Archive for September, 2010

Elton John live in concert – Article in The Malta Independent, 27th September 2010

September 28, 2010

Elton John delighted the sizeable crowd that gathered at the Granaries in Floriana, Malta  on Sunday 26th September, with a memorable concert, his second on the islands in 10 years. Sir Elton sang several of the songs that made him famous all over the world and helped him sell over 250 million records.

For further information, kindly contact 77 Great Estates on (00356) 2125 2455; (00356) 9944 7444; skype: info.77GreatEstates or info@77GreatEstates.com.

Property Holding Companies – Article by Mr Franco Falzon

September 23, 2010

Property holding companies are legal entities used by net worth individuals or groups of companies to invest in real estate or to hold shares or participations in other companies investing in real estate. A property holding company may be used to invest in a single property or a large number of properties forming part of a large development project. In some cases, a property holding company will be used for each property forming part of large development project. In addition to the holding of immovable property, property holding companies may engage themselves in other activities such as:

  • Leasing real estate to companies forming part of the same group or to un-related third parties; and
  • Financing of immovable property development projects

 

Advantages

In cross-border scenarios, the ideal location of a property holding company becomes a critical issue and normally takes into consideration and addresses a number of tax issues. Proper structuring may achieve the following benefits:

  • Tax efficient repatriation of gains from the sale / transfer of immovable property to the beneficial owners
  • Facilitating the transfer of ownership. Selling shares in the holding company itself may be a viable option to
  • transfer the legal title of the immovable property which in certain cases may not attract capital gains tax.
  • Rental and financing income arises in a tax efficient jurisdiction

Using a Maltese Property Holding Company
Malta has always been a favourite jurisdiction for locating a property holding company. In particular a Maltese property holding company may allow investors to achieve the following tax objectives:

  • Efficient repatriation of earnings to any jurisdiction without suffering any withholding tax in Malta
  • Transferring ownership without any incidence of taxation in Malta
  • Low tax burden on rental and financing income arising in Malta

The attractive features of the Maltese tax system attributable to property holding companies are the following:

Participation Exemption Regime

Income from dividends and capital gains on the disposal of a participation in a non-resident company which qualifies as a ‘participating holding’ are exempt from tax in Malta. For more details on the participation exemption regime please see our Holding companies section.

Tax Refund System
Income other than dividends and capital gains from a ‘participating holding’ such as rental income and interest income from financing activities is subject to corporate income tax. Resident and non-resident shareholders in a Maltese company may however claim back refunds of corporation tax paid in Malta upon a distribution of dividends by a Maltese company.

Shareholders are entitled to claim one of the following refunds of tax:

  • 6/7ths of the Malta tax
  • 5/7ths of the Malta tax
  • 2/3rds of the tax payable in Malta
  • Full refund

The tax refund system significantly reduces the tax suffered in Malta on any income which is not subject to the participation exemption in Malta and subject to tax at the normal corporate rate of tax. More details on the tax refund system in Malta.

No withholding tax on dividends distributed by a Maltese company

Malta does not levy any withholding tax on payments of dividends to non-resident shareholders of Maltese companies. This feature of the Maltese tax system facilitates the repatriation of profits to low-taxed jurisdictions.

No capital gains on the transfer of shares in a Maltese company

Capital gains derived by non-residents on the transfer of shares in a Maltese company are not subject to capital gains tax in Malta provided that the assets of the Maltese company do not consist wholly or principally of immovable property situated in Malta.

No Stamp Duty

Malta does not levy any stamp duty on the transfers of shares in a Maltese company by persons who are not resident in Malta provided that certain conditions are met.

No Thin capitalisation Rules

There are no thin capitalisation rules in Malta. The absence of thin capitalisation rules allows a holding company to finance the acquisition of a participation and push-down debt in a tax-efficient manner. Provided that certain conditions are met, the holding company may fully deduct any interest on loans received from its shareholders. The absence of thin capitalisation rules increases the attractiveness of using a Maltese holding company also as a tax efficient financing vehicle.

Incorporation a Maltese Property Holding Company
A Maltese property holding company may be incorporated as a normal company registered under the
Companies Act.

Minimum share-capital
A Maltese company may be incorporated with a minimum issued share capital of Lm 500 (EUR 1,165).

Incorporation Process
Company incorporation is an easy and straight-forward process in Malta. Provided that the required due diligence documentation is submitted to the Registry of Companies in Malta, a company may be registered within 24 hours from the submission of the Memorandum and Articles of Association and other due diligence documents which may be required.

Bank Account
There is no need for a Maltese company to open a bank account with a Maltese bank, however it is recommended under certain circumstances to open a bank account in Malta

Substance Requirements
No substance requirements, no need to have registered employees or Maltese resident directors. A Maltese company is obliged to have a registered address in Malta. A certain degree of substance may nevertheless be required to gain treaty access.

Applications

Exclusive Holding Activities

 

Holding and Financing

For further information, kindly contact 77 Great Estates on (00356) 2125 2455; (00356) 9944 7444; skype: info.77GreatEstates or info@77GreatEstates.com.

Double your pension by moving to Malta – Article by Hans Bolander

September 17, 2010

Double your pension by moving to Malta

Free translation by Jakob Kegel.

Article first published in Dagens Industri

Lower taxes in other EU countries offers Swedish emigrants twice as much in pension.

An increasing number of Swedes are moving south to countries such as Malta.  New tax regulation makes it easier to live outside Sweden on a Swedish pension.  “Research suggesting that around 300,000 Swedes are going to move abroad in the next 10 years.  There are several reasons, such as climate, high taxes and a general distrust of the Swedish welfare system” says Göran Andersson, a tax advisor and founder of Taxzero, a consulting firm.

On behalf of Dagensi Industri, Swedens leading business newspaper, Taxzero together with Deloitte, a consulting firm, have calculated the amount of tax savings for a group of four 61 year old couples at different income levels in different countries.

Not only wealthy Swedes can gain from the tax savings, according to the study.  With even a modest pension it is possible to save €10,000 per year in taxes. The savings will obviously increase the larger the pension.

The examples are based on people who are 61 and above since it is only from that age the Swedish state pension can be collected.

The new Swedish rules for capital gains tax when selling immovable property is making it easier for many Swedes to move abroad, since you can transfer the capital gains tax between EU countries.  When you buy a permanent property in another EU country the tax must not be paid in Sweden, but can be withheld and transferred to the new property.

Generalizing which country is the best in terms of tax savings is impossible since the tax laws are complex and distinguish, among other things, between the different pension types and the treatment of capital gains tax.

“A Swedish pensioner will always get a lower tax when moving abroad. That is because Sweden has one of the world’s highest progressive taxes.  The tax in Sweden will be 25% or 0% when a person emigrates”, Göran Andersson is explaining.

One problem when emigrating might be inheritance and wealth taxes since these have recently been abolished in Sweden.  It is however possible to avoid with fairly simple solutions.

Facts:
Malta
A married couple, 61 years old, sell their property in Sweden and buy a new one in Malta.  They keep their holiday home in Sweden.  The couple have had well paid jobs in the private sector and have €1,700 per month in state pension, €3,000 per month in occupational pension and €550 per month in private pension.

Tax benefits:
Lower tax on the pension
No capital gains tax
Relieve from property tax (when selling)
No wealth or inheritance tax
Can benefit from the national health care

Tax if they live in Sweden per year: €€50,000
Tax if they move to Malta per year: €€21,000
Joint tax saving per year: €           €29,000

For further information, kindly contact 77 Great Estates on (00356) 2125 2455; (00356) 9944 7444; skype: info.77GreatEstates or info@77GreatEstates.com.

Finance Broker

September 3, 2010

Photo: renjith krishnan / FreeDigitalPhotos.net

As part of 77 Great Estates’ concierge service, our firm may introduce you to a finance broker who specialises in brokering project funding.

Generally speaking, the majority of funders’ criteria sits within the following brackets:

– Worldwide locations considered (inc. resent deals in Africa, Iran, UAE, Europe, USA, etc)

– Minimum Investment US $5,000,000

– No Maximum

– 50% – 70% of GDV (certainly above this level and up to 100% of GDV has been considered in certain cases, with firm exit strategies or additional security)

– Senior debt, preference.

– Equity considered, but more difficult to achieve, exceptional projects needed.

– Due diligence fees (independent site visits, legals, etc) in most cases are applicable and would need to be paid directly from sponsor to funder.

– Prefer site owned (where applicable)

– Identification of a clear exit (i.e. pre-sales/ pre-lets, etc)

– Sponsors with a relevant background & experience (appointed alliance partners where appropriate)

– Sectors; Property, (leisure, resorts, hotels, residential, office, etc), Mining, Renewable Energy/ Waste to Energy, Technology (Telecomms, Aviation, etc)

The process would usually involve:

Review of the outline project, data capture filled in

Queries raised and presentation prepared for potential funders

Confirmation of appetite and agreement of NDA, attached and brokerage fees (only payable upon successful delivery of funding)

Further documentation requested to progress to formal lending terms with relevant funder (typically this can take 1- 3 weeks depending on the funder/ type of project etc)

Progress to DD and completion of funding, processes differ depending upon funder

The following is an overview of the individual funders:

Fund 1 – Worldwide, with the exception of US

– Minimum $25m, no maximum at this time.

– 100% of development costs.

– Project must be “shovel ready”, new construction/development, viable, and in need of at least $25m.

– No casinos, though these can be planned in later phases – the casino cannot be mentioned in the Executive Summary or Pro Forma to be submitted or the file will be rejected. No nuclear projects.

– Multiple projects CAN be combined into one funding request.

Fund 2 – Emerging Markets (Africa, China, Latin America, South Asia and South East Asia.)

– Typically invest between US$10m and US$50m of equity capital.

– Preferred sectors office, residential, industrial, hotel and retail space, either at the project or corporate level.

– While the main opportunity in the emerging markets is of a development nature, the fund will also acquire single assets or a portfolio of assets.

– The fund places considerable emphasis on sustainable development – not only with respect to energy efficiency and other aspects of building design and construction, but also quality developments that last and improve the quality of life in the communities they touch.

– Response usually within 1 month.

Fund 3 – Five Star Leisure Resorts – Worldwide

– The Fund owns and manages a chain of 5 star properties, based in the Middle East and Asia, they look for developments in the leisure sector that can be revamped and re branded to an ultra high level. They would have particular interest in the Caribbean and South America.

– Response usually within 1 month.

Fund 4 – Affordable Housing – Worldwide

– They are actively investing in local government approved affordable housing schemes.

– Worldwide.

– Response usually within 1 month.

Fund 5 – Developments – Worldwide.

– Fund based in BVI with a UK parent company.

– 100% of development costs. Up to 100% of acquisition has been considered with additional security or firm exit strategy – prefer land owned.

– Minimum c£10m, No maximum.

– All project sectors considered, preference to property based projects.

Fund 6 – 95%.

– Worldwide.

– $20m to $1bn.

– 95% LTV for most new projects.

– Interest of 5% or less.

– No JV component, unless you ask them to invest with you then up to 20% can be converted into equity.

– Debt repayment only required when project generates income.

Fund 7 – 100% Equity Fund.

– Minimum Loan Amount: $25m.

– Rate: No interest payments, true equity.

– Term: Based on the size of the deal.

– LTV: 100% of costs (project must be unencumbered, or debt being repaid by the Equity request).

– Equity Participation: 45%

– Response usually within 2 weeks.

For further information, kindly contact 77 Great Estates on (00356) 2125 2455; (00356) 9944 7444; skype: info.77GreatEstates or info@77GreatEstates.com.

Company Formation in Malta

September 1, 2010

Photo : Francesco Marino/FreeDigitalPhotos.net

As part of 77 Great Estates’ concierge service, our real estate firm may introduce you to a law firm which may form a company and administer same.  An initial investment of only €2,289 is required as explained hereunder.

 

Legal fees :

Company Incorporation Fees (including opening of local bank account): €1,000  (+ 18% VAT)

Provision of Registered office:  €450 (+ 18% VAT) yearly

 

Share Capital Deposited at Bank : €233 

 (i.e.  20% paid up of a minimum share capital of €1,165)

 

Disbursements :

Registry of Companies filing fee (based on share Capital of €1,165):  €245

Copies (4 copies of Memorandum & Articles):  €50

Administration fee:  €50

For further information, kindly contact 77 Great Estates on (00356) 2125 2455; (00356) 9944 7444; skype: info.77GreatEstates or info@77GreatEstates.com.