Category: Corporate Services

Vantagens para a localização de uma sociedade “holding” internacional

A localização de uma sociedade “holding” é uma consideração importante em qualquer estrutura internacional, onde um dos objetivos é optimizar o imposto cobrado sobre o fluxo de rendimentos.

Idealmente, a sociedade “holding” deve estar localizada numa jurisdição que:

• Beneficie de uma boa rede de tratados de dupla tributação, minimizando assim a retenção na fonte sobre os dividendos recebidos.
• Isente de impostos o pagamento de dividendos.
• Isente de impostos as mais-valias na alienação de subsidiárias.
• Não imponha retenção na fonte sobre as distribuições da sociedade “holding” às suas controladoras ou aos seus accionistas.
• Isente de imposto sobre mais-valias sobre lucros decorrentes da venda de ações na sociedade “holding” por acionistas não residentes.
• Isente de imposto de selo a transferência de acções.
• Beneficie de previsibilidade no conteúdo e aplicação de leis e regulamentos fiscais

As sociedades “holding” de Malta beneficiam de todos os pontos ilustrados supra.

Benefícios disponíveis para sociedades “holding” de Malta

Rede de Tratados de Dupla Tributação

Malta tem uma rede de mais de 70 tratados de dupla tributação.

Na maioria das situações em que uma sociedade de Malta possua mais de 10% do capital social de uma subsidiária no estrangeiro, a taxa de retenção na fonte sobre os dividendos recebidos pela sociedade de Malta de uma sociedade registada num pais com o qual Malta tenha celebrado um tratado de dupla tributação é reduzida para 5%.

Como Malta faz parte da UE, também beneficia da Directiva Mães e Filhas, reduzindo assim a retenção na fonte a zero sobre os dividendos recebidos da maioria dos países da UE.

Vantagens fiscais disponíveis para as sociedades “holding” de Malta

• Isenção para participações em capital social e isenção para mais-valias

Os dividendos qualificados e mais-valias derivados de uma “sociedade holding participativa” são (caso assim o escolha o contribuinte) isentos de imposto em Malta.

Se deseja mais informacoes sobre o que constitui uma “sociedade holding participativa” diriga-se ao nosso escritório Dixcart em Malta: advice.malta@dixcart.com.

• Venda de Ações na Sociedade “Holding”

Malta isenta de imposto as mais-valias na venda de acções de sociedades sediadas em Malta.

• Retenção na Fonte

Malta não retem na fonte imposto sobre o rendimento na distribuição de dividendos aos accionistas ou a sociedades “holding”.

A não-retenção é aplicável independentemente de onde o acionista seja residente.

• Imposto de Selo

Em Malta não há imposto de selo quer na emissão de capital social quer em transferências subsequentes.

• Outros Rendimentos

Os rendimentos, excluindo dividendos e mais-valias, estão sujeitos a imposto à taxa normal de de 35% em Malta. No entanto, o pagamento de um dividendo financiado por rendimentos que não dividendos e mais-valias pode dar origem ao reembolso de ente 6/7 a 5/7 do total do imposto pago pela sociedade em Malta ao acionista, o que resulta numa taxa efectiva de imposto entre 5% e 10%.

Nos casos em que os supra-referidos rendimentos tenham beneficiado de um tratado de dupla tributação ou do imposto de taxa fixa de Malta o reembolso não pode exceeder 2/3 do montante total.

Previsibilidade do conteúdo e aplicação de leis e regulamentos fiscais

A legislação em Malta preve a emissão de decisões administrativas fiscais. As decisões fornecem certeza sobre a aplicação da lei a uma transação específica, e vinculam as autoridades fiscais de Malta por um periodo de cinco anos.

Preve-se ainda a emissão de orientações informais pelas autoridades tributárias sob a forma de “cartas de orientação”. Essas cartas não são expressamente reguladas pela lei, mas criam uma expectativa legítima em que o contribuinte pode confiar. As autoridades tributárias de Malta consideram as “cartas de orientação” como sendo vinculativas.

Conclusão

As sociedades “holding” de Malta constituem uma opção atraente para grupos económicos internacionais.

As potenciais vantagens incluem:

• A extensa rede de tratados de dupla tributação de Malta
• Isenção de tributação de dividendos
• Isenção de imposto sobre mais-valias na alienação de acções em “sociedades holding participativas”
• Isenção de imposto sobre mais-valias na alienação de acções de uma sociedade “holding” por acionistas estrangeiros
• A ausência de retenção na fonte

Como pode a Dixcart ajudar?

A Dixcart tem um escritório em Malta e pode assistir:

• na incorporação de sociedades “holding”
• na prestação de serviços de sede social
• na prestação de serviços de consultoria
• no cumprimento de obrigações declarativas de natureza fiscal
• na prestação de serviços de contabilidade
• na prestação de serviços de diretoria
• na assessoria de todos os aspectos de aquisições e alienações de participações sociais

Informação Adicional

O Anexo 1 contem um exemplo de como uma sociedade “holding” de Malta pode ser usada como parte de uma estrutura fiscalmente eficiente.

 Contacto

Se gostaria de obter mais informações sobre este tema pode entrar em contato com Jonathan Vassallo no escritório da Dixcart em Malta – advice.malta@dixcart.com.

The Island of Guernsey offers Private Clients confidence in relation to the preservation, protection and growth of their wealth.

Guernsey is a well regulated jurisdiction situated in Europe, between the United Kingdom and France, with excellent travel links to both countries.  It is a tax neutral, politically stable jurisdiction with an excellent reputation and a network of multi-jurisdictional accounting and law firms.

The Island has a long history of providing financial services to the private client sector.  Dixcart Trust Corporation Limited has maintained a presence on the Island since 1972, with experienced staff who understand the requirements of modern families and international private clients.

Guidance is repeatedly sought by international clients to assist in planning for the future, protection of assets from probate, mitigation or deferral of tax, and/or the consolidation of asset management and protection.

• International clients can benefit from the tax neutrality of Guernsey, along with freedom from any local capital gains or inheritance taxes.

Guernsey Trusts

The Guernsey trust industry has evolved over many years. The most recent update to trust law in Guernsey took place in 2007.

• The Trusts (Guernsey) Law 2007 is now one of the most modern trust laws available, whereby trusts can be maintained indefinitely and can be created for charitable and for non-charitable purposes.

Guernsey Foundations

Guernsey introduced foundation legislation in January 2013, learning from popular civil law jurisdictions with well-established laws, to provide a positive and flexible approach.

With legal roots in Norman customary law, Guernsey is in a prime position to offer expertise in both common and civil law situations.  For those clients domiciled in civil law jurisdictions a foundation is an attractive structure where a trust may not be suitable.  A Guernsey foundation is a registered entity with a separate legal personality, which can be used for a purpose or to benefit beneficiaries. Foundations can be migrated to Guernsey from other jurisdictions.

Guernsey Company

An amendment to the Guernsey Companies Law in 2008 resulted in modernisation of the legislation.  The Guernsey Registry launched online registration and a database the same year, enabling time efficient incorporations and filings.

A Guernsey company can waive the requirement to hold annual general meetings and the requirement to have its accounts audited on an annual basis.  A Guernsey company can be cellular or non-cellular and the law does not distinguish between public and private companies.

• With a basic corporate income tax rate of 0% in Guernsey, Guernsey companies can form an important role in private client structuring.

Guernsey Limited Partnerships

Guernsey Limited Partnerships do not impose a rigid structure in the same manner that a cellular or non-cellular company might, but they do enjoy the benefit of limited liability and are therefore popular with International investors seeking limited liability and confidentiality.

The relevant Guernsey law is The Limited Partnerships (Guernsey) Law, 1995 and all Guernsey Limited Partnerships must be registered in Guernsey with the Registrar to retain Limited Liability status.

Guernsey Limited Liability Partnerships (LLPs)

The Limited Liability Partnerships (Guernsey) Law, 2012 was passed on 12 May 2014.

Although this legislation is relatively new, Guernsey LLPs are becoming increasingly popular for a number of different commercial scenarios, including real estate joint-ventures and family offices, due to their workable and flexible structure.

A Guernsey LLP has no statutory capital requirements and can be migrated from one jurisdiction to another.  Guernsey legislation is unique as it provides the ability to convert a general partnership into an LLP.

Dixcart Trust Corporation Limited

As part of a group, with 10 offices in 9 jurisdictions, Dixcart Trust Corporation Limited is distinct from other Corporate Service Providers as it is able to offer multi-jurisdictional full corporate and private client services.

These services include serviced office space within the Dixcart Business Centre, assistance with redomiciliation, captive insurance and full trust and corporate services.

The Dixcart network can be utilised to find a suitable multi-jurisdictional solution to meet our clients’ bespoke requirements, along with access to a wide range of resources from across the Group.

The Guernsey office has extensive knowledge and expertise to offer all clients, not only Guernsey registered structures, but for a wide range of trusts and companies based in other jurisdictions.

For further information please speak to John Nelson at the Dixcart office in Guernsey: advice.guernsey@dixcart.com or to your regular Dixcart contact.

At the start of July 2018 three new Double Tax Agreements (DTAs) were announced between the UK and the Crown Dependencies (Guernsey, Isle of Man, and Jersey). The three DTAs (from each of the islands) are identical, which was a key aim of the UK Government.

Each of the DTAs cover clauses relating to Base Erosion and Profit Shifting (’BEPS’) and they comply with new international tax standards, under the OECD’s Model Tax Convention.

The new DTAs will come into force once each of the territories has notified the others, in writing, of the completion of the process required under their local law.

Key Tax Related Clauses

• Full interest and royalty tax withholding reliefs will apply in a number of circumstances, including, in relation to individuals, pension schemes, banks and other lenders, companies that are 75% or more beneficially owned (directly or indirectly) by residents of the same jurisdiction, and also listed entities meeting certain requirements.

These tax reliefs are likely to significantly increase the attractiveness of Guernsey and the Isle of Man as jurisdictions from which to lend into the UK. The Double Tax Treaty Passport Scheme will be available to Crown Dependency lenders to make the process of claiming withholding tax relief administratively easier.

Additional Significant Clauses

• A residence tie breaker for individuals, which is clear and straightforward to apply.

• A residence tie breaker for companies to be determined by the mutual agreement of the two tax authorities having regard to where the company is effectively managed, incorporated and where the major decisions are made. This should make it easier to establish where the management and control is taking place and to therefore determine where the tax obligations arise.

• The inclusion of a non-discrimination clause.  This will prevent the application of a range of restrictive UK measures, such as the late paid interest rules and the application of transfer pricing for Small or Medium-Sized Enterprises (SMEs). At the same time benefits such as withholding tax exemptions for qualifying private placements and the dividend exemption for SMEs will be enjoyed.  This will place Guernsey and the Isle of Man on a much fairer and more equal footing with other jurisdictions.

Collection of Taxes for the UK Exchequer

Whilst the new DTAs confer a number of advantages, the Crown Dependencies will also now be required to assist in the collection of tax for the UK Exchequer.

Principal Purpose Test and Mutual Agreement Procedures

The DTAs include the ‘Principal Purpose Test’. This means that the benefits under each DTA may be denied where it is determined that the purpose, or one of the main purposes, of an arrangement was to secure those benefits. This test is derived from   BEPS treaty measures.

In addition, ‘Mutual Agreement Procedures’ will mean that where a taxpayer considers that the actions of one or both of the jurisdictions specified in the DTA gives rise to a tax outcome which is not in accordance with the DTA, the relevant tax authorities will try to resolve the matter through mutual agreement and consultation.  Where agreement is not reached, the taxpayer can request that the matter is submitted to arbitration, the outcome of which will be binding on both jurisdictions.

The Crown Dependencies – and Substance

In addition to the DTAs just announced, the commitment to substance, as defined in the ‘Council of the European Union – Code of Contact Group  (Tax) Report’ issued on 8 June 2018 is also likely to have a positive impact for the Crown Dependencies. In relation to international business, proving the existence of substance in the form of employment, investment, and infrastructure, will be key, to establish tax certainty and acceptability.

Additional Information

If you require further information regarding the new DTAs between the UK and the Crown Dependencies, please speak to your usual Dixcart contact or to the Dixcart office in Guernsey: advice.guernsey@dixcart.com or in the Isle of Man: advice.iom@dixcart.com.

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Dixcart Management (IOM) Limited is Licensed by the Isle of Man Financial Services Authority.

Companies licensed to operate within the legal framework of the Free Trade Zone of Madeira are Portuguese companies. The double taxation agreements (DTAs) concluded between Portugal and its treaty partners generally apply to Portuguese companies registered in Madeira. Not only is access to most of the agreements available, but also access to EU Directives, for instance the Parent-Subsidiary Directive.

Certain agreements are particularly advantageous and when combined with the benefits enjoyed by a Portuguese company licensed in Madeira the advantages are further enhanced.

Portugal does not impose withholding tax on dividends if the conditions for the application of the domestic participation exemption regime are satisfied and dividends are paid to a country with which Portugal has a DTA.

Portuguese Double Taxation Agreements

The network of double taxation agreements entered into by Portugal continues to expand. Portugal has 79 double taxation agreements with the following countries: Algeria, Andorra, Austria, Bahrain, Barbados, Belgium, Brazil, Bulgaria, Canada, Cape Verde, Chile, China, Colombia, Croatia, Cuba, Cyprus, Czech Republic, Denmark, East-Timor, Estonia, Ethiopia, Finland, France, Germany, Georgia, Greece, Guinea Bissau, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Ivory Coast, Japan, Kuwait, Latvia, Lithuania, Luxembourg, Macao, Malta, Mexico, Moldova, Montenegro, Morocco, Mozambique, Netherlands, Norway, Oman, Pakistan, Panama, Peru, Poland, Qatar,  Romania, Russia, San Marino, São Tomé e Principe, Saudi Arabia, Senegal, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela and Vietnam.

Particularly Attractive Agreements

Detailed below is a brief review of the particularly attractive DTAs between Portugal and Cape Verde, China, Colombia, Mexico, Mozambique, Singapore, South Africa and Turkey.

• Double Taxation Agreement between Portugal and Cape Verde

Portugal is the only country with a signed agreement with Cape Verde. Foreign investors into Cape Verde, therefore, frequently use Portuguese companies licensed in Madeira to invest into Cape Verde.

• Double Taxation Agreement between Portugal and China

This agreement is unique with regard to the taxation of capital gains from the sale of shares. Taxation only occurs in the state where the seller is resident. This is contrary to other agreements signed by China. In the case of a Madeira licensed company, capital gains realised from the sale of shares in China would be taxed in Portugal. If the company was licensed in Madeira, this would be at the low tax rate (of 5%) available to Portuguese companies licensed in Madeira.

• Double Taxation Agreement between Portugal and Colombia

Portugal signed a double taxation agreement with Colombia in 2015. The agreement allows a withholding tax of 10% on dividends and also includes information exchange mechanisms to control tax evasion.

• Double Taxation Agreement between Portugal and Mexico

There is a 10% withholding tax on the distribution of dividends from and to Portugal.

• Double Taxation Agreement between Portugal and Mozambique

Portugal is one of only two countries with a signed agreement with Mozambique. Potential investors into Mozambique can therefore use Portugal, more particularly Portuguese companies licensed in Madeira, to invest into Mozambique.

• Double Taxation Agreement between Portugal and Singapore

Although there is a provision in the agreement if 10% of withholding tax on dividends distributed by Portugal to Singapore, Portugal does not impose withholding tax on dividends if the conditions for the application of the domestic participation exemption regime are satisfied and the dividends are paid to a treaty partner recipient.

• Double Taxation Agreement between Portugal and South Africa

The agreement provides for a 10% tax rate where dividends are paid to a company that directly holds at least 25% of the capital of the company paying the dividend for a minimum two-year period before the dividends are paid; otherwise the rate is 15%.

• Double Taxation Agreement between Portugal and Turkey

The agreement provides for a 5% tax rate where dividends are paid to a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends for a minimum two-year period before the dividends are paid; otherwise the rate is 15%.

A 10% tax rate applies to interest on loans where the duration of the loan is a minimum of two years; otherwise, the rate is 15%.

The Madeira International Business Centre: Additional Corporate Tax Details

Madeira companies are subject to a reduced corporate tax of 5% until the end of 2027. Corporate tax is applied in conjunction with ceilings relating to taxable income and is also dependent on the number of jobs created in Madeira. A low level of taxation is often more attractive than the use of a zero tax jurisdiction. The latter may invoke Controlled Foreign Company Rules and negate Double Taxation Agreements.

Additional tax benefits applicable to Portuguese companies registered in Madeira include:

• exemption from withholding taxes on the distribution of dividends, royalty and interest payments to EU countries;
• exemption from capital duty, notary and registration fees;
• capital gains are not taxed separately from the company’s overall income. This means that capital gains realised by companies registered in the Madeira International Business Centre also benefit from the low corporate tax rate.

Additional Information

If you require additional information regarding Portuguese holding companies or registering a company in the International Business Centre of Madeira, please speak to your usual Dixcart contact, or contact the Dixcart office in Portugal: advice.portugal@dixcart.com.

Corporate entities are established and managed in a number of countries across the world for a variety of reasons. The location chosen for the incorporation and management of a company is a vital factor and integral aspect of the international, commercial planning process.

Business Centres are becoming an increasingly popular feature within international trading centres. They provide an opportunity for businesses with international interests to establish a presence in a particular location without the costs of setting up a new office. In addition, with the implementation of Anti Base Erosion and Profit Sharing legislation (BEPS) and the need to tackle international tax avoidance, it is becoming increasingly important to demonstrate real substance and genuine activity.

The Need for Substance and Value

Substance is an important factor for organisations to take into account, especially international companies seeking to establish subsidiaries in other countries. In addition, measures are constantly being implemented to ensure that corporate tax is levied where real value creation takes place.

Companies must show that management, control and day to day decisions concerning their activities are taken in the specific, relevant foreign jurisdiction and that the company itself operates through an establishment which provides a real presence in that location. In the event that substance and presence are not demonstrated and/or no real value creation has taken place in that jurisdiction, the tax benefits enjoyed by the subsidiary company may be negated by a tax imposition in the country where the parent company is based.

Dixcart Business Centres and the Benefits of Serviced Offices

Dixcart Business Centres provide office facilities and services to businesses wishing to establish themselves in a new location. Dixcart has serviced offices located in Guernsey, the Isle of Man, Malta and the UK, each offering advantageous tax regimes and attractive residency programmes to companies setting up for the first time or relocating.

Why Choose Dixcart Business Centres?

Dixcart Business Centres not only offer serviced offices, they are also Dixcart offices with Dixcart professionals working there, who are able to provide a complete range of services to companies wishing to establish themselves in a new location. A comprehensive range of administrative support and professional services is available to tenants, including accounting, business planning, HR, IT support, legal support, management, payroll and tax support, if required.

In addition, our experienced teams of well qualified, professional staff provide international business support and private client services to clients around the world.

Key Characteristics of Dixcart Business Centre Jurisdictions

Guernsey

Guernsey is an attractive location for international companies and individuals. Benefits include:

• A general zero rate of corporate tax.
• No VAT.
• A personal income tax rate of a flat 20%, with generous allowances.
• No wealth taxes, no inheritance taxes and no capital gains taxes.
• A tax cap of £110,000 for Guernsey resident taxpayers on non-Guernsey source income or a tax cap of £220,000 on worldwide income.

The Dixcart Business Centre is situated in a prime location within the island’s main financial district of St. Peter Port. Our nine fully furnished offices can each accommodate between two and four staff.

Isle of Man

The Isle of Man continues to attract an increasing number of international businesses. The Dixcart Business Centre is spread across two buildings, each in a prime location within the island’s main financial district of Douglas. A number of suites are available, with each office varying in size and accommodating between one and fifteen staff.

Companies and individuals in the Isle of Man benefit from the following advantages:

• A zero rate of corporate tax on trading and investment income.
• Businesses in the Isle of Man are treated by the rest of the EU, for VAT purposes, as if they were in the UK, and they can therefore register for VAT.
• There is no wealth tax, inheritance tax, capital gains tax or investment income surcharge.
• A standard rate of income tax for individuals of 10%, with a higher rate of 20%.
• A cap of £150,000 exists on an individual’s income tax liability for a period of up to five years.

Malta

The Dixcart Business Centre in Malta is located in the prime area of Ta’Xbiex, close to the capital, Valetta. The building is iconic and incorporates a delightful roof terrace. An entire floor is dedicated to serviced offices; nine in total, accommodating between one and nine people.

• Companies operating in Malta are subject to a corporate tax rate of 35%. However, shareholders enjoy low effective rates of Maltese tax as Malta’s full imputation system allows generous unilateral relief and tax refunds:
  • Active income: in most instances shareholders can apply for a tax refund of 6/7ths of the tax paid by the company on the active profits used to pay a dividend. This results in an effective Maltese tax rate of 5% on active income.
  • Passive income: in the case of passive interest and royalties, shareholders can apply for a tax refund of 5/7ths of the tax paid by the company on the passive income used to pay a dividend. This results in an effective Maltese tax rate of 10% on passive income.
• Holding companies – the dividends and capital gains derived from participating holdings are not subject to corporate tax in Malta.
• There is no withholding tax payable on dividends.
• Advance tax rulings can be obtained.

UK

The Dixcart Business Centre in the UK is located on Bourne Business Park, Surrey. Dixcart House is 30 minutes by train from central London and minutes from the M25 and M3, allowing a 20-minute drive to Heathrow Airport and 45 minutes to Gatwick Airport.

Dixcart House has 8 serviced office suites, each accommodating two to seven staff, 6 meeting rooms and a large boardroom, which can accommodate up to 25 people comfortably.

The UK is a popular jurisdiction for both companies and individuals:

• The UK has one of the lowest rates of corporation tax in the western world. The current UK corporation tax rate is 19% and this will be reduced to 17% in 2020.
• There is no withholding tax on dividends.
• The majority of share disposals and dividends received by holding companies are exempt from taxation.
• Controlled foreign company tax only applies to a narrow classification of profit.

Additional Information

Dixcart is seeking to expand its Business Centres and will be opening a further Centre in Cyprus before the end of 2018. Dixcart Cyprus has acquired a new office building in Limassol, which will have approximately 400 square metres of serviced office space.

If you require additional information regarding substance and the serviced offices offered through the Dixcart Business Centres, please visit our Business Support Services page and speak to your usual Dixcart contact, or email: advice.bc@dixcart.com.

Why Consider the Jurisdiction of Cyprus? 

Cyprus is the third largest and third most populated island in the Mediterranean Sea. It is situated to the east of Greece and to the south of Turkey. Cyprus joined the European Union in 2004 and adopted the euro as the national currency in 2008. 

Factors contributing to and enhancing the status of the jurisdiction of Cyprus include: 

• Cyprus is a member of the EU and therefore has access to European Union Conventions.   
• Cyprus has an extensive network of Double Taxation Treaties (DTAs). The DTA with South Africa is particularly attractive, reducing withholding tax on dividends to 5% and to zero on interest and royalties. 
• Resident companies are generally taxed at 12.5% of their business profit. This means that Cyprus is a good location for trading entities. 
• Cyprus is an attractive location for holding companies. There is no tax on dividends received and there is an exemption from withholding tax on dividends paid to non-resident shareholders. 
• Profits from a permanent establishment located outside of Cyprus are tax exempt from Cypriot taxes, as long as not more than 50% of the income has arisen from investment income (dividends and interest). 
• There is no capital gains tax. The only exception to this is immoveable property in Cyprus or shares in companies owning such property.  
• Notional interest deduction(NID) is available when new equity is introduced which generates taxable income in a Cyprus company, or in an overseas company with a Cyprus permanent establishment. NID is capped at 80% of the taxable profit generated by the new equity. The remaining 20% of profit will be taxed at the standard Cyprus corporate tax rate of 12.5%. 
• Cyprus offers a number of tax efficiencies for royalty structures. 80% of the profits from the use of intellectual property are exempt from corporation tax, which reduces the effective tax rate on intellectual property income to less than 3%. 
• Shipping regime whereby tax is based on an annual tonnage rate instead of a corporate tax.       

 Formation of a Private Limited Company in Cyprus

International business entities may be registered in Cyprus under Cyprus company law, which is almost identical to the United Kingdom’s former Companies Act 1948.  

1. Incorporation

Incorporation normally takes two to three days from the time that the necessary documentation is presented to the Cyprus Registrar of Companies.  Shelf companies are available. 

2. Authorised Share Capital

The minimum authorised share capital is €1,000.  There is no minimum paid up requirement.  

3. Shares and Shareholders

Shares must be registered. Different classes of shares with different rights as regards dividends and voting rights may be issued. The minimum number of shareholders is one and the maximum is fifty. 

4. Nominee Shareholders

Nominee shareholders are permitted. Dixcart can provide nominee shareholders. 

5. Registered Office

A registered office is required in Cyprus. 

6. Directors

The minimum number of directors is one.  A corporate entity may act as a director. 

7. Company Secretary

Every company must have a company secretary. A corporate entity may act as a company secretary. 

8. Statutory Records and Annual Returns

Financial statements must be filed with the Registrar of Companies once a year. Tax returns are filed with the Income Tax Authority. the company must hold an Annual General Meeting (AGM) every year and no more than 15 months should lapse between the first AGM and the subsequent one.  

9. Accounts and Year End

All companies have a year end of 31st December but may elect  another date.  Companies which follow the calendar year for their tax year must file an income tax return and financial statements within twelve months of their year end.   

10. Taxation

Companies, for tax purposes, are identified as tax resident and non tax resident. A company, irrespective of where it is registered, is taxed only if it is a tax resident of Cyprus.  A company is considered to be tax resident in Cyprus if its management and control is in Cyprus. 

The net profit of tax resident companies is liable to corporation tax of between zero and 12.5%, depending on the type of income. As mentioned above, such companies are those which are managed and controlled in Cyprus, regardless as to whether the company is also registered in Cyprus. Generally, resident companies are taxed at 12.5% of their business profit.

Updated January 2020

A number of significant benefits are available through using a Portuguese holding company. Portugal offers an internationally competitive tax framework that is both transparent and compliant.

As an alternative to being registered on the mainland, Portuguese companies can, in the correct circumstances, be registered on the island of Madeira. The Madeira International Business Centre (MIBC) offers a number of attractive tax advantages.

The Portuguese Corporate Tax Structure – An Overview

Portuguese companies are subject to tax on their worldwide income. Branches of non-resident companies are only taxed on Portuguese-source profits.

Corporate tax is charged at a rate of 21% on a company’s profit, although some exemptions may apply in relation to passive income, under the Participation Exemption Method.

Worldwide Participation Exemption Regime: Applicable to Capital Gains and Dividend Payments Inbound and Outbound

Under Portugal’s participation exemption regime, dividends received and capital gains received and distributed by a Portuguese resident company from a domestic or foreign shareholding are exempt from tax, provided that the shareholder holds, directly or indirectly, at least 10% of the capital or voting rights of the other company for 12 months.

The subsidiary may not be resident in a listed tax haven and must be subject to, and not exempt from, income tax at a rate which is equivalent to at least 60% of the Portuguese corporate tax rate (currently 21%).

A tax credit may be applicable when the conditions for the application of the participation exemption regime are not fully met, with an option for an underlying tax credit for dividends on foreign shareholdings held for 12 months of at least 10%.

In terms of capital gains, the participation exemption method applies to the gains on disposal of shares.

Patent Box Regime

There is a 50% exemption on income generated by intellectual property. This is applicable to the income generated by the assignment or sub-licensing of patents, models and industrial designs protected by intellectual property and which have been subject to registration.

The acquisition costs of certain intangible assets, with unlimited durability, and goodwill are deductible on an annual basis of 5% for a period of 20 years. In addition, all costs associated with the development of the intellectual property are tax deductible.

R&D

The current Portuguese R&D benefit package is valid until 2020.

A tax credit is available, under certain conditions, for R&D expenses:

1. A corporate tax credit of 32.5% of qualifying R&D expenses is available in the relevant tax year and may be carried forward for eight years;
2. 50% of the surplus of expenses suffered in the tax year over and above the average two previous tax years, capped at €1,500,000.

Madeira Free Trade Zone

Taxable income derived from the activities of licensed financial, industrial,  international service and shipping companies established in the Madeira free trade zone are subject to a reduced corporate tax rate of 5%, when certain conditions are met.

Read about the substance requirements in Madeira here. 

The Advantages for Portuguese Companies in Madeira

Companies licensed to operate in the International Business Centre (IBC) of Madeira enjoy a number of tax advantages, which are guaranteed until the end of 2028.

Portuguese companies registered in the IBC of Madeira enjoy:

• A corporate tax rate of 5%
• Access to the majority of Portuguese Double Taxation Treaties
• Application of the Portuguese participation Exemption Method and Patent Box Regime
• Automatic VAT registration when incorporating a company
• Exemption from withholding taxes on Dividends, Interest and Royalties, with the exception of Dividends paid to entities resident in tax havens as defined by Portugal
• Exemption from capital duty, notary and company registration fees.

In addition, directors of companies incorporated in Madeira do not need to be Portuguese resident. However, if all of the directors are non-resident in Portugal, the company must appoint a local representative in Portugal.

Certain criteria need to be met to register a company in Madeira. Full details are available from the Dixcart offices in Madeira and Lisbon.

Additional Information

If you require any additional information on this topic, please contact your usual Dixcart adviser or speak to Catarina Sardinha in the Portugal office: advice.portugal@dixcart.com

The UK updated its foreign company (“CFC”) rules on 1 January 2013. A number of exemptions apply that can reduce or remove the obligation to pay UK tax.

Background

A CFC is a non-UK resident company controlled by persons in the UK.  Typically a CFC is a foreign subsidiary of a UK group, although corporate control is not required for a company to be a CFC.

The rules, which are essentially anti-avoidance rules designed to prevent a company artificially moving its profits abroad to a country with more favourable tax rates, came into effect for accounting periods beginning on or after 1 January 2013.

Where the CFC rules apply some or all of the CFC’s profits will be allocated to the UK company that controls it and the UK company will be taxed on this amount.

Exemption from CFC Rules

Certain types of company and income are exempt from the CFC rules.

“Entity Level Exemptions” – these are a series of exemptions. Where a CFC qualifies under one of these exemptions the entire income of the CFC will be outside the scope of the CFC rules, and the group need not concern itself with CFC provisions.

“Gateway Provisions” – these examine the activities of the CFC and essentially leave only those profits that have been artificially diverted from the UK (those within the gateway) under the scope of the CFC rules, and therefore liable to UK tax.

Entity Level Exemptions

The following are full entity level exemptions:

• Exempt period exemption – this exemption applies for the first 12 months after a non-resident company has come under UK control. There will be no CFC charge, provided that any necessary restructuring is undertaken to ensure that no future CFC charges will arise in subsequent time periods.

• Excluded territories exemption – CFCs resident in specified territories (generally territories with a headline tax rate of more than 75% of the UK tax rate) will be exempt, provided that their total income within certain designated categories does not exceed 10% of the company’s pre-tax profit for the accounting period, or £50,000 if greater. This exemption is not available where significant IP has been transferred to the CFC from the UK during the accounting period or during the previous six years.

• Low profit exemption – a CFC will be exempt if its accounting profit does not exceed £50,000 in an accounting period, or if its accounting profit does not exceed £500,000 and its non-trading income does not exceed £50,000.

• Low profit margin exemption – a CFC will be exempt provided its accounting profit does not exceed 10% of the relevant operating expenditure.

• Low level of tax exemption – a CFC that has paid local tax of at least 75% of the amount it would have paid as a UK resident company is exempt.

Gateway Provisions

If the entity level provisions above do not apply, then the gateway provisions need to be considered to determine if profit passes through the CFC gateways and should therefore be subject to UK taxation.

There are a number of gateways specified in the various chapters of the legislation and for each gateway it is necessary to establish whether the applicable test applies, and, if so, which profits pass through the gateway.

The CFC charge gateway tests are as follows:

• Chapter 4: Profit attributable to UK activities
• Chapter 5: Non-trading finance profit
• Chapter 6: Trading finance profit
• Chapter 7: Captive insurance business
• Chapter 8: Solo consideration

Chapter 4 – Profit Attributable to UK Activities

Chapter 4 will apply if the CFC has business profit (other than property business profit and non-trading finance profit), where the CFC is unable to satisfy at least one of the following tests:

• the CFC does not hold assets or risks under an arrangement to avoid tax;

• the CFC does not have any UK managed assets or bear any UK controlled risks; and

• the CFC could operate effectively if its UK managed assets or UK controlled risks were managed/controlled other than from the UK.

Chapter 4 includes a number of exclusions which prevent a CFC’s profits passing through this gateway, for example; where those profits arise mainly from non-UK activities or where they relate to arrangements entered into with group companies where those arrangements could have been entered into with independent organisations.

Chapters 5 to 8 Gateway Tests

Chapters 5, 6, 7 and 8 gateway tests are specifically designed for CFCs with certain non trading finance profit, trading finance profit, insurance companies and CFCs consolidated with regulated UK financial companies. Unless the CFC falls into one of these categories, it will only be the Chapter 4 gateway that will need to be considered.

Chapter 5 – Non-Trading Finance Profit

Non-trading finance profit, which is incidental to business profit, will not pass through the gateway. Full or partial (75%) exemption may apply with regard to non-trading finance profit from qualifying loan relationships.

Chapter 6 – Trading Finance Profit

Only trading finance profit which derives from UK connected capital contributions will pass through this gateway. The profits of a group treasury company are treated as non-trading finance profit and therefore do not fall within this category. This enables such a company to access the full or partial (75%) finance company exemption.

Chapter 7 – Captive Insurance Business

Profits from captive insurance business will pass through the gateway where the contract of insurance is entered into with:

• a UK resident person connected with the CFC; or
• a non-UK resident person connected with the CFC acting through a UK permanent establishment; or
• a UK resident person where the contract is linked to the provision of services or goods to the UK resident person.

Chapter 8 – Solo Consideration

Solo consideration applies where the CFC is controlled by a UK resident bank.

Summary

It is important that UK CFC rules are clearly understood by all non-UK resident companies controlled by persons in the UK.  Due to the exemptions and the various gateways there may be legitimate opportunities to reduce the UK tax payable. Dixcart can provide advice in relation to UK CFCs and the exemptions that are available.

Additional Information

If you require any additional information please speak to Paul Webb or to your usual Dixcart contact.

Background

In February 2017, Guernsey’s Government approved the establishment of a register of beneficial ownership information.

In implementing this initiative, Guernsey, along with a large number of other jurisdictions, is maintaining its commitment to meet international standards on tax transparency and is adopting the recommendations of the Financial Action Task Force.

This new Register will not impact greatly on the fiduciary sector in Guernsey, as corporate service providers are already required to obtain relevant information on beneficial ownership under anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.

In Guernsey, unlike many other jurisdictions, the use of a regulated corporate service provider to undertake company formations is already obligatory.

Restricted Access to the Register

Certain jurisdictions, including the UK, consider that a publicly available register should be adopted. However, Guernsey’s approach is that open accessibility would not allow the Government to guarantee the security of information held and would not be compliant with data protection legislation.

Consequently, access to the register in Guernsey will be restricted to “designated persons” in Guernsey. Legal gateways are being established to allow the sharing of beneficial ownership information with specific Guernsey entities, such as the Guernsey tax authorities and other foreign authorities for designated purposes.

Guernsey Registered Agents

Under the Companies Law and the Limited Liability Partnerships Law, Guernsey companies and Limited Liability Partnerships must appoint a Resident Agent. This is a corporate service provider licensed by the Guernsey Financial Services Commission (GFSC) or a locally resident official. For a company, a locally resident official will be a director and for a limited liability partnership it will be a member. A record of the Resident Agent must be provided to the Registrar.

For companies where the Resident Agent is a company official, additional information may need to be gathered. 

Definition of “Legal Persons”

The Register will include beneficial ownership information in relation to all types of legal persons established in Guernsey. This will include:

1. Companies incorporated under the Companies (Guernsey) Law, 2008
2. Foundations created under the Foundations (Guernsey) Law, 2012
3. Limited Partnerships with legal personality formed under the Limited Partnerships (Guernsey) Law, 1995
4. Limited Liability Partnerships established under the Limited Liability Partnerships (Guernsey) Law, 2013.

Administration of the Register

The Registrar of Companies has been appointed to administer the new register. 

The Role of Resident Agents and Power of the Registrar

Obligations of Guernsey Resident Agents will be enhanced and extended to include the provision of additional information regarding beneficial owners, such as former names of individuals, a service address if this is different to an individual’s residential address, and the date on which beneficial ownership commenced (if after the date the legislation comes into force).

If no beneficial owner has been identified, a statement must be provided to this effect.

Resident Agents will also be required to verify the information provided (although this is already an obligation under AML/CFT regulation). They will be required to provide this information to the Registrar, together with a statement confirming that the information has been verified, and they will be required to notify the Registrar of any changes to the information maintained on the Register.

The Registrar will be given powers to issue compliance notices and warnings, impose administrative financial penalties and disqualify persons from acting as Resident Agents.

Definition of a “Beneficial Owner”

For the purposes of the Register, a beneficial owner will be defined as an individual (i.e. a natural person).

In the case of a company, this will apply to individuals who hold, either directly or indirectly through a chain of ownership, more than a specified percentage of the shares or voting rights in a company, or the right to appoint or remove the majority of its directors, as well as individuals who might otherwise control the company.

Currently the percentage threshold is 10%. It will be interesting to see whether the same, or even tighter parameters, will be introduced under the new regulations.

Where shares are held jointly or individually by a number of associated persons, e.g. by members of the same family, or persons who have entered into an arrangement to exercise their rights jointly, each person will be treated as holding the combined shares or the rights to them all.  

Nominee Arrangements

It is expected that specific requirements will be introduced in respect of nominee arrangements. At minimum, where there is a nominee relationship, details relating to the legal owner and the beneficial owner must be notified to the Registrar and there must be a statement as to why the nominee relationship has been established.

Summary

Guernsey as a jurisdiction has always taken its compliance and reporting obligations very seriously. This is reflected in the approach to the new Register of Beneficial Owners.

An interesting feature of the new Register is that it will not be open to the public and will only be accessible by “designated persons”.

Additional Information

For additional information regarding the Guernsey Register of Beneficial Owners please speak to John Nelson at the Dixcart office in Guernsey: advice.guernsey@dixcart.com, or to your regular Dixcart contact.

Why is Guernsey an Attractive Jurisdiction for Companies?

There are a number of reasons why an individual may wish to migrate a company or foundation from its current jurisdiction of registration to the Bailiwick of Guernsey.

Guernsey is a well-regulated and internationally respected international jurisdiction.  It is also a politically stable jurisdiction with its own autonomous government but with close links to the UK.

Another advantage that Guernsey offers is a more flexible regulatory regime compared to those in other jurisdictions; for example:

• The Companies (Guernsey) Law, 2008 enables a company to convert from a non-cellular company into a protected cell company or an incorporated cell company.
• The Foundations (Guernsey) Law, 2012 provides a number of unique options compared to the laws of other jurisdictions. Additional details can be found in Dixcart Article: Guernsey Foundations.

Guernsey is also a leading jurisdiction in which to conduct investment fund business and has expertise and experience in dealing with a variety of asset classes, investment strategies and legal structures.

Corporation Tax in Guernsey: The Benefits Available

Non-resident corporations are subject to Guernsey tax on their Guernsey source income. Companies, however, pay income tax at the current standard rate of 0% on taxable income. The only exceptions are income derived from banking business, insurance business or custody services business, and licensed fund administration business, which are all taxable at 10%.

Conditions and Procedures: A Company or Foundation Migrating to Guernsey

Certain criteria must be met before a company or foundation is able to migrate to Guernsey:

• An entity must be permitted to migrate to another jurisdiction, according to the law of the jurisdiction under which the entity currently operates. Without this permission the entity will not be entitled to relocate.
• The members (shareholders) of the company, or officers of the foundation, must have passed a special resolution under the terms of the current foreign law under which the entity operates, consenting to the migration of the entity.
• The entity may not be in liquidation or any other insolvency process during relocation.
• The entity must satisfy the statutory ‘solvency test’ immediately after it is placed on the Guernsey Registry.
• A company’s memorandum (and/or articles of association) or the foundations charter must not differ on entry to the Guernsey Registry, compared to what was previously in place before the registration. If any changes are required, they must be approved by a resolution of the company/foundation as prescribed under the foreign law under which it currently operates.
• The company must not be able to issue bearer shares.
• If a company is intending to perform any activities (even if regulated by the Guernsey Financial Services Commission (GFSC)) which may result in the company becoming classified as a ‘supervised company’, then the company must obtain consent from the GFSC prior to commencing the migration process.

Status on Migrating to Guernsey

On registration as a Guernsey company or foundation:

• all property, and rights to which the entity was entitled immediately before the registration, remain its property and rights;
• the entity remains subject to all criminal and civil liabilities, all contracts, debts and other obligations to which it was subject immediately before the registration or removal;
• all actions and other legal proceedings which could have been instituted or continued by or against the entity immediately before the registration or removal may be instituted or continued by, or against it, after the registration or removal has occurred; and
• any conviction, ruling, order or judgment which is in favour of, or against the entity before the registration or removal, may be enforced by or against it after the registration or removal has occurred.

Registration as a Guernsey company or foundation does not:

• create a new legal person; or
• prejudice or affect the identity or continuity of the legal person, constituted by the company or foundation.

Solvency Test

To protect creditors who could be affected by a company’s migration in to or out of Guernsey, a test of solvency must be applied to the company. A company is considered to pass this solvency test if:

• the company is able to pay its debts as and when they are due; and
• the value of the company’s assets is greater than the value of its liabilities.

Provided that all of the information required in connection with an application is available, migration into Guernsey can generally be carried out quickly and is similar in terms of provisions, costs and timescale to the formation of a new entity. It must, however, be taken into consideration that there may be time constraints regarding outward migration from the country where the company or foundation was previously domiciled.

How Can Dixcart Help?

The Dixcart office in Guernsey has an extensive knowledge and expertise regarding redomiciling companies and foundations to Guernsey.

Dixcart managers can provide:

• Comprehensive advice and assistance throughout the process.
• Assistance in registering a company or foundation in Guernsey.
• Assistance in meeting the criteria and regulations before and after migration.
• A comprehensive range of individual and professional commercial services once relocation has taken place, including ongoing advice and compliance guidance.

Additional Information:

If you require additional information on this topic, please speak to John Nelson at the Dixcart office in Guernsey: advice.guernsey@dixcart.com or to your usual Dixcart contact.