Malta Ltd Setup with 3 living destinations in EU, possible?

[uncreative]

Hi!
I would like to have my setup checked.

I am planning to move to Malta with my wife (Spanish nationality, no residence in spain) and two childs, applying non dom status with typical Malta company setup. ( active ltd + holding abroad ) .

I will be CEO of the company and my wife will also be employed. Since we have traveled a lot in the past (digital nomad life), we would now like to take it easy and only live in 3 destinations permanently.

We bought a small holiday home in Spain and would like to live there 5 months a year. We would also like to spend 3 months a year in Germany in Summer, due to the agressive german tax regulations we will only spend here in hotels or short-term rented airbnb apartments in order not to trigger a residence.

Maybe 1 month for Holiday Trips in Europe.

In summary:

- Malta Residence ( Non Dom ) for me, wife and children. Permanently rented apartment, company in Malta with substance ; own office, another employee. We stay here only 3 months a year.

- 5 months Spain stay in our own holiday home in Andalusia.

- 3 months in Germany, different places and short rented apartments

- 1 month Holiday trips ( Italy , France, Portugal, ...)

I will continue to work remotely online for my Malta Ltd ( IT Service ) when I am not in Malta. I tax my salary as CEO in Malta, where I have a lot of ties: economic, family, apartment.

I know there are double taxation agreements with Spain and Germany. However, I also occasionally receive dividends from the maltese company. According to Maltese law, these are taxed at only 5%, if not remitted to Malta.

Can I live like this for a few years or does this construct offer a tax target from Spain or Germany? I dont want to make mistakes, maybe I can still improve something?

thanks in advance.

 

[Marzio]

Since you will be working from your house in Spain, potentially Hacienda could see this as a fixed place of business so it could claim that's a permanent establishment (even if you stay less than 6 months).

 

[uncreative]

Since you will be working from your house in Spain, potentially Hacienda could see this as a fixed place of business so it could claim that's a permanent establishment (even if you stay less than 6 months).

Thank you for your post,
yes this could be a problem theoretically. The only question is what the burden of proof looks like in practice.
Or could I just go on holiday without working in the 5 months in spain?

As CEO, I just have to prove that I am doing business for the company locally in Malta. That could be the case in the three months when I am in Malta. My active business and my position as CEO doesnt require me to take care of it every month, for important things I have also a employee in Malta.

Maybe it is also more plausible for a vacation time if I only stay 3 months in Spain.

But how could I proof that I am not working in this time if it is imposed by the Spanish tax authorities? Difficult...

BTW yesterday the new startup law was passed in Spain, which probably would have some advantages, at least on paper... https://www.thelocal.es/20221104/breaking-spain-passes-startups-and-digital-nomad-law/

The only problem in my opinion is that in Spain everything is very complex and complicated, and you never really have the feeling of legal certainty, such as with the Beckham Law. Other countries like Malta are more straightforward.

Maybe the new spanish startup law is an alternative for people like me.

I would just go to Spain if the new law offers tax advantages for entrepreneurs, but without this bureaucratic madness. I have read that there will be a flat tax for 24% for 5 years, and no and no wealth tax ( modelo 702, ...).

But it is to early to say if it will be an option, maybe for the future, at the moment my feeling is that it is just more relaxed and better not to have Spain as a tax residence.

 

[Marzio]

But how could I proof that I am not working in this time if it is imposed by the Spanish tax authorities? Difficult...

Having employees in Malta would help.

 

[CyprusLawyer101]

Set up looks fine. Good luck !

 

[uncreative]

Set up looks fine. Good luck !

Okay great, thank you!

 

[Marketint]

I know people who try this and yes maybe by law you are right but the tax authorities will try to come after you and it will cost you a lot of money if you need to pay lawyers to discuss with them. Better choose one residence where you stay most of the year. More easy to defend yourself if the authorities comes with questions. Europe is a sh*thole nowadays

 

[Mr Gus]

So you will only spend 3 months in Malta?

 

[JimBeam]

I usually do not suggest Cyprus easily, but you might want to look into it as well.

Reasons:

1. Only 60 day stay/year to get non-dom status (fits your life style perfectly).
2. A slightly bigger place than Malta and a bit cleaner and less crowded and maybe a bit cheaper
3. Easier to open bank account for your business and more reliable banking in general. Malta is having banking issues.

Also, where your kids will go to school?

 

[uncreative]

So you will only spend 3 months in Malta?

yes , the maltese authorities do not specify a minimum length of time that I must stay in Malta, however with the restriction that I will not stay in any other country for more than 183 days.

I usually do not suggest Cyprus easily, but you might want to look into it as well.

Reasons:

1. Only 60 day stay/year to get non-dom status (fits your life style perfectly).
2. A slightly bigger place than Malta and a bit cleaner and less crowded and maybe a bit cheaper
3. Easier to open bank account for your business and more reliable banking in general. Malta is having banking issues.

Also, where your kids will go to school?

Yes I know that Cyprus has a very good offer too, but I prefer Malta for various reasons.
The children dont have to go to school yet. I would also like to do this life model for just 2 years and then want to go to Spain permanently at some point.

I think some things are moving in the right direction in Spain with the new startup law. But I think it still needs time for improvements. Should be better and simpler to apply than the previous spanish beckham law. We will see...

 

[Mr Gus]

yes , the maltese authorities do not specify a minimum length of time that I must stay in Malta, however with the restriction that I will not stay in any other country for more than 183 days.


Yes I know that Cyprus has a very good offer too, but I prefer Malta for various reasons.
The children dont have to go to school yet. I would also like to do this life model for just 2 years and then want to go to Spain permanently at some point.

I think some things are moving in the right direction in Spain with the new startup law. But I think it still needs time for improvements. Should be better and simpler to apply than the previous spanish beckham law. We will see...

They do and it's 183 days.

 

[uncreative]

They do and it's 183 days.

My accountant told me so. I think it's like in other EU countries, as soon as you have your center of life in a country due to economic and personal interests, the number of days plays a subordinate role. From 183 days you are automatically a tax resident almost everywhere, but you can also be one under this 183 number, if your ties are too strong. For example, I read in Germany it is sufficient to have your own apartment with key access to establish tax residency. Or p.e a pilot who is abroad for more than 183 days a year is still tax resident in his home country.

 

[Mr Gus]

My accountant told me so. I think it's like in other EU countries, as soon as you have your center of life in a country due to economic and personal interests, the number of days plays a subordinate role. From 183 days you are automatically a tax resident almost everywhere, but you can also be one under this 183 number, if your ties are too strong. For example, I read in Germany it is sufficient to have your own apartment with key access to establish tax residency. Or p.e a pilot who is abroad for more than 183 days a year is still tax resident in his home country.

Most of the time they added special clauses in tax treaties for pilots.

For Malta it's 183 days, except for the HWNI scheme which is 90 days.

And even if Malta would see you as tax resident if you only spend 90 days there what happens if Spain claims you are tax resident there as well. Now you are tax resident in two places, in other words you are fucked because you neither have treaty protection for Spain nor for Malta.

 

[uncreative]

Most of the time they added special clauses in tax treaties for pilots.

For Malta it's 183 days, except for the HWNI scheme which is 90 days.

And even if Malta would see you as tax resident if you only spend 90 days there what happens if Spain claims you are tax resident there as well. Now you are tax resident in two places, in other words you are fucked because you neither have treaty protection for Spain nor for Malta.

Spain does not have the first right, Spain and Malta have a DTA, so you can only be tax resident, where you have stronger ties. Maybe there will be a conflict between two countries, then there will be "Tie breaker rules" in double residence conflicts. For Spain p.e :

An individual is considered to be a tax resident in Spain if:

1. He/she physically remains in Spanish territory for more than 183 days.
2. Or has in Spain the main nucleus or base of his/her activities or economic interests, directly or indirectly (hereinafter “center of economic interests”).
3. Likewise, it is presumed in the absence of proof to the contrary, that an individual is a resident when his/her spouse who is not legally separated and dependent minor children are considered as such in accordance with the above rules.

1. : not the case, I want to stay 4-5 months.
2. economic interest are in Malta (my company with substance) I dont do business in spain or with spanish customers.
3. Wife and kids are resident in Malta not in spain.

Of course, the Spanish authorities may try it. But I think there are quite clear rules and laws from the Spanish side. In Spain, the 183 days is very important for the spanish tax authorities (see the Shakira case, she spent more then 200 days in spain each year).

I think it will be very difficult as I am getting a tax residency certificate from Malta, and I just have more connections in malta and finally the DTA is on my side in this case because of the TIE Breaker Rule. Although in my opinion I do not trigger a tax residency in Spain as I comply with the most important rule in the spanish tax law and do not spend 183 days in Spain and I have no economic interests there.

But thats exactly what I am here to discuss.

Perhaps it makes more sense to spend 4 months in Malta and only 4 months in Spain,
then Spain would have even fewer arguments?

 

[Mr Gus]

Spain has not the first right here, Spain and Malta have a DTA, so you can only be tax resident, where you have stronger ties. Maybe there will be a conflict between two countries, then there will be clerar Tie breaker rules in double residence conflicts. For Spain p.e :

An individual is considered to be a tax resident in Spain if:

1. He/she physically remains in Spanish territory for more than 183 days.
2. Or has in Spain the main nucleus or base of his/her activities or economic interests, directly or indirectly (hereinafter “center of economic interests”).
3. Likewise, it is presumed in the absence of proof to the contrary, that an individual is a resident when his/her spouse who is not legally separated and dependent minor children are considered as such in accordance with the above rules.

1. : not the case, I want to stay 4-5 months.
2. economic interest are in Malta (my company with substance) I dont do business in spain or with spanish customers.
3. Wife and kids are resident in Malta not in spain.

Of course, the Spanish authorities may try it. But I think there are quite clear rules and laws from the Spanish side. In Spain, the 183 days is very important for the spanish tax authorities (see the Shakira case, she spent more then 200 days in spain each year).

I think it will be very difficult as I am getting a tax residency certificate from Malta, and I just have more connections in malty and finally the DTA is on my side in this case because of the TIE Breaker Rule. Although in my opinion I do not trigger a tax residency in Spain as I comply with the most important rule in the spanish tax law and do not spend 183 days in Spain and I have no economic interests there.

But thatss exactly what I am here to discuss.

Perhaps it makes more sense to spend 4 months in Malta and only 4 months in Spain,
then Spain would have even fewer arguments?

Tax residency certificate is bull crap, it's about the facts, not some paper.

 

[uncreative]

Tax residency certificate is bull crap, it's about the facts, not some paper.

Okay I understand...

When an individual is present in Malta for more than 183 days (in any particular year) they will be considered as tax residence in Malta for that year, regardless of the purpose and the nature of the individual’s stay in Malta. On the other hand, an individual who does come to Malta to establish his residence becomes resident from the date of their arrival, regardless of the duration of their stay in Malta in any particular year.

A person who lives in Malta on a permanent or indefinite basis is ordinarily resident in Malta. A person who is in Malta for a temporary purpose may also become ordinarily resident in certain circumstances. This would apply, for example, to individuals who are in Malta for more than 183 days in each year over a long period - say, for three consecutive years. It can also apply to individuals who do not stay in Malta for more than 183 days in any year but who come to Malta regularly over a long period - say, over a period of three years - and establish personal and economic ties with Malta. An ordinary resident may also lose their residence status if they leave Malta permanently or indefinitely. If on the other hand they are temporarily absent from Malta, they will continue to be considered as resident here unless their absence is or becomes inconsistent with a residence status. This depends on the circumstances of each case and on the personal and economic ties that the individual may have retained with Malta.

Source: Tax Residence

 

[oldtimer2]

Here are my ramblings on your questions . Satisfying the 183 day rule in Malta as others mention is the safest bet. That raises the usual question … can you be happy living in Malta for half the year? that’s a personal question only you and your family can answer. Are your children school age? Where will they be attending school during your stays in various countries? Seems to me most countries write some laws so they can have some grey areas that can be used as reasons / excuses to look at and maybe chase targets with deeper pockets. Countries can wait years to make sure you are well and truly snared or at higher risk before starting tax proceedings (By which time large sums might be at stake). They can track most aspects of your everyday life now, to possibly gather data that helps them to build cases that match their own objectives If for any reason they think your arrangements are ‘unusual’. None of them sends you a warning in advance to say: “oh be careful you might be starting to fall into a grey area about where you are tax resident “.
So yes you are wise to ask if your structure will stand any test of time. Well done. I would do the same. Most dta’s seem to say finally if two countries want to fight over who should tax you then the two countries make a decision between themselves. I doubt they would care much about your own wishes. Malta did a lot to get of the fatf grey list - including far broader data gathering and sharing …. so in your case (if Spain for example decided to chase you) then would Malta fight to keep you in a battle against Spain? Just saying. So I would feel calmer about your structure if the two main countries involved (Malta and Spain) were different - I mean, if both were similar low tax countries that both did not tax broadly like Spain or France. In such scenario’s if two low tax countries ever fight over who gets a share of your taxes then the end result might not be so bad either way… but loosing out to Spain hmmm ouch.

 

[Mike Forman]

Spain does not have the first right, Spain and Malta have a DTA, so you can only be tax resident, where you have stronger ties. Maybe there will be a conflict between two countries, then there will be "Tie breaker rules" in double residence conflicts. For Spain p.e :

An individual is considered to be a tax resident in Spain if:

1. He/she physically remains in Spanish territory for more than 183 days.
2. Or has in Spain the main nucleus or base of his/her activities or economic interests, directly or indirectly (hereinafter “center of economic interests”).
3. Likewise, it is presumed in the absence of proof to the contrary, that an individual is a resident when his/her spouse who is not legally separated and dependent minor children are considered as such in accordance with the above rules.

1. : not the case, I want to stay 4-5 months.
2. economic interest are in Malta (my company with substance) I dont do business in spain or with spanish customers.
3. Wife and kids are resident in Malta not in spain.

Of course, the Spanish authorities may try it. But I think there are quite clear rules and laws from the Spanish side. In Spain, the 183 days is very important for the spanish tax authorities (see the Shakira case, she spent more then 200 days in spain each year).

I think it will be very difficult as I am getting a tax residency certificate from Malta, and I just have more connections in malta and finally the DTA is on my side in this case because of the TIE Breaker Rule. Although in my opinion I do not trigger a tax residency in Spain as I comply with the most important rule in the spanish tax law and do not spend 183 days in Spain and I have no economic interests there.

But thats exactly what I am here to discuss.

Perhaps it makes more sense to spend 4 months in Malta and only 4 months in Spain,
then Spain would have even fewer arguments?

You are a Spanish citizen so as long as you have any ties to Spain, be it living there for some time, owning property tax authorities will go after you once they find out you operate from Malta and don't declare taxes in Spain.

Operating a Malta business is already a red flag, as a ceo your name is visible in the public register of Mallta.

Tax authorities just want one thing, tax, so as soon as your name pops up related to any low tax jurisdiction it is assumed that you are trying to avoid high taxes (which you are also trying to do).

You will need a tax lawyer if it comes to that point (they cost around 350-500 eur per hour) and make sure you have a lot of proof that you are living in Malta, very occasionally go to Spain and don't own or rent anything there and that your company in Malta is not an empty box, but you have an office rental contract, payment receipts of rent, utilities, at least one local staff (family won't do it ).

 

[uncreative]

It is very strange
because the spanish Tax authorities uses three very clear points to define whether someone is a tax resident in Spain or not.

1. You spend more than 183 days a year in Spain.

2. Your principal centre of economic interests (e.g., your job, business and/or other personal links) are directly or indirectly in Spain.

3. Your family (spouse, partner and/or dependent children) habitually live in Spain.

And all of these points are not fitting in my case.

And owning an apartment, so unlike in many other countries, in Spain only plays a role in the TIE Breaker rules.
A lot of foreigners have a second home in Spain.

I spoke to a number of accountants and lawyers, and they all reassured me that these rules apply.
They should also know the practice of the tax authorities.

However, I still have a queasy feeling when I want to spend a few months in Spain.

I think I will do the split like this to be safe: 6 months in Malta ( company, family, friends, resident flat)
only 3 months in Germany (airbnb, hotels)
only 3 months in Spain ( holiday home )

I think then it's more obvious that I dont live in Spain or Germany.

All these tax regulations are too complex and give little legal certainty these days, medieval bulls**t...

 

[A1988]

just move to the canary islands and pay 4% tax there and get it over with, you will be more happy, you spending more time in spain and less in malta is an easy case for the tax authorities in spain to go after you. Just form a company in canary islands and pay 4% tax and get it over with.