The Annual Dixcart London Seminar was held in the City of London, at the Institute of Chartered Accountants in England and Wales (ICAEW). Further details regarding Brexit are emerging virtually continuously and these impending changes, as well as others within the UK, have provided an incentive for certain individuals to explore moving elsewhere.
The seminar started by attempting to evaluate the potential impact of Brexit and for those seeking to move elsewhere, then examined the corporate tax regimes and personal tax advantages available in Cyprus, Malta and Portugal.
Brexit – Where Are We Now?
Oliver Crosby, a tax adviser from Baker McKenzie, London opened the presentation with an assessment of the current status in relation to Brexit.
At 11pm (UK time) on 29 March 2019 the UK will leave the EU, with the agreed 21 month transition period then starting (ending 31 December 2020). There is much that still needs to be progressed and, in particular, the key areas of ‘regulation’ (numerous types) and ‘immigration’ need to be discussed and agreed between the EU and the UK.
It is difficult to predict the precise impact of Brexit. Some advantages are likely to be enjoyed by the UK economy whilst other negative outcomes have also been identified. Many UK non-doms are looking to move out of the UK due to changes to UK non-dom legislation, as well as a fall out from Brexit. How many actually move remains to be seen. The UK remains an attractive place to do business and there has been an increase in entrepreneurs and wealthy families, particularly from the Middle East and Russia, coming to settle in the UK.
Cyprus offers a positive incentive in terms of climate, being voted to have the second best climate in the world (source - InterNations 2016), with 326 days of sunshine. Robert Homem, Managing Director of the Dixcart office in Cyprus, went on to detail the attractive 12.5% corporate tax rate in Cyprus and the fact that tax credits are available on foreign tax paid.
Individuals can enjoy various tax benefits and a Cyprus non-dom regime was introduced in July 2017. The non-dom regime includes a zero rate of tax on dividends, rental income and capital gains (with the exception of immoveable property located in Cyprus) and a zero rate of inheritance tax. Tax on pension income arises at a flat rate of 5%. Two residence schemes exist for non-EU individuals: The ‘Citizenship by Investment Scheme’ and ‘The Residence Through Investment Scheme.’
Malta, like Cyprus, offers an attractive climate, is only a three hour flight from the UK and is English speaking.
The corporate tax rate in Malta is 35% but a 30% refund is available on trading income and a 25% refund on passive income. A notional interest deduction option is available from the financial year 2018, granting a deemed interest rate on equity financing, which is allowable as a tax deduction. This brings to par the treatment of equity financing with that of debt financing. There is a zero rate of withholding tax on dividends paid to non-resident shareholders.
Jonathan Vassallo, a Director of the Dixcart office in Malta, also detailed several additional positive features relating to Malta companies.
Five residence programmes are available in Malta; for more information please refer to Dixcart Article 450. Income not remitted to Malta is not taxed in Malta, in addition capital and capital gains remitted to Malta are not taxed in Malta. Income tax levels in Malta are also low.
Historically England and Portugal are the ‘oldest’ allies in Europe. During the past five years the economic status of Portugal has been transformed and Lisbon has become a thriving, vibrant international city.
The Golden Visa has become one of the most popular residence programmes currently available to non-EU individuals. In addition, Portugal offers a Non-Habitual Residents Regime, which is available for ten years and provides a 20% flat tax on employment and self-employment income in Portugal. Pensions are exempt from tax if they are potentially taxed in the source country, in accordance with a Double Tax Treaty (DTT) between Portugal and that country.
Carlos Santos, a Director in the Dixcart Portugal office, then detailed the corporate regime available in Portugal. This jurisdiction has 71 DTTs, offers a tax credit for R&D expenses and exemption from capital gains on the sale of participations.
Madeira is an autonomous region within Portugal and has its own corporate tax regime. Corporation tax is capped at 5% (with certain conditions in place) until at least the end of 2027 and there is a popular international ship and yacht register.
The seminar attracted many professionals from top London firms and organisations elsewhere in the UK, and there was plenty to discuss in the networking following the event. It was also pleasing to have attendees from overseas including jurisdictions such as: Cyprus, Guernsey, Ireland, Isle of Man, Jersey, Portugal and Switzerland.
For more information regarding the corporate tax regimes and personal tax advantages in the jurisdictions discussed at the seminar, please contact: