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Malta, a strategic hub within the European Union, continues to attract highly skilled professionals from around the world.
On June 19th, the Commissioner for Revenue unveiled new guidelines under Article 6 of the Income Tax Act, aimed at providing compelling tax benefits to “investment services and insurance expatriates.”
The goal is to bolster these sectors, which have experienced substantial growth since Malta’s EU accession in 2004, by enticing top-tier talent to contribute their expertise.
Who Qualifies?
For those looking to make a significant impact in Malta’s investment services or insurance sectors, the criteria are well-defined.
An ‘Investment Services Expatriate’ is someone employed by or providing services to a company holding an investment services license or recognized by the relevant competent authority.
This includes activities like management, administration, safekeeping, and investment advice to collective investment schemes.
Similarly, an ‘Insurance Expatriate’ works for an entity authorized under the Insurance Business Act, an insurance manager under the Insurance Distribution Act, or engaged in the business of insurance broking.
To be eligible, these expatriates must not be ordinarily resident or domiciled in Malta, nor have resided there for a minimum of three years preceding their employment or service provision in Malta.
The Generous Benefits
Qualifying Investment Services or Insurance Expatriates will enjoy a range of exemptions, which makes this opportunity even more attractive.
The tax benefits cover personal expenses paid by the employing company, such as removal costs, accommodation expenses in Malta, travel costs for the expatriate and immediate family, provision of a car in Malta, medical expenses, medical insurance, and school fees for children.
These benefits, which are typically taxed as fringe benefits, are exempt from taxation for a remarkable period of ten years, starting from the first taxable year in Malta.
Additionally, these expatriates will be treated as not resident in Malta for specific income tax purposes, leading to exemptions on various types of income, including interest, royalties, profits from transfers of units in collective investment schemes, shares, securities, and more. These benefits remain in effect throughout the duration of the individual’s employment as an Investment Services or Insurance Expatriate.
It’s essential to note that individuals who qualify for these tax benefits cannot simultaneously benefit from Malta’s Highly Qualified Persons Rules. The two registration options are mutually exclusive.
Malta’s progressive tax benefits for Investment Services and Insurance Expatriates paint an attractive landscape for skilled professionals seeking a dynamic and rewarding career within these thriving sectors.
The generous exemptions, combined with Malta’s strategic position in the EU, make this opportunity a compelling proposition for those looking to make a significant impact while enjoying a supportive environment
If you have any queries regarding this article on Malta’s new tax benefits for expatriates or Malta tax in general, then please get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
As Hungary continues its journey towards modernization, private clients must grapple with intricate tax considerations outlined in the Act of CXVII of 1995 on Personal Income Tax.
This is the main legislation dealing with personal income tax.
Like in many jurisdictions, determining tax residency in Hungary involves some care.
The following are likely to be resident for tax purposes in Hungary:
The definition extends to individuals with a permanent home, vital interests, or habitual abode in Hungary.
Hungarian tax residents are globally taxed, contrasting with non-residents taxed solely on income from Hungarian sources.
Hungarian-resident individuals face a 15% PIT rate on worldwide interest income.
PIT covers various scenarios, including publicly offered debt securities, where capital gains are deemed interest income.
To eliminate double taxation, Hungary provides tax credits or follows relevant double tax treaty rules.
Notably, interest income received in valuable assets triggers tax based on fair market value if withholding isn’t feasible.
Dividend income for Hungarian-resident private individuals is subject to a 15% PIT rate, along with a 13% social tax in 2023.
Distribution from entities in low-tax jurisdictions attracts additional taxes.
Capital gains, including those from the sale of shares, are subject to a 15% PIT rate and a 13% social tax in 2023.
Preferential PIT rules may apply to controlled capital market transactions.
Favorable tax treatment applies to qualified long-term investments, potentially leading to a zero percent tax rate after five years.
Hungary imposes an 18% tax rate on the net value of inherited or gifted properties.
Residential properties benefit from a preferential 9% rate.
Several exemptions exist, such as lineal relatives being exempt from tax, and exemptions for scientific, artistic, or educational purposes.
Transfer tax applies to real estate, movable property, rights of pecuniary value, and securities acquired through inheritance.
Shares in real estate holding companies may also incur real estate transfer tax.
Local municipalities may levy building tax, capped at 1,100 forints per square meter or 3.6% of the adjusted fair market value.
Land tax, imposed annually or based on adjusted fair market value, allows municipalities to charge up to 200 forints per square meter or a maximum of 3%.
Like their equivalents in other jurisdictions, private clients navigating Hungary’s tax landscape face a myriad of considerations.
Hopefully, our high level article underscores the importance of understanding the nuances to ensure compliance and optimize tax outcomes in this dynamic environment.
If you have any queries about this article on Hungary Private Client Tax Matters, or Hungarian tax matters in general, then please get in touch.
A recent court judgment has held that non resident hedge funds should be treated like residents in Spain if they meet certain requirements.
Under the Non-resident Income Tax Law, hedge funds resident in Spain are taxed at a lower rate of 1%, while those resident in other countries are taxed at a higher rate of 19%, unless there is a relevant double tax treaty.
The Supreme Court ruled that this different treatment is discriminatory and goes against the free movement of capital regulated in article 63 of the Treaty on the Functioning of the European Union.
The court held that non-resident hedge funds should be treated like residents if they can prove that they are open-ended entities, that they have relevant authorization, and that they are managed by an authorized management company pursuant to the terms of Directive 2011/61/EU.
The nonresident hedge fund has the burden to prove these requirements, but a certain flexibility should be allowed due to the lack of specific regulations in Spain in this regard. If the Spanish authorities have reservations about the documentation provided by the fund, they must initiate an exchange of information procedure with its State of residence.
The Court also concluded that the restriction on the free movement of capital could only be considered neutralized by the provisions of a double tax treaty if the treaty permits the hedge fund (not its members) to deduct the total amount of Spanish tax withheld in excess. However, given the way hedge funds operate and are taxed, that neutralization is impossible in practice.
This judgment is significant as it removes discrimination against nonresident hedge funds and brings Spain in line with the free movement of capital provisions of the Treaty on the Functioning of the European Union.
The decision clarifies the requirements that nonresident hedge funds must meet to be treated like residents and offers some flexibility in terms of providing documentation. It also highlights the difficulty in neutralizing restrictions on the free movement of capital through double tax treaties in practice.
In conclusion, the recent Supreme Court judgment in Spain has removed discrimination against nonresident hedge funds and clarified the requirements for them to be treated like residents.
This decision is in line with the free movement of capital provisions of the Treaty on the Functioning of the European Union and offers some flexibility in terms of providing documentation.
However, the decision also highlights the difficulty in neutralizing restrictions on the free movement of capital through double tax treaties in practice.
If you have any queries about issues around Spain non-resident hedge funds, or Spanish tax matters in general, then please do get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
The United Arab Emirates (UAE) has taken a significant step towards modernizing its tax system with the recent introduction of new criteria for determining tax residency status.
The UAE Cabinet of Ministers, through Decision No. 85 of 2022, announced these changes on 9 September 2022.
The new rules apply to both individuals and legal entities for the purpose of UAE tax law or bilateral tax agreements, starting from 1 March 2023.
Ministerial Decision No. 27 of 2023, published on 1 March 2023, provided further clarity on some definitions related to tax residency for individuals, as outlined in Cabinet Decision No. 85 of 2022. These new tax residency criteria replace the previous system that relied solely on the number of days an individual spent in the UAE.
Under the new rules, an individual will be considered a tax resident if they fulfill any one of the following conditions:
These criteria, which came into effect on 1 January 2023, apply to all individuals, including UAE nationals and expatriates. This decision has significant implications for individuals who were previously classified as non-residents for tax purposes but will now be considered residents.
The introduction of the new tax residency criteria is part of the UAE’s ongoing efforts to diversify its economy, broaden its tax base, and generate more revenue to support economic growth and development.
An individual might still be considered a tax resident of the UAE, even if they don’t meet any of the three criteria mentioned above, if they aren’t considered a tax resident in any other jurisdiction and they spend at least 90 days in the UAE in the calendar year. This means that an individual who spends less than 183 days in the UAE in a calendar year and doesn’t have a permanent home or active residence visa in the UAE could still be considered a tax resident if they spend at least 90 days in the country and aren’t tax residents of any other country.
This 90-day criterion is designed to capture individuals who may not be physically present in the UAE for an extended period but who have strong connections to the country, such as those who frequently travel to the UAE for business or have family ties in the country.
It’s crucial to note that this criterion isn’t an automatic exemption from tax residency in other countries. Individuals must still consider the tax residency rules in any other countries where they may have tax obligations to determine their overall tax residency status and obligations.
In conclusion, the introduction of the new tax residency criteria is a positive move towards modernizing the UAE’s tax system and aligning it with international best practices.
The decision ensures that the UAE’s tax system remains competitive and attractive for individuals and businesses.
The introduction of the 90-day criterion offers more flexibility in determining tax residency in the UAE and acknowledges the diverse ways individuals may have ties to the country.
If you have any queries about the UAE tax residency or UAE tax matters more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article
Understanding UK Non-Domiciled Status: Myths and Facts Have you ever heard of Non-Dom status?
It’s a tax status available in the UK for people who are not domiciled in the country. This article aims to clarify some common myths and facts surrounding Non-Dom status.
What is Non-Domiciled (Non-Dom) status? Non-Dom status is a tax status available to individuals who are not domiciled in the UK. It means that they only have to pay taxes on money they earn inside the UK, not on money they make outside the UK. However, specific rules and conditions must be met, which is not a one-size-fits-all solution.
Some people think that Non-Dom status is only for the super-rich. But that’s not true! Anyone who meets the criteria can qualify for this status. Non-Doms still have to pay taxes like UK residents, but they can benefit from some tax advantages.
Another common myth is that Non-Doms don’t have to pay any tax in the UK, which is false. Non-Doms are subject to the same taxes as UK residents, including income and capital gains taxes. However, they can benefit from some tax advantages, such as the remittance basis of taxation.
One of the benefits of Non-Dom status is the remittance basis of taxation. This means that Non-Doms only have to pay taxes on the money they bring into the UK, not on the money they keep in their bank accounts outside of the UK. However, there are some restrictions and additional charges.
Non-Dom status can also help people save money on taxes and inheritances. Non-Doms are not subject to UK inheritance tax on their non-UK assets. In addition, Non-Doms can have foreign bank accounts and invest in other countries without paying UK taxes.
Non-Dom status can be a valuable tax status for people who are not domiciled in the UK. However, it’s essential to seek professional advice to ensure that you qualify for this status and that it’s the right choice for your situation.
In summary, Non-Dom status is a tax status available in the UK that can benefit people who meet the criteria. Non-Doms still have to pay some taxes like UK residents, but they can benefit from some tax advantages. The remittance basis of taxation allows Non-Doms to pay tax only on money they bring into the UK. Non-Doms can also enjoy other benefits like not being subject to UK inheritance tax on non-UK assets and having foreign currency bank accounts and investments without being subject to UK tax.
If you have any queries relating to the non-dom status UK or tax matters in the UK more generally, then please do not hesitate to get in touch with a UK specalist Native!
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
On October 26, 2022, President Zelensky signed a law creating an electronic system through which foreign entrepreneurs can apply for residency permits.
Foreigners will be able to obtain an electronic residence (an E-Residence / E-Resident) in Ukraine without having to become Ukrainian tax residents.
It is scheduled to come into effect on April 1, 2023. Under it, foreigners will be able register themselves as private entrepreneurs and pay taxes in Ukraine.
The E-Residency program provides its participants access to a range of services, including the registration and termination of business activities in Ukraine.
The E-Residency status will not grant the right to live or visit Ukraine.
The E-Residency program is open to people who meet all of the following requirements:
To become an E-Resident, applicants must go through the “E-Resident” information system, obtain qualified digital signatures, and pass identification procedures.
Ukraine E-Residence may withdraw from the program at any time by applying for termination.
Ukrainian authorities have the power to revoke an individual’s E-Residency if they decide that this person no longer qualifies for the status.
To become an E-Resident, in addition to the above conditions, you must:
E-Residents will pay a flat tax of 5% on their business income. They are not allowed to deduct any expenses from this amount.
The nature of the business activities of the E-Resident is not restricted.
E-Residents must transfer their business income to the Ukrainian bank account they opened as part of the process.
The bank will also operate as the E-Resident’s tax agent and deduct the relevant tax and deal with all other reporting.
E-Residents are not subject to the social security charges in Ukraine.
E-Residents should consider whether the Ukrainian taxes deducted in respect of their business income can be credited against taxes they are liable in their country of tax residency.
If you have any queries about Ukraine E-Residence then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article