Moving to Malta: Personal Residence & Property Investment in Malta

Transcription

1 Moving to Malta: Personal Residence & Property Investment in Malta Dr Priscilla Mifsud Parker Partner

2 Agenda: Opportunities Overview Personal Residence in Malta Tax Implications Non-tax implications Schengen & Citizenship Permanent Residence Scheme Case Studies How we can help VAT Minimisation on EU Yachts Personal Estate Planning Property Investment 2

3 Personal Residence in Malta: Tax Implications Personal Taxes No Tax on Overseas Capital Gains No Tax on Overseas Income not received in Malta No Tax on Savings / Capital received in Malta No Capital Gains / Property Tax on resale of own home after 3 years Other taxes No Local Taxes / Municipal Taxes / Rates No Waste Collection Taxes No Property Taxes / Window Taxes No Wealth / Estate Taxes No Inheritance / Death Taxes [more...] 3

4 Personal Residence in Malta: Tax Implications 2 Certificate of Residence for Double Tax Treaty Relief > 50 Double Tax Treaties Only tax on income arising in & remitted to Malta: Tax rate can be locked at 15% (PRS) Tax can be capped at Euro4,200 (PRS) set by law, no need for negotiation with tax authorities Favourable VAT Scheme for Registration of Yachts in EU (5.4%) Favourable environment for Registration of Private Aircraft 4

5 Personal Residence in Malta: Non-Fiscal Benefits Permanent Residence Scheme well established (since 1988) Visa free travel within European Schengen Area Sun & Sea, Stable & Safe European Quality of Service; Mediterranean Quality of Life Lower Cost of Living than the rest of Europe Established & Reputable Private Schools & University New 5* Public Hospital, several Private Hospitals (#5 WHO) No minimum stay requirements You get: Certificate of Residence Maltese (EU) ID Card & Driving Licence EU Residence Permit (visa sticker in PP) 5

6 Personal Residence in Malta: Non-Fiscal Benefits Malta full member of the European Union since 2004 Malta part of the Euro Zone since 2008: Euro is the local currency Part of the Commonwealth Legal Certainty: Clear Immigration & Tax Laws Business & Financial Services well regulated Banks established, prudent & well capitalised, survived the financial crisis with minimal impact. Government Pro-Foreign Investment, Business FDI is encouraged & supported by Law & Government Subsidies Preferential tax treatment Mortgage support & Subsidised Leases of Gov Property 6

7 Schengen & Citizenship myths ID Card facts: Identical to what the locals get, except: Letter A at the end (instead of M for Malta and G for Gozo) NOT VALID FOR TRAVEL printed at the back. Does not replace a passport in the EU / Schengen Area No further visa requirements to travel to other Schengen states Citizenship Can be applied for after 5 years of residence Unlikely - NOT guaranteed Tax? 7

8 Permanent Residence Scheme: Conditions Annual Income of Euro 24,000 OR Total Net Wealth of Euro 350,000 Buy or Rent Property in Malta Buy min. Euro 90,000 (apartment), Euro 130,000 (house) Rent min. Euro 4,200 annual Annual Remittance Euro 14,000 + Euro 2,300 for each child / spouse / parent Allowed in one application: Spouse, child under 21, financially dependent parent Health Insurance Policy No business*, employment, voting except local councils Formal residence within 12 months of approval of permit 8

9 Personal Residence in Malta: Scenarios Scenario 1: Retiree seeking Alternative Retirement Destination Scenario 2: Disposal of Major Asset outside Malta: e.g. Shares & other financial assets Scenario 3: Frequent business traveller doing business in Europe Scenario 4: International Property Investor, Overseas Holiday Home Owner 9

10 Personal Residence in Malta: Scenario 1 Scenario: Retiree seeking Alternative Retirement Destination Objectives: Tax-friendly jurisd. for receiving Pension / Investment Income High Quality of Life, Safety & Stability, Sun & Sea is a plus Tax Planning Steps: 1. Obtain a residence permit in Malta 2. Exit home country tax system 3. Obtain evidence of Malta Tax Residence 4. Notify home country tax authorities of exit & new country of residence 5. All foreign income received in Malta taxed at 15%. Foreign income not received in MT during basis year not subject to tax. 10

11 Personal Residence in Malta: Scenario 2 Scenario: Disposal of Major Asset outside Malta: e.g. Shares & other financial assets Objectives: Lowest taxation of Capital Gains, Zero tax is a bonus Legal Certainty, Ease of Establishing up Residence Tax Planning Steps: 1. Obtain a residence permit in Malta 2. Exit home country tax system 3. Dispose of asset No tax on capital gain even if proceeds are received in Malta 11

12 Personal Residence in Malta: Scenario 3 Scenario: Frequent business traveller doing business in Europe Objectives: Visa-free travel within most EU countries A residence base in Europe Legal Certainty, Ease of Establishing up Residence Tax Planning Steps: 1. Obtain a residence permit in Malta 2. Apply for EU residence permit by virtue of PR Permit 12

13 Personal Residence in Malta: Scenario 4 Scenario: International Property Investor, Overseas Holiday Home Owner Objectives: Possibility to invest in more than one property Availability of Bank Finance Visa-free travel within most EU countries Mediterranean destination, legal certainty Tax Planning Steps: 1. Obtain a residence permit in Malta + EU residence Permit 2. Obtain a sanction letter for a home loan from a local bank 3. Buy property in Specially Designated Area 4. PRS: Cannot sublet property; ORS: Can sublet property 5. More than one property can be purchased 13

14 How we can help Malta Tax Advice on taking up residence Malta Immigration Law Advice Pre-application qualification check Pre-application docs preparation Legal representation during application process Follow-up of application and client updates Hand-holding through formalities of personal tax registration when you visit (Immigration & Tax Depts.) Annual Renewal of Residence Permit Annual Tax Returns & Ongoing Tax Advice Bank Introductions, Account Opening, Credit Cards 14

15 Personal Estate Planning: Trusts Malta: An established Trusts Jurisdiction Civil Law Jurisdiction with a Common law heritage Signatory of the Hague Convention on Recognition of Trusts Trust law codified into our Civil Law - Legal Certainty Offshore Trusts Act Trusts & Trustees Act Access to Courts, Established Trusts Jurisprudence Trustees are regulated by the Malta Financial Services Authority Our trust company: Claris Trustees & Fiduciaries Ltd 15

16 Personal Estate Planning: Trusts 2 Favourable Tax Treatment Options for foreign income & foreign beneficiaries : Tax Treatment as a company (exemption / full refund) Tax Transparency (a look-through vehicle) Asset Protection, Confidentiality Trust Deed - Private - Non-registrable Fully confidential 16

17 Personal Estate Planning: Companies An established Holding Company Jurisdiction Can hold all private / business asset classes worldwide Favourable Tax Treatment Full exemption from tax (applic. rules) Full refund to shareholders of 35% corporate tax paid by the company. > 50 double tax treaties EU P/S, Merger Directives Asset Protection, Confidentiality Possibility of fiduciary shareholding: Trust or Fiduciary / Mandate (Nominee) or 17

18 Buying Property in Malta: Property Investment Why is the Maltese property market so cushioned from the global financial climate? Steadily rising property market An idyllic European Island State in the Mediterranean in demand. Malta easily accessible from all main cities worldwide Prestigious property developments: Internationally branded & marketed, International Award Winners Key locations: sea view, historical settings Top notch facilities within or within walking distance: hotel-serviced, gym, hotel, sports facilities, yacht berths Hi-tech: data/internet, fully wired / WIFI, home automation shopping, cinema, casino, entertainment 18

19 Opportunity Malta: Property Investment Why such a foreign demand for Malta property? Opportunities? Specially Designated Areas Government backed & privileged Track record of high-profit re-sales Many property prices well below comparable prices elsewhere 19

20 Buying Property in Malta: The Risks and the Pitfalls Malta is a safe place to invest... So what could go wrong? 1. Defect in legal title: fraud / negligence watch out for companies. 2. Burdens, Charges: creditor s precautionary charge, executive charge, moves with the property. 3. Legal Servitudes: property rights e.g. third party window &/ light, right of passage, a right to access or use you roof for a water tank or antenna, etc. 4. Rights to sublet: is it allowed? Where? Residence types? 5. Structural Defects: historical properties, flooding, damp-proofing, cracks, ceilings, beams 6. Planning Irregularities: Legal? Covered by a planning permit? Sanctioned? 20

21 Buying Property in Malta: Understanding the Legal Transaction Who stands for what? Obligations vs. Interests. Who represents YOU? The Buyer! Interests: structurally sound property, Clean legal title, compliance with planning permits, and all rights, possibilities and defects you are AWARE of and happy with. The Seller. Interests: sell at the highest possible price. The whole truth? The Notary Public. Obligations: public officer, enrolls public deeds in Public Registry. Impartial. No advice. Duty of disclosure of all legal facts re property. A respected profession. Risks: notaries tied with property developers (sellers) or estate agents (agents for the sellers): 'expedite' title-verification process, overlooking material defects in title. Advice: GET YOUR OWN Notary: It s your right you will pay the fees anyway! 21

22 Buying Property in Malta: Understanding the Legal Transaction 2 The Estate Agent. Interests: sell property, that deal goes through. Most estate agencies ethical and professional, but not regulated in Malta; No duty to advise/inform. Risks: selling at all costs, overlook defects. The Lawyer for the Seller. Interests: Seller s. Duty: legal representation, advise on resale. You might soon be the Seller. The Lawyer for the Buyer. Interest: YOURS; Duty: protect & enforce YOUR interests, empower you in negotiation process; providing legal & tax advice, conveyancing & legal due diligence, recommend legal vehicle to acquire the property (trust, company, direct). The Architect: Duty: valuation & inspection, Interest: Yours if independent; Risks: may be tied to the estate agent / seller. 22

23 How we can help Our Private Clients Team: Small, Personalised Recommend property consultants Help you go direct to owner where possible Local legal support during negotiations Legal advice & representation during property purchase Tax and estate planning of property purchase Set up of Corporate / Trust Vehicles Providing impartial public notary Applications for property related permits where necessary 23

24 Thank you Chetcuti Cauchi 120, St Ursula Street Valletta VLT 1236 Malta