Category Archives: European Tax & Money Havens

Portugal Launch Investment Tax Credit

Portugal’s Finance Minister Vitor Gaspar has unveiled details of a raft of financial and fiscal incentives, designed to boost investment, growth, and employment in Portugal.

Rua Augusta, Lisboa, Portugal
Rua Augusta, Lisboa, Portugal

The elegant downtown of Lisbon, the heart of the city is Baixa’s Rua Augusta, which leads to Lisbon’s famous Terreiro do Paço. Picture courtesy of Osvaldo Gago.

Gaspar made clear that “the time is right for investment,” given the successful reduction of the budget deficit and in view of financial stability in Portugal. The Minister argued that the Government’s proposed measures are intended to initiate the recovery of economic activity by reviving “productive private investment.” As a result, an increase in investment is expected in the second half of the year, Gaspar said.

To re-launch investment in Portugal in 2013, the Government plans to introduce an extraordinary investment tax credit. The Government also plans to introduce a package of fiscal initiatives, designed to create attractive fiscal conditions, to stimulate productive investment.

Alluding to the extraordinary investment tax credit as an “innovative measure, unprecedented in Portugal,” given the amount and scope of the investment tax break, Finance Minister Gaspar explained that the provision corresponds to a corporate tax reduction (IRC) of 20 percent of the investment, up to a maximum 70 percent of total IRC due.

Gaspar emphasized that the incentive will serve to reduce the effective corporate tax rate to 7.5 percent for those companies that elect to invest significantly in 2013. Already approved by the European Union, the provision will apply to investments realized between June 1, 2013, and December 31, 2013, up to EUR5m (USD6.5m).

The proposed package of fiscal measures is designed to consolidate the various tax benefits currently provided for in the country’s Investment Tax Code.

Defending the proposals, Finance Minister Gaspar underscored that Government efforts to balance the Portuguese budget will not be affected by the resulting revenue shortfall, pointing out that the tax initiatives will generate growth and promote economic activity.

Referring to the announcement as “a very important day” for Portugal, Economy and Employment Minister Alvaro Santos Pereira stated that the proposals are already having a positive impact on the country’s economy, by “restoring investor confidence.”

State Secretary for Fiscal Affairs Paulo Nuncio stressed that the provisions are a “very powerful incentive,” both for companies that have not thought about investing in 2013, and for businesses that have so far hesitated, unsure of whether to invest in Portugal or in other countries.

Liechtenstein Lawmakers give green light to alternative investment fund managers’ law

Vaduz Castle, Liechtenstein   Picture by Michael Gredenberg

The Liechtenstein parliament has unanimously given the green light to the government’s alternative investment fund managers’ law (AIFMD). According to the Liechtenstein government, parliament’s approval of the law establishes a second legal basis for the Principality’s fund industry, in addition to the law on Undertakings for Collective Investment in Transferable Securities (UCITS).

The Liechtenstein government highlights the fact that political stability, an attractive tax law, and favorable geographic location in the Swiss franc zone, coupled with membership of the European Economic Area (EEA) enable the Principality to offer unique location advantages. This combination together with other favorable conditions make Liechtenstein an interesting location for managers of alternative investment in the international fund market, the government adds.

The EEA-compliant framework of the law and the market-orientated shaping of national legislation will serve to promote the Liechtenstein fund center as an attractive and competitive location for the international fund industry, the government insists, emphasizing that improved investor protection and strong, internationally networked supervision will also promote the stability of the Liechtenstein fund center as well as confidence in the functioning of the financial market as a whole.

Liechtenstein’s “flexible” law provides for the introduction of the European Union (EU) passport, allowing EU-wide marketing to professional investors, and places greater personal and organisational requirements on managers, their business partners, and the financial market authority (FMA).

Welcoming parliament’s decision, Liechtenstein’s Prime Minister Klaus Tschütscher emphasized the fact that there is a broad consensus among key stakeholders on the common AIFM strategy. Noting that the Principality endeavors to be “interesting for both existing and new customers,” who particularly value stability in times of uncertainty, Tschütscher explained that the AIFMD will further strengthen the Liechtenstein fund center.

Tschütscher predicted that many fund or wealth managers from Austria, Germany, Switzerland and other countries will be interested in Liechtenstein as a location, and that larger wealth managers will also elect to settle in the Principality.

Director of Liechtenstein’s Office of International Financial Affairs Katje Gey underscored that the AIFMD creates a competitive legal basis in accordance with European law, for Liechtenstein as a future-orientated AIFM location. Liechtenstein is the first country in Europe to transpose the lessons from the financial crisis into national law, to prevent as far as possible investor losses and systemic risks arising from inadequate supervision, while at the same time increasing the competitiveness of the fund center, Gey said.

Gey maintained that the further development of the Liechtenstein fund center is one of the central and most promising areas. Gey underscored the attractiveness of the location for managers of alternative investments and stressed the importance of access to innovative products in a structured regulatory framework for existing investors.

The law is due to enter into force on July 22, 2013.

Malta gives tax breaks to attract expat pensioners

Malta launches new schemes to attract expat pensioners and promote a new generous tax incentive scheme to encourage European individuals to transfer their pensions to, and take up residence in Malta.

Under the scheme, which is exclusively available to European Union, European Economic Area, or Swiss nationals, income tax will be fixed at 15%, with a minimum tax liability of EUR7,500 per annum, plus EUR500 for each dependant.

To be eligible for the scheme, applicants would need to fulfil a number of conditions, including:

Purchasing a property worth at least EUR275,000 in Malta, or EUR250,000 in Gozo, or renting a property for EUR9,600 per annum in Malta, or EUR8,750 in Gozo.

Applicants must spend a minimum of 90 days in Malta per annum, averaged over a five-year period. In addition, they must not reside in any other single jurisdiction for more than 183 days in a year.

Marsascala, Malta   picture above courtesy Best of European Union, is a town located at the Marsascala Bay on the southeastern part of the island of Malta. It is a popular travel destination.

The individual’s entire pension would have to be remitted and taxed in Malta, and 75% of the income chargeable to tax in Malta would have to arise from pension or similar income, including lifetime annuities, personal pension plans, occupational pension.

Global Tax Rates Comparison

Hong Kong and Switzerland are attractive with relatively low effective tax rates. Many international corporations have relocated to these two countries the last decades.

The worst ones are Greece, Belgium and Italy. We expect both people and corporations to continue to flee these countries the coming years.

Click on the image to get a larger picture.

Source: Economist