There are three types of corporate income tax rate that may be applicable for a company incorporated in Portugal. It is important to understand the differences, as the relevant corporate income tax rates, substance criteria and activity requirements vary widely, and may have a significant impact on profitability.
The Three Types of Portuguese Corporate Income Tax Rate
The three types of tax rate are largely dependent on the physical location; Portugal mainland, the island of Madeira, or the International Business Centre of Madeira (also based on the island of Madeira, referred to as ‘MIBC’).
What Corporate Income Tax Rates are Applicable?
The corporate income tax rates vary significantly and are detailed below:
Portuguese Mainland Company
Madeira Company
International Business Centre of Madeira Company(for international activity)
First €50,000 of taxable income (small-medium enterprises)
16%
11.9%
5%
Taxable income above €50,000
20%
14.7%
5%
Which Corporate Income Tax will Apply to my Company?
The tax rate that applies to a company will depend on a number of factors, including; the company’s location, its business activities, and its size.
Companies with local Portuguese business activities, in Portugal mainland or the island of Madeira, may liable to tax rates up to 20% and 14.7% respectively. Please see below a Dixcart Article that summaries the advantages that are available: The Advantages of Portuguese Companies – Holding Companies
What Substance Criteria are Applicable for Companies Registered in Mainland Portugal and in Madeira?
Portugal and Madeira do not have specific substance requirements that need to be met (the exception to this are companies incorporated in the MIBC). However, to ensure compliance with tax regulations, including the ability to take advantage of Portugal’s double taxation treaty network, as a member of the OECD, substance does need to be maintained.
Examples of maintaining substance include:
Maintaining an open and active bank account in Portugal/Madeira respectively;
Having registered office address and/or premises for the use of the company in Portugal/Madeira respectively;
Having a qualified director and/or permanent employee, resident in Portugal/Madeira respectively;
Making important business decisions in Portugal/Madeira respectively and evidencing these through minutes of board meetings;
Maintaining board minutes, accounting and other records in Portugal/Madeira respectively;
Ensuring sufficient commercial activity occurs in Portugal/Madeira respectively.
The UK Government is demonstrating a desire to increase the diversity of investment in the UK.
The objective will be to increase investment in funds directed towards women and ethnic minorities and to also increase the diversity of regions, where the venture capital investment is taking place.
What is Happening?
In Jully 2023, the UK House of Commons Treasury Committee announced the release of a report on venture capital, and recommendations to address issues with venture capital tax relief. Such types of relief include; the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs).
What is Venture Capital?
Venture capital is a form of investment in early-stage companies, typically in return for an equity share of the business. This type of financing can be risky and a proportion of firms that receive venture capital will fail.
It is an important type of investment for innovative companies with high growth potential.
What Reliefs are Available in the UK?
The UK venture capital sector receives state support in the form of three tax reliefs (targeted reductions in tax liability). These are the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCTs). The sector also receives support via British Business Bank (BBB) funding schemes.
The EIS and VCTs have statutory ‘sunset clauses’ that will cause them to expire in April 2025. The UK Government has signalled an intention to extend the schemes but has not said when it will do so or for how long. This current uncertainty is a potential risk to investment in the UK.
An Opportunity
The renewal of the EIS and VCT schemes is an opportunity to improve them and to address current shortcomings. These chiefly comprise; diversity, regional inequality and scale-up capital.
Suggestions Regarding Increasing Diversity
Diversity in the sector is extremely poor, both in terms of the characteristics of the business founders that receive venture capital funding, and the people who make venture capital funding decisions.
Women and people from ethnic minorities are highly underrepresented in both groups.
There are three main suggestions:
The provision of statistics relating to diversity in staffing and funding decisions should be a condition of receiving tacit taxpayer support in the form of the EIS and VCT tax reliefs.
Venture capital firms to be required to comply with the industry standard Investing in Women Code or if not, needing to explain why.
The UK Government and BBB to consult on the creation of venture capital funds targeted towards women and ethnic minority individuals.
Suggestion Regarding Regional Inequality
Take positive measures to expand the areas of the UK receiving investment by addressing the concentration of the current majority of, venture capital investment in the so-called ‘Golden Triangle’; London, Oxford, and Cambridge.
Additional Information
If you would like to discuss this topic in more detail, please contact: advice.uk@dixcart.com.
Today’s businesses are subject to the constantly shifting sands of tax, regulation and an ever evolving, increasingly globalised economy. Engaging a Trust & Corporate Services Provider to manage and administer your company can offer many benefits, particularly for entrepreneurs, family offices or organisations that operate in multiple jurisdictions.
Trust & Corporate Services Providers, often referred to TCSPs, are specialist firms that offer a range of professional services to businesses, helping them with administrative, legal, financial, and regulatory aspects of running a company, partnerships and more.
In this article we look at 7 of the leading reasons why utilising a properly licensed and regulated Isle of Man TCSP can save entrepreneurs and dynamic businesses precious resources:
For many entrepreneurs and growing businesses there simply isn’t the resource to devote to day-to-day company administration that does not add to the bottom line – but in today’s world, good governance is more important than ever. Further, there may not be the personnel and/or skills or expertise in-house to fill important appointments such as Directorships or Company Secretary etc.
Even for those more established businesses that operate internationally, or have a presence in multiple countries, having a single base of operation can deliver stability and certainty where taxation and the legal regime are concerned.
Utilising an Isle of Man TCSP can provide the business with such stability and reduce the administrative burden on you and your team, freeing you up to focus on core business activities and strategic planning in a neat “all-in-one” package.
In addition, the opening and ongoing maintenance of banking relations is integral to the running of any business. An established TCSP will have strong banking relations and be in a position to guide your business through onerous bank account on-boarding processes. Indeed, many high street clearing banks rely on introductions made by licensed and regulated TCSPs to entrepreneurs and small businesses. In most instances, said banks will insist on a local, resident Board of Directors that are provided by a TCSP.
TCSPs, such as Dixcart, are staffed with professionals who possess the experience, expertise and operational capabilities to handle your day-to-day company admin like bookkeeping, banking, secretarial tasks, and regulatory filings effectively and efficiently. Furthermore, best practices will inform all of the company’s underlying activity – giving you peace of mind that all regulatory, tax and legal requirements are being fulfilled.
2. Expertise and Specialist Knowledge?
A good quality TCSP will ordinarily employ qualified professionals from a number of disciplines. This typically includes persons from the accounting, legal, tax and fiduciary sectors such as trust and estate practitioners and chartered secretaries.
Having experts and their skillsets readily available can provide entrepreneurs and fledgling businesses with invaluable support for navigating their industry, avoiding potential liabilities or pitfalls. This is also of particular importance in the bearish post-pandemic skills market where recruiting has become so very difficult in almost every industry – in affect, your business would have a group of retained professionals on-hand.
At Dixcart, our professionals possess a deep understanding of corporate governance, laws, regulations, and maintain a good tax awareness along with any jurisdictional or global requirements.
TCSPs also often have extensive networks of legal, tax, financial, and business professionals that can provide additional support and services as needed. Over Dixcart’s 50+ years of trading, we have amassed a network of trusted experts, so that even where we do not know the answer, we know who will. This knowledge can be invaluable in the company’s decision-making and ensures compliance whilst avoiding potential liabilities.
3. Cost Efficiency
As the saying goes, ‘time is money’. This adage is of paramount importance to entrepreneurs and growing businesses, who are typically light on staff headcount and need to remain agile to have the best chance of succeeding in their given business activities.
The proper administration of a company can be time-consuming and require specialist knowledge. Activities such as completing annual filings, handling legal matters (such as contracts) or seeking counsel, dealing with tax advisers, maintaining proper accounts, holding board meetings and minuting decisions, banking etc. take precious working hours away from achieving the business’s objectives. The question is, would it be more efficient to hire employees rather than outsource?
Let’s take the UK as our working strawman, as they are our closest neighbour. Employing an administrator, who would carry out basic admin e.g. collating documentation, basic filing work, answering the phone etc. and (not items like accounting, dealing with third-party professional advisers, making tax and VAT filings etc.), generally commands an income of between £25,000 to £35,000, on average, within the UK. This does not include employers NI, lost hours due to statutory minimum holiday allowance, pension contributions, sick days, equipment, office space, bonuses, benefits etc. which, based on the lower of £25,000, represents a cost to the employer of circa £45,000+ per annum. This cost also represents a resource that is fairly limited in remit and capabilities, and potentially disproportionately expensive.
On the other hand, a company that undertakes a mid-high level of ongoing activity may incur TCSP fees of circa £25,000+ per annum in total. For this, the business is getting access to qualified accountants, corporate secretaries, professional trustees etc., a network of trusted and professional contacts around the globe, normally hundred(s) of years’ combined experience and, in a good TCSP, a direct line to the senior management team and a transparent fee structure that delivers cost certainty.
Dixcart delivers a full suite of services to its clients, many of whom are entrepreneurs and small to medium sized enterprises wishing to conduct ambitious projects or have growth targets to meet within a certain period of time. Not only does the Isle of Man company benefit from an efficient and effective team of qualified professionals, but the fees are always transparent and tailored to the business in question.
4. Risk Management, Governance and Compliance
Ok, I know that the heady subjects of risk management, governance and compliance (GRC) aren’t the most exciting benefit of utilising a TCSP but hear me out.
GRC management has become essential for the ongoing profitability and sustainability of any modern business, ensuring that the business operates in a lawful, ethical, and profitable manner. GRC is closely related to the core principles of the Environmental, Social, and Governance (ESG) phenomenon that has developed over the decades and accelerated in recent years – now being actively policed by financial regulators with regards to misconduct and adherence to public statements etc.
This is all very well to say, and sounds good, but what does GRC management really mean in practice?
Good corporate governance involves balancing the interests of a company’s many stakeholders, such as shareholders, angel investors, management, employees, customers, suppliers, financial/banking institutions, government agencies and local communities etc. Good governance helps to build trust and confidence among stakeholders, thus promoting sustainability and safeguarding growth.
Risk management is central to the identification, assessment and control of vulnerabilities and threats to the company and its stakeholders. These threats could come in many forms, including financial practices, legal liabilities, strategic decision making, management errors or cybersecurity issues. Good risk management aids a company in proactively eliminating, mitigating or identifying environmental factors that could lead to financial loss, reputational damage, criminal liability and more – therefore it enhances the company’s resilience and aims to futureproof the business.
For example, diversifying business operations across multiple jurisdictions enables an entrepreneur to spread their risk and reduce their exposure to changes in a single country’s economic, legal or tax environment.
Finally, compliance relates to the company’s adherence to applicable laws, regulations, standards, and ethical practices within the jurisdictions of trade. Failure to comply with these requirements can lead to financial penalties, legal liability and reputational damage. Businesses that carry out certain activities, such as investment management, medical services etc. must follow strict regulatory rules.
TCSPs stay updated on legal and regulatory changes, ensuring that the business remains compliant with all relevant laws and avoids potential penalties or legal issues. This is especially important for the business as it develops, whether the goal is a future sale or floating the company on an exchange, GRC is here to stay.
By engaging professionals such as Dixcart to handle critical business functions, such as GRC management, businesses can:
Enhance decision making via delivering regulatory, legal and tax awareness in a reliable and timely manner, thus improving the quality of strategic and operational decisions.
Improve efficiency by streamlining processes and procedures, saving time and resources.
Increase stakeholder trust, which can lead to increased investment, better working partnerships, and improved reputation.
Ensure sustainability by identifying, assessing and managing potential financial risks, legal liabilities and malicious threats.
Diversify the business’s operations across multiple jurisdictions, by spreading risk and reducing exposure to changes in a single jurisdiction’s economic, legal or tax environment.
5. Business Continuity and Expansion
As a business grows its needs evolve. A TCSP’s services can adapt to meet those changing needs by providing revised and scalable solutions that align with the business’s development and expansion plans. Privately owned TCSPs, such as Dixcart, can adjust their offerings quickly and evaluate your evolving requirements based on growth or fluctuations in demand, without disruption.
Workforce continuity is of paramount importance for the success of fledgling and growing businesses. In fact, one of the key issues experienced by businesses today is the reliable acquisition and retention of good quality staff. This is not an issue where a good quality TCSP is engaged.
Dixcart provides businesses with access to the skills and knowledge of consummate professionals for as long as needed. When choosing a TCSP you should ensure that there is a low churn rate of staff and/or a large proportion of long-serving senior team members, who you will have direct access to. In such instances, the same contacts can act as your dedicated touchpoints throughout the entire relationship, allowing them to gain significant insight into the business, your issues and objectives, and therefore deliver more effective and efficient services.
Moreover, for entrepreneurs and businesses with global aspirations, TCSPs can also assist with company formation and compliance in foreign jurisdictions – enabling a full global group structure to be created through one point of contact. This support can help navigate complex international regulations and cultural differences, making the expansion process smoother. Having a presence in multiple locations can also reduce risk by diversifying operations and protecting assets.
By collaborating with entrepreneurs, our various Dixcart Group TCSP offices around the world, or TCSPs of similar standing to Dixcart, we can create comprehensive business continuity plans to aid existing or expanding operations. These plans outline strategic procedures to follow during challenging times – emergencies, natural disasters, or other disruptions – ensuring the business is resilient and can continue functioning effectively, no matter what. In addition, an extra layer of ongoing financial stability and flexibility may be introduced by the diversification of banking and professional relationships, taking advantage of Dixcart’s already established list of reputable contacts.
6. Pre-planning For Future Sale
When entrepreneurs and businesses embark on new commercial ventures, such as entering a new market or undertaking a special project, the activity is often undertaken with a view to hitting certain growth or value targets before selling the subsidiary or business as a whole. Where this is the case, especially in instances of cross-border trade or multi-jurisdictional planning or ownership, engaging a good TCSP within a reputable jurisdiction can augment the journey to sale.
By delivering tailored solutions, a TCSP can help maximise the value of the business and ensure a smooth and efficient sales process. Working with advisers and clients to provide the optimal corporate structure can enhance the business’s attractiveness to potential buyers via maximising value and operational efficiency. This may involve creating a holding company or subsidiary structure that is more appealing to investors or simplifies the ownership and shareholding arrangements etc.
Very often we are approached by entrepreneurs and business owners, pre-incorporation, to establish and administer Isle of Man holding structures for the purpose of owning the equity in the various arms of the business. The Isle of Man holding company can also hold any other relevant assets, for example, Real Estate, Investments, or Intellectual Property. This can provide the Beneficial Owners with additional flexibility when it comes to onward sale of the business and the potential to optimise their sale proceeds and mitigate unnecessary tax liabilities.
A good TCSP can ensure the company’s financial records and reporting requirements are always up-to-date, well-organised, and comply with the relevant requirements, making the preparation for sale a more straightforward and efficient task. Engaging a TCSP, such as Dixcart, to assist with due diligence requirements, valuation, confidentiality measures and negotiations can not only give owners and investors peace of mind, but also instil confidence in potential buyers. In addition, post-sale, an experienced TCSP can ensure smooth transition and transfer of assets to the new owners and help the outgoing owners wind down operations as part of a post-sale planning strategy.
Proper planning and collaboration with experts at Dixcart can significantly enhance the likelihood of a successful and profitable business sale.
7. Everything Else
So, it is clear from the information above, that utilising an offshore TCSP can be advantageous in the running of an entrepreneur’s business, but what else can be offered?
Offshore jurisdictions often offer tax neutrality and efficiency compared to the entrepreneur’s home country. By structuring their businesses offshore, entrepreneurs may legally reduce their tax liabilities, retain more profits, and reinvest them in their businesses or personal portfolio.
Legitimate use of offshore trusts or entities can create a legal separation of ownership between personal and business assets, therefore helping to protect those assets from potential lawsuits, creditors, or other financial risks.
Where the legal separation of assets has occurred, a TCSP can facilitate estate and succession planning, ensuring that an entrepreneur’s wealth and business interests are managed and distributed to future generations according to their wishes, in a tax efficient manner. Further, the TCSP can assist entrepreneurs in designing and implementing various employee benefit plans such as share purchase schemes or Employee Ownership Trusts etc., incentivising their performance and loyalty.
Some entrepreneurs value privacy and may prefer to keep their financial affairs confidential. Offshore jurisdictions often have strict laws that protect the privacy of business owners and shareholders, offering a higher level of confidentiality.
Speak with a member of the Dixcart team to find out more about the various structuring options and services that may be available to you.
Why Choose an Isle of Man Trust & Corporate Service Provider?
There are many reasons to choose the Isle of Man, such as regulators who work in harmony with the private sector, political and economic stability, a comprehensive financial infrastructure, a strong banking sector, favourable taxation that encourages the creation and preservation of wealth and world class communications.
Ultimately, the Isle of Man is a competitively priced, reputable and well-regulated international financial centre, which can enhance the credibility of an entrepreneur’s business in the eyes of clients, partners, and investors alike.
Things to consider…
It is important to note that whilst TCSPs can be beneficial, often crucial, for businesses to thrive, they should be selected carefully. Research and due diligence are required to ensure the TCSP is reputable, compliant and can deliver the necessary support for the company’s specific requirements.
Additionally, it is important to ensure that the chosen offshore jurisdiction aligns with the company’s overall business strategy and goals.
Seeking professional advice from qualified accountants, tax, legal and financial advisors is essential to ensure that the chosen structures and arrangements are legal, ethical, and aligned with the entrepreneur’s specific needs and objectives.
With ten offices covering nine different jurisdictions worldwide, Dixcart are ideally placed to provide any entrepreneur with the support and expertise required to support a flourishing business.
Get in Touch
If you would like to discuss corporate services or estate and succession planning, please feel free to get in touch with the team at Dixcart: advice.iom@dixcart.com
The Isle of Man is an OECD whitelisted offshore jurisdiction with an excellent track record of providing effective, efficient, and above all, compliant corporate structures. One such vehicle, that provides both flexibility and tax efficiency when used for structuring, is an Isle of Man Company.
The requirements and formation of an Isle of Man Company are governed by either the Companies Act 1931 (CA 1931) or the Companies Act 2006 (CA 2006) – the merits of which are not considered here. Within both Acts there are stipulations pertaining to Registered Offices and in the Companies Act 2006, Registered Agents.
In this brief article, we will discuss the following subjects, to help illustrate the rules and obligations in relation to these requirements and how Dixcart can help:
The Isle of Man is rated Aa3 stable and is an independent Crown Dependency. Among other things, Manx registered companies benefit from the business-friendly Government and locally set tax regime.
In addition to offering efficiency for the management of wealth, the Island also provides a great deal of privacy to inbound investors, whilst still meeting global compliance standards; earning it a place on the OECD whitelist, which means that it is not considered a tax haven.
Headline rates of taxation include:
0% Corporate Tax
0% Capital Gains Tax
0% Inheritance Tax
0% Withholding Tax on Dividends
Isle of Man companies are also able to register for VAT, and businesses in the Isle of Man fall under the UK’s VAT regime.
What is an Isle of Man Registered Office?
In the Isle of Man, as with other Common Law jurisdictions – such as the UK, a Registered Office is the official address where all statutory correspondence and formal notices are delivered. This address can be separate from the company’s place of business and is very often the address of an appropriately licensed third-party agent; usually a legal firm, accountants or Corporate Service Provider (CSP) such as Dixcart.
Requirements of a Registered Office on the Isle of Man
Whether incorporated under the CA 1931 or CA 2006, the Isle of Man company must have a physical Registered Office address on the Island, and an official record of the address must be provided in the company’s incorporating documents filed with the Isle of Man Companies Registry.
In addition to providing a physical Isle of Man address where notices can be served and received, the Registered Office must also be the location where certain company records are properly maintained. These include the following:
Memorandum & Articles of Association
Accounting Records
Register of Directors
Register of Members
Copies of Minute Books
Register of Charges
Dependent on whether it is a CA 1931 or CA 2006 Company, there are certain administrative duties that are the responsibility of the Directors or Registered Agent. For example, where there is a change of Registered Office on a CA 1931 Company, the Directors must file a form 4 with the Registry, within a month of change to avoid a penalty; whereas under a CA 2006 Company, this notice must be submitted by the Registered Agent.
What is an Isle of Man Registered Agent?
The CA 2006 introduced the role of the Registered Agent into Manx legislation. Companies formed under that Act are commonly referred to as New Manx Vehicles (NMVs).
A Registered Agent is appointed to ensure proper recording and upkeep of company information to comply with regulatory obligations; including activities such as filing and maintaining statutory documentation. The Registered Agent is a key fiduciary, but is not an officer of the Company.
The person appointed must be permitted to act as Registered Agent, possessing the appropriate license granted by the Isle of Man Financial Services Authority (IOM FSA), under the Isle of Man Financial Services Act 2008.
Unlike a CA 1931 company, which requires the appointment of two Directors and a Company Secretary, CA 2006 companies only require a single Director and do not require a Company Secretary. However, a Registered Agent must be appointed at all times.
Both a Registered Office and a Registered Agent are requirements for a CA 2006 company; more often than not, the two functions are carried out by the same licensed third-party provider, such as Dixcart.
The Registered Agent needs to be aware and understand the company’s activities at all times; therefore systems and procedures will be put in place to manage the flow of information on the company that services are being provided to.
When expressed in basic terms, it can be easy to think that the Registered Office and Registered Agent functions are simple and straightforward. However, there are many pitfalls that can result in penalties, or even worse, the company being struck off the register.
Pitfalls to be aware of: Incorporating and Administering an Isle of Man Company
As with many things in life, there is not an insignificant degree of nuance involved in establishing and administering a corporate structure; it can be easy to find yourself open to a myriad of potential risks if you do not know what you are doing.
When establishing an Isle of Man Company
Note the requirement for the Memorandum of Association, filed on incorporation, to include the details of the Isle of Man Registered Office, and for a CA 2006 company, the Registered Agent. From the outset, these are absolute conditions for the establishment of the company; meaning you need a service provider with a Class 4 license issued by the IOM FSA to setup. In the case of a Registered Agent, this person will actually submit the documentation to the Registrar.
There are many online service providers that claim to offer Isle of Man incorporation, however many of these do not have a real Isle of Man address etc. and as such, do not meet the statutory requirements of an Isle of Man company Registered Office. It is best practice to ensure you deal directly with an Isle of Man service provider, which will give assurance of both compliance and value for money.
Before incorporating, you need to make sure that the structure is set up and operates in a way that is best suited to your personal and financial objectives. It is recommended that you seek professional advice so that you are aware of the legal obligations associated with the chosen structure.
Seeking appropriate advice is also of particular importance, if the proposed company activity is impacted by the Substance Requirements legislation brought into effect in 2019. Companies engaging in a relevant sector activity are required to demonstrate that they have adequate substance on the island. Failure to comply can result in significant penalties and, if persistent, can lead to the company being stuck-off the Register.
Dixcart are well placed to provide guidance on all corporate services and structuring matters, and can work alongside your chosen personal advisers.
On-going statutory requirements for an Isle of Man Company
Statutory and procedural knowledge is essential for traversing the requirements and obligations related to a well-run and compliant Company. For example, if reporting obligations are missed, such as the filing of returns with the Isle of Man Companies Registry, there can be penalties.
There is a perpetual need for a Registered Office, and Registered Agent if required, to be in place ‘at all times’. The legislation makes it clear that it is an offence to have a company without meeting these commitments.
If a Registered Agent chooses to remove services, it must give 8 weeks’ formal notice of its resignation. Within one week of serving notice, the Registered Agent must file a copy with the Registrar. After the 8-week period, if no replacement is found, the Isle of Man Companies Registry may begin proceedings for non-compliance with the Act.
When statutory obligations are not met, such breaches may signal to the Isle of Man Companies Registry that the company may no longer be in operation. In such instances, or where a serious breach occurs, action may be taken to strike the company from the Register, which could result in the company being dissolved when still holding assets.
Working with Dixcart
At Dixcart, we have been providing Corporate Services and guidance for over 45 years; assisting clients with the effective structuring and efficient administration of companies tailored to their individual objectives.
Our in-house experts and senior employees are professionally qualified, with a wealth of experience; this means we are well placed to support and take responsibility for different roles, including acting as executive director, non-executive director and providing specialist consultancy services where appropriate. If required, our qualified professionals can also assist entities with any substance issues.
We have developed an extensive range of offerings, which includes the provision of Registered Office and Registered Agent services to Isle of Man companies. From pre-incorporation planning and advice to the day-to-day management of the company and troubleshooting issues, we can support your goals at every stage.
Get in Touch
If you require further information regarding the incorporation, management or provision of Registered Office and/or Registered Agent services for an Isle of Man company, please feel free to get in touch: advice.iom@dixcart.com.
Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.
A Foreign Interest Company is an international company, which, subject to meeting specific criteria, can employ non-EU national employees in Cyprus. This programme enables employees and their families to gain residence and work permits under favourable terms. The main objective of Cyprus Foreign Interest Companies is to attract foreign investment to Cyprus.
What are the Main Requirements Enabling an International Company to Qualify as Foreign Interest Company?
The third country shareholder(s) must own more than 50% of the total share capital of the company.
There must be a minimum Investment of €200,000 into Cyprus by the third country shareholder(s). This investment can be used at a later date to fund future expenses incurred by the company when it is established in Cyprus.
What are the Main Advantages of a Cyprus Foreign Interest Company?
Foreign interest companies can employ third country national employees.
Third country national employees can obtain a residence and a work permit, the precise details of which will be dependent on the employment contract. Residence and work permits can be for up to 2 years with a right of renewal.
Directors and middle-management employees can reside in Cyprus with NO time limit (subject to holding a valid residence and work permit).
Employees can exercise their right for their family to join them and to also reside in Cyprus.
Companies located in Cyprus are taxed at 12.5% and can benefit from the double taxation treaties that are in force (currently over 60).
Dividend income is exempt from corporation tax.
Dividend distributions to shareholders are not subject to withholding tax.
Tax Benefits for Individuals taking up Tax Residence in Cyprus
As a result of previous tax legislation and the exemption from the Cyprus Special Contribution for Defence Tax (“SDC”), introduced in July 2015, non-domiciliaries benefit from a zero rate of tax on the following sources of income:
interest;
dividends;
capital gains (other than from the sale of immoveable property in Cyprus);
capital sums received from pensions, provident and insurance funds.
The zero tax benefits detailed above are enjoyed even if the income has a Cyprus source and is remitted to Cyprus.
Other sources of income may also be exempt from tax however we recommend that professional advice is taken.
In addition, there are NO wealth and NO inheritance taxes in Cyprus.
Other Beneficial Features of the Cyprus Tax System for Individuals
Income Tax Reduction for New Residents in Cyprus
Individuals who were not previously resident in Cyprus, take up residence in Cyprus for work purposes, and earn over €55,000 per annum, are entitled to the following tax benefit:
50% of employment income earned in Cyprus is exempt from income tax for a period of 17 years.
Cyprus’ standard income tax rates are:
€0 to €19,500: 0%
€19,501to €28,000: 20%
€28,001to €36,300: 25%
€36,301to €60,000: 30%
Greater than €60,000: 35%
Additional Information
If you require additional information regarding Cyprus Foreign Interest Companies please speak to Charalambos Pittas/ Katrien de Poorter at the Dixcart office in Cyprus: advice.cyprus@dixcart.com or to your usual Dixcart contact.
Madeira is part of Portugal, an island located south west of Portugal’s mainland, in the Atlantic Ocean.
It is well known for its tourist attractions but also offers the International Business Centre of Madeira, which offers appealing tax benefits to attract foreign investment.
Madeira is a Portuguese island and is therefore an integral part of the European Union. Individuals and corporations that are resident, or registered in Madeira, therefore have full access to all of Portugal’s international treaties and conventions.
What Are the Key Tax Advantages Offered by the International Business Centre of Madeira (IBCM)?
The IBCM offers a number of attractive tax benefits for corporations:
A 5% corporate tax rate which is guaranteed by the EU to remain in place, until at least the end of 2028.
Non-resident individual and corporate shareholders benefit from a total exemption from withholding tax on dividend remittances, as long as they are not resident in jurisdictions featured on Portugal’s ‘black list’.
No tax is payable on the worldwide payment of; interest, royalties and services.
Access to the wide network of Double Tax Treaties that Portugal has with other countries.
Madeira is accepted by the OECD as an on-shore, EU-compatible free trade zone.
Additional Advantages Offered by the Island of Madeira
The island offers an attractive quality of life and has one of the lowest costs of living in the EU. It is a top tourist and retirement destination and has a young workforce, with one third of the population being under the age of 24. It is a multi-lingual jurisdiction with English being the second language and regarded as the business language, alongside Portuguese.
Madeira also has an international airport, with many daily connections to Lisbon and several weekly connections to Germany, Switzerland, and the UK.
The IBCM covers a wide range of activities, including; commercial, industrial, service-related industries and shipping. The greatest benefits can be enjoyed by; e-business, managing of intellectual property, shareholding, trading and shipping and yachting businesses.
Substance Requirements
An important feature of the IBCM regime is that the law clearly defines appropriate substance requirements to be met, for the company to obtain the relevant tax benefits.
These substance requirements essentially relate to the creation of jobs.
There are two key requirements, verifiable at different times:
1. After the incorporation of the company:
within the first 6 months of the activity, the IBCM company must hire at least, one worker, and undertake a minimum investment of €75,000 in fixed assets (tangible or intangible) within the first 2 years of activity. OR
it can hire 6 employees during the first 6 months of activity, where it will be exempt from doing the minimum investment of €75,000.
2. On an ongoing basis, the company must have at least one full time employee on its payroll, paying Portuguese personal income tax and social security. This employee can be the Director or a Board Member of the IBCM company.
Capping of Benefits
The regime is very favourable and, not surprisingly, upper limits apply, to ensure that very large companies have a cap on the benefits that they can receive.
As detailed previously, the corporate tax rate of 5% applies to a company’s taxable income. There is an upper limit of income which can enjoy this favourable tax rate, based on the number of jobs that have been created in Madeira by the company.
These figures are detailed below:
Job Creation
Minimum Investment
Maximum of Taxable Income Reduced Tax Rate Applies to
1 – 2
€75,000
€2.73 million
3 – 5
€75,000
€3.55 million
6 – 30
N/A
€21.87 million
31 – 50
N/A
€35.54 million
51 – 100
N/A
€54.68 million
100+
N/A
€205.5 million
In addition, the total benefits granted to companies licensed to operate in the IBCM are capped at one of the following amounts:
15.1% of the annual turnover; OR
20.1% of the annual earnings before interest, tax, and amortisation; OR
30.1% of the annual labour costs.
How can Dixcart Help?
Dixcart has had an office in Madeira for over thirty years.
We offer advice regarding the establishment of a company in the IBCM and provide a complete range of services relating to the incorporation and management of the company.
These services include meeting all of the company’s day-to-day obligations, including: accounting, legal, human resources, tax compliance and IT.
If you require further information regarding the IBCM and/or if you would like information regarding the type of company and tax frameworks available in Portugal, please speak to the Dixcart office in Portugal: advice.portugal@dixcart.com.
In an increasingly global and competitive world, countries are constantly seeking ways to attract foreign investment, foster innovation, and promote economic growth. One such initiative is the Intellectual Property (IP) Box Regime, a tax incentive scheme offered by Malta. In this article we will explore the key features of the IP Box Regime, its benefits, and its impact on Malta’s economy.
The IP Box Regime in Malta is a tax incentive programme designed to encourage the development, acquisition, and exploitation of intellectual property assets. This attractive regime combined with other incentives and Malta’s favourable business environment, makes it an appealing choice for businesses looking to establish their intellectual property rights and conduct research and development activities.
What Are the Advantages of the Malta IP Box Regime?
The reduced tax rate provides a competitive advantage, incentivising businesses to establish their IP rights in Malta and ensuring that a larger portion of their profits remains within their control. The tax advantages are explored in detail below.
This strategy enables companies to allocate resources towards further research, development, and innovation, ultimately leading to enhanced competitiveness and growth. In addition to this, the IP Box Regime promotes collaboration between academia and industry.
The Malta IP Box Regime attracts foreign direct investment (FDI) by offering an attractive tax environment for businesses involved in intellectual property-driven sectors. This influx of FDI stimulates economic growth, creates job opportunities, and expands Malta’s knowledge-based economy. In addition, the regime enhances Malta’s reputation as an innovative and business-friendly jurisdiction, which can further attract foreign companies seeking to establish a European presence.
What is Qualifying IP?
In terms of the Maltese Rules, qualifying IP includes:
a) Patents that have been issued or are in the process of being applied for.
b) Assets in respect of which protection rights are granted in terms of national or international legislation. This includes rights relating to plant and genetic material, plant or crop protection products and orphan drug designations; or utility models; or software protected by copyright under national or international legislation.
c) In the case of a small entity (defined in the Rules), other intellectual property assets that are ‘non-obvious’, useful, novel and have features similar to those of patents, and as are certified as such by Malta Enterprise.
Marketing-related intellectual property assets such as; brands, trademarks and trade names do not constitute qualifying IP.
What are the Conditions to Claim a Deduction?
The definition relates to, activities that must be carried out by the beneficiary:
‘The research, planning, processing, experimenting, testing, devising, designing, development or similar activities leading to the creation, development, improvement or protection of the qualifying IP.’
Further criteria relating to the ‘beneficiary’, include:
functions performed by employees of other enterprises, provided that such employees are acting under the specific directions of the beneficiary in a manner equivalent to its employees;
functions carried out through a permanent establishment situated in a jurisdiction other than the jurisdiction of residence of the beneficiary, where such permanent establishment derives income which is subject to tax in the jurisdiction of residence.
The beneficiary is required to be the qualifying IP’s owner or the holder of an exclusive license in respect of the qualifying IP;
The qualifying IP is granted legal protection in at least one jurisdiction;
The beneficiary maintains sufficient substance in terms of physical presence, personnel, assets or other relevant indicators in the relevant jurisdiction in respect of the qualifying IP.
What is the Patent Box Regime Deduction
The patent box deduction is calculated as follows:
95% x (Qualifying IP Expenditure x Income or Gains derived from qualifying IP) Total IP Expenditure
The resultant figure is the amount that is deductible from the gross income of the company, that created and developed the IP in Malta, thereby reducing the income that is taxable.
Qualifying IP Expenditureis established at the time when incurred, and consists of the following:
a) Expenditure incurred directly by the beneficiary for, or in the creation, development, improvement or protection of the qualifying IP;
b) Expenditure incurred by the beneficiary for activities related to the creation, development, improvement and protection of the qualifying IP, subcontracted to persons which are not related to the beneficiary; and
c) Where other expenditure not falling within (a) and (b) above has been incurred, that expenditure may also be included as part of Qualifying IP Expenditure, however the amount of this expenditure is capped at 30% of the amounts referred to in (a) and (b) above.
Total IP Expenditure comprises expenditure directly incurred in the; acquisition, creation, development, improvement or protection of the qualifying IP, being the sum of:
All expenditure actually incurred by the beneficiary and constituting qualifying IP expenditure and any other expenditure incurred by any other person which would constitute qualifying IP expenditure had it been incurred by the beneficiary;
and
Acquisition costs and expenditure for outsourcing activities made to related parties.
Summary
The IP Box Regime in Malta serves as an effective tool to attract investment, promote innovation, and strengthen the country’s economy. By providing a favourable tax environment for businesses involved in intellectual property, Malta has positioned itself as an attractive destination for companies seeking to harness the potential of their intellectual assets.
Dixcart Malta has a wealth of experience across financial services, offering legal and regulatory compliance insight. Our team of qualified Accountants and Lawyers are available to set up and manage the structure as well as ensuring overall efficiency.
Additional Information
For further information about the Malta matters please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com.
Portugal is a popular destination for foreign investors, thanks to its buoyant economy, favourable tax climate, and strategic location in Europe.
If you are considering incorporating a company in Portugal, there are a few things you should take into consideration. Please see our sister Article which details the three Portuguese company structures, for tax purposes, and the benefits that each offers: Three Types of Portuguese Company Advantages and Criteria.
In this article, we will discuss the steps involved in incorporating a Portuguese company, including:
Choosing the right type of company structure
Registering the company with the Portuguese Commercial Register
Obtaining a Tax Identification Number (NIF)
Opening a bank account
Obtaining a business license
Choosing the Right Type of Company Structure
There are two main types of company that can be incorporated in Portugal: limited liability companies (Sociedades por Quotas ‘LDAs’) and joint stock companies (Sociedades Anónimas, ‘SAs’).
LDAs are the more common type of company in Portugal. They are relatively easy to set up and have a lower minimum share capital requirement than SAs.
SAs are more complex to set up and have a higher minimum share capital requirement.
However, they offer a number of advantages, such as limited liability for shareholders and the ability to raise more capital.
The table below summarises the key differences between SA and LDA companies in Portugal:
Feature
SA
LDA
Minimum capital
€50,000
€2 (or €1 for a single shareholder)
Number of shareholders
Minimum of 5 (unless the company is sole shareholder)
Minimum of 2 (or 1 by the denomination of Sociedade Unipessoal Lda)
Transfer of shares
Freely transferable
Can only be transferred by public deed
Management
Board of directors
General partners
Liability
Shareholders are liable for the company’s debts up to the amount of their shares
Shareholders are liable for the company’s debts up to the amount of their quotas
Taxation
Subject to corporate income tax
Subject to corporate income tax
Audit Requirements
Always subject to auditor or supervisory board
One independent auditor or supervisory board is required, if for a period of two consecutive years, two of the following thresholds are met: 1. Balance exceeds €1.5 million 2. Total turnover and other revenue of at least €3 million 3. Average number of 50 or more employees
There are, a number of additional things to consider when choosing between an SA or an LDA:
Future growth plans: if you plan to grow your business and raise capital from investors, an SA may be a better option. This is because SAs are more widely recognized and accepted by investors.
Management structure: If you want to have more control over the management of your business, an LDA may be a better option. This is because LDAs are more flexible in terms of management structure.
If you are still unsure about which type of company is right for you, it is a good idea to consult with a lawyer or accountant who can help you assess your specific needs and circumstances such as Dixcart Portugal Lda.
The type of company that is right for you will depend on your individual circumstances and needs. If you are unsure which type of company to choose, you should consult with a professional adviser. At Dixcart Portugal, we have senior qualified accountants who will be able to assist.
Registering the Company with the Portuguese Commercial Register
Once you have chosen the type of company you want to incorporate, the company needs to be registered with the Portuguese Commercial Register (Registo Comercial). the proposed company name and the names and addresses of the shareholders and directors will need to be provided.
Obtaining a Tax Identification Number (NIF)
Once your company has been registered with the Portuguese Commercial Register, a Tax Identification Number (NIF) from the Portuguese tax authorities needs to be obtained for the company – this is referred to as the NIF (Número de Identificação Fiscal – Tax identification number).
Opening a Bank Account
Once you have obtained a NIF, a bank account needs to be opened for your company. A Portuguese bank and/or an international bank may be chosen to open a corporate bank account. In some cases, this may be performed remotely. It is suggested a Portuguese bank account is opened in order to make payments to local authorities and be able to receive refunds (if any are due) from the local tax authorities.
Obtaining a Business License
Once the bank account is open, a business license from the local council is required. The company’s; articles of association, company’s certificate of incorporation, company’s NIF, and bank account details, need to be submitted.
Choose to Incorporate the Right Type of Company Structure for you
Incorporating a Portuguese company can be a complex process, but it is essential if you want to do business in Portugal.
By engaging with professionals you can ensure that your company is incorporated correctly and that you comply with all of the applicable laws and regulations.
This article considers a number of questions that we are frequently asked regarding Swiss companies.
Why is Switzerland Such an Attractive Location for Corporates?
Switzerland is considered an attractive location for corporates for several reasons:
Strategic Location: Switzerland’s central location in Europe makes it an ideal hub for businesses aiming to access European markets. It offers excellent connectivity and transportation infrastructure, with multiple international airports and efficient rail networks.
Innovation and Research: Switzerland has a strong emphasis on innovation and research. It is home to prestigious universities, research institutes, and numerous multinational companies’ research and development centres. The country actively promotes collaboration between academia and industry, fostering an environment conducive to innovation.
Stable Economy: Switzerland has a highly stable and prosperous economy. It boasts a low inflation rate, low unemployment rate, and a strong currency, which provides a secure environment for businesses to thrive.
Political Stability: The country is renowned for its political stability and neutrality. Switzerland has not participated in any armed conflict for over two centuries, which enhances its reputation as a safe and predictable business environment.
Strong Legal Framework: Switzerland has a well-established legal system that emphasises the protection of property and intellectual property rights, and contract enforcement. This legal framework provides businesses with a high level of security and confidence when conducting their commercial activities.
Business-Friendly Regulations: The Swiss Government maintains a business-friendly regulatory environment, characterised by; low bureaucracy, efficient administration, and attractive tax policies. The tax system is competitive, with low corporate tax rates, tax incentives for research and development, and several beneficial double taxation agreements, with numerous countries.
Skilled Workforce: Switzerland has a highly educated and skilled workforce. The country invests heavily in education and vocational training, ensuring a competent labour pool for businesses. The Swiss labour market is respected, for its; productivity, reliability, and multilingual abilities.
The factors above, combine to make Switzerland an appealing location for corporates, attracting a wide range of industries, including; finance, pharmaceuticals, technology, manufacturing, and many international organisations.
How Easy or Difficult is it to Establish a Swiss Company?
Setting up a Swiss company involves putting in place a number of administrative obligations, and the timescale and costs can vary depending on the type of company and specific circumstances.
A brief overview is provided below:
A Swiss bank account needs to be opened in the company’s name and the required share capital must be deposited.
The timescale can range from a few weeks to a few months, depending on various factors, including; the complexity of the corporate structure, the number of employees to be recruited and the type of business. Each of these can affect the appropriate administrative procedures.
It is advisable to consult with a Swiss legal advisor or a business service provider, such as Dixcart: advice.switzerland@dixcart.com, to ensure compliance with the latest regulations and procedures.
3. What Criteria do I need to meet to Establish a Swiss Company?
General criteria for setting up a Swiss company include:
Residence: While it is not mandatory to be a Swiss resident to set up a Swiss company, you will need at minimum, a local representative who resides in Switzerland to act as director of the company.
Share Capital: The share capital of the company has to be paid into a Swiss bank account when initiating the incorporation procedure. The share capital amount varies depending on the legal structure chosen. For a stock corporation (SA/AG), CHF 100,000 minimum is the minimum requirement. For a limited liability company (Sàrl/GmbH), the minimum capital is CHF 20,000.
Articles of Association: Prepare the Articles of Association, which outline the; purpose, capital, shareholder structure, and internal organisation of the company.
Shareholders and Directors: Identify the shareholders and directors of the company. The shareholders can be individuals or legal entities, and there is no residency requirement for shareholders. However, at least one director must be a Swiss resident, for certain types of company.
Bank Account: Open a Swiss bank account in the company’s name and deposit the required share capital.
Permits and Licenses: Depending on the nature of the business activities, you may need to obtain specific permits or licenses from federal, cantonal, or municipal authorities. This requirement varies by industry and the location of your business.
Compliance: Ensure compliance with Swiss laws and regulations, including tax laws, employment laws, and any business sector-specific regulations.
It is important to note that the criteria and requirements may vary depending on the canton (state) in Switzerland where you plan to establish your company. It is recommended that you consult with a Swiss legal advisor or a business service provider, such as Dixcart: advice.switzerland@dixcart.com to obtain accurate and up-to-date information specific to your circumstances.
4. Does it Make a difference Which Canton I Establish my Company in?
Yes, the canton (state) in which you establish your company in Switzerland can make a difference in several aspects. Each canton has its own; regulations, taxation system, business-friendly policies, and incentives, which can influence the attractiveness and feasibility of setting up a company.
Detailed below, are some factors to consider regarding the choice of canton:
Taxation: Cantons have the authority to set their own tax rates, which can significantly impact your company’s tax liabilities. Some cantons may have lower corporate tax rates, favourable tax incentives, or special tax regimes for specific industries. It is crucial to research and compare the tax systems of different cantons to determine which offers the most beneficial tax environment for your business.
Legal Framework: Whilst Swiss federal law governs many aspects of business regulations, some areas, such as company registration procedures or commercial laws, may vary slightly at the cantonal level. It is important to be familiar with the specific legal requirements and regulations in the chosen canton.
Cost of Living and Business Expenses: The cost of living and operating a business can vary from one canton to another. Expenses such as; office space, salaries, utilities, and administrative costs may differ, and it is essential to consider these factors when choosing a canton.
Infrastructure and Accessibility: Cantons may vary in terms of infrastructure, transportation networks, and access to markets. Some cantons may have better connectivity, proximity to international airports, or superior logistical infrastructures, which can be advantageous for certain industries.
Industry Focus: Different cantons may have a particular focus or strength in specific industries. For example, Zug is known for its favourable tax environment and concentration of companies in the cryptocurrency and blockchain sector. Zurich is a hub for finance and technology companies, while Basel is renowned for its pharmaceutical and life sciences industries. Choosing a canton aligned with your industry can provide access to specialised networks, talent pools, and support services.
Economic Stability and Support: Economic stability, access to funding, and the availability of business support services can vary across cantons. Some cantons may have a more diversified economy, stronger entrepreneurial ecosystems, or specific support programmes for startups and foreign businesses.
You need to conduct thorough research and we recommend that you seek professional advice from local experts or business service providers, and consider your business’s specific needs and objectives, when selecting the canton for your company’s establishment.
5. I Anticipate that Swiss Corporation Tax is High – Am I Correct?
Swiss corporation tax rates vary depending on the canton and municipality where the company is registered. Whilst Switzerland is generally considered to have a competitive tax system, it is true that the overall tax burden for corporations in Switzerland can be relatively high compared to some other countries. However, it is essential to consider several factors when evaluating the tax landscape in Switzerland:
Federal vs. Cantonal Tax: Switzerland operates a federal tax system where both the federal government and the cantons levy corporate taxes. The effective federal tax rate is uniform, at 7.8%, across all cantons, whilst additional cantonal tax rates can vary significantly. This means that the total tax burden will depend on the specific canton where the company is located.
Cantonal Tax Rates: Cantonal tax rates range from relatively low to relatively high, depending on the canton. Some cantons, such as Zug and Schwyz, are known for their low corporate tax rates and favourable tax environments, which attract many businesses. On the other hand, some major cities like Zurich and Geneva may have higher tax rates but offer other advantages. It is important to research and compare the tax rates of different cantons to find the most advantageous option for your business.
Tax Incentives: While the overall tax burden may be high, many cantons in Switzerland offer tax incentives and special regimes for specific industries or activities. These incentives include; reduced tax rates, tax holidays, or deductions for research and development (R&D) expenses. Taking advantage of these incentives can help mitigate the tax impact.
Overall Tax Efficiency: It is important to consider the broader tax environment in Switzerland, including factors such as the stability of the tax system, the availability of double taxation treaties, and the potential for tax planning and optimisation. Switzerland’s stable political and legal framework, as well as its extensive network of double taxation agreements, can provide opportunities for efficient tax planning and international tax optimisation strategies.
Other Factors: While corporate tax rates are an essential consideration, it is also important to evaluate the overall business environment, including factors such as; political stability, the legal system, infrastructure, and access to: markets, skilled labour, and quality of life, each of which Switzerland generally excels in.
In summary, while Swiss corporation tax rates can be relatively high, the specific tax burden will depend on the canton and municipality in which the company is registered. In addition, Switzerland offers a competitive tax system, tax incentives, and opportunities for tax planning and optimisation, which can help mitigate the overall tax impact. It is advisable to consult with a tax advisor or business expert such as Dixcart: advice.switzerland@dixcart.com, to assess your specific situation and determine the most suitable approach for your business.
6. Why is Dixcart Switzerland Based In Geneva?
Geneva is a hub for private banking and hosts a significant number of international organisations including; the World Trade Organisation (WTO), World Health Organisation (WHO), International Red Cross, Red Crescent Movement, and various United Nations agencies. It is a city that attracts a diverse and international community, fostering a cosmopolitan atmosphere.
Geneva has a well-established financial infrastructure, including numerous banks, asset management firms, and financial institutions. The city has a long history of banking and wealth management, dating back centuries, which has contributed to its reputation as a prominent financial centre.
It offers a very competitive combined federal and cantonal tax rate of 13.99%, compared to Zürich, for example, with an equivalent rate of 19.17%.
One final factor to consider is that having a Swiss company can enhance a business’s reputation and branding. Switzerland is globally recognised for its quality, precision, reliability, and innovation across various industries. Associating your business with the Swiss brand can provide a competitive advantage and create additional confidence for customers, partners, and investors.
It is important to note that the advantages offered by a Swiss company vary depending on the; industry, location within Switzerland, and specific circumstances. Conducting thorough research and seeking professional advice will help assess how these advantages align with your business objectives and determine the feasibility of establishing a Swiss company.
Advice and Additional Information
Dixcart has had an office in Switzerland for over twenty-five years and is well place to provide advice regarding the establishment of companies here. Please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.
If you are considering establishing a business in the UK, ensuring the compliance and administrative elements are setup at an early stage is crucial, to allow the business to grow efficiently.
Similarly, when any move of residence to a new jurisdiction takes place, a thorough review of how a family’s wealth is held, needs to be undertaken, in order to avoid any potentially costly errors. This should take place before the move has occurred.
This Article details the main checklists of items that you need to take into consideration. Dixcart in the UK has extensive expertise in assisting individuals and families to set up businesses and to move to the UK and can guide you through the process and actions that you need to take: advice.uk@dixcart.com
Compliance Checklist for a New UK Business
Immigration: unless you are looking to only employ workers already with the right to work in the UK, you may need to consider business related visas, such as a sponsor license or sole representative visa.
Employment contracts: all employees will need to have an employment contract compliant with UK employment laws. Many businesses will also need to prepare staff handbooks and other policies.
Payroll: UK income tax rules, benefits-in-kind, pension auto-enrolment, employer’s liability insurance, all need to be understood and implemented correctly. Administering a UK compliant payroll can be complex.
Book-keeping, management reporting, statutory accounting and audits: well- maintained accounting records will help provide information for considered decision-making and financing, and will ensure that you remain compliant with Companies House and HMRC.
VAT: registering for VAT and filing, in compliance with requirements, will help ensure there will be no unexpected surprises and, if dealt with promptly, can help with early-stage cash-flow.
Commercial contracts: whether an agreement with a; vendor, supplier, service provider or customer, a well prepared and robust contract will help protect your business and ensure it is well placed for any future exit strategy.
Premises: whilst many businesses are operating more and more online, many will require office or warehousing space. Whether renting or purchasing space we can assist. We also have a Dixcart Business Centre in the UK, which may be helpful if a serviced office is needed, with professional accounting and legal services being available, in the same building.
2. Matters to Consider Prior to Moving to the UK
As indicated at the start of this Article, it is important that families evaluate arrangements, including tax and succession matters, well ahead of any move. A practical list of some of the factors that should be taken into consideration is detailed below.
Practical matters:
Travel documents (visas)
Formal enrolment in country/jurisdiction of ‘arrival’, including communication with tax authorities, healthcare and schooling.
Taxation matters:
Confirm the arrangements that affect heirs and family in other countries.
Plan for the optimal timing of loss of tax residence, and any exit charges.
Consider any action that needs to be taken to ensure assets are held in the optimal way, prior to moving. Leaving this until after arrival can result in unexpected and large tax bills that could have been avoided.
Plan the timing of disposals and acquisitions, to ensure the best possible tax outcome.
Consider establishing new banking arrangements to segregate income and gains.
Succession and inheritance:
Confirm which laws govern succession and if a choice of different jurisdiction law is available.
Confirm whether marital/family laws are affected and whether a choice of different jurisdiction law is available.
Review estate planning documents (wills, succession, and prenuptial documents), and consider the interaction of wills, appropriate for different jurisdictions.
Consider the use of trusts for estate planning, not forgetting that the timing of the settlement of trusts could be key to the taxation outcome.
Implications of transferring physical wealth:
Family heirlooms, jewellery, works of art, aircraft, cars and yachts: can they be transferred, are import duties applicable?
Gifts and Donations:
Confirm whether gifts or donations should be executed, in advance of acquiring the new residency.
Ongoing Matters to be Reviewed at Least Annually
There are a series of important reviews, that should be taken at least annually, to take into account both changes in personal circumstances and the law:
Review of estate planning documents. These include wills, succession and prenuptial documents.
Review of trusts arrangements, structures, and bank accounts.
Review of any changes to tax laws and the implications in relation to existing agreements and structures.
How can Dixcart Help?
Dixcart can assist with:
Establishment, management and on-going corporate compliance
Pre-arrival and departure tax planning.
Advice and assistance with visas for residence in the UK.
Accounting, legal and taxation advice.
Additional Information
If you would like to discuss planning, for the potential setting up of a business in the UK or move of location to the UK, please contact Peter Robertson or Paul Webb, at the Dixcart office in the UK: advice.uk@dixcart.com.
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