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Malta Approves Three Blockchain and Crypto-related Bills

In on June 29, 2018 by NEWCO

bitcoins

The Maltese Parliament has unanimously approved three digital ledger technology and crypto-related bills on the 26th of June, thus becoming the world’s first country to have put in place a legal framework for the creation of a regulatory body in the sectors of Blockchain, Artificial Intelligence, and IOT devices.

The Government had already announced recently that it was working closely with the industry to come up with a legal framework that satisfies the Anti-Money Laundering and KYC regulations, without stifling technology innovation in such a highly dynamic sector. With the publication of these Bills, Malta is now unquestionably the right place to set up crypto-currency exchanges, ICOs and related activities.

The three bills include the Innovative Technology Arrangements and Services Bill, the Virtual Financial Assets Bill, and the Malta Digital Innovation Authority Bill. The first two bills provide for the regulation of digital ledger technologies (such as blockchain) and virtual financial assets in Malta under the supervision of the Malta Digital Innovation Authority.

The third bill establishes the Malta Digital Innovation Authority in order to “promote consistent principles for the development of visions, skills, and other qualities relating to technology innovation” as well as support regulations of the sector.

In addition to the passing of the three bills, the Government has also appointed the first chief executive of the Malta Digital Innovation Authority, Mr. Stephen McCarthy, who has worked in accountancy and iGaming before serving as CEO of the Housing Authority in the past few years.

These recent developments are a clear proof of Malta’s commitment to be at the forefront in the regulation of this sector, and will clearly contribute to the fast growth of new companies, that will occur as soon as subsidiary regulations that are to supplement these new laws are published.

Please contact us for more information on how to benefit from Malta’s advantages for international operations.

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Malta’s Participation Exemption regime even more competitive

In on June 28, 2018 by NEWCO

Malta

Recent changes to Malta’s “participation holding” concept have improved the competitiveness of the Maltese (already quite flexible and comprehensive) participation exemption regime.

In practice, the equity holding test still requires that at least one of 6 conditions are satisfied (the conditions are outlined here) but the shareholding percentage in the subsidiary has been reduced to 5% (formerly 10%) which holding entitles to at least 5% of any two of the following rights:

i) right to vote;
ii) profits available for distribution;
iii) assets available for distribution on a winding up.

Another relevant change is that, where one does not have an equity holding in a ‘company’ (as defined), one may now consider 2 new classes of entities in which a Maltese resident company has a holding for the purposes of this definition, namely:

Class A – Maltese entities:

The partnership en nom collectif;

  • The partnership en nom commandite, whether or not its capital is divided into shares (one exception – for partnerships with shares set up prior to 2015 whose share capital is divided into shares);
  • A registered civil partnership set up in terms of the Civil Code;
  • A European Economic Interest Grouping – EEIG;

in all cases, provided the entity in question has elected to be taxed as a ‘company’ in terms of Article 27 of the Income Tax Management Act.

Class B – non- Maltese entities:

Any ‘body of persons’ (as defined) constituted, incorporated or registered outside Malta AND of a nature similar to a Maltese limited liability company;

Any ‘body of persons’ (as defined) constituted, incorporated or registered outside Malta AND of a nature similar to:

  • A Maltese limited liability company
  • A partnership en nom collectif;
  • A partnership en nom commandite, whether or not its capital is divided into shares (one exception – for partnerships with shares set up prior to 2015);
  • A registered civil partnership set up in terms of the Civil Code;
  • A European Economic Interest Grouping – EEIG;

in all cases, provided the entity in question has elected to be taxed as a ‘company’ in terms of Article 27 of the Income Tax Management Act.

Thanks to its legal, operational and tax environment, Malta is one of the European Union’s most competitive jurisdictions for the development of international activities. Learn more about its advantages here: http://www.newco.pro/en/malta

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NEWOFFICE – new offices with shared services

In on June 21, 2018 by NEWCO

 BLOG_newoffice

The speed and ease of setting up their companies in new jurisdictions has been one of the factors increasingly highlighted by our clients. In response to this growing concern, NEWCO is now offering furnished offices with shared services in Madeira and Malta. This will mean our clients can begin their activity in a space dedicated to their team without the demands of investing in a fully autonomous office.

NEWCO’s offices include support for reception and administrative services, IT and telecommunications structure, IT support, electricity, internet and telecommunications, cleaning services and proximity to the NEWCO team, which handles the necessary outsourcing of services.

Come and discover your new place in Madeira and Malta: NEWOFFICE

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Additional protocol to the DTA between Portugal and India

In on June 1, 2018 by NEWCO

India Flag-2181887_1920

The protocol signed in Lisbon on 24 June 2017, 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 of 11 September 1998),  has been approved.

The amendments introduced serve to reinforce the conditions and forms of cooperation between the authorities of both States as regards tax-related matters. Enabling an adequate exchange of information, this will foster more effective control of the financial flows between the two countries.

The amended protocol contains a new provision relating to the exchange of tax information. Under this provision, the competent authorities of the two States will exchange information that is likely to be relevant for the application of the convention or for the administration or application of domestic legislation relating to taxes of any nature or denomination charged in benefit of the contracting States, their political or administrative subdivisions, or local government, insofar as the taxation provided for in them does not contravene this convention.

Any information obtained by a State will be considered confidential in the same way that information obtained pursuant to that State’s domestic law would be. Such information may only be disclosed to the people or authorities (including courts and administrative authorities) in charge of the liquidation or collection of the taxes, or the declarative or executive procedures, or appeal decisions, relating to these taxes, or their control. Such information may be disclosed during public court hearings or judicial decisions.

The full text is available for consultation online at: https://dre.pt/application/conteudo/115392182.

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New Guide: Holdings in Spain (ETVE)

In on May 16, 2018 by NEWCO

ETVEs_BLOG_holdings

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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