Proper scheme

[thirtyniner]

Well, I have made a post last Wednesday, but by some reason it was not published!

The admin can feel free to move the topic to
Mentorship gold if it is not suitable.

Imagine the following:

EU citizen from one of the PIGS countries. Companies in HK, Dubai and on that PIGS country. Want to relocate to a nearby country where full benefit of the tax residence can be achieved (half-year + 1 day). Biggest goal is to reduce tax burdain and maximize tax efficiency. Second is 2/3 hours flight. Willing to make a holding company to secure companies from these 3 locations.

All businesses are legit and legal. No crypto, NTF or “whatsoever future is about”!

Dubai is not an option by many reasons. Can recall countries/places as:
A) Gibraltar;
B) Malta;
C) Luxembourg;
D) Switzerland;
E) Madeira Island;
F) Cyprus;
G) Andorra;
H) UK or any of the attached islands/territories
I) Monaco

What would be your best choice and why?

Thanks

 

[troubled soul]

Without any doubt... Monaco is the best place If you have sound many. Other jurisdiction is tricky. Not as simple as Monaco

 

[Sols]

A) Gibraltar;

Boring, inconvenient, and expensive. The only people I know who have lived in Gibraltar have been very happy to relocate elsewhere after just a few years.

B) Malta;

Popular and with good reason. Especially if you only spend six-seven months a year there. That makes it feel less cramped.

C) Luxembourg;

Boring. No huge tax savings for most people in most cases.

D) Switzerland;

Not exactly a tax haven but taxes are usually below average compared to Europe. However, a good chunk of those savings are lost to significantly higher costs of living.

E) Madeira Island;

Small and remote. Can be boring and isolated.

F) Cyprus;

Same as Malta, but bigger (less cramped) and life in general is slower and quieter.

G) Andorra;

Can feel isolated, being at least 2+ hours drive away from nearest airport.

H) UK or any of the attached islands/territories

UK can be very attractive if you qualify as non-dom. Isle of Man, Jersey, and Guernsey are boring and small, without anything besides low taxes to make up for it.

I) Monaco

I find Monaco boring but there's no denying lots of people like it.

What would be your best choice and why?

Travel around, spend some time there, and then pick your favorite.

I would add Ireland to your list of considerations. Since you included Luxembourg and UK, I'm guessing all year mostly good weather isn't a prerequisite. Ireland has relatively low taxes, business friendly climate, English speaking, and decent flight connections to Europe and even US/Americas.

 

[thirtyniner]

Well, thanks for the feedback Sols.

My first option was Malta, but I’m totally unaware of the tax policy of each of the locations. I just know the basics from what people speak. I always tended to go as far as possible from home, since I never thought of really relocating.

Now I have this possibility, since I cannot accept anymore the situation of my country. So, and since I have a dependent, I need to be near “home”.

P.S. Madeira I have been a few times there. It is quite nice to live, and good option to explore in terms of Hospitality industry if you have some money in your pocket to invest.

 

[Marzio]

There are a lot of elements in choosing the best location for an holding. The general advice would be to avoid like the plague the EU because of DAC6 (EU directive on cross border tax arrangements). If you just consider this, plus consider countries without CFC rules you are left only with a handful of options. Switzerland could be an option but also San Marino could work well depending on your setup.

 

[thirtyniner]

There are a lot of elements in choosing the best location for an holding. The general advice would be to avoid like the plague the EU because of DAC6 (EU directive on cross border tax arrangements). If you just consider this, plus consider countries without CFC rules you are left only with a handful of options. Switzerland could be an option but also San Marino could work well depending on your setup.

Well, I would say my set of requirements would go as bellow (more important to less important):
1) Near my actual home (2/3 hours flights). All jurisdictions I mentioned above are within 4 hours flight;
2) Tax efficiency on the above mentioned structure and scheme;
3) Safety;
4) Nice quality of living;
5) good weather part of the year;

Without any doubt... Monaco is the best place If you have sound many. Other jurisdiction is tricky. Not as simple as Monaco

Can you mention why you say so? Thanks

 

[JohnnyDoe]

Ireland has relatively low taxes, business friendly climate, English speaking, and decent flight connections to Europe and even US/Americas.

what are the advantages for personal taxation in Ireland?

 

[Sols]

what are the advantages for personal taxation in Ireland?

They have a non-domicile status setup where you are taxed on a remittance basis, foreign capital gains can be remitted in without tax, and a few other advantages. Not quite as permissive as for example Malta or Cyprus, but worth looking into.

 

[JimBeam]

Sols has explained it very well.

If you don't want a boring country: Habibi come to Dubai LOL.

Monaco would be my #1 choice if I had the money for it as you can always drive out of it an spend a day in France or some city in Italy that is near by. The thing you don't have in Malta or Cyprus or Dubai.

 

[gh71]

I would choose UK/London non domiciled as it’s a great place to live as a foreigner, not feeling like an outsider. Especially if you have a chunk of money that you bring with you when you move there to live off for a few years, if could then be tax free if you keep all your income abroad. Obviously make sure you are not controlling the companies from UK soil. After 7 years it starts becoming less attractive tax wise. Maybe move to Monaco at that point…

Number 2 for me would be Italy, but only if your income is high enough to justify paying 100k Euro flat tax.

 

[JohnnyDoe]

The non som status is not so straightforward… most importantly, if you move with the intention of move permanently you can’t claim a non dom status. (Same for UK and IE)

 

[fortunespeculator]

The non som status is not so straightforward… most importantly, if you move with the intention of move permanently you can’t claim a non dom status. (Same for UK and IE)

Can anyone explain the non dom well,here?

 

[JohnnyDoe]

Can anyone explain the non dom well,here?

Your domicile is the country where you live with the intention of remaining there permanently. It may be different to your residence or nationality.
The concept of domicile in common law is different from the one in civil law, which opens the door to a number of issues that must be carefully considered with a professional.

 

[gh71]

Can anyone explain the non dom well,here?

Your domicile is the country you consider your permanent home, which can be different to country of birth or where you currently live. However if you move to a country with the intention of staying there permanently, that could change your domicile to that country. If you wish to claim non-domiciled tax status it's important to build as much evidence as possible that the intent is not to stay permanently, in case of a challenge from the tax authorities. This includes things like business/job interests, family, social interests, property ownership etc. Rent a place to stay on a fixed term contract rather than buying, keep a family house in your home country if possible, keep regular travel tickets to the home country, etc. Do not acquire a passport of the country in question, the same applies for family members. And don't stay for too many years (in the UK you're deemed domiciled after 15 years). For peace of mind I would recommend a professional review of your situation before submitting the first tax return where you claim non-domiciled status (the earlier the better).

 

[Larin]

Can anyone explain the non dom well,here?

The concept of tax domicility originated in the British empire and refers to the 'homeland' of the individual. There are two generally acceptable ways of having a homeland according to common law: 1) by birth (or origin), and by 2) choice. The easiest way to think about it is when someone asks you what is your homeland, what would you answer and how would you justify it?

For example, someone who was born and has lived their whole life in France might say that their homeland is France because they have lived there their whole lives, their family lives there, they work there and have very close ties to France and therefore it is their homeland (origin). This person might move for work to Italy, but in general they would still probably maintain that their homeland is France.

But, imagine another scenario, where after immigrating to Italy and living there for 20 years, this same person might marry an Italian, have kids in Italy, start supporting a local football team, would start to prefer pasta over a bloody steak, and they might start to consider Italy their new homeland (choice).

As you can imagine, these concepts are extremely broad and personal. As HMRC (UK tax agency) notes: ''As domicile depends on the facts of an individual’s life, each case is unique. Each enquiry will differ in detail from all other enquiries. The facts have to be considered as a whole and the importance of a particular matter will vary from case to case. An event that could properly be regarded as trivial in one individual’s life might assume great importance in determining another person’s domicile.'' RDRM20020 - Domicile: Introduction and Background: Introduction - HMRC internal manual - GOV.UK

So, why does any of this matter? Because some common law countries (namely, Cyprus, UK, Malta) take domicility, alongside residence, into consideration in their tax laws. Namely, one can be a tax resident in these countries, but not domiciled there, and therefore be taxed differently from someone who is a tax resident and is also domiciled there. The difference in tax treatment is usually around income and capital gains that arises outside of these jurisdictions. In other words, someone who is a tax resident, but not domiciled in the UK, for example, would only be taxed on income arising in the UK, or any income that is remitted to the UK. So, if you were a Russian oligarch with assets outside of the UK and you kept the income from those assets in Russia, you would not pay taxes on it in the UK.

Hopefully, this sheds at least some light on the concept for you. Here is a nice little article on from FT: https://www.ft.com/content/58b2d422.../content/58b2d422-b918-47a7-b860-f25959f50a40 and here is a not so nice, but much more in-depth manual from HMRC: RDRM20010 - Domicile: Introduction and Background: Contents - HMRC internal manual - GOV.UK

 

[fortunespeculator]

The concept of tax domicility originated in the British empire and refers to the 'homeland' of the individual. There are two generally acceptable ways of having a homeland according to common law: 1) by birth (or origin), and by 2) choice. The easiest way to think about it is when someone asks you what is your homeland, what would you answer and how would you justify it?

For example, someone who was born and has lived their whole life in France might say that their homeland is France because they have lived there their whole lives, their family lives there, they work there and have very close ties to France and therefore it is their homeland (origin). This person might move for work to Italy, but in general they would still probably maintain that their homeland is France.

But, imagine another scenario, where after immigrating to Italy and living there for 20 years, this same person might marry an Italian, have kids in Italy, start supporting a local football team, would start to prefer pasta over a bloody steak, and they might start to consider Italy their new homeland (choice).

As you can imagine, these concepts are extremely broad and personal. As HMRC (UK tax agency) notes: ''As domicile depends on the facts of an individual’s life, each case is unique. Each enquiry will differ in detail from all other enquiries. The facts have to be considered as a whole and the importance of a particular matter will vary from case to case. An event that could properly be regarded as trivial in one individual’s life might assume great importance in determining another person’s domicile.'' RDRM20020 - Domicile: Introduction and Background: Introduction - HMRC internal manual - GOV.UK

So, why does any of this matter? Because some common law countries (namely, Cyprus, UK, Malta) take domicility, alongside residence, into consideration in their tax laws. Namely, one can be a tax resident in these countries, but not domiciled there, and therefore be taxed differently from someone who is a tax resident and is also domiciled there. The difference in tax treatment is usually around income and capital gains that arises outside of these jurisdictions. In other words, someone who is a tax resident, but not domiciled in the UK, for example, would only be taxed on income arising in the UK, or any income that is remitted to the UK. So, if you were a Russian oligarch with assets outside of the UK and you kept the income from those assets in Russia, you would not pay taxes on it in the UK.

Hopefully, this sheds at least some light on the concept for you. Here is a nice little article on from FT: https://www.ft.com/content/58b2d422.../content/58b2d422-b918-47a7-b860-f25959f50a40 and here is a not so nice, but much more in-depth manual from HMRC: RDRM20010 - Domicile: Introduction and Background: Contents - HMRC internal manual - GOV.UK

Thanks mate really appreciate you to have taken out time for explaining.