mt/en/pag...AD-implemented-into-Maltese-domestic-law.html
----
CFC rule
In terms of the ATAD Implementation Regulations, the CFC rule shall find application where the following conditions are met:
Should an entity or permanent establishment be treated as a CFC, the non-distributed income of the said entity or permanent establishment arising from non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage shall be included in the tax base of the taxpayer. The income to be included in the tax base of the taxpayer shall be limited to amounts generated through assets and risks which are linked to significant people functions carried out by the controlling company.
- control test (in case of an entity): the taxpayer by itself, 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 capital or is entitled to receive more than 50% of the profits of that entity; and
- low-taxation test: the actual corporate tax paid by the entity/permanent establishment is less than 50% of the tax that would have been ‘charged’ on the entity or permanent establishment in terms of the ITA.
The CFC rule shall not find application in relation to an entity or permanent establishment:
-----
- with accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000; or
- of which the accounting profits amount to no more that 10% of its operating costs in the tax period.
Even the PWC link you posted stated this but didn't give the figures:
"CFCs whose profits fall within certain minimum thresholds are excluded from the application of this regulation"
In fact just google "malta CFC 750,000". Maybe they all have it wrong then
Even stated below etc:
https://www.dmeurope.eu/blog/controlled-foreign-company-cfc-malta-eu-atad/
----
Exceptions to the rule
A CFC that satisfies the following criteria would not be charged to tax in Malta:
-----
- CFC with accounting profits of no more than €750,000, AND non-trading income of no more than €75,000; OR
- CFC of which the accounting profits amount to no more than ten per cent (10%) of its operating costs for the tax period, Provided that the operating costs may not include the cost of goods sold outside the country where the CFC is resident for tax purposes AND payments to associated enterprises.
Deloitte does talk about 750k I even posted it and quoted them above. See link for yourself below again.
https://www2.deloitte.com/mt/en/pag...AD-implemented-into-Maltese-domestic-law.html
But anyway we are way of topic on this thread
. So back to topic.If you are resident non-dom in Malta, manage an offshore compay and that company's accounting profits are less than 750k and passive income (royalties, trading) are less than 75K you only pay the 5K minimum tax per year in Malta. The downside is that you have to be there at least 183 days per year which for somebody could be a deal breaker.
Strangely enough they don't talk about the 750k in the country highlights for 2021. Back to topic.
Back to subject.
Worse case we might end up seeing a global minimum personal income tax which may scupper anyone's plans to find a place to live with 0-5% tax
. The motive for such a move would be the EU's (via OECD) continued attacks to destroy all tax havens.
Worse case we might end up seeing a global minimum personal income tax which may scupper anyone's plans to find a place to live with 0-5% tax
. The motive for such a move would be the EU's (via OECD) continued attacks to destroy all tax havens.
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