Residence status and tax implications

Permanent Residency, Ordinary Residency or Temporary Residency? It depends on your financial circumstances, not on how much time you will spend in Malta. Getting it wrong could cost you dearly!

Two nice young ladies & taxes

Postby billy » Wed 25 Apr 2007 19:53

Forgot to say:

As I have a home in Malta and I'm not considered tax resident of Belgium I could pay tax nowhere. As tax and dead are the only sure things in life I find this very strange???
billy
Free member
 
Posts: 45
Joined: Fri 07 Jul 2006 09:35

Postby gozomark » Wed 25 Apr 2007 20:58

well, prior to Peter's message, I'd say definitely yes, but now I'm not so sure - I guess the logic is your are a tourist in Malta, so no tax to pay under Maltese tax law - what other countries do is up to them.

Billy - you have a home here, whereas Peter, I believe, is renting - maybe thats important ???
gozomark
Site Admin
 
Posts: 14215
Joined: Sun 20 Aug 2006 18:35
Location: Republic of Gozo

twon nice young ladies who will save me tax

Postby billy » Thu 26 Apr 2007 07:21

Dear Gozomark,

I rent also but I consider it as having a home. Sorry bad English.

Maybe I'm confused with the old system whereas the "Temporary Resident" had to pay tax on income remitted.

What's also confusing is that a major Law firm is marketing "Ordinary Residency" without minimum stay requirements as having ones Tax Residency in Malta.

As it stands now is that Peter stays less then 183 days in Malta and has no tax obligation and Billy who also stays less then 183 days but is frequent in Malta has just paid his Provisional tax for 2007 because Billy wants to.


Malta is the first country that lets its Residents decide if to pay tax or not.

Tax residency in most OESO countries:

An individual is considered a resident is a country if his domicile or his customary place of abode is in that country.

Domicile:

A persons domicile is the place where he occupies a home under circumstances indicating that he will retain and use it. No length of stay.

Domicile in Malta, UK and Ireland: Family ties with the country

Customary place of abode is deemed to exist if an idividual has been present in a country for a period of at least 6 month's during a calendar year

OESO Double tax treaty residency tie breaker number 1:

Has one have a home available to his personal use during the year.

The story goes on.........
billy
Free member
 
Posts: 45
Joined: Fri 07 Jul 2006 09:35

Postby peterj » Thu 26 Apr 2007 18:27

Hi Billy

Can't answer your question re the remittance (although the tax free threshold has gone up to 3250 btw), however a small follow up on the other day.

I asked for written confirmation re <6mths residence and tax return for last year, and got the following reply today:

"if you didn't spend six months on the island, than we cannot register you for tax purposes from 2006 but from 2007"

I wasn't asked anything about how much I had remitted during the 06 year. I did tell them I remained a Tax resident of Australia.

Like all responses from gov officials, this should be treated with a degree of caution.

I think that some countries - perhaps Italy, Spain, and I think Australia and NZ for example - back up the 6 month bit with a rider that you must be paying tax in another country, to get those who stay in three countries for less than 6 mths a year each. Again, this has never actually applied to me, and I can't remember where I read it.
peterj
Free member
 
Posts: 383
Joined: Mon 08 May 2006 06:49
Location: Goowa, South Oz

Two young nice ladies with a lot of tax

Postby billy » Thu 26 Apr 2007 19:45

Hi Peter,

Smart to ask for a written reply.

I think your situation is clear because you stay tax resident of Australia and don't stay for more then 183 days. You are clearly a tourist and if you remit more then 3250 You don't have to pay tax. If you remit capital then its even more clear.

Gozomark's situation is also clear because he spends more then 183 days in Malta and he is smart by only remitting capital to Malta.

Before becoming an Ordinary resident I was 4 years a Permanent resident and so as long as I'm not considered tax resident of another country which is the case and pay tax in Malta I don't see any problem. I would only remit capital if I would buy an appartment or buy a car which is like comitting suicide. I'm afraid to drive in Malta after being nearly killed by a drunk on the coast road.

In any case what they are saying about 2006 and 2007 I don't understand?

Regards


I asked for written confirmation re <6mths residence and tax return for last year, and got the following reply today:

"if you didn't spend six months on the island, than we cannot register you for tax purposes from 2006 but from 2007"
billy
Free member
 
Posts: 45
Joined: Fri 07 Jul 2006 09:35

Postby peterj » Fri 27 Apr 2007 11:19

Hi Billy

The 2006 reference was confirmation that I wouldn't be registered with the Maltese IRD is a tax resident for the 2006 financial year, as I hadn't spent a full 6 months during 2006. The 2007 reference was because I told them that I intend to spend most of 2007 here.

The bit that really interested me from the quote was the word "cannot" as I would have thought that had I really wanted to (I didn't) I could have registered and paid tax for the 2006 year if I had wanted to do so, on the basis on intention to remain resident for an extended period. The response I received would seem to suggest otherwise.

As usual, I don't put too much faith in what any one tax official might say, even if it is in writing.
peterj
Free member
 
Posts: 383
Joined: Mon 08 May 2006 06:49
Location: Goowa, South Oz

cannot

Postby billy » Sat 28 Apr 2007 17:27

Dear Peter,

Yes this is suprising. I wonder what will happen next near when your intention is to stay for more then 183 days. Because I allready pay provisional tax on an intention to stay more then 183 days. However I allready had an taxregistrationnumber because of my privious PT status.

If I understand your situation well. Next year you will become a resident of Malta and will not pay taxes in Australia?
billy
Free member
 
Posts: 45
Joined: Fri 07 Jul 2006 09:35

Postby peterj » Sun 29 Apr 2007 09:59

Hi Billy

I'm intending to remain a tax resident of Australia. Most of my income comes from Oz based investments, and if you become a "non resident" the Australian tax rate on these appears to rise to a flat rate of 30% (although I still need to do some checking as I may be able to avoid CGT and tax on Oz based overseas income such as my Oz international unit trusts), as opposed to the effective rate we pay at the moment of approx 7.5%.

To keep my Oz tax residency I'll probably have to go back there for a while in about a year's time (not much of a chore).

I will, as I understand it, also pay Maltese tax this year, but only if I remit more than the tax threshold, which on expenditure rates to date is unlikely.

I have yet to fully understand the double tax agreement between Oz and Malta, but as far as I can make out it will not let me entirely avoid taxation. It certainly appears that if Malta doesn't tax it, Australia will, and the normal rates are similar in both countries.

You are the first person who has mentioned provisional tax to me. In Australia this is only levied if your "non-paye" income in the previous year reaches a fairly high level. Is this the same here?
peterj
Free member
 
Posts: 383
Joined: Mon 08 May 2006 06:49
Location: Goowa, South Oz

Provisional tax

Postby billy » Sun 29 Apr 2007 11:03

Hi Peter,

I don't understand your tax situation because as I became resident of Malta for tax reasons. I cannot understand that you would keep your tax residency in Australia because if your income is investment based which is the 75 % the case for me. The first thing I did was move my personal investments offshore and direct investments can go thru a Malta Ltd which have the most beneficial tax (treaties) in the whole EU. But probably your beter off this way. I am lacking info on Australia.

Provisional tax is always based on the remitance of the previous year and is paid in 3 installments. April, August and December. This is the same for OR & PR in which the PR has its top of 1800 Lm. If your late in paying an installment 1% is added for every month you are late.

Be prepared to increase your remitances because with the Euro changeover next year I'm afraid that the same thing will happen as with all the other countries. Prices will go up because of rounding up and a spiral upwards is the next effect. Especially with small products. For example A cup of coffee was hiked 60% etc

Regards
billy
Free member
 
Posts: 45
Joined: Fri 07 Jul 2006 09:35

Postby peterj » Sun 29 Apr 2007 11:28

Some of my investments in Australia are in direct owned property, which I want to hold on to (generally with a view to occupying them some time in the future). The reason for keeping the rest is mainly comfort factor. I am very comfortable with the Australian companies I have dealt with for years, so I'm more than happy to pay a modest amount of tax to keep my investments there. If the Australian tax rate was significantly higher for us, I'm sure I would be taking a different view.

I think that you are probably right about the Euro changeover and it's inflation implications. At least the Government have done one thing right by insisting that all prices are quoted in Euro's as well as mL for the lead up year, which should at least make price hiking reasonably obvious.

Can't help wondering what the "Tal Lira" etc shops are going to do though.
peterj
Free member
 
Posts: 383
Joined: Mon 08 May 2006 06:49
Location: Goowa, South Oz

Postby gozomark » Sun 29 Apr 2007 16:29

peterj wrote:
You are the first person who has mentioned provisional tax to me. In Australia this is only levied if your "non-paye" income in the previous year reaches a fairly high level. Is this the same here?


thats my understanding - I pay provisional tax

as for inflation implications of euro, even in places like Italy, the impact was actually very small (about 0.2%) - although there are many examples of things like cup of coffee and newspapers going up alot, these actually account for a very small percentage of the typical consumers basket - Malta also has the advantage of prices becoming bigger on joining the euro (ie Lm1 = about Euro 2.32), and consumer psychology will make it much harder to push through price increases thasn in countries like Italy when prices went from, from memory, Liri 2,000 to about Euro 1.

agree on the Tal Lira - what will they change the name to ??
gozomark
Site Admin
 
Posts: 14215
Joined: Sun 20 Aug 2006 18:35
Location: Republic of Gozo

Residency and immigration after the Euro

Postby Chasd » Fri 29 Jun 2007 14:47

I am considering moving to Malta/Gozo in the next year or two. Is there any information available on what will happen after the change to Euros? I assume that the tax bands and the minimum requirements will be changed to Euros with perhaps some rounding upwards in favour of the tax office. Are any changes in policy on immigration likely to be introduced at the same time?
csd
Chasd
New Member
 
Posts: 4
Joined: Mon 25 Jun 2007 09:34

Postby gozomark » Sat 30 Jun 2007 09:01

at the first stage, all figures will be converted at the official fx rate - any rounnding would presumably be done as part of the budget

there should be no change to immigration policy from the adoption of the euro
gozomark
Site Admin
 
Posts: 14215
Joined: Sun 20 Aug 2006 18:35
Location: Republic of Gozo

Postby Chasd » Sun 01 Jul 2007 08:49

Thank you for that re-assuring information, and all the other valuable information you have posted. Is your accountant with KPMG whose contact details I have? If not, would it be possible for you to privately provide me with contact details?
csd
Chasd
New Member
 
Posts: 4
Joined: Mon 25 Jun 2007 09:34

Postby gozomark » Tue 03 Jul 2007 03:26

a pleasure

yes, I use KPMG
gozomark
Site Admin
 
Posts: 14215
Joined: Sun 20 Aug 2006 18:35
Location: Republic of Gozo

PreviousNext

Return to Residency status and immigration issues



Who is online

Users browsing this forum: No registered users and 1 guest

cron