Not sure what your point is. These are actual quotes from the tax code. There is a definition of "Security" for tax purposes which encompasses equity and debt obligations and does nowhere add "and everything else that Rod1 considers a security". It further states that some derivatives on such "Securities" (note the capital letter = defined term) are also exempt from tax. Hence, equity, equity index, and fixed income based options, futures, and forwards are exempt. Everything else needs to be analyzed in detail within your planning process or it will be clarified in your tax accounting process with potentially unexpected outcomes.
Recommendation Malta or Cyprus?
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Yes, both countries would try to screw you over. UNLESS there is a tax treaty. In that case, in the tax treaty it has been specified in advance who gets to milk you.
However, newer DTA's usually use the newer OECD template that says both countries' authority should simply come to an agreement. Which is much worse obviously because the outcome is harder to predict. Previously this was only the option of last resort, when none of the other tie-breaker rules would fit your case.
Interpreting everything in your favor is clearly not the way to do planning. If you are serious about doing business there you should try to understand the tax law or get professional advise on the specific products you want to trade.
My last reply regarding this topic:
It does not say futures are exempt but futures on Securities are exempt. Securities for tax purpose are exactly defined and I listed the examples of futures that do exist on these Securities. Your interpretation that the guys writing the law are idiots and do not know futures is a little presumptuous at best. They clearly had equity and debt in mind for the exemptions. If you read around the internet, you will find examples of products and derivatives which are not tax exempt in practice.
Their definition of Securities and the two clarifying circulars include basically anything that can be traded in a brokerage account or OTC. In a court case the intention of the law is also important, not just the letter of the law. In the same way I someone gets a fine for going 55kph in a 50kph zone but not going 50.00001 kph.
Further it is not presumptuous that the tax deparment of the Cyprus government may know how to pefectly define every word of description of trading everything they clearly intended to describe. I have seen this kind of thing many times.
Further it is not presumptuous that the tax deparment of the Cyprus government may know how to pefectly define every word of description of trading everything they clearly intended to describe. I have seen this kind of thing many times.
It is about your passport / citizenship / domiciled country. Owning a house in some other country does not trigger tax residency (probably local property taxes and if you rent it out maybe also income tax). Owning a house in your passport country that you moved away from wanting to take up tax residency somewhere else is a completely different story. In order for your domicile country to not tax you anymore you have to tick all the boxes that they require and as your domicile / passport country they have the ultimate control over you no matter where you are. If you bum around at a beach in Malta for 100 days a year and go to the same doctor there over years etc nobody gives a crap. If you move away from Germany but still go back there 100 days and are being caught just having a key to an apartment there - it is game over. The basic premise is "cut all ties and be not able to just fly back and have an apartment aka shelter that you have power over (key)". If you can just return tomorrow for them that means it is still your point of interest in life apart from things like being married etc. It is dumb especially if you have money you can just move to any country tomorrow, airbnb/hotel and not give a f**k but well... these laws were never made to make sense.
The rules are different from country to country but 183 days alone is not sufficient for any halfway developed country in the EU anymore to let you off the hook. There is even special provisions depending on which country you move to. Germany famously has Switzerland in there as that was the usual target for wealthy Germans so they made it harder for them. Low tax countries like Malta are also in the law like specific the case "you are moving to a lower tax country" and they have certain provisions for still being allowed to partly tax you or tax your for a few years after you move (switzerland), having to declare your income in the moving year and so on.
In theory the law is usually the same for everyone, especially in the EU where discriminating based on passports is illegal: If a country like Germany taxes you for having a key to an apartment, then it doesn't matter if you're Italian, French or German. But if you can easily show that you really live in Italy and you only have a holiday home in Germany, then the DTA will determine that you are tax resident in Italy, not Germany.
However, if there is no DTA, you may find yourself in trouble. Even if you spend 200 days per year in Panama (no income tax treaty) where you are a citizen and resident, if you have a key to an apartment in Germany, you will be considered German tax resident and your worldwide income will be subject to German tax. In theory at least.
But of course, passport holders will always be subject to more scrutiny and there can also be more complex rules for exit tax etc.
However, if there is no DTA, you may find yourself in trouble. Even if you spend 200 days per year in Panama (no income tax treaty) where you are a citizen and resident, if you have a key to an apartment in Germany, you will be considered German tax resident and your worldwide income will be subject to German tax. In theory at least.
But of course, passport holders will always be subject to more scrutiny and there can also be more complex rules for exit tax etc.
Actually no it is not that easy in terms of income taxation. If you own a holiday home in Germany and you use that home yourself even if just now and then but with a certain frequency and it is not in general rented out all the time to a 3rd party (this is the only case where it is ok to own real estate as a German living / taxed outside of Germany afaik) then they will income tax you (if your tax agent looks into you). If it is a true holiday home and always rented out to 3rd parties then yes you can own real estate there.
Germany is the extreme case though also in general how tax is handeled and how they are going to deal with you. I am not aware of any country that comes even remotely close.
Germany is the extreme case though also in general how tax is handeled and how they are going to deal with you. I am not aware of any country that comes even remotely close.
Also concerning passport discrimination. This only / mainly applies to German citizens. There is no discrimination case. They have the full authority to decide when they let you off the hook or not and when you trigger income taxation again or not. Just search for German legal cases about this. It is complete batshit crazy for what people have been busted for in Germany concerning moving their (tax) residency. To be fair quite a few did indeed rather take "long vacations" outside of Germany... the same mistake many here want to make especially with 60 days Cyprus...
I can imagine a few European countries have similar issues though - for people having their citizenship and moving away.
I can imagine a few European countries have similar issues though - for people having their citizenship and moving away.
It would depend on the DTA. If you are the only one using the holiday home, then you would be tax resident according to domestic German law. But if you don't work in Germany and you spend 9 months of the year working in Italy for Italian clients, living in an apartment in Italy which you own with your family, then you would clearly be tax resident in Italy per the DTA and Germany would not tax you, despite owning the holiday home. At least in theory, I guess it would be a lot of bureaucracy to get there.
In theory yes, the DBA does not override the point of interest in life problem though. The DBA more or less also assumes a known tax residency and that this is not contested.
If you have a key to a German apartment that tax residency is already void and will be redeclared German. No idea how the DBA then comes into play as its still valid but the whole terminology in there is then questionable as it assumes you are not tax resident in your home country and just visiting.
In theory it should be clear cut, you spend your time away, have your main residency there (and none in your citizenship country), cut other major ties and are not married and your are good. In practice the whole point of interest in life bulls**t makes it a complete s**t show as you can see from all the financial court rulings which are a complete mess and just downright scary.
Anyone that has a citizenship from one of the more developed EU countries i can only STRONGLY urge to read up on the local point of interest in life requirements (they are not written in the tax code btw but rather assumed through past tax court rulings) and take a good look at court cases where people got busted or the taxman tried to bust people for moving their tax residency and what the points of attack where and how successful that was. Its jaw dropping...
If you have a key to a German apartment that tax residency is already void and will be redeclared German. No idea how the DBA then comes into play as its still valid but the whole terminology in there is then questionable as it assumes you are not tax resident in your home country and just visiting.
In theory it should be clear cut, you spend your time away, have your main residency there (and none in your citizenship country), cut other major ties and are not married and your are good. In practice the whole point of interest in life bulls**t makes it a complete s**t show as you can see from all the financial court rulings which are a complete mess and just downright scary.
Anyone that has a citizenship from one of the more developed EU countries i can only STRONGLY urge to read up on the local point of interest in life requirements (they are not written in the tax code btw but rather assumed through past tax court rulings) and take a good look at court cases where people got busted or the taxman tried to bust people for moving their tax residency and what the points of attack where and how successful that was. Its jaw dropping...
Look at Article 4 of any DTA, usually section 2.
It is usually worded like this:
“If an individual is a resident of both Contracting States, then this case shall be determined in accordance with the following rules“
And then there is a list of so-called tie-breakers. They vary from DTA to DTA. So you can be resident of both Germany (because you have a key to an apartment) and in Cyprus (because you have an apartment there and spend 60 days per year there), and then the DTA determines which one “wins”.
If none of the rules really work, there is a “catch-all” rule that says the tax authorities should simply reach an agreement. Newer DTA's have removed the clear rules and replaced them with this vague “agreement” bulls**t as the only rule!
If there is no DTA, you will simply be tax resident in both countries and possibly have to pay taxes twice.
But of course I agree with everything else you said.
Also it can be a real PITA to get this stuff sorted out because it's usually a lot of bureaucracy. I recently talked to someone who lives in one high-tax country as an expat, but has clients in his high-tax country of birth, whom he frequently visits and bills through a local company. He said it cost him tens of thousands of euros in legal fees to get everything sorted out when his business was audited. Because in the end, his home country said they longer considered him tax resident, so they refunded him all of his income tax, and then he had to pay it in his new country of residency instead. Complete bulls**t.
It is usually worded like this:
“If an individual is a resident of both Contracting States, then this case shall be determined in accordance with the following rules“
And then there is a list of so-called tie-breakers. They vary from DTA to DTA. So you can be resident of both Germany (because you have a key to an apartment) and in Cyprus (because you have an apartment there and spend 60 days per year there), and then the DTA determines which one “wins”.
If none of the rules really work, there is a “catch-all” rule that says the tax authorities should simply reach an agreement. Newer DTA's have removed the clear rules and replaced them with this vague “agreement” bulls**t as the only rule!
If there is no DTA, you will simply be tax resident in both countries and possibly have to pay taxes twice.
But of course I agree with everything else you said.
Also it can be a real PITA to get this stuff sorted out because it's usually a lot of bureaucracy. I recently talked to someone who lives in one high-tax country as an expat, but has clients in his high-tax country of birth, whom he frequently visits and bills through a local company. He said it cost him tens of thousands of euros in legal fees to get everything sorted out when his business was audited. Because in the end, his home country said they longer considered him tax resident, so they refunded him all of his income tax, and then he had to pay it in his new country of residency instead. Complete bulls**t.
Thats good to know. I spent quite some time with DBAs concerning Portugal a few years back but have not read too much about the article 4 section 2 issue yet. Will look into that.
Yeah it is complete PITA and bulls**t. It would be popcorn funny if it wasnt so serious / dangerous. Also why everyone doing this should think about asset preservation preferably outside of your name. You never know if some stupid tax agent interprets it in whatever crazy way and tries to f*** you over which can be a very long and sometimes almost impossible case to proof or can easily bankrupt you before you win.
Yeah it is complete PITA and bulls**t. It would be popcorn funny if it wasnt so serious / dangerous. Also why everyone doing this should think about asset preservation preferably outside of your name. You never know if some stupid tax agent interprets it in whatever crazy way and tries to f*** you over which can be a very long and sometimes almost impossible case to proof or can easily bankrupt you before you win.
with only company in Gibraltar or Estonia - 100% Shares owned by me and I am the sole director
Myself - Personaly tax resident in Malta and holding non-dom status
in this case CFC rules also kick in?
thanks
Check also permanent establishment rules, not just CFC. CFC is almost never a problem for people like us.
no idea but likely and you will likely not have tax credits from corp tax payments / dividend refunds to offset as you dont have a maltese ltd
Which of the following scenarios would you recommend to me, planning on moving from Germany to Malta permanently:
Scenario 1) operating my online business only using my Seychelles IBC and some EU banks/PayPal/Transferwise outside of Malta to only pay taxes on my remitted income but avoid the corporation taxes.
Scenario 2) operating my online business using a Maltese corporation/Seychelles IBC to benefit from the 6/7 taxation rule and pay 5% corporation taxes additional to my remitted income.
Some additional informations about my situation, which may be important:
I'm planning on visiting Germany/other countries like 40 up to 60 days a year and might buy myself a new flat/house in Germany/other countries from time to time. My country of residence would stay Malta for a couple years at least, so I don't want to lose my tax advantages just because I'm investing in real estate which will be used as holiday homes or rented to family members.
Scenario 1) operating my online business only using my Seychelles IBC and some EU banks/PayPal/Transferwise outside of Malta to only pay taxes on my remitted income but avoid the corporation taxes.
Scenario 2) operating my online business using a Maltese corporation/Seychelles IBC to benefit from the 6/7 taxation rule and pay 5% corporation taxes additional to my remitted income.
Some additional informations about my situation, which may be important:
I'm planning on visiting Germany/other countries like 40 up to 60 days a year and might buy myself a new flat/house in Germany/other countries from time to time. My country of residence would stay Malta for a couple years at least, so I don't want to lose my tax advantages just because I'm investing in real estate which will be used as holiday homes or rented to family members.
You will have to ask a tax lawyer. Why a Seychelles IBC? Just makes UBO stuff with banks etc a nightmare. You will need a Maltese LTD either way if you want to do it right and legal.
If you are German read up on German tax law. Your buying yourself house will not go so easy.
If you are German read up on German tax law. Your buying yourself house will not go so easy.
Do you know any reliable Maltese tax lawyers?
The reason I went for the Seychelles IBC was to avoid paying taxes on Malta since non-doms don't have to pay taxes for foreign income and due to the IBC status I don't have to pay taxes in the Seychelles either. That's the conclusion from what I've researched so far. So why would it be necessary to have a Maltese LTD either way?
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