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NEWOFFICE: set up company in Malta quickly and efficiently

In on March 20, 2019 by NEWCO

Criar empresa Malta

Now that we’ve opened our NEWOFFICE in Malta, our clients can set up company in Malta quickly and more efficiently. In addition to corporate start-up and business services in Malta, NEWCO now offers offices with shared services for customers who want to set up a Malta company and start working in Malta with the highest levels of productivity and flexibility possible.

Starting a business in Valletta

Located in Valletta bay near the Cruise Port and with easy access to the centre of Valletta, NEWCO’s versatile offices with shared services allow our clients to focus on growing their international businesses. Here, our clients have the continual support of our team, from setting up their Malta company and assistance with all the necessary outsourcing services for the day to day running of the office, to fulfilling all the applicable accounting, fiscal and legal requirements of their Malta company.

Professional solutions to help you set up company in Malta

Aware of the importance of substance and effective management when setting up a Malta company, clients use NEWCO’s services when setting up and managing their business in Malta, complying with accounting and tax requirements, payroll management, legal and tax advice and recruitment, the latter of which is carried out in partnership with renowned, experienced service providers.

Furnished offices with shared services

Our offices with shared services, which are located in Valletta Bay, provide flexibility and efficiency for customers who want to set up company in Malta. The offices are furnished and have telephones, Wi-Fi, air conditioning and padlocked lockers. Included in the use of these offices are reception services, mail collection, weekly cleaning, use of the meeting room for 1 hour per week, utility charges and an initial stationary kit.  In addition to these advantages is the new company’s proximity to the NEWCO team, who can provide any outsourcing services necessary to manage their Malta company.

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Registered Office Plus service

While companies are still in their initial stages of the operation in Malta, clients can benefit from the Registered Office Plus service, which, in addition to access to a furnished office and meeting room a few hours a week, gives the option of complementary services and flexible solutions that can be used by different employees working in Malta.

Services for expatriates and families

Thanks to the partnerships established with reputable companies in their respective sectors, in addition to setting up businesses and getting companies off the ground quickly in Malta, NEWCO also provides the services necessary to hire or relocate workers to Malta. This service includes helping them find accommodation or purchase a house, obtain visas or legalise documents, write-up employment contracts and all the necessary personal assistance services to ensure that all employees and families settle in Malta as easily as possible.

NEWCO provides external services to support investment in Portugal, Madeira and Malta. With over 25 years of experience, NEWCO clients can trust that they know how to interpret and systematise relevant information in matters of taxation, overcome the barriers and bureaucracies of investments in a new market and comply with all accounting, legal and tax regulations, allowing their clients to focus on growing their business.

Download the NEWOFFICE Malta Brochure to find out more.

Check also our NEWOFFICE Madeira and learn more about more about our serviced offices in Madeira.

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Fitch affirms Malta at ‘A+’ with a stable outlook

In on February 13, 2019 by NEWCO

Malta

Shortly after Moody’s recent reaffirmation of Malta’s rating ‘A3’, credit rating agency Fitch has once more affirmed Malta’s sovereign credit rating at ‘A+’ with a stable outlook. The agency underlines the robust economic growth, strong budget performance and sound and well capitalized banking sector.

Strong private and public consumption is driving growth

Fitch credit rating report attributes the ‘A+’ rating to Malta’s high income per capita, strong governance and human development indicators relative to peers, robust economic growth, and a large net external creditor position, amongst others. The rating agency acknowledges that the strong private and public consumption is driving growth, with private consumption supported by low interest rates and strong employment and wages. It notes that such strong growth has not led to overheating as reflected in the absence of macro imbalances and the inflation rate, which remained contained.

Malta’s budget performance stronger than similarly rated countries

Fitch further notes that Malta’s budget performance has been stronger than similarly rated countries and is on an improving trend. It acknowledges that Malta’s fiscal policy outlook is anchored by the Government’s commitment to a structural fiscal balance net of IIP revenues, with IIP revenues ringfenced for investment purposes.

Fitch commends the rapid fall in public debt and expects the debt-to-GDP ratio to continue declining owing to the low interest payments, strong nominal GDP growth and recurrent primary surpluses. It also acknowledges the Government’s commitment to reduce guarantees, noting that they fell to 9.5 per cent of GDP at the end of 2017, down from 13.5 per cent in 2016.

Banking in Malta remains sound and well capitalised

On the financial sector, Fitch acknowledges that banking in Malta remains sound and well capitalised while on external trade, Fitch notes Malta’s current account surplus driven by the growing services trade sectors. It further expects the trade surplus to be sustained in the coming years.

Source: www.financemalta.org

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Malta implements EU measures on tax avoidance

In on February 11, 2019 by NEWCO

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In June 2016, the European Council published the EU Directive 2016/1164, later modified by EU Directive 2017/952, that set the rules against tax avoidance practices with direct impact in the functioning of the internal market.

This so called Anti Tax Avoidance Package set forth a set of measures aimed at a more just and efficient taxation through the implementation of anti-abuse mechanisms targeting multinational companies and cross-border operations, in line with the conclusions and recommendations outlined in the G20 and OECD Base Erosion and Profit Shifting Project.

In line with the deadlines for implementation defined in the Directive, Malta has published on the 11th of December 2018 Regulation 411 of 2018, which transposes the Directive into the internal legislation.

Besides amending the General Anti Abuse Rule (GAAR), the following rules shall apply to Maltese companies as of the 1st of January 2019:

Interest Limitation Rule:

Exceeding borrowing costs (the amount by which the deductible borrowing costs – interest expenses on all forms of debt, other costs economically equivalent to interest and expenses incurred in connection with the raising of finance – of a taxpayer in terms of the Income Tax Act, were it not for the provisions of this Rule, exceed taxable interest revenues and other economically equivalent taxable revenues that the taxpayer receives) shall be deductible in the tax period in which they are incurred only up to thirty per cent (30%) of the taxpayer’s EBITDA.

The taxpayer may carry forward, without time limitation, exceeding borrowing costs and, for a maximum of five (5) years, unused interest capacity, which cannot be deducted in the current tax period.

Notwithstanding the general rule above, the taxpayer may deduct exceeding borrowing costs up to three million euro (€3,000,000), in addition to other derogations foreseen in the law. Learn +

Controlled foreign company Rule (CFC):

An entity, or a permanent establishment of which the profits are not subject to tax or are exempt from tax shall be treated as a controlled foreign company where the following conditions are met:

(a) in the case of an entity, the taxpayer by itself, or together with its associated enterprises holds a direct or indirect participation of more than fifty per cent (50%) of the voting rights, or owns directly or indirectly more than fifty per cent (50%) of capital or is entitled to receive more than fifty per cent (50%) of the profits of that entity; and

(b) the actual corporate tax paid on its profits by the entity or permanent establishment is lower than the difference between the tax that would have been charged on the entity or permanent establishment under the Income Tax Acts (as computed according to the Income Tax Acts) and the actual corporate tax paid on its profits by the entity or permanent establishment.

Where an entity or permanent establishment is treated as a controlled foreign company, there shall be included in the tax base the non-distributed income of the entity or permanent establishment arising from non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax advantage. Learn +

Exit Taxation:

This rule shall come into force on 1st January, 2020.

A taxpayer shall be subject to tax on capital gains that are to be calculated at an amount equal to the market value (the amount for which an asset can be exchanged, or mutual obligations can be settled between willing unrelated buyers and sellers in a direct transaction) of the transferred assets, at the time of exit of the assets, less their value for tax purposes, in any of the following circumstances:

(a) a taxpayer transfers assets from its head office in Malta to its permanent establishment in another EU Member State or in a third country in so far as Malta no longer has the right to tax capital gains from the transfer of such assets due to the transfer;

(b) a taxpayer transfers assets from its permanent establishment in Malta to its head office or another permanent establishment in another EU Member State or in a third country in so far as Malta no longer has the right to tax capital gains from the transfer of such assets due to the transfer;

(c) a taxpayer transfers its tax residence from Malta to another EU Member State or to a third country, except for those assets which remain effectively connected with a permanent establishment in Malta;

(d) a taxpayer transfers the business carried on by its permanent establishment from Malta to another EU Member State or to a third country in so far as Malta no longer has the right to tax capital gains from the transfer of such assets due to the transfer.

A taxpayer may however defer the payment of an exit tax under certain circumstances. Learn +

Impact on maltese companies

Interpretation guidelines are expected to be published soon by the Maltese authorities, so that Maltese firms potentially affected by these rules may adapt and operate with the certainty and stability that characterizes this jurisdiction. NEWCO is fully available to clarify and assist clients wishing to understand the impact of these rules in their international operations.

 

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The new Tonnage Tax Regime in Portugal

In on January 31, 2019 by NEWCO

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This year promises to be a year of change in the maritime transport sector of Portugal.

For decades the International Shipping Register of Madeira (RIN-MAR) was the only competitiveness factor that Portugal could leverage to invigorate the Portuguese merchant marine fleet. Despite all the obstacles and difficulties that it has faced, both in terms of legislation and operations, RIN-MAR has been able to prevent restriction of the number of commercial vessels to fly the Portuguese flag to the dozen or so ships registered in the Portuguese Conventional Register.  The operational and fiscal advantages granted to vessels and their crew registered with RIN-MAR, together with the tax regime available within the scope of the International Business Centre of Madeira for maritime transport companies have kept Portugal on the map as regards countries that should be considered by national and international shipowners, and they have resulted in a gradual increase in the number of ships that fly the Portuguese flag to a total of 523 commercial vessels registered with the RIN-MAR at the start of 2019.

It is expected that the legislative changes introduced over the course of 2018 will bring new vigour to this sector, adding to the advantages of the IBCM that will continue to be available, at least until end 2027.

Introduction of the tonnage tax in Portugal

In fact, in 2018 the European Commission approved the creation of a new tonnage tax regime for Portugal, together with the publication of Decree-Law 92/2018 of 13 November, which implemented a special regime that determines taxation base in accordance with ship tonnage, a specific tax and contribution regime for crew members, along with a simplified register of ships and vessels.

Under this Decree-Law, companies with their head office or permanent management in Portugal that are in the business of transporting goods or passengers or involved in some related activities can benefit from the special regime that determines the taxation base.

Tax calculation

Under this special regime, the taxation base is calculated by applying the following daily values to each eligible vessel:

Net tonnage Daily taxation base per 100 net tonnes
Up to 1,000 net tonnes € 0.75
Between 1,001 and 10,000 net tonnes € 0.60
Between 10,001 and 25,000 net tonnes € 0.40
Greater than 25,001 net tonnes € 0.20

There is expected to be a 50% and 25% reduction in the taxation base determined during the first two years of business, along with a 10% to 20% reduction for vessels with a net tonnage greater than 50,000 net tonnes that fulfil some environmental requirements.

The taxation base that is thereby determined shall be subject to the general tax rate stipulated in the Corporate Income Tax Code, which is currently 21% on mainland Portugal, 20% in Madeira and 16.8% in the Azores. Specific conditions have been determined for deducting costs and losses, carrying forward tax losses and calculating the special payment on account; however, opting for this regime does not hinder application of the Corporate Income Tax Code in relation to other matters, namely with regard to general rules related to transfer prices, autonomous taxation, settlement and payment rules, among others.

Taxation and contribution regime of crew members

Similar to the benefits granted to crew members of ships registered with the RIN-MAR, this legislation seeks to provide personal income tax exemption and a special contribution regime for crew members of ships or vessels registered in the conventional Portuguese register or in another Member State of the European Union or EEA and which are used by entities that opt for this special regime for determining taxation base.

Such crew members shall be covered by the general social security regime and shall be entitled to parental, unemployment, illness, occupational illness, disability, old age and death benefits, subject to a contribution rate of 6% (4.1% paid by the employer and 1.9% by the crew member).

In order to benefit from personal income tax exemption the crew member must remain aboard the ship at least 90 days during each taxation period.

Eligibility and application requirements

Payers of corporate income tax may opt for the tonnage tax regime if their head office or permanent management is located in Portugal and their main commercial activity is related to maritime transport of goods and people and they legally exercise it, and the simplified regime for taxation base determination does not apply to them.

The regime only applies to income from activities performed using ships that fly the flag of an EU or EEA member State, ships that are strategically and commercially managed from an EU or EEA Member State (presupposes control and risk of the maritime activity) and that are used to perform the activities listed in the legislation, namely the transport of goods and passengers and some additional activities, such as the sale of products for onboard consumption, the supply of services directly related to the activity, returns on short term investment of working capital, advertising and marketing of advertising spaces onboard ships, shipbrokerage, strategic, commercial, technical, operational and crew management, among others.

Shipowners and charterers can benefit from this regime, including those who have ships registered outside the EU under certain conditions.

Fifty percent (50%) of the crews must be made up of members who are Portuguese, from EU and EEA Member States, or countries whose official language is Portuguese.

Duration of the regime and period for remaining within it

The tonnage tax shall be valid for 10 years and it may be renewed for identical periods, provided that the European Commission authorises the renewal. The minimum period for remaining within this regime is 5 years and the option may be selected at the start of the activity or by the end of the taxation period during which the special regime is to be applied.

Tonnage Tax and the IBCM and RIN-MAR

Taxpayers who opt for this special regime shall not receive any other tax benefits or incentives of the same type. As such, the reduced Corporate Income Tax rate provided for within the scope of the International Business Centre of Madeira (IBCM) shall not apply to income that is subject to this special regime.

Notwithstanding, companies that opt for this special regime may still benefit from all other tax benefits applicable to companies licensed within the scope of the IBCM. Here is a list of those companies: http://www.newco.pro/pt/regime-fiscal-madeira

Likewise, companies that opt for this special regime may also register their ships with the RIN-MAR, which is a reliable and efficient register that offers all the guarantees and security that shipowners seek.

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Relevant taxation updates for the International Business Centre of Madeira

In on January 24, 2019 by NEWCO

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Following the publication of the national and Autonomous Region of Madeira budgets, below we highlight the main measures that will impact the companies of the International Business Centre of Madeira (IBCM).

  • Minimum Wage in Madeira

The monthly minimum wage for Madeira will now be €615, effective as of 1 January 2019.

  • Corporate Income Tax

Corporate Income Tax Rate

The general rate for corporate income tax in the Autonomous Region of Madeira has been reduced to 20% (previously 21%). For taxpayers whose direct and main economic activity is of an agricultural, commercial or industrial nature and who are classified as a small or medium enterprise, the applicable Corporate Income Tax Rate for the first €15,000 of the taxation base is 13% (previously 17%), while the rate of 20% applies to the remaining amount.

We point out that the tax rate applicable to the qualified income of the companies of the International Business Centre of Madeira will be 5% until end 2027.

Regional Surcharge

The additional payment on account for the Regional Surcharge shall now be made as follows: when greater than €35,000,000, it is divided into three parts: one equal to €6,000,000, to which a rate of 2.5% is applied; another, equal to €27,500,000, to which a rate of 4.5% is applied; and another, equal to taxable profit that exceeds €35,000,000, to which a rate of 8.5% is applied (previously 3%, 5% and 9%, respectively).

The companies that are established within the scope of the International Business Centre of Madeira as of 2015 shall be subject to a limitation of 80% with respect to the Regional Surcharge for each taxation period with respect to income obtained within the scope of the IBCM and taxed at a rate of 5% (Corporate Income Tax). As such, for these companies the applicable rates are 0.5%, 0.9% and 1.7%, respectively

Impairment losses on doubtful debt

Debt between directly or indirectly held companies with over 10% of capital held by the same individual or legal person shall no longer be considered doubtful debt and as such shall not be accepted for taxation purposes, except if the debtor has enforcement, insolvency or special rehabilitation proceedings pending, or extrajudicial company recovery proceedings pending under SIREVE (Extra-Judicial Company Recovery System), and cases in which the debt has been claimed judicially or in a court of arbitration.

Intangible Assets

The cost of acquiring intangible assets from entities with which there are special relationships is no longer excepted in equal parts for tax purposes during the first 20 fiscal years.

Capital gains obtained by non-residents

No longer benefitting from the exemption provided for under article 27 of the Portuguese Tax Benefits Law are capital gains resulting from the transfer of ownership of shares or similar rights in companies or other entities that do not have a head office or permanent management on Portuguese territory when at any time during the preceding 365 days the value of those shares or rights directly or indirectly results in over 50% of real estate properties or real rights over real estate properties located on Portuguese territory, with the exception of real estate allocated to an activity that is of an agricultural, industrial or commercial nature and does not consist of buying and selling real estate.

Corporate Income Tax – Special Payment on Account (SPA)

Taxpayers who do not make the payment by the end of the third month of the respective taxation period are now exempt from the special payment on account provided that they have fulfilled, in a timely manner, declaration obligations pertaining to submitting tax return form 22 and SCI during the two previous taxation periods.

This dispensation is valid for each taxation period and the Taxation Authority shall be responsible for verifying the taxation situation of each taxpayer.

  • PERSONAL INCOME TAX

Income from work or supply of services earned by non-residents

Personal income tax shall not be withheld from income from dependent employment or business and professional income rendered by non-residents to a single entity, up until the guaranteed minimum monthly wage.

The owner of the income must communicate to the payer entity, via written declaration, that he or she has not earned or does earn the same type of income from other entities residing on Portuguese territory or from permanent establishments of non-resident entities.

Tax regime applicable to former residents

A tax regime will be introduced in 2019 and 2020 with the aim of encouraging those persons who emigrated from Portugal to return. Under this regime, 50% of income from dependent employment (Category A) or business and professional income (Category B) that they earn after they return to Portugal is excluded from taxation. The following conditions apply to this regime:

  • The taxpayer may not have been a resident of Portugal during the three years that precede the return;
  • The taxpayer was a resident of Portugal before 31 December 2015;
  • The taxpayer has his or her tax situation settled; and
  • The taxpayer has not requested registration as a non-habitual resident.

This regime shall apply for 5 years (between 2019 and 2023 or between 2020 and 2024), terminating at the end of that period. During this period, withholding tax rates on any affected income shall only apply to half of the income paid or made available.

  • VAT

Telecommunications, radio broadcasting or television services and services provided by electronic means.

The supply of telecommunications, radio broadcasting or television services and services provided by electronic means, namely those described in annex D of the VAT Code, supplied to a person that is not the taxpayer and who is domiciled or established in another Member State, are taxed at the location of the head office of the supplier, as long as the latter has a head office or permanent establishment, or failing this, is domiciled only on Portuguese territory and the total value of the supply of services does not exceed €10,000 during the previous calendar year or the calendar year currently underway.

  • Tax Courts

Portal das Finanças (Taxation Authority portal) reserved area

Taxpayers who are obliged to a have an electronic mailbox and have not given notice of it can now be notified and summoned in the reserved area of the Portal das Finanças, as can representatives in tax proceedings, residents not residing in the EU or EEA who have not appointed a representative residing on Portuguese territory, and taxpayers who opt for electronic notifications and summons.

Suspension of enforcement

Enforcement proceedings shall be suspended while dispute resolution proceedings are underway in relation to a double taxation agreement, as long as a guarantee or a lien has been pledged in warrant of the total outstanding amount and the accrued amount.

Contact us if you have any questions regarding any of these matters and their impact on IBCM companies.

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Double tax treaty between Portugal and Montenegro now in force

In on December 13, 2018 by NEWCO

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According to Notice 144/2018, published in the Government Gazette on the 10th of December 2018, the necessary formalities were complied with, for implementing the Convention for avoiding Double Taxation between Portugal and Montenegro, signed in Lisbon on the 12th of July 2016.

Under the terms of art. 29 of this Convention, it has come into force on the 7th of December 2017.

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Recording of webinar on substance in international taxation

In on October 10, 2018 by NEWCO

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The recording of our Webinar on Substance in international taxation is now available.

In this webinar, our Managing Partner Frederico Gouveia e Silva identified the key elements of the concept of substance, provided some guidelines and highlighted the requirements to take into consideration when setting up a new company in a low tax jurisdiction.

Click to watch the recording.

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    New Webinar: Substance in international tax planning

    In on September 28, 2018 by NEWCO

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    Wednesday, 10th of October 2018 at 3pm

    Substance, substance, substance.

    Is there any other concept as relevant, yet as imprecise, as “substance” nowadays in international taxation?

    Don’t miss the opportunity to listen to our Managing Partner, Frederico Gouveia e Silva, identifying the key elements of the concept of substance, providing some guidelines and highlighting the requirements to take into consideration in each of the jurisdictions in which NEWCO operates: Madeira/Portugal and Malta.

    Register now.

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    The special tax regime for Non-habitual residents in Portugal

    In on September 19, 2018 by NEWCO

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    The characteristics of Portugal and its various regions are reason enough to justify a new life in this country, but the tax advantages on offer are the icing on the cake for anyone who wishes to invest and live in Portugal, including in Madeira.

    In this Guide, we explain the advantages of the special tax regime available to non-habitual residents, and how investors with international activities can take the best advantage of these tax benefits.

    Download now!

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    Portugal: The legislation on the Legal Regime governing the Central Registry of Effective Beneficiaries has been published

    In on September 14, 2018 by NEWCO

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    Ordinance no. 233/2018, which regulates the Legal Regime governing the Central Registry of Effective Beneficiaries (RCBE), has been published. Among other aspects, this ordinance defines the way the form on effective beneficiaries is to be declared and submitted, information is to be provided and authentication procedures are to be used for obligated entities, as well as the respective search criteria and the terms for obtaining information and certificates from the database.

    It is also established that the initial declaration of entities subject to the RCBE, which have already been established at the time of this decree coming into force (specifically 1st October 2018) will be done in phases, under the following terms:

    1. a) the entities subject to the commercial register by 30th April 2019;
    2. b) the remaining entities subject to the RCBE by 30th June 2019.

    The first phase for initial declaration begins on 1st January 2019.

    We wish to emphasise that the Legal Regime governing the Central Registry of Effective Beneficiaries (RCBE), approved by Law no. 89/2017 of 21st August, transfers chapter III of Directive (EU) no. 2015/849 relating to the prevention of the use of the financial system for the purposes of money laundering or financing terrorism into domestic law, under the terms of which the member states are now required to ensure the identification of all individual persons who own or control a corporate body.

    The RCBE is made up of a database with sufficient, accurate and up-to-date information on the individual person or people who own or have effective control of entities subject to it, even where this is indirectly or through a third party.

    The full text of the ordinance can be read here (in Portuguese).

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