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New Guide: Holdings in Spain (ETVE)

In on May 16, 2018 by NEWCO

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The Entities Holding Foreign Securities (ETVE) are companies that reside in Spain and that are entitled to a special tax regime. The regime governing these entities is one of the most competitive in the EU, since under certain circumstances, not only does it not tax income from foreign sources obtained by the holding company, but it does not tax income that the holding company distributes to its non-resident shareholder or income that arises when the shareholder in question transfers his or her share in the holding company. This regime is one of the main tax advantages that Spain offers for foreign investors.

Learn more about it in our new Guide to holding companies in Spain.

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Financial Services Sector now represents 11% of Maltese economy

In on May 9, 2018 by NEWCO

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According to the annual report of the Malta Financial Services Authority (MFSA), which has just been published, the financial services sector now represents 11% of the Maltese economy. In 2017, Malta’s economic growth rate continued to be higher than the European Union and Euro Zone averages, with the increase in service exports being the main driving force behind this economic expansion. The financial services sector has remained robust and solid, growing in size, diversity and attractiveness, and is today a fundamental pillar of the Maltese economy.

The MFSA’s annual report also highlights the fact that 5,297 new companies were registered in 2017, an increase of 2.5% year-on-year. Additionally, 109 companies from other jurisdictions were redomiciled.

The full report is available for consultation online at: https://mfsa.com.mt/pages/viewcontent.aspx?id=45

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Portugal or Spain? Two tax regimes for non-habitual residents to consider in the EU

In on March 20, 2018 by NEWCO

Portugal ou Espanha

In the last decade, both Portugal and Spain have created very attractive tax regimes for non-habitual residents, the aim being to attract highly-qualified professionals and high-net-worth individuals, and thereby generate additional income for their economies.

Generally speaking, in Portugal, income from wages earned in Portuguese territory is taxed at 20%; income from outside Portugal is exempt and there is no maximum threshold. This also applies to private pensions from foreign sources. Anyone wishing to opt for this regime must prove that they have not been resident for tax purposes in Portugal in the last five years, and once they have been registered, the said non-habitual resident will benefit from the regime for 10 years, whenever, in any given year, they meet the residence requirements in Portugal.

Any dividends, capital gains and other income from capital will be exempt from taxation in Portugal whenever they have been obtained outside Portugal and there is a double taxation agreement between Portugal and the country of origin of said income according to which such income may be taxed at source; the country of origin must also not be on Portugal’s blacklist. Income earned in Portugal will be taxed at 28%.

In Spain, income from wages is subject to a general taxation rate of 24% up to a maximum of 600,000 euros, rising to 45% once this threshold has been exceeded. Furthermore, income from wages will be taxed globally, irrespective of where such income was generated, and this includes pensions.

Anyone wishing to opt for this regime must prove that they have not been resident for tax purposes in Spain in the last 10 years. Once registered, they will be able to take advantage of the regime for six years (the year of notification and the next five years).

Any dividends, capital gains and other income from capital will be exempt from taxation in Spain whenever they have been obtained outside Spain and there is a double taxation agreement between Spain and the country of origin of said income. Income earned in Spain will be taxed at a rate of between 19% and 23% depending on the amount.

Anyone who has assets in Spain is obliged to pay Spanish wealth tax. (Except for the Community of Madrid).

You can read about each of these regimes in more detail below:

  • Tax regime for non-habitual residents

In 2009, with the aim of attracting foreign investment, qualified professionals, foreign pensioners and high-net-worth individuals to Portugal, the Portuguese government created the so-called non-habitual resident regime. The regime is regulated by Article 16 of the IRS (personal income tax – PIT) Code and was introduced by Decree-Law 249/2009 of 23 September.

To qualify for this regime, individuals must be able to prove that they have not been resident in Portugal for tax purposes in the last five years and establish tax residence in Portugal. Generally, anyone who spends more than 183 days per year in Portugal can establish tax residence in the country; it is even possible to do so when spending less time in the country, as long as the individual has a dwelling here and the indications are that they intend to keep it and occupy it as a habitual residence.

The deadline for registering for the regime is the 31st of March, inclusive, in the year following that in which the individual becomes resident in Portugal. Once approval has been granted by the Portuguese tax authorities, the regime will remain in force for 10 years.

Whenever income from wages earned in Portuguese territory is deemed as generating high value added of an artistic, scientific or technical nature, it will be taxed at the rates shown in the following table:

NEWCO_EN-Tabela2

Other tax considerations of interest:

Portugal abolished inheritance tax on 1 January 2004. All members of the family (spouse, children, grandchildren, parents and grandparents) are exempt from tax on free transfers by donation or inheritance.

Consequently, in Portugal, spouses and direct descendants and ancestors are not subject to tax on assets that are transferred to them as a result of a death. Not-for-profit transfers of assets between living people are subject to 10% stamp duty, except for transfers where the beneficiary is a spouse, descendant or ancestor, such transfers being exempt from stamp duty.

It should also be noted that there is no wealth tax in Portugal.

  • Tax regime for expatriates (“Beckham Law”)

The special regime for migrant workers, now widely known as the “Beckham Law”, was passed in Spain in 2004, with the aim of boosting the country’s economy by attracting directors and qualified personnel from abroad. This basis for attracting foreign talent created the perfect scenario for the signing of footballers, and the first to take advantage of it was David Beckham, hence the law’s nickname. For this reason, the rules were changed in 2015 and elite athletes ceased to be eligible, although the changes did not have any retroactive effects.

The Spanish tax regime applicable to expatriates is regulated by Article 93 of Law 35/2006, which governs personal income tax. Under this rule, anyone wishing to opt for the aforementioned regime must meet the following conditions:

  • They must not have been resident in Spain during the ten years prior to moving there
  • They are moving to Spain to take up an employment contract. Professional athletes can no longer benefit from this regime.
  • They must be moving to Spain to take up a position as a company director, although the contract must not be with a related entity (shareholding <25%).
  • They must not be earning income through an entity with permanent establishment located in Spanish territory.

The deadline of six months from the start date of the activity in Spain (and not from the date on which tax residence is finalized) to apply for this regime must be strictly adhered to because neither the tax authorities nor the courts will grant access to the regime after the deadline has passed. Under this option, the regime will remain in force for six years (the year of registration and the five years thereafter).

Income earned by an expatriate living in Spain will be taxed as follows:

NEWCO_EN-Tabela3

Other tax considerations of interest:

Unlike Portugal, Spain has a wealth tax and beneficiaries of the special regime must declare and pay the wealth tax only on their assets in Spain.

As regards the tax on inheritance and donations, beneficiaries of the “Beckham Law” who are resident in Madrid can benefit from the corresponding allowance from the Autonomous Community, in the same way that applies to the wealth tax.

They are also obliged to submit the Banco de España’s foreign transactions statement, which is mandatory for anyone who is conducting economic transactions with non-residents or who has financial assets or liabilities abroad, and Model D for statements to the Investment Register of Spanish investments abroad in companies listed on the stock exchange or the organised market, when the sums are deposited abroad or remain in the custody of the owner of the investment.

They are not required to submit the statement of assets abroad, through model 720.

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Recording of webinar Why Malta

In on March 14, 2018 by NEWCO

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The recording of our webinar Why Malta is now available.

In this webinar Frederico Gouveia e Silva, Managing Partner of NEWCO, explained the advantages of Malta for international operations, its tax regime and in particular some of the opportunities it offers for international trading activities, holding, succession planning and asset management, among other.

Watch the recording here.

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    Portugal: draft resolutions relating to two conventions approved

    In on March 13, 2018 by NEWCO

    Trading Madeira

    Portugal continues in its efforts to strengthen bilateral cooperation with regard to taxation. Consequently, on 8 March, the Council of Ministers approved the draft resolutions relating to the following conventions:

    • Protocol amending the convention between the Government of the Portuguese Republic and the Government of the Republic of India for the purpose of avoiding double taxation and guarding against tax evasion as regards income tax, signed in Lisbon on 24 June 2017. This protocol is intended to strengthen bilateral cooperation with regard to taxation, incorporating the current international standards concerning transparency and the exchange of information for tax purposes;
    • Convention between the Portuguese Republic and the Republic of Finland for the Purpose of Avoiding Double Taxation and Guarding Against Tax Evasion as Regards Income Tax, signed in Brussels on 7 November 2016, aimed at eliminating double taxation on income earned by residents of both states, as well as guarding against tax evasion.

    See the full list of double taxation conventions signed by Portugal here.

     

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    Discover Malta’s advantages for international investments

    In on February 23, 2018 by NEWCO

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    Malta continues to be an example within the European Union as far as economic growth is concerned, largely thanks to the country’s ability to attract foreign investment, its conservative banking system and the strength of its regulatory system.

    With a modern, diverse economy and a stable macro-economic environment (low unemployment, low public deficit and controlled public debt), a secure, stable and competitive corporate environment, Malta offers clear advantages for investors with international operations:

    • Competitive, flexible tax regime with very low effective tax rates;
    • Exemption from withholding tax when distributing dividends, interest and royalties;
    • One of the most inclusive participation exemptions in the EU;
    • Qualified, bilingual workforce with advanced knowledge in other languages;
    • Highly attractive for overseas personnel;
    • Low operational costs;
    • Strong but flexible and business friendly administrators and regulators.

    Download our brochure on Malta to find out more about all these advantages and understand how to they apply to the optimization of international operations in various sectors of activity.

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    New Webinar: Why Malta

    In on February 19, 2018 by NEWCO

    Blog_WEBINAR_Malta_

    Wednesday, 14th of March at 3 pm

    Malta is at present recognized as one of the EU’s most attractive jurisdictions for the management of international operations.

    Thanks to a sound and credible economy, a competitive tax regime with low effective tax rates, competitive operational costs and easy access to the European and north of Africa markets, Malta has increasingly attracted foreign investors in different sectors of activity.

    In our forthcoming webinar you will learn more about the advantages of this jurisdiction for international operations, its tax regime and in particular some of the opportunities it offers for international trading activities, holding, succession planning and asset management, amongst other.

    Register now!

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    Portugal: Tax changes for 2018

    In on January 23, 2018 by NEWCO

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    The State Budget for 2018, approved via Law no. 114/2017 of 29 December, has brought some changes to taxation that have led to a degree of stability in the Portuguese tax system, a characteristic which is essential to attracting foreign investment. Below, we highlight the changes that may have an impact on the companies of the International Business Centre of Madeira (IBCM):

    Corporate Income Tax:

    • Gains resulting from the onerous transfer of shareholdings or similar rights in companies or other entities (not residing in Portugal) are now considered to have been obtained on Portuguese territory when, at any time during the preceding 365 days, the amount of these shareholdings or rights originates, directly or indirectly and by a proportion of more than 50%, from real estate or real rights over real estate property located on Portuguese territory, with the exception of real estate property allocated to an agricultural, industrial or commercial activity that does not consist of buying or selling real estate;
    • Regional Surtax is the tax applicable to taxable profit that exceeds €35M and it is now 9%; in this regard, we would point out that the companies established at the IBCM as of 2015 will benefit from an 80 % reduction with respect to Regional Surtax in terms of income obtained within the scope of the IBCM and taxed at a rate of 5% (corporate income tax); with this change the respective rate at the IBCM has gone up from 1.4% to 1.8%;
    • Following the previous change, Additional Payments on Account, which are obligatory whenever taxable profit for the previous taxation period exceeds €1.5M, have increased from 6.5% to 8.5% in cases of taxable profit that exceeds €35M; with this change the respective rate at the IBCM has gone up from 1.3% to 1.7%;
    • If no income tax return is submitted (Mod. 22 form), payment shall be made no later than 30 November of the year that follows the year it pertains to or by the end of the sixth month that follows the end of the time period for submitting said return, based on the largest of the following amounts:
      • The taxable amount that is determined on the basis of the information held by the tax authorities, in accordance with the rules of the simplified framework and applying a coefficient of 0.75;
      • The total taxable amount for the closest taxation period that has been determined;
      • The annual amount of minimum monthly remuneration;
    • For the purpose of determining taxable profit attributable to each stable establishment located outside of Portuguese territory for a taxpayer with head office or permanent administration located on Portuguese territory, the taxpayer must adopt proportional calculation criteria that are suitable and duly justified in order to distribute costs, losses or negative changes in assets that are related to taxable operations or assets allocated to a stable establishment or related to other operations or assets of the taxpayer;
    • Agreed remuneration from shareholder capital: When determining taxable profit, an amount corresponding to the agreed remuneration from shareholder capital may be deducted, calculated by applying the rate of 7%, limited to each financial year, to the amount of entries made up to a ceiling of €2M, not only through deposits of cash, conversion of shareholder advances or loans, but now also by converting credits or using profits from the year, when establishing the company (subject to certain requisites being fulfilled);
    • Should the company be dissolved, it must submit two tax returns (Mod. 22 form), one no later than the last day of the 5th month following that of the dissolution and pertaining to the period from the beginning of the taxation period during which the dissolution took place up to the date of the dissolution; and another return no later than the last day of the fifth month following the date of the end of the taxation period, relative to the period from the day after the dissolution up to the end of the taxation period in which the dissolution took place (period when the liquidation took place);

    Personal Income Tax:

    • Capital gains resulting from onerous transfers of shareholdings or similar rights in companies or other entities are now considered to have been obtained on Portuguese territory when, at any time during the preceding 365 days, the amount of these shareholdings or rights originates, directly or indirectly and by a proportion of more than 50%, from real estate or real rights over real estate located on Portuguese territory (with the exception of real estate allocated to an agricultural, industrial or commercial activity that does not consist of buying or selling real estate);
    • The amount of the meal allowance exempt from personal income tax has been increased to €4.77;
    • Guaranteed Minimum Monthly Income: The amount of the Guaranteed Minimum Monthly Income in 2018 in the Autonomous Region of Madeira will be €592;
    • Termination of the temporary framework for payment of holiday and Christmas bonuses in monthly instalments;
    • A Tax Representative may, under generally applicable terms, resign their position, subject to sending written communication to the represented party at the latter’s last known address, and notifying the Tax Authorities in order for the resignation to be considered effective.

    VAT:

    • Taxpayers may now recover VAT when insolvency proceedings have ended due to lack of assets or after final distribution resulting in non-payment of credits; this possibility is also provided for when there is a delay in the ruling for the approval of the insolvency or recovery plan that provides for non-payment of credits;

    Stamp Duty:

    • It is now possible to be compensated for taxes paid in situations of cancelation of operations or reduction of the taxable amount (except lessors and sub-lessors); the compensation ceases to obligatorily refer to the same amount of the General Table and can relate to any subsequent tax payment; the compensation time period has also been extended;
    • Taxpayers are now obliged to submit a monthly statement itemized according to each applicable amount of the General Table, no later than the 20th day of the month that follows the one in which the tax obligation was created.

    NEWCO is entirely at your disposal to answer any questions regarding these developments or to enlighten you regarding the impact that these changes may have on the companies of the International Business Centre of Madeira.

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    MALTA: Register of Beneficial Owners

    In on January 15, 2018 by NEWCO

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    On 20 December 2017 legislation was published in Malta regarding the transposal of Directive EU 2015/849 of the European Parliament and of the Council of 20 May 2015 regarding the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, i.e. by creating the Register of Beneficial Owners.

    In this regard, a Register of Beneficial Owners was created, with legislation published regarding Trusts and Trustees, Foundations, Associations and companies/corporations. In relation to the latter, the changes are made pursuant to the Companies Act and we shall address them below.

    As of the date of its coming into force (1 January 2018), whenever a new company is established, in addition to all the documentation that must be submitted to the Registrar, a declaration signed by the company Directors must be submitted containing the following information regarding the Beneficial Owners (UBOs) of the company: name, date of birth, nationality, country of residence, number of the official identification document, and indication of the type of document and country of issue, along with the nature and extension of their interest.

    This requirement also applies to companies that have redomiciled to Malta.

    Similarly, whenever a change is made to the UBOs, a transfer of shares, reduction or increase in capital, or any restructuring of share capital, or a change in the company voting rights, a declaration containing updated information regarding the UBOs shall be submitted to the Registrar.

    All Maltese companies must have an internal UBO register at all times, containing adequate, updated and precise information regarding the respective UBOs.

    Companies that already exist in Malta must comply with these obligations within a maximum period of six months, starting from the date when this legislation came into force. In fact, they must submit a declaration to the Registrar containing information regarding the respective UBOs on the anniversary of their registration or when there is any change to their beneficial owners or, at the latest, six months after the date when this legislation came into force.

    Annually, all companies shall submit a declaration to the Registrar signed by a Director or by the Secretary with the aforementioned information regarding the UBOs and dates of any changes in that respect.

    The company, its governing bodies, shareholders and beneficial owners shall be held responsible for failing to comply with the aforementioned rules. Fines may be imposed and a prohibition may be applied making it impossible to make any entries in the Register regarding the company.

    It should be pointed out that access to the Register of Beneficial Owners in Malta is limited to the Financial Intelligence Analysis Unit, the national taxation authority and to any other competent national authority within the scope of preventing money laundering or terrorist financing. This access occurs without restriction and without notification or prior notice given to the respective company.

    It is also possible to allow access to people or entities that wish to undertake due diligence in accordance with the applicable legislation against money laundering or terrorist financing.

    Lastly, it is also possible for any person or entity to gain access subject to a written request that denotes a legitimate interest that must be duly demonstrated as being specific and uniquely related to the prevention, detection and elimination of money laundering or terrorist financing.

    NEWCO is entirely at your disposal to answer any questions you may have regarding the impact of this new legislation on Malta companies.

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    Recording of Webinar on Non habitual residents in Portugal

    In on October 24, 2017 by NEWCO

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    The recording of our webinar on Non habitual residents in Portugal is now available.

    In this webinar, our Managing Partner Frederico Gouveia e Silva explained the benefits of the special tax regime for non habitual residents in Portugal and the opportunities it offers for international investors.

    Watch the recording.

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