Category: Corporate Services

In recent years, Malta has become an increasingly popular destination for startups, particularly in tech, fintech, blockchain, gaming, and iGaming sectors. The island nation offers EU Membership, a business-friendly environment, strategic location, and strong government support, making it an attractive option for entrepreneurs looking to establish and scale their businesses.

A survey carried out by the Europe Startup Nations Alliance (ESNA) across 21 EU countries ranked Malta as the 4th best destination for innovative startups. Events and meetups are increasingly common, fostering connections with investors, mentors, and other entrepreneurs. Malta’s blend of business advantages, strategic positioning, and lifestyle benefits creates a conducive environment for startups to launch and scale successfully.

Why Malta?

As a member of the European Union (EU), Malta provides startups with seamless access to the single European market, which encompasses over 450 million consumers across 27 member states. Also, the EU’s single market policies help reduce costs and simplify logistics, allowing startups to expand rapidly into new regions.

Malta’s strategic location in the middle of the Mediterranean makes it the ideal gateway to access the African market. With English as one of the official languages, foreign entrepreneurs can easily navigate the country’s legal and business landscapes. Malta offers a mix of local talent and international professionals attracted by Malta’s quality of life. The island also encourages collaboration between innovative companies and the University, with the aim of boosting knowledge transfer and tailoring the offering of the education system with the needs of the jobs market.

Government Support to the Startup Ecosystem

Malta Enterprise, the Government agency tasked with attracting new foreign direct investment, has contributed to the development of a vibrant, engaging and talented startup community. The Startup Festival is now a yearly event for start-ups to exhibit their products and services, where attendees can engage directly with cutting-edge technology and innovative products. Malta Enterprise also offers a wide range of incentives not only to attract innovative startups to the island, but also ensuring that those that are already in Malta have the support needed to grow. For more information on incentives available in Malta, please read the article Supercharge your Company in Malta – A Guide to the Support Measures Available for Businesses.

In recent years, the startup ecosystem saw a significant increase in companies offering tech solutions in sectors such as Fintech (Malta is now home to many Electronic Money Institutions and Payment Solution Providers); Blockchain (not only related to cryptocurrencies, even though it should be underlined that Malta was the first country to adopt legislation to regulate Virtual Financial Assets), and Artificial Intelligence (with applications on many industries such as Tourism, Compliance and Medicine).

Attractive Conditions for Founders and Key Employees

The presence in Malta of incubators and accelerator programmes, such as Supercharger Ventures or the Visa Innovation Programme, are a testament to the progress that the jurisdiction has made over recent years to establish itself as a European Startup Hub.

Malta offers a wide array of favourable conditions to founders, co-founders and other key employees of the startup. These measures include attractive income tax, particular residency programmes and fast-track work permits. We have previously covered the Key Employee Initiative in detail.

How Dixcart Can Assist

The Dixcart office in Malta can assist startup founders since their very first steps on the island and for their entire journey in Malta. For further information, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

Switzerland stands out as an ideal location for setting up a business, due to its economic and political stability, favourable tax rates, and central European location.

This article provides an overview of the essential steps involved in forming, operating, and, if necessary, dissolving a Swiss company.

Incorporating a Swiss Company

Choosing a Legal Structure

When establishing a business in Switzerland, entrepreneurs have several options:

• Sole Proprietor: Owned by one individual who is personally liable.
• Limited Liability Company (SARL/GmbH). Minimum share capital CHF 20,000 and partner(s) names are publicly disclosed.  
• Limited Company (SA/AG). Minimum share capital CHF 100,000, with shareholder names kept private.
• Branch: An extension of a foreign company that adheres to Swiss regulations with no initial capital requirement.

Selecting the appropriate structure depends on factors such as business scale, liability preferences, and taxation.

Key Steps in Incorporation

Setting up a Swiss company generally involves:

1. Selecting and registering a unique business name.
2. Opening a Swiss transitory bank account to deposit share capital.
3. Preparing essential legal documentation.
4. Holding a founders’ meeting with a public notary.
5. Registering the company with the commercial register and tax authorities.
6. Ensuring at least one director resides in Switzerland.

The entire process takes approximately three weeks.

Operational and Day to day Support

Accounting & Audit

Companies must maintain accurate financial records and comply with Swiss accounting standards. A statutory audit is required if specific thresholds are met, which are relatively high

Taxation

Corporate tax rates vary between 12% to 14% in most regions. Additional tax considerations include:

• Value Added Tax (VAT): Mandatory registration for businesses earning over CHF 100,000 annually.
• Dividend Withholding Tax: Eliminated or reduced between 5% and 15% for EU and treaty-based jurisdictions.
• Zero tax regime for capital gains and dividend income.

Employment Regulations

Swiss labour laws emphasise flexibility and protection. Employment contracts should be detailed, and foreign employees require work permits. Additionally, while there is no national minimum wage, certain regions implement wage regulations.

Administrative Services

For smooth day-to-day operations, comprehensive administrative support is available. This includes:

• Bookkeeping and Payroll Services
• Business Plan Development
• Management Accounts: Prepared monthly, quarterly, or annually, to aid strategic decision-making.
• Regulatory Compliance: Expertise in Swiss insurance, social security, VAT and anti-money laundering (AML) reporting.

Liquidation and Company Dissolution

If the time comes to dissolve a Swiss company, the process must be carefully managed. The steps include settling all liabilities, distributing remaining assets to shareholders, and deregistering from the commercial register. Proper management throughout the liquidation phase is important to ensure all legal and financial obligations are met.

Additional Information

If you require additional information relating to Swiss companies and the advantages they can offer, please speak to Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

Equity incentive plans have grown in popularity in recent years as they provide a fantastic mechanism for motivating employees, retaining talent and aligning the interests of the workforce and Shareholders. While these plans are particularly beneficial for global corporations with a dispersed workforce, they are equally effective for larger companies seeking to incentivise employees and drive long-term success.

This guide provides an overview of equity incentive planning, exploring how such plans can be structured and managed to meet the needs of large businesses, regardless of their geographical scope.

Understanding Equity Incentive Plans

Equity incentive plans are designed to offer employees shares or share options as part of their compensation package. Early plans were used by publicly listed companies to reward executives through Long-Term Incentive Plans (LTIPs).

In more recent times, the data shows that the scope of such incentive schemes has expanded not only to unlisted companies but are also increasingly established for the benefit of the wider workforce. Equity incentive plans are now widely adopted by private companies across various industries.

The core objective of equity incentive plans is to attract and retain talent while incentivising behaviours that contribute to the sustainable growth of the business. By granting employees a stake in the company, these plans foster a sense of ownership, aligning employee actions with the long-term goals of the organisation.

Key Benefits of Equity Incentive Plans

Alignment of Interests

Offering equity ensures that employees’ interests are closely aligned with those of shareholders, encouraging decisions and actions that enhance the company’s value and long-term profitability.

Talent Acquisition & Retention

Equity-based compensation is a compelling component of a competitive remuneration package, helping companies to attract high-calibre professionals. Conversely, not providing equity incentives can make securing the best team more difficult and place a premium on other elements of the remuneration package. Employees with a vested interest in the company’s success are also more likely to stay, supporting succession planning and business continuity. Therefore, equity incentives can form an important part of the businesses long-term strategy.

Culture & Values

Equity incentives can be strategically used to shape corporate culture by promoting behaviours that align with the company’s values and long-term objectives, such as innovation, collaboration, sustainability and risk tolerances. In this way, the business can ensure that only behaviour and actions aligned with the agreed strategy are rewarded accordingly.

Structuring Equity Incentive Plans

To facilitate equity incentives, companies can choose from a variety of structures. Two common structures utilised to manage the transference and administration of equity are Employee Benefit Trusts (EBTs) or Employee Ownership Trusts (EOTs).

EOTs are a unique type of EBT and a method of transferring more than 50% of the company’s ownership to all eligible employees. This vehicle has a more niche appeal and as such, we will not cover EOTs here – although we have produced a comprehensive article on EOTs for your review if you would like to learn more.

Other types of EBT can also have complex rules but allow for more flexibility than EOTs. For example, in terms of the amount and types of shares made available. Therefore, EBTs have a more universal appeal when it comes to establishing an equity incentive plan.

The Role of Employee Benefit Trusts (EBTs)

An Employee Benefit Trust (EBT) is established by a company to manage and provide various benefits to its employees. These benefits can include share options or awards, but also bonuses, pensions, and other incentives aimed at improving employee welfare and aligning their interests with those of the company. For our purposes, we will purely focus on EBTs used for equity incentive arrangements.

EBTs are particularly advantageous for companies that want to offer equity incentives across various employee levels, from executives to the wider workforce.

EBTs are typically structured through Discretionary Trusts, which allow companies to customise the allocation of benefits, ensuring they align with the broader strategic goals of the business. The Trustees hold the shares on behalf of the Beneficiaries, managing the joiners and leavers buying and selling their interests. The rules governing the equity incentive plan are typically outlined in a combination of the Trust Deed and various agreements and/or policies, e.g. employment contracts, share agreements, or specific equity incentive plan rules.

EBTs can also hold and manage (or ‘warehouse’) unallocated shares, which can be used to support future vesting events, such as restructuring efforts, or preparations for a public listing.

Choosing the Right Trustee for Your EBT

When setting up an EBT, companies must decide whether to appoint Lay Trustees—who are typically internal stakeholders such as directors or employees—or Professional Trustees, who are external Trust management experts.

Lay Trustees

Internal Trustees can bring valuable insights into the company’s operations but may face challenges such as conflicts of interest and a lack of Trust governance expertise. Balancing their primary responsibilities with their Trustee duties can also lead to inefficiencies.

Professional Trustees

Professional Trustees offer independence, objectivity, and specialised knowledge in Trust governance and regulatory compliance. By focusing exclusively on Trust management, they eliminate potential conflicts of interest and ensure that the EBT is administered in the best interest of the Beneficiaries.

Why Choose an Isle of Man Professional Trustee?

The Isle of Man is a globally recognised financial centre, known for its robust regulatory environment and stability. This makes it an ideal jurisdiction for managing complex Trust arrangements like EBTs. Trustees must be licensed under the Isle of Man Financial Services Authority and adhere to high standards, ensuring that your EBT is managed with the utmost professionalism and compliance.

How Dixcart Can Support Your Equity Incentive Plan

With over 35 years of experience in managing complex Trust arrangements and employee share ownership structures, Dixcart is well-positioned to assist growing companies in implementing effective equity incentive plans. Our team in the Isle of Man offers tailored Trustee services that align with your business’s long-term objectives, enhancing your incentive strategies and supporting their success.

Get in Touch

For more information on how Dixcart’s Professional Trustee services can enhance your equity incentive planning, please contact Paul Harvey at Dixcart: advice.iom@dixcart.com.

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

While many are aware of the fact that Malta offers a pleasant climate, a charming lifestyle, a business-friendly environment and an attractive tax regime, fewer are aware that eligible businesses might benefit from a suite of financial incentives to further enhance their offering, which positions Malta as an appealing destination for many companies. This article will explore the various support measures available for Maltese businesses in detail.

Organisations offering Support to Companies

Malta Enterprise

Malta Enterprise is the Maltese Government agency tasked with economic development. They offer the following support measures:

• Startup Finance targets startups that have not yet distributed profits and provides assistance through repayable advances (interest rate set at 2% plus ECB rate) of up to €1 million for innovative startups. Assistance may be used to cover payroll costs, tangible and intangible assets, procurement of materials and specialised technical services.

• The R&D Grant aims to boost Industrial Research and Experimental Development by providing financial assistance in the form of cash grants and/or tax credits. It is available to Limited Liability Companies (LLCs), partnerships, and cooperatives and provides 25% of eligible expenditure for experimental development and 50% of eligible costs for industrial research.

• Micro Invest providestax credits to start-ups, family businesses, and self-employed individuals to innovate and drive economic development.

The assistance is in the form of tax credits ranging from 45% to 65% of eligible expenditure, capped at €50,000 over three years. Eligible expenditures include increase in wage costs that exceed 3%, expenses related to furbishing, refurbishing, and upgrading of Business Premises, investment costs, acquisition of motor vehicles and certification costs incurred for attaining certifications relevant to their business.

• The Business Development incentive supports the setting up of new ventures, businesses expansions, environmental activities and employment of workers with disabilities. Assistance  is in the form of grants, cash assistance, and tax credits up to €300,000 per single undertaking over a rolling period of three years, capped at 75% of the costs approved.

Fondi.eu

Fondi.eu is a Maltese Government initiative aimed at managing the EU funds available, while ensuring maximum transparency and information in relation to the funds.

• Digitalise your Business is an initiative targeted to enterprises of all sizes and sectors willing to digitalise their activities. Funding is capped at €10,000 for micro businesses and €120,000 for other enterprises per digitalisation investment in digital technologies for each operation in both cases. This measure covers, among others, expenses for e-commerce websites, hardware purchases and software upgrades, digital infrastructure development, training and skill costs, consultancy services.

• Start-up Enhance provides grants to micro and small companies to help them overcome initial financial hurdles. It covers 50% of eligible costs, along with a minimum of €10,000 and a maximum of €400,000 per operation. Expenditures on equipment, plants, and machinery, including ancillary items necessary for start-up operations, as well as expenses related to the rent of a workspace may also be eligible.

• The Business Report for SMEs consists of a grant to help medium-sized enterprises to identify opportunities, mitigate risks, and optimise their operations. The support is a €4,000 grant to cover 80% of eligible costs (expenses related to obtaining a comprehensive business plan and conducting process and system reviews).

• The measure SME Enhance is available in two frameworks, both of which aim at enhancing productivity and sustainability of micro and small-to-medium enterprises. Eligible expenditures are those related to equipment, plant, machinery and, in some cases, also ancillary costs. Funding can reach up to €500,000 provided that certain criteria are met.

Malta Development Bank (MDB)

The Malta Development Bank (MDB) is a project fully owned, financed and launched by the Government of Malta. It supports the following measures:

• Guaranteed Co-lending Scheme, targeted to SMEs seeking financial assistance during economic hardship. It provides businesses with additional financing (loan with reduced interest) during economic challenges, to retain employees and invest in growth. Loans may range from €750,000 up to €10,000,000.

• The SME Guarantee Scheme offers an easier way for SMEs to access affordable finance, simulating economic activity and fostering growth.

This support measure guarantees up to 80% of a loan, provides flexible loan amounts (from €10,000 to €750,000) and extended loan terms (to a maximum of ten years).

Almost all the above-mentioned support measures give particular importance to Gozo, Malta’s sister island. In many cases, companies located in Gozo may benefit of higher capping and/or higher aid intensity.

Dixcart in Malta

The Dixcart office in Malta has professionals that can assist your business applying for appropriate financial assistance. For further information on company incentives and how to obtain them, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

This article is intended to provide general information on company incentives available in Malta as of the publication date. Policies and regulations may evolve, and readers should seek up-to-date advice from industry experts or official resources.

Einführung

Guernsey ist ein führendes Finanzdienstleistungszentrum. Mit seinem ausgezeichneten Ruf und den lokalen Rechts- und Buchhaltungsressourcen ist es zunehmend zu einer beliebten Gerichtsbarkeit für die Gründung eines Unternehmens geworden.

In diesem Hinweis skizzieren wir die wichtigsten Fakten und Schritte im Zusammenhang mit der Gründung eines neuen Unternehmens in Guernsey.

Warum ein Unternehmen in Guernsey gründen?

• Besteuerung – Der allgemeine Steuersatz für ein Unternehmen in Guernsey beträgt 0 % (es gelten einige Ausnahmen, bitte kontaktieren Sie uns für weitere Informationen)
• Selbständige Rechtspersönlichkeit – bietet Vermögensschutz, der dazu beitragen kann, das persönliche Vermögen eines Aktionärs vor den Verbindlichkeiten des Unternehmens abzuschirmen
• Schnelle Gründung – sobald alle erforderlichen Informationen bei Dixcart eingegangen sind, können wir die Gründung innerhalb von vierundzwanzig Stunden veranlassen
• Hervorragender Ruf und lokale Ressourcen – es gibt eine Vielzahl professioneller Wirtschaftsprüfungs- und Anwaltskanzleien, die sich für den reibungslosen Betrieb eines Unternehmens auf Guernsey eignen. Darüber hinaus genießt die Gerichtsbarkeit weltweit hohes Ansehen und einen ausgezeichneten Ruf und wird von Dritteirichtungen wie Banken und Kreditgebern anerkannt.

Welche Unternehmensarten gibt es in Guernsey

Es gibt verschiedene Optionen, die auf die spezifischen Anforderungen jedes Kunden zugeschnitten sind, wenn es darum geht, ein Unternehmen auf Guernsey zu gründen. Dazu gehören:

• Gesellschaft mit beschränkter Haftung (bei der die Haftung der Gesellschafter durch Anteile oder Bürgschaften beschränkt ist)
• Gesellschaft mit unbeschränkter Haftung, bei der der Gesellschafter für alle Schulden des Unternehmens haftet
• Zellgesellschaft: (i) eine geschützte Zellgesellschaft (Protected Cell Company, PCC), bei den Vermögenswerten und Verbindlichkeiten in separate Zellen aufgeteilt und voneinander getrennt werden, wobei bei einer PCC jede Zelle keine eigene Rechtspersönlichkeit hat, oder (ii) eine eingetragene Zellgesellschaft, bei der jede Zelle separat eingetragen ist und eine eigene Rechtspersönlichkeit hat. Diese Arten von Unternehmen müssen von der Guernsey Financial Services Commission genehmigt werden.

Wer sind die Parteien eines Unternehmens in Guernsey

• Geschäftsleiter
  • Können Einzelpersonen oder Unternehmen sein
  • Mindestens 1
• Sekretär
  • Kann ernannt werden, diese Rolle ist jedoch optional
• Mitglieder
  • Auch als Aktionäre bekannt
• Wirtschaftlicher Eigentümer
  • Die Details müssen vom registrierten Vertreter aufbewahrt werden und einige Details werden an den Guernsey Registrar of Beneficial Ownership of Legal Persons weitergegeben. Es ist zu beachten, dass diese Informationen nach der geltenden Gesetzgebung nicht öffentlich zugänglich sind.

Wie gründet man ein Guernsey Unternehmen

1. Wählen Sie einen Firmennamen aus
2. Bestellen Sie einen registrierten Vertreter/Geschäftsleiter (Dixcart kann Sie bei diesen Aspekten unterstützen)
3. Stellen Sie dem Anbieter von Unternehmensdienstleistungen die erforderliche Due Diligence für alle Parteien des Unternehmens zur Verfügung
4. Überprüfen/entwerfen Sie die Unternehmenssatzung, wie z. B. der Gesellschaftsvertrag und die Satzung – das Guernsey-Register stellt Standardvorlagen für beide der Gesellschaftsvertrag und die Satzung zur Verfügung
5. Eintragung beim Guernsey Register durch einen Anbieter von Unternehmensdienstleistungen

Um ein Unternehmen gemäß dem Guernsey Unternehmensgesetz (Companies Law) von 2008 in seiner geänderten Fassung zu gründen, muss ein lizenzierter Unternehmensdienstleister einen Antrag beim Registerführer der Unternehmen von Guernsey stellen. Dieser Anbieter, der von der Finanzdienstleistungskommission von Guernsey als Treuhänder lizenziert ist, muss dem Antrag folgende Informationen beifügen:

• Der Gesellschaftsvertrag und die Satzung
• Die vollständigen Namen und Adressen der ersten Geschäftsleiter und Gründungsmitglieder
• Das anfängliche Aktienkapital oder die anfängliche Garantie (falls zutreffend)
• Die eingetragene Geschäftsadresse und der Name des ansässigen Vertreters, bei dem es sich entweder um einen Anbieter von Unternehmensdienstleistungen (z. B. Dixcart) oder einen in Guernsey ansässigen Direktor des zu gründenden Unternehmens handeln muss

Die Dixcart Trust Corporation Limited verfügt über eine von der Guernsey Financial Services Commission erteilte Volltreuhandlizenz und kann einen eingetragenen Vertreter/eingetragenen Firmensitz zusammen mit umfassenden Verwaltungsdienstleistungen bereitstellen, einschließlich der Bereitstellung lokaler Geschäftsleiter, die im Vorstand des zu gründenden Unternehmens sitzen.

Bitte wenden Sie sich an advice.guernsey@dixcart.com, um weitere Informationen zu erhalten und ein Antragsformular für die Gründung eines neuen Unternehmens auf Guernsey zu erhalten.

Under Guernsey Company Law a Guernsey company may only be incorporated by a licensed Corporate Service Provider on application to the Guernsey Registrar

In addition to incorporating Guernsey Companies for international clients, Dixcart Trust Corporation Limited (“Dixcart”) also assists Guernsey residents who wish to incorporate a local Guernsey Company.

This Article outlines the key facts and steps for incorporation of a Guernsey Company by a Guernsey Resident. The provision of services by Dixcart is dependent on all parties, including Directors and Shareholders, being ordinarily resident within the Bailiwick of Guernsey and on the risk profile of the activities of those parties and the proposed company.

Below is a list of actions the Guernsey Resident must take in order to provide the information required for Dixcart to make the application:

• Select a Company Name
• Appoint a Registered Agent / Directors
• Provide certified Passports and Utility Bills. These are required for each Director and Shareholder of the proposed company. Original documents may be brought to the Dixcart office for certification.
• The Guernsey Registry provides a Standard set of Memorandum & Articles of Association. Should the client wish to amend either of the standard formats then they must provide a copy of the amended documents,
• Confirm the activities of the company,
• Complete a Director’s declaration signifying the individuals acceptance of their appointment and confirming their eligibility to be appointed,
• All prospective Directors must be registered with the Guernsey Registry who will provide them with a Director’s ID number – should the applicant not already possess a Director’s ID number, then Dixcart can request this from the Guernsey Registry.

Additional services can also be provided by Dixcart which include the provision of the draft documents listed below. These documents are generally required for any subsequent applications made by the company:

• Initial Director’s minute
• AGM and Audit waiver resolutions
• Register of Directors
• Register of Shareholders
• Share Certificates

Please contact advice.guernsey@dixcart.com for further information and to receive an application form for the incorporation of a new local Guernsey company.

Dixcart Trust Corporation Limited has a Full Fiduciary License granted by the Guernsey Financial Services Commission and can provide local incorporation and full administration services including the provision of local directors to sit on the board of a company being incorporated.

The Maltese tax regime has historically been based on a full imputation system, further enhanced by a network of over 70 Double Taxation Agreements (DTAs), and by the possibility to apply for unilateral tax relief for countries with whom a DTA is not in place. The corporate tax rate for a company incorporated in Malta is 35%. There are instances, however, in which the features of the Maltese tax system might be beneficial and lead to cost-effective and tax-efficient solutions for businesses.

We have previously written about the Consolidated Group Rules, which were added to the legislation in 2019, introducing the concept of fiscal unity and resulting in cash flow advantages where only the effective tax rate (5%/10%) must be paid, eliminating the requirement to pay the full 35% tax and wait for the refund for Malta-based companies; the Notional Interest Rate Deduction introduced in 2017 which encourages equity financing (providing a tax deductible expense on the value of the company equity) as opposed to debt financing, resulting in tax savings while at the same time stimulating investment and supporting entrepreneurship; the Participation Holding Exemption under which, in certain cases, dividends received from the subsidiary company are not subject to taxation in Malta from a shareholding as low as 5%.

In this article, we will delve into the Maltese Double-Tier (or Two-Tier) structure and the benefits for shareholders.

Tax Refund for Shareholders Resident Abroad

With regards to corporate taxation, non-Maltese resident shareholders can claim, upon the distribution of dividends, a tax refund of 6/7ths for active income and 5/7ths on passive income. This would bring the effective taxation to 5% in case of active income and to 10% in case of passive income.

The refund is to be claimed by the shareholders, who will receive the refund by the Maltese tax authorities, which are bound to pay the refund within a reasonable timeframe by a bank transfer to the shareholder anywhere in the world. For example, if a trading company generates an income of €100, the company will pay €35 as tax, while €65 will go to the shareholder as dividends. The shareholder would then receive a tax refund of €30 from the Maltese tax authorities, bringing the effective taxation to 5%.

The Two-Tier Structure

In this scenario, popularly referred to as the Maltese Double Tier Structure, there would be a structure whereby a Malta Holding company holds shares in another Maltese company, for instance, a trading company. By doing this, the tax refund is not received by the shareholder, but by the Holding company. The Holding company can then remit the full amount, consisting of the dividend income plus the tax refund, to the shareholders.

For example, if a trading company generates an income of €100, the company will pay €35 as tax, and €65 will go to the holding company as dividends. The holding company would then receive a tax refund of €30 from the Maltese tax authorities. After this, the Holding company may distribute €95 to the shareholder.

The Double-Tier structure is particularly effective when the Malta Company engages in trading activities, but can be applied also to investment, rental and Intellectual Property activities.

The Two-Tier Structure with Fiscal Unity – Cashflow Benefit Option

The Double-Tier structure can be created under the regime of fiscal unity. In this case, the ‘Group’ (Holding Company and Trading Company) would need to prepare consolidated financial statements and present a consolidated tax return to the Maltese Tax Authorities, and therefore only the effective tax rate will be charged. The advantages of this regime include simplified tax management, enhanced efficiency and significantly improved cash flow. For more information on the fiscal unity, please read this article on the Dixcart website: Malta Introduces Consolidated New Group Rules – Offering Cash Flow Advantages. It is important to underline that the fiscal unity regime is optional, and the decision is at the prerogative of the company.

Dixcart in Malta

The Dixcart office in Malta has a wealth of experience across financial services and offers legal and regulatory compliance insight. Our team of qualified Accountants and Lawyers are available to set up structures and help to manage them efficiently.

Additional Information

For further information about Maltese companies matters, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

Introduction

As the international corporate landscape changes, so do the various laws and regulations. Keeping pace with these changes can be difficult given each jurisdiction has their own quirks and specifics.

In this article we hope to clearly outline Cyprus’ Economic Substance requirements and highlight the importance of ensuring any Cyprus Tax Resident Company has sufficient Economic Substance.

Requirements

Quite simply, for a company to be considered tax resident in Cyprus and enjoy the various corporate tax benefits available as a Tax Resident Company, it must be managed and controlled in Cyprus.

Although the term “Management and Control” is not defined in the Cyprus Income Tax Legislation, there is a list of factors to consider when ensuring a company has economic substance and as a result can be considered a Cyprus Tax Resident Company.

The key areas of focus for demonstrating “Management and Control” in Cyprus are:

• The majority of the Board of Directors must be Cyprus residents. The directors should have effective management and control of the company, and make decisions concerning the company’s strategic and operational activities in Cyprus;
• Board meetings should be held in Cyprus as significant decisions need to be taken in Cyprus. This should be also reflected in the effective documentation;
• The directors of a Cyprus company must be qualified, have sufficient knowledge to make independent decisions and be able to demonstrate their role as decision-makers;
• The company secretary should be a Cyprus resident, which can either be an individual or a Cyprus-based company;
• The discussion and approval of the financial statements and audited accounts should take place in Cyprus;
• The company’s bank accounts must be operated and managed from within Cyprus;
• The company should maintain employees and a fully-fledged office in Cyprus, for day-to-day operational functions;
• Record keeping: Archiving books and records like minutes, company seal and share register should be kept in the Cyprus office;
• Books and accounting records should be kept in Cyprus.

What are the Benefits?

Not only will the company be considered tax resident and therefore eligible to enjoy the Cypriot corporate tax regime, ensuring the company has sufficient Economic Substance safeguards the structure of the company and facilitates the ease of on-going business.

Companies established in jurisdictions without substance requirements often struggle when it comes to opening bank accounts or with purchasing investments. This is because these countries often end up on Grey or even Black Lists.

With the implementation and adoption of the EU Directives and the guidance provided by OECD (Organisation for Economic Co-operation and Development), setting up a company in a jurisdiction that requires economic substance will ensure the new company meets the EU and OECD requirements and is less likely to be challenged by various global tax authorities.

As a result of the above we do not view Economic Substance requirements as a hurdle to be overcome. We see them as an advantage to those that wish to establish meaningful ties with Cyprus and the EU and structure their companies in a fully compliant manner.

How can Dixcart Help?

At Dixcart Management (Cyprus) Limited we are dedicated to developing value-adding and fully compliant solutions for our clients when establishing a Cyprus company. Under the new international regulatory environment, entities without sufficient economic substance have a substantial risk of facing challenges with tax authorities. As such, we only establish companies for our clients whereby we assure that the companies can meet the economic substance requirements.

To do this, we provide a full suite of services to those looking to set up a Cyprus company. From incorporation services to accounting and company secretarial services, we can assist you every step of the way in ensuring you have a bespoke and fully compliant solution.

If you are interested in establishing a Cyprus Company, we would be more than happy to discuss the relevant details with you, as well as the various tax incentives available. Please do not hesitate to contact us at: advice.cyprus@dixcart.com.

 

The Dixcart UK Legal team is thrilled to introduce Tom Jones, a solicitor who recently joined our Commercial Property department. Tom brings a wealth of experience and a proven track record in commercial property law, making him a valuable asset to our team and our clients.

Tom has a robust background in commercial property law, complemented by his support to the Corporate Commercial department. His expertise spans various facets of commercial property, including negotiating and renewing commercial leases, bridging finance, development finance, property acquisitions and sales, corporate support, and property development.

Tom’s career began at a nationwide law firm where he completed his training and qualified as a solicitor in September 2020. Following this, he joined a law firm specialising in property development, representing a diverse array of clients such as corporate entities, national house builders, and developers. In this role, he provided comprehensive legal support for their projects, navigating the complexities of commercial property law with ease.

Subsequently, Tom furthered his career at a regional firm, where he honed his skills in commercial landlord and tenant matters, real estate finance, development finance, and corporate transactions involving real estate. His experience has made him adept at managing transactions from start to finish, ensuring that clients’ needs and goals are met efficiently and effectively.

At Dixcart UK, Tom plays a crucial role in assisting clients with their commercial leases, property acquisitions and sales, and various corporate commercial transactions. His commercially-minded approach and keen awareness of clients’ final goals in each transaction ensure that he provides practical and timely solutions tailored to their specific requirements.

Tom holds an LLB (Hons) and an LLM in Intellectual Property Law and Human Rights. His academic achievements and professional qualifications reflect his commitment to providing high-quality legal services.

Our Comprehensive Commercial Property Legal Services

At Dixcart UK, we offer a wide array of commercial property legal services, tailored to meet your unique needs . Our experienced team is dedicated to providing top-tier legal advice and support throughout every stage of property transactions.

Property Acquisition and Disposition

Whether you are buying or selling commercial real estate, our team provides thorough guidance throughout the entire process. We ensure that all transactions are smooth, legally sound, and aligned with your commercial goals whatever they may be. From initial negotiations to final completions, we manage every aspect meticulously.

Due Diligence

Conducting thorough investigations is a cornerstone of our service. We identify potential risks and ensure that you can make informed decisions. Our due diligence process covers all necessary checks and balances, providing you with a comprehensive understanding of their prospective property transactions.

Contract Negotiation and Drafting

Our team excels in negotiating and drafting clear, enforceable agreements for the purchase and sale of properties. We ensure that all contractual terms are well-defined and aligned with your objectives, providing a solid foundation for their property dealings.

Lease Negotiations and Drafting

We specialise in crafting commercial leases that protect your interests and align with their business goals. Our services include negotiating favourable lease terms, drafting comprehensive lease agreements, and advising on renewals and terminations. We also handle licenses required under leases, whether for occupying or altering properties.

Representing the interests of both tenants and landlords, we negotiate favourable lease terms that ensure clarity and security. Our expertise covers all aspects of lease agreements, including renewal options and the legal implications of terminating leases.

Financing and Investment

Dixcart UK provides strategic counsel on financing options and investment structures, helping you secure the necessary funding. Our services include negotiating terms and drafting loan agreements for commercial real estate financing, as well as handling secured lending matters for development finance, refinancing, and investment finance.

Joint Ventures and Development Finance

We structure joint venture agreements to facilitate shared ownership and development projects. Securing finance for new developments requires meticulous planning and execution, and we work closely with you to understand your project needs. From loan agreements to security documentation, we cover all legal aspects to ensure smooth and efficient financing.

Corporate Transactions

Our expertise extends to providing comprehensive support for corporate transactions, ensuring seamless execution and optimal outcomes for you. We provide guidance through the complexities of mergers and acquisitions, conducting due diligence, title investigations, and lease negotiations where necessary.

Register of Overseas Entities

We assist overseas entities who wish to buy, sell, or transfer property or land in the UK. Our team handles all aspects of the registration process, including preparing and submitting necessary documentation, ensuring compliance with local laws and regulations, and liaising with foreign legal and governmental authorities.

Why Choose Us?

Choosing Dixcart UK means benefiting from our in-depth knowledge and experience in commercial property law. We offer personalised service, taking the time to understand your unique business goals and tailoring our services to meet your specific needs. Our commitment to efficiency ensures that the property transaction process is as smooth as possible, allowing you to focus on core business activities.

Tom Jones, alongside the rest of the Dixcart UK Commercial Property team, is dedicated to providing top-tier legal support for all property-related matters. For more information, contact us at advice.uk@dixcart.com.