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

[Anonymous1234]

You are totally wrong, non dom status is clearly written in cfr website, please find the︀ link below. If you are making a statement then I would request you to provide︁ a source. Here is the cfr link.

https://cfr.gov.mt/en/individuals/P...ual who is resident,that is remitted to Malta︂.

 

[RAGAV]

Thanks for your response.

Yes, active trading is very⁠ different from holding shares. I am not worried about 9% tax.

So, any freezone like⁤ Meydan or others (in Dubai) that allow holding shares as an activity should be acceptable,⁣ right? Can you suggest few reputed options at less than 20K AED?

I was worried⁢ about choosing an activity that does not exactly match with my active trading activity and︀ implications if found by regulators/authorities. Is that a concern if I open an LLC and︁ trade in company account? Do you suggest paying myself a salary as an employee of︂ the LLC and trade in company account?

Also, I don't plan on hiring office space,︃ staff etc.

 

[Anonymous1234]

It does not work there like that, i suggest you go and live there︂ for a while and do some research, the way you are talking and asking questions︃ I am sure you dont know how it works there. If you are tight with︄ money and thinking of getting everything cheap then trust me dubai is not a cheap︅ place. You will be better off living in malaysia or somewhere there.

 

[lili247]

@PhantomOf ThePits Regarding the « professional trader » issue in CH.

Imagine someone who is‌ tax resident in UAE, sells his business and everything he got, and buys some accumulating‍ s&p ETF., basically has all his net worth in accumulating ETFs.

Then the guy moves⁠ to CH.

He does not trade, does not do anything with futures, derivatives, nothing. At⁤ the beginning of each year, he does one sell order of 200k chf and lives⁣ with that for the year. That’s the only one trade for the whole fiscal year.⁢

But he does not have any other income, so 100% of the « income »︀ is from selling some ETF once a year.

In your opinion, is the guy considered︁ a professional trader in CH ?

 

[daniels27]

There are rules laid out in a Kreisschreiben. And I paste for‍ you in German:

And translated

Hence, he is NOT on the safe side, but fulfills 4 out of 5. A deeper⁤ analysis would be necessary.

He is not︈ working and only holdig 1 type of asset that is being sold annually for living︉ expenses, in the same way as you pull money from a savings account. Given the︊ fact, that X spends most of his days laying on the beach/snow and (this is︋ important) is not engaged in any way professionally at any invested company/etc., it is not︌ a professional activity. The matter would be deemed differently if X was working as CXO︍ for an invested company.

If you want to be sure, you can apply for a︎ private letter ruling. But this case seems pretty clear to me. Call the Zürich Tax️ Office on Monday, they will give you their 2 cents free of charge.

 

[lili247]

Yes I’ve seen those criteria and indeed criteria 3 would not be fulfilled in that‌ situation, however they say that the rules are not definitive :

« If these criteria‍ are not cumulatively met, the existence of professional securities trading cannot be ruled out. This⁠ assessment must be based on the entirety of the specific case’s circumstances (see section 4).⁤ »

If guess the only way is to get a tax ruling, or maybe ask⁣ some accountant in the canton that knows the tax administration staff very well but that⁢ would be a lot of uncertainty.

 

[daniels27]

I am not sure︀ why the title read something about Malta. But for Switzerland, feel free to ask. Do︁ you have a clear description with details about the case? I can ask. Also filing︂ a ruling is fairly simple, you can do it yourself or ask me for help.︃ Please PM or open a thread with a proper name. I am not opening anything︄ with Malta, Cyprus, UAE unless there really is not anything else to open.

 

[PhantomOf ThePits]

As @daniels27 wrote, best︂ is to try to get a tax ruling in the canton you want to live︃ - then you are on the safe side.
But first would be to call Steueramt︄ in your canton and tell them you're basically a Privatier (living off your money).
I'd say in some cantons it would not be considered prof Wertschriftenhaendler as you basically live︅ like Retiree.

Also, if you are below 65, keep in mind even if your 200k︆ CHF from your selling your ETFs once a year would NOT be considered income, you'd︇ still need to pay AHV (Retirement contribution) on your assets which can be up to︈ 26k CHF/yr (max rate based on your net assets above 9m CHF).

https://www.expatica.com/ch/finance/retirement/ahv-switzerland-pensions-1089118/

Switzerland has︉ wealth taxes and depending which canton and how many assets you have, it can add︊ up to quite some amount even if you have 'no income':
https://www.taxolution.ch/swiss-tax-guide/wealth-tax/

Here you can︋ calculate your Swiss taxes based on the place (state/municipality) you consider living (there can be︌ HUGE differences depending on income/assets):
https://www.estv.admin.ch/estv/en/home/fta/tax-statistics/calculate-taxes.html

 

[JackAlabama]

It is 200k income︂ in the form of realized cap gains. (since he has no other income).

If he︃ has a job paying lets say 410k / pa, the 200k would be capital gains︄ tax free (less 50% of total income).
If the job only pays 50k, the 200k︅ become cap gains again due for tax.

it has been mentioned: 3.The achievement of capital︆ gains from securities transactions is not necessary to replace missing or lost income for living︇ expenses. This is usually the case if the realized capital gains are less than 50%︈ of the net income in the tax period.

You have to operate it all under︉ (your own) company setup in a cheap cantone.

 

[RAGAV]

Thanks for your post.

I found lot of websites and articles listing approximate LLC⁢ license cost in range of 12 K to15K AED per year. So, I wanted to︀ check if any suitable freezone license can be obtained in that price range.

My main︁ concern was around compliance in terms of my activity being considered within the scope of︂ the license.

Ignoring the budget, can you provide few decent freezones that grant license for︃ "holding of shares" and would not raise any issues for me in the future?

===========================

This has been my experience in last one month of my research. You may ignore︄ it.

I have never been there so not sure how it works. I have been︅ searching for lot of information in reddit and other forums.

I spoke to around 10︆ - 12 business set up consultants, couple of NRIs (non-resident Indians) residing in UAE, Sarwa︇ customer service (local securities broker offering trading in US markets), a practicing CA and couple︈ of people who assist in opening bank accounts.

Business consultants: None of them were suggested︉ an activity that exactly describes active derivatives trading in international regulated exchanges. Some of them︊ told me that you can choose investment category license. Couple of them told me that︋ there are people who take some kind of visa (either through Freezone LLC or freelancer)︌ and just reside there in UAE without any genuine business activity. They keep renewing their︍ visas to extend their stay and are financially comfortable to sustain their lifestyle. Few of︎ them told me that people take license and use it as a vehicle to stay️ in UAE and
suggested that I can do the same and trade in my personal‌ account as I am using my personal funds.

I did not know how much to‍ trust these consultants because they have a vested interest in making me open a business⁠ through them. So, they might hide consequences of compliance issues if my activity is deemed⁤ to be outside the license by authorities. I would have to face the potential fallout⁣ if any questions are raised about my activity.

NRIs told me that you can open⁢ a Freezone LLC for visa purpose and trade in personal account to keep things simple︀ (without audits, compliances etc). No permission or license is needed for trading personal funds.

Sarwa customer service: Told me that I don't need any license to trade options in US︁ markets in my personal account.

The practicing CA told me that I can take any︂ investment license or freelancer license and then register for Corporate tax because my activity is︃ defined as a business activity. Actual tax liability would depend on total profits.

 

[daniels27]

As mentioned, the 5 criteria are like a safe harbour rule. If you︀ don't meet them, it still depends on your circumstances. If anybody has a clear case︁ and honest interest, I will call the canton of choice for you.