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!

Re: bankstatements with tax declaration

Postby gozomark » Wed 26 Sep 2007 14:34

billy wrote:I assumed that it was normal to provide, as in any other country one has to provide the yearly bankstatements with interest income etc to the tax office. Oh I recall I was asked because of Permanent Residence and one has to sign a letter that the money wasn't taken out of the country.


ah yes, as a permanent resident you have to bring in a minimum amount of money a year, don't you

in the UK, you don't have to provide bank statements for the tax authorities, but you do have to keep them just in case (for 7 years ??) - I think thats correct ??
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bank statements to tax department

Postby billy » Wed 26 Sep 2007 14:53

In many European countries the bank will send the statements directly to the tax department and they make a declaration for you to agree or not to agree. It saves the taxman a lot of control this way. You just check if the taxman is right. Usually he is.
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Postby Mr Kriss » Wed 26 Sep 2007 15:41

Billy,

I have lived worked and been taxed as employee, sole trader and plc business and never yet been asked to provide bank statements to the tax assessor. I do provide my (off shore) plc bank statements to my accountant but these are neither passed on to the assessor nor form part of any audit statement.

The employee part above relates to five different Western European countries and three different CEE countries.

I operate multiple accounts in multiple countries and view of any one of these would be meaningless to an assessor. FWIW, if any bank started sending my statements anywhere but to me, without my prior approval, then I would change banks/countries.
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A new world

Postby billy » Wed 26 Sep 2007 16:41

Dear Mr Kriss,

I do understand your concern but this is the new road to tax control.

Also it makes it a lot easier for us as client from the taxman. You get the assessed form ready for you to sign or to correct.

Offshore banks are different. Alltough all your interest will be informed to the tax department in the European country where you are tax resident except for a couple of countries.

The European savings tax directive is a perfect example.
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Re: A new world

Postby gozomark » Wed 26 Sep 2007 16:48

billy wrote: all your interest will be informed to the tax department in the European country where you are tax resident except for a couple of countries. The European savings tax directive is a perfect example.


As I'm sure you are aware Billy, fortunately Malta is one of the few (only one in EU ?) offering the third option under the savings directive for non Maltese citizens residing in Malta ie neither exchange of information nor witholding tax, but a declaration from the account holder that they are tax exempt :D
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EU savings directive

Postby billy » Wed 26 Sep 2007 17:08

Mr Kriss,

Yes, Malta, the UK (Non domiciled), Monaco and Andorra is the complete list I think? Austria is the only (offshore) country that haven't adopted the third option.
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One step more

Postby billy » Tue 02 Oct 2007 08:37

The UK has taken one step further to change the tax laws for the "Non domiciled"

Will Malta follow?
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Re: One step more

Postby gozomark » Tue 02 Oct 2007 10:17

billy wrote:The UK has taken one step further to change the tax laws for the "Non domiciled"

Will Malta follow?


all one can say is "maybe". Why would they ? 2 possible reasons

1. the EU forces them to - for now, taxation is (almost) nothing to do with the EU , but who knows in the future

2. The Maltese decide to do it. Then it becomes a matter of why ?
a. for fairness - why should foreigners be treated better than locals ?
b. for increasing tax take - how many foreigners would leave/be put off moving to Malta ? no idea. How many foreigners would just move their money into investment vehicles that aren't covered by the EU savings directive - plenty
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Postby doc » Tue 04 Aug 2009 09:02

Tim wrote:Regarding the question of income as opposed to other funds, I think you need to be careful how the word income is interpreted. I think that if you transfer money into a personal current bank account in Malta, they will regard that as income unless you can clearly show it being transferred into an investment vehicle.


Looking at later posts the above seems to be incorrect? ie whether or not money remitted to malta, by a Temporary Resident or Permanent Resident, depends purely on whether it was income during the current tax year or not. eg if it came from savings account, and you remit it, then its not taxable. No limit, no tax bands apply etc eg I could remit 50k Eur of savings and spend it on non-investment things, school fees, rent, car purchase or car lease, restaurants, food, flights etc etc all entirely tax free.

(the quoted text above claims that it matters whether or not you spend it in malta or invest it in malta - this is a very different story! And if correct would make PR very important).

Can someone confirm my understanding is correct?

-doc
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Postby doc » Tue 04 Aug 2009 09:28

doc wrote:Looking at later posts the above seems to be incorrect? ie whether or not money remitted to malta, by a Temporary Resident or Permanent Resident,


I more meant Ordinary Resident than Temporary Resident. I guess a temporary resident is tourist.

But, presumably however, the same rule would apply to all 3 types of resident as far as whether income earned for work carried out over the internet while physically resident in malta, but paid to an offshore bank account, and not remitted to Malta.

(Except that a really short term resident, ie a tourist in malta for a week, is highly unlikely to declare any such work and there is probably some explicit or implicit exemption. Not the interesting case anyway.)

Anyway, the interesting scenario to me and I presume other people who posted such questions in the past is for Ordinary Resident, working over the internet, paid offshore, and not remitting that income.

-doc
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Postby gozomark » Tue 04 Aug 2009 09:49

I presume that if the client and payment is offshore, and the money is kept offshore*, then its non-declarable in Malta**, but this is really an area that should be discussed individually with an accountant as its borderline, and an accountant could tell you by changing things slightly (eg how the client is billed) you go from one side of the border to the other.

Accountants are useful not just for telling you what you owe, but just as importantly how legally you can reduce what you owe

* by offshore I mean outside of Malta
** but maybe declarable in the country or countries where clients are and where payment(s) made
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Re: EU savings directive

Postby doc » Tue 04 Aug 2009 11:59

billy wrote:Mr Kriss,

Yes, Malta, the UK (Non domiciled), Monaco and Andorra is the complete list I think? Austria is the only (offshore) country that haven't adopted the third option.


Ireland has similar non-domicile remittance tax option as UK. It is even open to UK domiciles since 2008.

However it is time-limited -- lasts for 3 years.

I presume therefore with Ireland non-dom status, you would be able to present the relevant docs to your offshore bank and take the 3rd option as an Ireland non-dom. (3rd option being no information disclosed, and no EU savings-tax directive tax withheld).


(UK domiciles/UK passport holders used to be excluded before 2008, but in 2008 the EU forced them to open the same deal to UK domiciles as otherwise they viewed it as discriminatory (against UK domiciles) I

think the reverse is true also - Irish domiciles could now make use of the UK non-dom option, though from 2010 I think the the UK are introducing a time-limiting of 7 years after which you get hit with GBP30k/year flat tax)

-doc
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Postby doc » Thu 06 Aug 2009 14:00

doc wrote:
Tim wrote:I think that if you transfer money into a personal current bank account in Malta, they will regard that as income unless you can clearly show it being transferred into an investment vehicle.


Well I went to see gozomark's recommended accountant (not telling you company name see recommended suppliers) to clarify this and other questions.

He agrees that the above is wrong. He said there is no restriction on what you can do with remitted capital.

ie You can put it in your deposit account and spend on living expenses or invest it however you like.

The only tax liability would obviously be interest earned in Malta if you put money in some kind of account paying interest. As an ordinary resident you get a tax free allowance anyway so you have to put quote a lot of money to earn enough interest to pay tax.

-doc
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Postby gozomark » Thu 06 Aug 2009 14:20

I'm not sure how long ago Tim wrote that, but I agree its wrong now, even if it may have been right when he wrote it.
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Postby gozomark » Thu 06 Aug 2009 14:29

actually this whole thread has been rather superseded by other threads - I've taken off its sticky status
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