Recommendation Malta or Cyprus?

[ghouldog]

@jackfrost Assuming you are in Malta as "economically self-sufficient", you pay your €5K in tax,‌ have your insurance, etc. But you work remotely (running an offshore company with no business‍ whatsoever in Malta) from home or a co-working space. Are you are breaching the rules?⁠ I understand that if you are doing business in Malta as an employee or self-employed⁤ you have to register as such (pay national insurance, etc.), but I cannot seem to⁣ find a definitive answer on working from Malta as economically self-sufficient.

Also, if you set-up⁢ a Maltese co (with offshore holding co.) can you retain the "economically self-sufficient" status? Thanks︀

 

[Spinat]

that's interesting. I can't believe‌ that this is accepted if you live in country X but work as " economically‍ self-sufficient " in Malta. Objective looking at it you are doing nothing else then working⁠ from home and it change nothing to the old "offshore company" setup we all were⁤ used to for this purpose! Or what am I missing?

 

[jackfrost]

Economic self sufficiency has nothing to do with taxes really. This is just that you‌ are allowed to have your residency on Malta. While you have freedom on movement in‍ the EU there are still rules individual to each country. In Malta that is you⁠ need to provide a corresponding job, degree whatever it is and then there is the⁤ route of just handing them a bank statement with i think like 16k Eur or⁣ so + health insurance certificate and declare yourself economic self sufficient. This way you will⁢ get your residency card. Again has nothing to do with taxes but just to be︀ able to permanently reside on Malta which is the basic requirement in general.

Working for︁ an offshore does not change anything at all. You need to look up what foreign︂ / local soured income is. It is not where you company is but where you︃ butt sits and that sits on Malta so it would still be local income and︄ be taxed at 35%.

You need a Maltese active Ltd and the foreign holding either︅ way unless you have purely (proovable) passive income (no your no substance nevis company is︆ not passive income) with certain ownership requirements and so on. If you only have this︇ truely passive income then yes you would not need any Maltese company as long as︈ you dont remit the Money to Malta. You would still pay your 5k just to︉ not have to even declare your world wide income and just make them f*** off.︊

 

[jackfrost]

PS: for me it helped that i already had a company incorporated a couple weeks‌ earlier (takes like 1-2 weeks) and was able to give the officer that incorporation certificate‍ to proof i have indeed a legit interest to reside on Malta. A year+ rental⁠ contract would also do the job. I did not have an apartment at that time⁤ and just lived in Hotels.

 

[ghouldog]

Thanks, that makes a lot of sense now. I guess if you want to do‌ things properly (i.e. you are a "digital nomad" living and working from Malta_, you would‍ still need to register as an employee of your Malta Co (owned by an offshore⁠ co.), pay taxes on your salary (although you could choose not to pay your salary),⁤ pay National Insurance, etc?

 

[jackfrost]

No you dont. You have to do private insurance anyways. But you should pay the‌ 5k expat tax which also means you dont have to declare your word wide earnings.‍

 

[lonizzita]

Hello Paper thanks for︆ the thread I read your very interesting post.

Regarding the 183 days of stay in︇ Malta, I spoke to an agent and he told me to apply for the Malta︈ tax residency certificate.
apply once a year in Malta and prove that you have resided︉ more than 183 days on Maltese soil, this will help you '' defend '' from︊ your country of origin

What do you think about it? do you also know this︋ procedure?

Also could you recommend me some reliable agents? all accountants recommend me different information︌

thank you

 

[biz1]

@jackfrost can you detail this? Malta has some CFC rules as of recently. If⁣ it's >750k€ turnover and you as Maltese resident have >50% control/ownership then it's taxed in⁢ Malta, I don't understand how this principle plays out, please feel free to share your︀ thoughts.

 

[biz1]

If your country of citizenship does not⁣ ask you to provide any tax certificate from the country where you reside (e.g. Malta),⁢ will a tax certificate ever be needed?? I presume not... would a bank need it?︀ The Maltese tax number (TIN) is on the Maltese ID card, right, that's what any︁ bank would ask for for CRS, no need for a tax certificate.

 

[JohnLocke]

In some simple terms I still believe that Cyprus is worth to look into, if‌ you have a good agent there you may be in good hands and can have‍ almost all the freedom you seek, both in regards to tax but also in regards⁠ to privacy.

Above is off the record, so if you want to read you to⁤ the knowledge about Malta and Cyprus you will not understand what I mean.

 

[Spinat]

I have a gent I used for some years which work well for me and‌ customers. 100% privacy and no problems with the provided KYC docs. He do the job‍ for ages and we know each other so never a question is asked 🙂

 

[Martin Everson]

Basically Malta like some other countries has a CFC threshold.⁤ So even if your offshore company is considered a CFC in Malta it is not⁣ subject to tax as a CFC if accounting profits are less than 750,000 euros and⁢ non-trading income is no more than 75,000 euros.

So lets be clear if a company︀ is considered a CFC then the non-distributed income of that CFC is added your tax︁ base in Malta and you go to war with tax man over DTA's etc...lol. However︂ most importantly the above mention threshold applies before this occurs.

Perhaps others have a different︃ interpretation.

 

[Paper Chaser]

Yes, I‘ve read and⁢ heard about that certificate many times, too. If my government is really going to annoy︀ me, I will just go get it. 😉

Well, I just posted some experiences with internationally-based︁ agents a couple of weeks ago, did you overlook it? I‘d highly recommend contacting all︂ of them by yourself since every person is in a different spot and has different︃ needs.

 

[jackfrost]

if they look into you in⁣ any way they will ask

cyprus might also be interesting for some︄ people because of its size, banking etc. it is definitly more expensive but still well︅ within limits.

 

[jackfrost]

The CFC rules are watered down even more by the fact that they only apply‌ if it results in less tax paid, they only work in one direction and you‍ are getting 35% tax credits on dividends anyways which would offset local maltese taxes.

Also they get further erased by the remittance system. As long as your money does not⁠ touch malta its a different story tax wise anyways.

Also the moment you apply for⁤ the corp tax refunds this gets checked by the maltese tax agency too so they⁣ already sign off on your structure and have all the details since malta has UBO⁢ etc registers with 100% transparency.

 

[biz1]

General Malta questions, please let me know what you think:

(1) What is Malta's definition‌ of "manage and control" actually, do you know where in their legal code it's stated?‍

(2) If you are a Malta resident - that is you have the Malta ID⁠ on the basis of economic self-sufficiency and you have long vacations in Malta for say⁤ 2, 4, 90, 184 days per year such number - what if you spend the⁣ rest of the year in other countries, and while in other countries you manage and⁢ control some business and you make some income, may Malta ever make claims on such︀ business (as CFC) or on such income (taxes)?

(3) Is the general principle that, an︁ active action you take on Malta - such as,
* while you are on Malta︂ you make a phone sales deal between two parties in other countries that gives you︃ commissions, or
* you perform a consultancy service where you work for some hours while︄ you're on Malta for a client in another country, or
* say you do something︅ that is not work but someone just wants to pay you while you are on︆ Malta for something that's not active work by you and you sign some agreement "I︇ accept to receive these Euros/Yens in this business transaction" and someone pays you that to︈ your non-Malta bank account
- is the general principle that such income is taxed in︉ Malta at 35%, or is it only taxed if you receive the income into Malta?︊ What kind of work and income is specifically *not* taxable in Malta? (Any reference to︋ law greatly appreciated)

(4) The fact that you hold a Malta ID card, does that︌ mean you're taxable on Malta? If you are less than a certain number of days︍ on Malta per year, are you still taxable? Actually what's the criterium as a physical︎ person to be taxable on Malta. (Any reference to law greatly appreciated)

(5) Malta has️ some social security fee schedules too. Do they ever apply to income you get from‌ outside Malta?

I like to understand this so I understand exactly what a person who‍ is a Maltese resident (holds the Malta ID) can do so that he *not* attracts⁠ surprise 35% bills from Malta's tax authority.

(Finally @jackfrost what do you mean by "they⁤ only work in one direction"?)

 

[biz1]

@jackfrost do you have any︁ further reference to that CFC is subortinated to not-touch-Malta (remittance). This is great and like︂ to understand how it works.

 

[BlueMist]

Few years back they used to give this Malta ID card to anyone, even tourists‌ staying in the hotels, who as an address were providing their hotel address. Maybe something‍ has changed but I would not think about this document as a residency proof.

 

[biz1]

@BlueMist that is super interesting. What about declaring taxes because you hold a Malta ID‌ card, Malta will expect that won't they, if you don't file a tax return they'd‍ fine you or??

 

[biz1]

Just curious, the Maltese consolidated accounts setup, how does it work out in practice -‌ so you have A Ltd. and B Ltd. both on Malta, A owns B, and‍ you own A Ltd., and you are a tax resident on Malta only. B can⁠ then conduct any business (e.g. sell consulting services, facilitate sales, whatever), and you then pay⁤ out the profits as dividends to yourself, with 5% total company tax. Are you due⁣ any other taxes on top of this in Malta e.g. personal income tax?