Tag Archives: Residency

Malta gives tax breaks to attract expat pensioners

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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.

Venezuela a new tax haven in Latin America

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Mexico is attractive but Venezuelans pay the least taxes in Latin America, while Argentines and Brazilians pay the most according to a report from the Organisation for Economic Co-operation and Development (OECD), just released onTuesday.

Venezuela had the lowest tax take in Latin America at just 11.4% of national income, according to the report prepared by the OECD, Inter-American Centre of Tax Administrations and the Economic Commission for Latin American and the Caribbean.

Caracas, Venezuela. Picture by Stockphoto

Mexico, the second largest economy in the region and one of only two Latin American countries in the OECD, was confirmed as having the OECD’s lowest tax with 18.8%.

the Netherlands Antilles – Curaçao

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General Taxation system of the Netherlands Antilles

Curaçao’s Economy is based on shipping, tourism and oil refining. The total population is 150,000 and speak at least four languages including Dutch as the official language, but English, Spanish are also spoken.

Curacao Photos
This photo of Curacao is courtesy of TripAdvisor

Curaçao has nearly perfect weather year-round with temperatures between 70-80° F/23-32° C during the day and 60-70° F/15-27° C at night. The island lies outside the main hurricane belt. October-December is the rainy season, but the rain seldom lasts long. The coolest months are January and February, and the hottest are August and September.

The Government of Curaçao, as well as the leading companies, are aiming to make Curaçao a center of e-Business excellence, through investments in all areas of the Island’s technology infrastructure. For e-Commerce companies who establish themselves in these e-Zones a 0% turnover tax and 2% profit tax is applicable, and is exempted from import duties, turnover tax on imported goods.  Foreign employees assigned to an E-business enterprise on Curaçao could apply for the current expatriate legislation. This legislation provides wage tax incentives for employees as well as employers. With the introduction of the e-Zone legislation Curaçao can provide important tax incentives for global e-commerce enterprises.

Non-residents do not have to pay income tax from income generated from outside the Netherlands Antilles.

The 5 islands of the Netherlands Antilles have in principle the same tax laws, although the sales tax on Curaçao and Bonaire is different from the sales tax on St Maarten, Saba and St. Eustatius or Statia.

The income/profit tax of residents is levied on the income / profit generated world-wide, while foreign residents are subject to Netherlands Antilles tax if they generate income or profit from Netherlands Antilles sources. The tax system is a so called classical system, which means that a corporation must pay tax on its profit while the shareholder of such corporation must (again) pay tax on dividends received from the corporation. There are however certain facilities that reduce or eliminate this economic double tax effect.

Although Aruba and The Netherlands are part of the same Dutch Kingdom and the tax laws have been the same up to the period around the second world war, the tax laws of these three parts of the Kingdom have changed in different directions. The fact that the tax laws originate from the same system makes it possible to have the same judges decide on the tax law disputes. The judges from the Netherlands fly in at least twice a year to settle tax cases.

Each part of the Dutch Kingdom has its own right to tax which means that there is also the possibility of double taxation. Already in 1964 the Dutch Kingdom has one Tax Arrangement that solves double taxation issues and arranges for the possibilities to exchange information. This TAK (Tax Arrangement for the Dutch Kingdom) has been amended several times and is at this moment (June 2006) again in discussion on the subject of the dividends paid from the Netherlands to the Netherlands Antilles.

The social security system covers on the national level old age (AOV), widows and orphans (AWW) and exceptional medical expenses (AVBZ) and on the employer-level sickness (ZV) and accident insurance (OV).

The collection of the taxes and social security contributions is being divided between the Island Collector (EO), the Land Collector (LO) and the Social Security Bank (SVB).

Curaçao has special Income Tax Facilities for Penshonado Expatriates:

The income tax offers a favorable pensioners (“penshonado”) tax regime. This regime is available on the following conditions:

– The “penshonado” should be at least 50 years old on the date that he registers himself as a resident

– The pensioner should not have lived in the Netherlands Antilles in the five years before making the application for the  “penshonado” status

– The pensioner must own a house in the Netherlands Antilles with a value of at least ANG 450,000 (US$ 253,000) for his personal use within 18 months after his registration as a resident

– The “penshonado” must have requested the penshonado status from the tax inspector within two months after registration in the municipality register

– The penshonado must be a legally admitted resident

– The “penshonado” and his wife may in general not generate income from activities within the Netherlands Antilles unless this income is generated from a company established in the Netherlands Antilles and in which the “penshonado” has a participation of at least 40% or the income is generated from being a supervisory director of a company.

The income tax rate applicable on the income of the “penshonado” is 10% and is solely applicable to income from foreign sources (or which is considered to be income from foreign sources according to the income tax law such as interest on bank accounts kept within the Netherlands Antilles). It is also possible to report a fixed income of ANG 500,000 (USD 281,000) at the progressive income tax rate as mentioned above.

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Global Tax Rates Comparison

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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

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Gibraltar will cut taxes for shipping and domicile income

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The Gibraltar government has announced a number of tax cuts in the 2012/13 Budget, slashing import duties and cutting personal income tax payable for a number of categories of taxpayers.

In order to be more attractive to foreigners and rise future income, the Gibraltar government has announced a taxpayer-friendly budget, with consolidation efforts instead focusing on restraining government spending.

The most comprehensive changes will come in the area of import duties, which have been reduced or removed entirely for a number of retail goods. Most electrical goods and computer software will be newly exempt from import duties, while duties on perfumes, cosmetics, clothes, jewellery, and mobile phones will be halved.

Import duties on hybrid cars and biofuel are to be removed, and a cash-back scheme will be introduced for persons purchasing environmentally friendly vehicles. In addition, import duties are to be removed on the import of vehicles adapted for use by disabled persons.

In a move aimed at encouraging the registration of super yachts in Gibraltar, seagoing vessels over 18 metres in length will no longer be subject to import duties, while import duties on vessels under 18 meters in length will be subject to a reduced 6% rate. Under the previous regime, vessels of over 80 tons were exempt, while those under 80 tons were subject to a 12% rate.

The only increase to import duties will impact cigarettes. The system of import taxation in this area will be reformed, from a rate applied per kilo, to a rate per packet of 20 cigarettes, with the rate hike adding GBP 0.10 to a packet of cigarettes.

Substantial changes have also been announced in respect of the territory’s two income tax regimes, the Gross Income Based regime and the Allowance Based System.

The government has confirmed its commitment to reducing the maximum rate imposed on personal income tax under the Allowance Based System, to 15% by 2015 / 2016. To begin to reduce effective rates, the rate applicable to the first GBP 4,000 (USD 6,200) of taxable income will be reduced from 17% to 15%. This will exempt taxpayers with earnings of GBP 9,000 or less. Relief will be increased further in 2013, to exempt those with earnings of GBP 10,000 or less.

Taxpayers in receipt of income between GBP 9,000 and GBP 19,500 will receive enhanced tax relief to smooth tax liability disparity between tax-paying and tax-exempt earners. New changes also aim to exempt all disabled working persons from taxation.

Meanwhile, taxpayers under the Gross Income Based system will now benefit from being able to deduct up to GBP 1,000 from their assessable income in respect of mortgage interest payments.

In addition, persons taxed under the Gross Income Based tax regime will be entitled to up to GBP 5,000 in tax relief for approved expenditure incurred on painting, decorating, repair or enhancement, of the frontage of Gibraltar premises, if they are approved by the Town Planner.

Lastly, the cap of GBP 35,000 will be removed in respect of tax relief for private pension contributions.

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