Malta Residency or Portugal Residency + Romania SRL or UK LTD?

[ilpablo]

Hi everyone, I'm struggling to understand which option is the best and if it's legit and can work just fine.

Option 1) Malta residency + LTD UK or Romanian SRL
If you keep the LTD UK company or Romanian SRL avoiding the Maltese 2 companies structure, can you just pay the corporate tax in the UK and your personal taxes in Malta under the Self Sufficient regime?
Would be better to combine this with an LTD UK company or Romanian SRL?
I talked with many accountants and they said different things. Someone claim I'm breaking the CFC rules and someone else that Malta doesn't care since you are NON-DOM resident.
Also some told me I MUST stay 183 days every year, while others told me once you get the residency you can travel and again they don't care.

Has anyone already tried this option?

Option 2) Portugal residency + LTD UK or Romanian SRL
The same as above, can you just pay the corporate tax in the UK or Romania, and your personal taxes in Portugal under the NCHR regime?
Would be better to combine this with an LTD UK company or Romanian SRL?
Here as well, I talked with many accountants and they said different things. Someone claim I can benefit from the NCHR regime, and someone not.
Here you don't have to stay 183 days for sure.

Has anyone already tried this option?

Thanks y'all!

 

[Martin Everson]

Option 1 with UK company and stay below 750k in accounting profits to stay within Malta's CFC threshold.

How they can check the 183 is impossible. There is no passport control if you go to Italy for example from Malta as its Schengen.

 

[ilpablo]

Alright! I forgot about the 750k. But there is still the law "place of effective management".

If I reside in Malta as self sufficient, they can argue about this or not?

Also why do you think is better LTD UK instead of Romanian SRL?

Thanks Martin!

 

[Marzio]

Option 1 with UK company and stay below 750k in accounting profits to stay within Malta's CFC threshold.

Wouldn't managing the company from Malta make it tax resident in Malta? I mean if the company is tax resident in Malta he shouldn't worry about CFC rules, right?

 

[Martin Everson]

Alright! I forgot about the 750k. But there is still the law "place of effective management".

If I reside in Malta as self sufficient, they can argue about this or not?

They can argue anything in Malta and you will not win. P.S Non-do in Malta does not mean tax free. Your still pay a 5k fee if you earn over 35k offshore as non-dom that you do not remit - if I remember correctly.

Wouldn't managing the company from Malta make it tax resident in Malta? I mean if the company is tax resident in Malta he shouldn't worry about CFC rules, right?

Good question.

--- quote start

CFC rule​

In terms of the ATAD Implementation Regulations, the CFC rule shall find application where the following conditions are met:

1. control test (in case of an entity): the taxpayer by itself, or together with its associated enterprises holds a direct or indirect participation of more than 50% of the voting rights, or owns directly or indirectly more than 50% of capital or is entitled to receive more than 50% of the profits of that entity; and
2. low-taxation test: the actual corporate tax paid by the entity/permanent establishment is less than 50% of the tax that would have been ‘charged’ on the entity or permanent establishment in terms of the ITA.

Should an entity or permanent establishment be treated as a CFC, the non-distributed income of the said entity or permanent establishment arising from non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage shall be included in the tax base of the taxpayer. The income to be included in the tax base of the taxpayer shall be limited to amounts generated through assets and risks which are linked to significant people functions carried out by the controlling company.

The CFC rule shall not find application in relation to an entity or permanent establishment:

1. with accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000; or
2. of which the accounting profits amount to no more that 10% of its operating costs in the tax period.

--- quote end

 

[ilpablo]

They can argue anything in Malta and you will not win. P.S Non-do in Malta does not mean tax free. Your still pay a 5k fee if you earn over 35k offshore as non-dom that you do not remit - if I remember correctly.



Good question.

--- quote start

CFC rule​

In terms of the ATAD Implementation Regulations, the CFC rule shall find application where the following conditions are met:

1. control test (in case of an entity): the taxpayer by itself, or together with its associated enterprises holds a direct or indirect participation of more than 50% of the voting rights, or owns directly or indirectly more than 50% of capital or is entitled to receive more than 50% of the profits of that entity; and
2. low-taxation test: the actual corporate tax paid by the entity/permanent establishment is less than 50% of the tax that would have been ‘charged’ on the entity or permanent establishment in terms of the ITA.

Should an entity or permanent establishment be treated as a CFC, the non-distributed income of the said entity or permanent establishment arising from non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage shall be included in the tax base of the taxpayer. The income to be included in the tax base of the taxpayer shall be limited to amounts generated through assets and risks which are linked to significant people functions carried out by the controlling company.

The CFC rule shall not find application in relation to an entity or permanent establishment:

1. with accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000; or
2. of which the accounting profits amount to no more that 10% of its operating costs in the tax period.

--- quote end

So how to avoid that?

 

[Marzio]

In terms of the ATAD Implementation Regulations, the CFC rule shall find application where the following conditions are met:

1. yada yada
2. low-taxation test: the actual corporate tax paid by the entity/permanent establishment is less than 50% of the tax that would have been ‘charged’ on the entity or permanent establishment in terms of the ITA.

Well since UK CIT is 19% the UK LTD is not considered a CFC then.

In any case i don't think CFC is what matters here, what matters is PoEM and managing an offshore company from Malta would make it resident (but not domiciled).

Companies which are resident but not domiciled (or vice versa) in Malta are subject to tax in Malta on all income and chargeable gains arising in Malta, and on income arising outside Malta which is remitted back to Malta.

 

[Martin Everson]

Companies which are resident but not domiciled (or vice versa) in Malta are subject to tax in Malta on all income and chargeable gains arising in Malta, and on income arising outside Malta which is remitted back to Malta.

Sorry are you saying a foreign company is taxed if it is ordinarily resident but not domiciled in Malta and has no income sourced from Malta and conducts no remittance to Malta?

So how to avoid that?

You can't argue nothing with taxman. Especially on small islands. You can consult a tax adviser beforehand if in any doubt.

 

[Marzio]

Sorry are you saying a foreign company is taxed if it is ordinarily resident but not domiciled in Malta and has no income sourced from Malta and conducts no remittance to Malta?

Malta will not tax the foreign conpany if nothing is remitted to Malta.

 

[ilpablo]

Malta will not tax the foreign conpany if nothing is remitted to Malta.

Are you 100% sure about this?
So the same applies to any foreign company, right?

Can you please share a link where this is well explained?

Sorry are you saying a foreign company is taxed if it is ordinarily resident but not domiciled in Malta and has no income sourced from Malta and conducts no remittance to Malta?



You can't argue nothing with taxman. Especially on small islands. You can consult a tax adviser beforehand if in any doubt.

The thing that you are a NON-DOM resident and not an ordinary resident doesn't make the difference in this matter?

I mean you are not an ordinary resident, you stay in Malta for less than 183 days, managing the company from everywhere.

How can they claim the full taxation of the company?

Btw in Malta yes you pay 5k if you remit on the Island more than 35k per year.

If you don't, you don't pay that taxes if I'm not mistaken.

Please someone correct me if I'm wrong.

 

[Marzio]

Can you please share a link where this is well explained?

I already did in my previous comment but here you are: Resident, non-domiciled companies - Corrieri Cilia

 

[Martin Everson]

Malta will not tax the foreign conpany if nothing is remitted to Malta.

Thank you so much .

The thing that you are a NON-DOM resident and not an ordinary resident doesn't make the difference in this matter?

I mean you are not an ordinary resident, you stay in Malta for less than 183 days, managing the company from everywhere.

How can they claim the full taxation of the company?

Company is a separate legal entity not sure what your personal status has to do with this. Only tax benefit relates to being able to utilize the full imputation system as a non-dom.

Btw in Malta yes you pay 5k if you remit on the Island more than 35k per year.

Thats wrong. It applies to foreign income of 35k or more that was NOT remitted to Malta as a non-dom. If you remitted money a tax for that already exists...lol.

---- quote start

Individuals who in terms of Maltese tax laws are:

• considered as ordinarily resident but not domiciled in Malta (and who therefore are subject to income tax in Malta on a source and remittance basis)
• are not subject to any other minimum tax threshold under Maltese law, and
• during the calendar year preceding the year of assessment derived (together with their spouse, in the case of couples married and living together) income arising outside Malta of at least EUR 35,000 or equivalent, which was not received in Malta in full,

should be subject to a minimum tax in Malta of EUR 5,000 for the said year.

---- quote end

 

[Marzio]

Relevant discussion here: Definitive solution to work as a Self Sufficient Malta

 

[Mr Gus]

Option 1 with UK company and stay below 750k in accounting profits to stay within Malta's CFC threshold.

How they can check the 183 is impossible. There is no passport control if you go to Italy for example from Malta as its Schengen.

There is passport control if you go by ferry to Italy.

 

[Martin Everson]

There is passport control if you go by ferry to Italy.

Not by airplane their is zero apart from rear random checks. That's interesting they control you on ferry to Sicily .

 

[Mr Gus]

Not by airplane their is zero. Why would they control you on ferry to Sicily .

Ah okay never went by plane to Italy. Don’t ask me but they do, been on the ferry 10 times this year, they always check.

Could be they don’t register it anywhere..

 

[Martin Everson]

Ah okay never went by plane to Italy. Don’t ask me but they do, been on the ferry 10 times this year, they always check.

Could be they don’t register it anywhere..

Probably due to risk of migrants. It's a transit route into western Europe for many migrants coming via Libya.

 

[JimBeam]

I think you could travel your ID instead of the passport withing EU?

 

[Mr Gus]

I think you could travel your ID instead of the passport withing EU?

You could if you have one

 

[lacomaco]

You could if you have one

Are they swiping your passport or ID? If not then they just which is not a problem at all as records are not registered