Taxation of Highly Qualified/High Net Worth Individuals

Transcription

1 Malta as a Financial Centre Taxation of Highly Qualified/High Net Worth Individuals Doreen Fenech Director, Tax KPMG Agenda The General Non-Dom Rule Special Provisions/Schemes Article 6 of the Income Tax Act Highly Qualified Persons Rules High Net Worth Individuals Rules Malta as a Financial Centre: State of Play Page 2 1

2 General Provision THE NON-DOM RULE Malta as a Financial Centre: State of Play Page 3 Malta s jurisdiction to tax Ordinarily resident & domiciled Individual born in Malta, or of Maltese parents, who lives in Malta Taxed on worldwide income at progressive rates. Highest rate is 35% Ordinarily resident / non-domiciled Temporary resident Foreigner that moves to Malta Taxed in Malta on income and capital gains arising in Malta, or income arising outside Malta which is received in Malta Foreigner in Malta for some temporary purpose only, with no intention to establish residence and residing in Malta for less than 6 months Taxed in Malta only on income or capital gains arising in Malta Malta as a Financial Centre: State of Play Page 4 2

3 The Non-Dom Rule Individuals who are ordinarily resident but not domiciled in Malta are liable to tax in Malta on a remittance basis of taxation, therefore only on: Any chargeable capital gains arising in Malta Any income arising in Malta Any income arising outside Malta which is received in Malta Capital gains arising outside Malta are not subject to tax in Malta e.g. Sale of immovable property situated outside Malta; sale of shares in non-maltese company Malta as a Financial Centre: State of Play Page 5 The Non-Dom Rule Provides flexibility in the case of persons who are ordinarily resident but not domiciled in Malta, Malta s jurisdiction to tax depends on how they organise their affairs Is definitely one of our best selling points as a jurisdiction Malta as a Financial Centre: State of Play Page 6 3

4 When the Non-Dom Rule does not work... Although Malta s treaties may often be used to restrict other countries tax claims over certain income, in a number of Malta s treaties this will only be true where the income is received in Malta, and is therefore taxed in Malta. Also, income arising in Malta is invariably subject to tax in Malta. Malta as a Financial Centre: State of Play Page 7 When the Non-Dom Rule does not work... That is where we need the special provisions/schemes Article 6 or Highly Qualified Persons Rules to deal with certain employment income in Malta High Net Worth Individuals Rules to deal with foreign income Malta as a Financial Centre: State of Play Page 8 4

5 Special Provision ARTICLE 6 OF THE INCOME TAX ACT Malta as a Financial Centre: State of Play Page 9 Beneficiaries of Article 6 An investment service or insurance expatriate who is an employee of or provides services to an investment services company or an insurance company; and Who is either not ordinarily resident and not domiciled in Malta; or was not resident in Malta for a minimum period of three years before commencing his employment or provision of services and provided that during these three years the individual was engaged on a full time basis in a similar position outside Malta. Malta as a Financial Centre: State of Play Page 10 5

6 Benefit The following fringe benefits are exempt from tax for 10 years removal costs in respect of relocation to or from Malta; accommodation expenses incurred in Malta; travel costs in respect of visits by the expatriate and his immediate family to or from Malta; provision of a car for the use by the expatriate in Malta; a subvention of not more than 600 per calendar month; medical expenses and medical insurance; and school fees in respect of the children of the expatriate The expatriate is treated as not resident in Malta for the purposes of article12(1)(c). Malta as a Financial Centre: State of Play Page 11 Investment Services Company The Investment Services Company must be: licensed or recognised in terms of the Investment Services Act; and engaged solely in the provision of management, administration, safekeeping or investment advice to collective investment schemes. Malta as a Financial Centre: State of Play Page 12 6

7 Insurance Company The Insurance Company must be: authorised under article 7 of the Insurance Business Act; or an insurance manager authorised under article 13 of Insurance Business Act; or a company carrying on the business of insurance broking under article 12 of the Insurance Intermediaries Act. Malta as a Financial Centre: State of Play Page 13 Special Schemes HIGHLY QUALIFIED PERSONS RULES Malta as a Financial Centre: State of Play Page 14 7

8 Benefit Income from a qualifying contract of employment in an eligible office with a company licensed and/or recognised by the Malta Financial Services Authority (MFSA) or Lotteries and Gaming Authority is subject to tax at a flat rate of 15% Provided the minimum taxable income threshold of 75,000 adjusted annually in line with the Retail Price Index is upheld. Beneficial tax rate (15%) EU/EEA/Swiss /Third country Nationals 75,000-5,000,000 Exempt 5,000,000 + Malta as a Financial Centre: State of Play Page 15 Applicability of benefits EEU / EEA / Swiss Nationals The beneficial rate of tax applies for a period of 5 consecutive years Individuals in possession of a contract of employment prior to 1 January 2010 For a period in excess of 2 years preceding 1 January 2010 may not benefit from these rules For a period up to 2 years preceding 1 January 2010 may benefit from these rules for a period not exceeding 3 consecutive years For a period up to 1 year preceding 1 January 2010 may benefit from these rules for a period not exceeding 4 consecutive years Malta as a Financial Centre: State of Play Page 16 8

9 Conditions Derive employment income subject to tax in Malta Be subject to an employment contract subject to the laws of Malta and which is drawn up for exercising genuine and effective work in Malta Be in possession of professional qualifications with at least 5 years professional experience Not benefit from deductions available to investment services/insurance expatriates (Article 6 of the Income Tax Act) 5 Perform activities of an eligible office Malta as a Financial Centre: State of Play Page 17 Conditions (cont...) Disclose and declare emoluments received in respect of income from a qualifying contract of employment as well as all income received from a person related to his employer paying out income from a qualifying contract as chargeable to tax in Malta Be in receipt of stable and regular resources sufficient to maintain himself and his dependents without recourse to Malta s social assistance system Reside in accommodation regarded as normal for a comparable family in Malta Be in possession of a valid travel document Be in possession of sickness insurance for himself and his dependents Malta as a Financial Centre: State of Play Page 18 9

10 Third Country Nationals Rights will be withdrawn in the event that the individual: Physically stays in Malta for a period in excess of 1,460 days; or Acquires direct or indirect real rights over immovable property situated in Malta, or holds a beneficial interest directly or indirectly of real rights over immovable property situated in Malta Malta as a Financial Centre: State of Play Page 19 The Special schemes HIGH NET WORTH INDIVIDUALS RULES (HNWI) Malta as a Financial Centre: State of Play Page 20 10

11 Beneficiaries of the HNWI High Net-Worth Individuals EU/EEA/Swiss Nationals Rules Apply to EU nationals and nationals of Iceland, Norway, Liechtenstein and Switzerland High Net-Worth Individuals Non-EU/Non-EEA/Non- Swiss Nationals Rules Apply to any individual not a citizen of the EU, Iceland, Norway, Liechtenstein and Switzerland Malta as a Financial Centre: State of Play Page 21 Tax treatment All foreign-sourced income received in Malta is to be taxed at a reduced rate of tax of 15% Provided the minimum tax thresholds are upheld, the beneficial flat rate of tax is further complemented by the claim for relief of double taxation provisions, reducing the tax due in Malta through a relief of foreign WHTs and underlying corporate income tax suffered in the source country Any income or capital gains arising in Malta will be taxed at a flat rate of 35% Malta as a Financial Centre: State of Play Page 22 11

12 Minimum tax Minimum tax to be paid in Malta: EU/EEA/Swiss Nationals Non-EU/Non- EEA/Non-Swiss Nationals Applicant 20,000 25,000 Each Dependent 2,500 5,000 Malta as a Financial Centre: State of Play Page 23 Definition of Dependent A dependent includes: The beneficiary s spouse; The beneficiary s unmarried minor children including adopted minor children of the beneficiary or of the spouse; Minor children who are in the custody of the beneficiary or the spouse and who are financially dependent on the beneficiary; or Children who are not minors but, because of circumstances of illness or disability of a serious gravity are unable to maintain themselves. Malta as a Financial Centre: State of Play Page 24 12

13 Conditions 1 Hold a Qualifying Property Holding Some transitory provisions applied Purchased after 1 January 2011: > 400,000; or Annual rent > 20,000 Property must: Be used as primary residence of the applicant and his family members Not be used by any other person Not be leased or sub-leased Malta as a Financial Centre: State of Play Page 25 Conditions (cont...) 1...Property A Family Member includes: The beneficiary s ascendants in the direct line; The beneficiary s descendants in the direct line; The beneficiary s brothers, sisters, spouse/s; or Persons with whom the beneficiary is in a stable and durable relationship. Malta as a Financial Centre: State of Play Page 26 13

14 Conditions (cont...) Not benefit from the Residents Scheme Regulations or Highly Qualified Persons Rules Be in receipt of stable and regular resources sufficient to maintain himself and his dependents without recourse to Malta s social assistance system Be in possession of a valid travel document Be in possession of EU wide sickness insurance for himself and his dependents Not be domiciled in Malta; with no intent to establish domicile in Malta within 5 years from the date of application Be a fit and proper person Malta as a Financial Centre: State of Play Page 27 Conditions (cont...) The applicant s lifestyle must reflect his status as a resident of Malta, the applicant must: 9 10 Not stay in any one other jurisdiction for more than 183 days in a calendar year Be fluent in Maltese or English (Non-EU/Non-EEA/Non- Swiss Nationals Malta as a Financial Centre: State of Play Page 28 14

15 Conditions (cont...) 11 Long-term residents A third country national who has attained status/applied for such under the Status of Long-Term Residents (Third Country Nationals) Regulations, or who has resided, legally and continuously, in Malta for 5 years Non-EU/Non-EEA/Non-Swiss Nationals Where the applicant declares that he does not intend to become a long-term resident, he does not spend more than 9 months in Malta in any calendar year. Where the applicant declares that he intends to become a long-term resident he needs to be a party to a qualifying contract Malta as a Financial Centre: State of Play Page 29 Immigration Scheme Specific to Non-EU/Non-EEA/Non-Swiss Nationals These Rules do not grant the beneficiary any special rights to enter and reside freely in Malta. What options are available to Third Country Nationals? Malta as a Financial Centre: State of Play Page 30 15

16 Thank you Doreen Fenech Director, Tax KPMG Malta as a Financial Centre: State of Play Page 31 16