Malta 5% scheme structure formation

[realnomad]

Hi there, first of all, thanks for sharing such important information online.

I want to set up a foreign holding with a Maltese subsidiary to achieve the infamous 5% tax scheme.
Do you know any good but reasonably priced tax advisor/accountant to achieve this?

Thank you very much for your help and precious time!

 

[Gediminas]

Hi,

Yes, we can help you there. Send me an email along with the full description of your problem and needs, and questions if you have.

 

[clemens]

@Gediminas respect for your aggressive marketing strategy here at Offshorecorptalk, but this time you have probably gone far beyond the limit, you will now claim to be a certified public accountant?

To OP, please go and find one local in Maltha it's not difficult, what's your budget? if you can spend some hundred euro's you can get one from the TOP4 accountants.

 

[Gediminas]

you will now claim to be a certified public accountant?

Not exactly an accountant. My partner is a certified lawyer/tax advisor, to be more precise.

 

[realnomad]

Hi @clemens , I would say up to 5k€, but as it is a pretty standard service I'll go for the cheaper as long as he/she is certified and professional.

I started this thread because I found it pretty hard to find one locally in Malta. Seems like everyone just see you as a walking wallet.
It would be awesome if you can share those TOP4 you're talking about, I'll take care of enquiring the prices, as they may change from case to case

Thank you again for the time and help guys

 

[BlueMist]

I have used FBS Malta / FBS Cyprus for trading / holding combo. I think paid roughly around €4-5k with banks, VAT etc. It was few years ago though, so I guess it might be more now. Also while the setup won't be expensive, the annual running costs with nominee directors / shareholders will be roughly €10k + VAT.

And yes you will be treated as a walking wallet, because this is how the system works. Expect unexpected fees including compliance reviews from the banks, for which your corporate service provider will charge. Basically nobody is going to lift a finger without charging a fee.

Perhaps it could have been done cheaper, but usually it would involve some small accounting Malta company and separate provider for holding company e.g. in Cyprus. You have to pay a bit more for the convenience of being served under one roof by a company which has a physical offices in different jurisdictions, which I personally prefer.

 

[realnomad]

Thanks for the advice @BlueMist . I agree with you on spending more for the benefits you listed.

I'll enquire FBS, thank you very much for the hint

 

[Paper Chaser]

Are there any alternatives to FBS Malta? Some days ago I've read on this forum that they're shady.

Also, is 4 up to 5k just a usual price for the formation of a MT LTD (+ bank account)? Is it even necessary to have a bank account in MT?

 

[BlueMist]

Are there any alternatives to FBS Malta? Some days ago I've read on this forum that they're shady.

Also, is 4 up to 5k just a usual price for the formation of a MT LTD (+ bank account)? Is it even necessary to have a bank account in MT?

I am sure there are more alternatives, e.g. Michael Kyprianou , they have offices in few countries including Malta and Cyprus. I don't have direct dealings with them but I know someone who had and they seem to be good.

I don't know what did you read about FBS but there will always be happy and unhappy clients. FBS has one of the most informative websites among corporate service providers, that's for sure. So at least it helps you to understand things better.

It is no necessary to have MT bank account for Malta company.

 

[Paper Chaser]

@BlueMist what do you think, are the following costs reasonable for a professional establishment including all of the necessary structures and services:

~5.7k Malta company formation + ~3.7k UK company formation + some paperwork costs (= ~10k in total).

Annual costs: ~2.7k Malta company + ~2.7k UK company + ~3.6k accounting (can be lower or higher) + ~2.1k audit & tax compliance (can vary, too) + ~1.4k VAT returns (= ~13k in total).

I got those prices by 2 legit and highly professional law firms specializing in those kind of schemes (which by the way, I mentioned in the other thread). I'm just wondering if that's some usual pricing, because it seems quite high to me.

Just like you, I'd like to get it all done by one single firm to make it all right from the beginning and don't have to worry about anything.

There is a post by someone on this forum, but I don't remember the thread or user right now, stating that as long as you stay in the EU you can choose 2 out of 3 options: a) legal b) cheap c) low taxes. Considering that fact, prices from 10k+ now seem very reasonable to me. Like if you want to save as many taxes as possible legally, you can't have a cheap setup else it won't work.

 

[BlueMist]

I can’t speak for the UK company fees as I have no experience. Also not sure about the choice of the UK holding company vs Cyprus holding. What about Brexit and how it will affect the UBO tax situation I have no idea. Cyprus holding is one of the very few if not the only one within EU which doesn’t have public UBO registry and you can hide yourself behind nominees (for the privacy reasons).

Malta incorporation fees seems to be okay, especially if you are doing it by a company which has a presence in multiple countries and can structure it properly from the beginning. The only way to make things cheaper including the annual running costs would be to work with some small accounting firm in Malta which has lower fees, but not international presence. In such case the annual running costs of Malta company can be decreased to €6-7k per annum all inclusive. You can always negotiate after first year. Once the setup is done, nothing holds you to keep both companies with them.

 

[Paper Chaser]

I can’t speak for the UK company fees as I have no experience. Also not sure about the choice of the UK holding company vs Cyprus holding. What about Brexit and how it will affect the UBO tax situation I have no idea. Cyprus holding is one of the very few if not the only one within EU which doesn’t have public UBO registry and you can hide yourself behind nominees (for the privacy reasons).

Malta incorporation fees seems to be okay, especially if you are doing it by a company which has a presence in multiple countries and can structure it properly from the beginning. The only way to make things cheaper including the annual running costs would be to work with some small accounting firm in Malta which has lower fees, but not international presence. In such case the annual running costs of Malta company can be decreased to €6-7k per annum all inclusive. You can always negotiate after first year. Once the setup is done, nothing holds you to keep both companies with them.

Well, both structures actually work, Cyprus as well as UK. For the privacy reasons sure, Cyprus might be better. Since I don't need or even want to hide anything, it doesn't matter to me personally. So I'll just go with the UK, even keeping Brexit in mind, I think it's still a more stable option than Cyprus. But that's just a personal thing, both solutions work well.

Regarding the pricing, yeah you're right again, those guys seem to have a pretty decent presence in multiple countries and do know structures and laws very well. So that might be a reason for why the company formation is slightly more expensive as well as the accounting. If you want to earn big, you got to pay big. Might look to hire my own accountants who can do audits and taxes, too, in the near future. Or swap to another accounting firm like you just advised.

Thank you very much for your help so far, I could learn very much from your advices and experience already!

 

[fshore]

Have you checked if the tax refund will be taxable as income in the UK?

 

[Paper Chaser]

I'm dealing with few MT & UK service providers. This is minimal realistic cost level for holding companies that don't do active business transactions. For actively trading companies with bank accounts could be significantly higher. Depends on nature and scope of business (complexity and number of business contracts etc.)

So all in all it's a decent pricing, you say? Neither overpriced nor underpriced?

: ) I see you never tried to switch MT corp. services provider.
I did it several times. A lot of effort and some unexpected exit charges : ) very unusual is'n it : )

Better to get right one on first go.

I've heard so, too. Just depends whether your provider is legit and professional or if he's not. I don't pay those high prices to end up having a bad service or shady contracts so I make sure about the provider and their reputation.

Assuming you are not UK resident and the Holding co is UK tax resident that is going to use UK small company exemption to receive profit distributions from actively trading MT company that does not derive its profit from UK sources - this looks to be OK if all the conditions below are satisfied.

A distribution received by a small UK company is exempt provided that four conditions are satisfied. The
conditions are:

- The paying company is resident qualifying territory (MT IS QUALIFYING) and is not also dual resident (MAKE SURE THAT YOU WILL GET MT CO. TAX RESIDENCY CERTIFICATE - CHECK WITH SERVICE PROVIDER WHAT WILL BE THE COST).
- The distribution must not be an amount, typically of interest, that is deemed to be a distribution for tax purposes.
- A deduction is not allowed to any foreign resident in accordance with any foreign tax law in respect of the distribution.
- The distribution is not paid as part of a tax advantage scheme (CHECK WITH YOUR ADVISOR ALL THE ACTUAL CIRCUMSTANCES AND IF).

Thanks god, you finally got us, mate.

 

[fshore]

Assuming you are not UK resident and the Holding co is UK tax resident that is going to use UK small company exemption to receive profit distributions from actively trading MT company that does not derive its profit from UK sources - this looks to be OK if all the conditions below are satisfied.

A distribution received by a small UK company is exempt provided that four conditions are satisfied. The
conditions are:

- The paying company is resident qualifying territory (MT IS QUALIFYING) and is not also dual resident (MAKE SURE THAT YOU WILL GET MT CO. TAX RESIDENCY CERTIFICATE - CHECK WITH SERVICE PROVIDER WHAT WILL BE THE COST).
- The distribution must not be an amount, typically of interest, that is deemed to be a distribution for tax purposes.
- A deduction is not allowed to any foreign resident in accordance with any foreign tax law in respect of the distribution.
- The distribution is not paid as part of a tax advantage scheme (CHECK WITH YOUR ADVISOR ALL THE ACTUAL CIRCUMSTANCES AND IF).

The dividends should be ok to be receive tax free in the UK. But what about the tax refund from the Malta government, would that be classified in the UK as dividends?

 

[BlueMist]

Had a client serviced by F B S. Experience was not satisfactory. Cannot provide any more details due to confidentiality.

: ) I see you never tried to switch MT corp. services provider.
I did it several times. A lot of effort and some unexpected exit charges : ) very unusual is'n it : )

Better to get right one on first go.

I never had problems with FBS, but they are not necessarily cheap. As all csp they will charge you for all the small and big things.

However based on my experience, once you get some very attractive quotes from small accounting firms, you have higher leverage to negotiate the fees with existing csp. Nobody wants to lose a client and the client doesn’t want to have a hassle either.

 

[erni]

I am sure there are more alternatives, e.g. Michael Kyprianou , they have offices in few countries including Malta and Cyprus.

do you have any link to this consultancy firm? I want to avoid to get in the clows of the wrong company.

I never had problems with FBS

some link for this company too please?

 

[BlueMist]

https://kyprianou.com.mt
https://www.fbsmalta.com

 

[realnomad]

Hey guys, after many meetings I found out that the 5% scheme is not the most advantageous scheme for me.
As self-employed whom spend in Malta just a small part of the year, only the part of my income generated whilst on the islands is taxable.

Anyhow, I collected prices of proposals, which I cannot disclose, but I can share the averages and their standard deviation.
I contacted "Audit Firms & Principals" registered in the Maltese accountancy board.
About half of the proposals where with Gibraltar holding, other half Cyprus, a few UK and HK.

Setup cost: avg 3300, stddev 1050
Management cost: avg 4100, stddev 1550

Of course, the numbers are not part of a standard distribution, and neither are independent, but this should give you an idea of what prices to expect.
Many firms that provided high management costs had lower setup costs, so be careful about these baits.

For who doesn't know about statistics, the numbers I got are:
68% within 1 standard deviation form the average
85% within 2 ..
99% within 3 ..

I hope this helps someone

 

[jackfrost]

Calculate about 10k for a Malta Ltd + Gib/Cyp holding including some book keeping, virtual offices, filing fees, audits and so on.