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Will live in Malta but work for a foreign company

Hi!
I have looked through many threads but can't find the answer. I read redmiks post about residence, taxes and such and got confused

I will live in Malta but will work for a foreign company. My salary will be transferred to my German account.

It say in the regulations that salary not transffered to a bank in Malta is not taxed. But redmik write that also money taken with a debit/credit card from a foreign bank is considered to be transferred to Malta. In my eyes this means that foreign salary is taxed normal, at least the part you use in Malta.
In Cyprus where we live today, I pay no tax on foreign income as long as I am outside Cyprus borders more than 90 days per calendar year.

Can someone clarify?

As far as I know if you are resident in Malta for more than 183 days then you are liable to pay tax on any monies that are remitted to Malta, ie. money drawn from cash machines etc. or earned in Malta.
If your salary is paid from here into your German account then it would be taxable here, if paid from a company in Germany then it would be taxable there but you would still have to include money remitted to Malta on your Maltese tax return, you can then set any tax already paid on it against your Maltese tax liability under a dual taxation arrangement.

Ray

Hi!
That can be so but it is not true that money paid into my German bank account is taxed there. It all depends on where you are tax resident. I have my salary paid to a German bank from an offshore company. As we now are tax residents in Cyprus I should normally pay my tax here, but because of the special tax scheme Cyprus has for workers who work for a non-Cyprus company and work outside Cyprus for more than 90 days per calendar year I pay no tax or social contributions
The problem is that I work outside Cyprus 10 months a year in 3-4 different countries. So where should I be tax resident( live over 183 days)? Cyprus accept that I am registered for tax in Cyprus even if I pay zero, but if some other country claims that I should be tax resident in their country Cyprus would probably not insist. It seems that no country really follow the 183-day rule if you are there less.

Another thing that I have problems with is that you tax also money taken out from a debit or credit card in Malta.
If I have a savings account in Germany and use this money to live on, it is not possible that this money should be taxed in Malta.

I think your best bet is to contact an exPERT rather than an exPAT :) as your question is quite specific to your situation and any info you'll find on a forum like this might or might not apply to your situation - and in addition, as I've been told by a friend of mine who is an expert for international tax matters such as yours, in such cases it's often vital to take the right steps at the right time / in the right order (i.e. who to inform first, which countries have the best schemes for you, etc.) - something an expert will know, but of course they will charge you for their knowledge...

I understand but the basic question in this is if Malta tax money that is taken out on a ATM  in Malta ör used to pay a service in Malta with the card from a foreign bank.
That question someone must be able to answer

Vegaanders :

I understand but the basic question in this is if Malta tax money that is taken out on a ATM  in Malta ör used to pay a service in Malta with the card from a foreign bank.
That question someone must be able to answer

I figure it depends on the amount and whether you inform the tax office of it - I mean, how would they know if you don't tell them, and how would they tax you if they don't know...

I, for instance, have two different bank accounts in Austria, I withdraw cash (small amounts for groceries, etc.) at ATMs in Malta from both, or my wife's bank account, but first of all, I don't even keep track of these withdrawals (i.e. how much and when), and secondly, I never even thought of informing anyone of it... (well, except for my wife, of course, if I use her bank card...).

That you don't have to worry about. Starting September 2017 the bank will report all accounts and their movements to the taxman in the country the owner of the account is resident. This on all movements from 01-01-2016

Forget the 183 days rule. It does not exist. At least not as most people undestand it.

All Money you send to Malta or spend in Malta by credit/debit card needs to be taxed. Period.

But if you have for example savings, you can transfer that money to Malta tax free. So if you have savings its better to save your (tax free) income and live from your savings.

I would always tax a small sum anyway not because you are hiding something but its prob. better to pay a little bit so no one takes a closer look and you need to justify everything. Also paying at least a little tax in the country you live in seems only fair.

I understand but the basic question in this is if Malta tax money that is taken out on a ATM  in Malta ör used to pay a service in Malta with the card from a foreign bank.
That question someone must be able to answer

They will prob. not notice if its small sums but basicly if you dont tax it (income tax) you are doing tax fraud. Although you will prob. get away with it. From a legal point you need to file it in your income tax statement.

But what you can do for example when you book a flight. You do it on a foreign website and pay with foreign credit card. Everything you can pay outside the country is tax free.

Everything you transfer to malta or spend in malta must be taxed. (if its not old savings)

Edit: AS far as i undestand if you have enough saved "old" money you can live on, you can basicly live tax free.

That is how we live today in Cyprus, even with a salary. No tax and no social contributions. So why think of moving?

Well, different reasons. One is that we want to move to a climate that has a little lower summer temp and higher winter temp. Also, Schengen is important for my wife that is Russian and travel a lot.

The contact to mainland Europe with the ferry  is important when we want to travel with our dog and don't want to fly him.

But I will have a long chat with a tax lawyer or accountant to see what is the possibilities

Vegaanders :

Another thing that I have problems with is that you tax also money taken out from a debit or credit card in Malta.
If I have a savings account in Germany and use this money to live on, it is not possible that this money should be taxed in Malta.

Money sourced from capital and remitted to Malta is not liable to tax here but it is a case of when does money put into a savings account become capital!

Ray

I will for sure pay some tax because I will register as self-employed for a part of income. This mainly to get access to public healthcare. I have a worldwide health insurance but because I am diabetic it does not cover much.

The idea to live on the savings and let the salary stay abroad until savings are gone is a very good one. Because I own the company where I am employed I can control where and how my salary is transferred.

If you are working in Malta (by that I mean the money is actually earned in Malta), even if you work for a foreign client and get paid in a different country, all of that money is taxed in Malta.

Stuff like dividend payments, royalties, true passive income... can often be exempt.

They might not notice/care about relatively small amounts... it's up to you how you structure things. I would very much recommend that you see a tax lawyer (yes a consultation costs a hundred or two but it's worth it IMO).

I work 100% outside Malta in different parts of the world, Often for different employers. Max stay in the resident country is 2 months per year.

But it seems that Cyprus still is the best alternative. All done according to law, no worries

Cyprus is definitely easier than Malta.

I thought that by "live in Malta" you actually meant that and not a "max 2 month stay per year".

mantasmo :

If you are working in Malta (by that I mean the money is actually earned in Malta), even if you work for a foreign client and get paid in a different country, all of that money is taxed in Malta.

Stuff like dividend payments, royalties, true passive income... can often be exempt.

They might not notice/care about relatively small amounts... it's up to you how you structure things. I would very much recommend that you see a tax lawyer (yes a consultation costs a hundred or two but it's worth it IMO).

I dont think this is true. Malta is one of the few countries that does not have cfc rules.
Also only money remitted to Malta is taxed.

Malta would be where I am resident and the rest of the family will live. But we have to see.

Thanks for the input

Anders

Yves81 :

I dont think this is true. Malta is one of the few countries that does not have cfc rules.
Also only money remitted to Malta is taxed.

Only if you aren't resident in Malta. Or it's truly passive income (not work related). Plus there are MANY caveats to remittance including waiting periods before money can be remitted, etc.

CFC doesn't apply here if he is resident. It might apply to a non-resident company though. Or similar setups.

Having your family live in Malta automatically makes you a tax resident in Malta as well.

That's why I suggest speaking to a tax lawyer. Almost everyone on here is clueless.

Mantasmo thanks for the input, i read alot about this topic because i own an online business and want to relocate to Malta and become self sufficent resident.

From what i read so far is it not possible to get a cyprus company and only pay tax on the money i send to Malta for a living?

Can you recommend any decent not to expensive tax lawyer?

A Cyprus company is no good idea these days. The cost for a very small Ltd with very few transactions is high. Bookkeeping and audit start at 2000€ plus the basic fee of 350€ per year. Many of our friends close their Ltd and become self-employed instead

Yeah, i am not sure yet what is the best option. Cyprus bookkeeping is expensive thats true.

So far i have thougt/read about the following options:

1. Malta ltd and a holding company for example in scottland. Its 5% tax total plus upkeep. Not that cheap either but pretty clean setup with many advantages.

Could give me a salary (health insurance), VAT, PayPal, Europe, no problems invoicing in the EU and i would pay some Taxes in Malta which seems fair as it will be my new home.

2. RAK company (UAE) - No tax or bookkeeping/accounting but problems with paypal, no VAT and problems with invoicing clients in the EU. (at least in germany) Also no apostile which can be problematic when getting a non UAE bank account.

3. Isle of men company: expensive but pretty good also. Eventually banking problems.

4. Cyprus - Expensive & not the best reputation.

5. Some shady juristication like BVI, Nevis, Belize or whatever for my websites income and in addition self employed in Malta for living money and be able to invoice customers in eu. Could work very as i would only tax 20% of my income.

I think the best option would be 1. but i am not sure if it is worth it for like 5000-6000 income per month.

Belize is no shady jurisdiction more than any of the others that allow offshore IBC. We have an IBC in Belize, the company bank account in Cyprus. It is the only way to work if you spend 10 months every year working outside your resident country. And we have many clients that work that way and need 1 employer instead of 4-5 every year in different parts of the world.

Anders Yuran

****

Moderated by Priscilla 12 months ago
Reason : No external link please

Yeah well Belize does not have the best reputation.Thats what i mean with shady.
Also in germany, finance authorities often make problems if you have regulary invoices from belize (higher sums)

We invoice one of the biggest tunnel building companies in the world, German, around 150000 € every month without any problems. If you have the papers in order, visible real shareholders and directors, then offshore companies are no problem. But if you hide behind nominee people, then it SHOULD be a problem.

Yeah of course it always depends. A real big company wont make problems, but for example if you have a small belize company that does consulting you can get problems even if its legit.

The big problem now is what happened when the so-called "Panama papers" was leaked. Or more how the media decided to use the news. Suddenly all offshore or mailbox companies were only used for tax fraud on a different scale. And this is of course not true. Thousands of these companies are legitimate and the only way to solve certain problems.

Take our own company, Mirawai Ltd. We work as a staffing agency for freelance contractors, from all over the world and working all over the world.  A normal contract for the contractor can be 3 months and as an example, one of our employees has worked for 2 different companies in 4 different parts of the world. Turkey, Mexico, India and Vietnam. And it looks the same for most of our 25+ employees.

If we had started a Ltd in f.ex Cyprus, the company would be obliged to pay social contributions for all employees, even if only 2 of them actually are residents in Cyprus. The rest lives in Europe, Asia and USA. We probably would have to pay income tax for them also. This would ofc not be possible. The question where to pay tax and social contributions depends on where they are resident or can also be dependent on in which country you actually work.

To handle all this we started an IBC in Belize, a jurisdiction who have no tax on incomes or social contributions. So now it is up to the employee to see to that all applicable taxes and fees is paid in his country of residence.

This is an example of how an offshore company is the only solution for many different problems.

You undestand me wrong i dont have anything against offshore companies. In fakt i want something like that for myself. :)

Its just that some jurisdictions are not that reputabel.

mantasmo :

Only if you aren't resident in Malta. Or it's truly passive income (not work related). Plus there are MANY caveats to remittance including waiting periods before money can be remitted, etc.

CFC doesn't apply here if he is resident. It might apply to a non-resident company though. Or similar setups.

Having your family live in Malta automatically makes you a tax resident in Malta as well.

That's why I suggest speaking to a tax lawyer. Almost everyone on here is clueless.

This is a very interesting reply, because
1) You sound like you know what you're talking about, and
2)  It's completely the opposite of every thing I've read online from a wide variety of sources, including reports from pretty reputable sources such as Deloitte.

They often mention the difference between domiciled and non-domiciled resident, and a non-domiciled resident (i.e. someone who lives in Malta but was not born there, as far as I understand) is only tax liable on income remitted to a Maltese account or paid from a Maltese company, but not from a foreign company to a foreign account.

It also says that capital or capital gains can be remitted to Malta without incurring taxes.

So I have also been wondering whether it's possible to legally live off existing capital, and save up your entire salary paid from a non-maltese company into my non-maltese account, without incurring taxes of any of it.

I'd appreciate if anyone can recommend a tax lawyer that knows Maltese tax law well.

morganhiggs :

...
They often mention the difference between domiciled and non-domiciled resident, and a non-domiciled resident (i.e. someone who lives in Malta but was not born there, as far as I understand) is only tax liable on income remitted to a Maltese account or paid from a Maltese company, but not from a foreign company to a foreign account.

It also says that capital or capital gains can be remitted to Malta without incurring taxes.

So I have also been wondering whether it's possible to legally live off existing capital, and save up your entire salary paid from a non-maltese company into my non-maltese account, without incurring taxes of any of it.
....

Hi

I am looking at relocating later this year while maintaining UK based employment, and my understanding of it through research is the same as yours - i.e. only money I remit to Malta for day-to-day living expenses from my day job (not capital) may be liable to taxation.

I have found a few Maltese tax advisors online who advertise as being experts in British taxation affairs and am going to address a couple when we are next over. I think it may also pay to take it advice from a UK tax advisor, which is what I'm planning to do, before moving over permanently. There is a double taxation agreement in place but Malta and the UK do not have the same rates by income levels.

Professional advice relating directly to each individual situation is probably the best way forward. There is considerable rhetoric and well-intentioned misinformation on the internet which opens you up to complications and potential fines when dealing with such a serious and complicated matter. Not to say information in this thread is wrong, but I want to be 100% sure my situation is as I think it is and I am paying a fair amount of taxation in both countries.

Best wishes whichever way you decide to do it. 

Dan

*** edited to add - it's against forum rules to pop links up for businesses, but google is your friend and have a look at the business advertisers section on this forum there may be some tax advisors in there too e.g. John Huber and Associates Tax Services Malta who have a good reputation online from what I have found. ****

I would really like to know as well the answer here or a contact person to talk to?
I get paid from a German company to my German account and either use transferwise or an atm to withdraw funds... pay rent and everything else in cash.

Did anyone talk to a pro yet?

I'm in the same boat... from what I read it is remittance basis. So an ordinary resident would only pay tax on income arising in Malta or remitted into Malta. I'm double checking this myself, hopefully next week.

I'm also curious as to what the Inland Revenue's definition of remittance is. Is it remitting monies to a bank account in Malta or does it include taking cash out of the atm. Also what about sending wires to the landlord or using debit card to purchase groceries. Naturally I would assume this is remitting income and for that reason I am looking at their Visa Residence program, which means only 15% tax which is great compared to the personal tax in the UK.

If it comes here and it's income like things, it's taxed. No matter how it gets here.

If it's provable that its capital and it comes here, not taxed - buying assets like houses for example, deposit and such can be brought here without tax.

Please see:

http://www.expat.com/forum/viewtopic.ph … 51#3450742

In general, where you pay tax depends on where you are deemed to live.  My understanding of the Maltese tax system is that If you live in Malta for more than 183 days in any single tax year, then you are deemed as being resident and liable to pay the appropriate tax on any income earned in that period.  However, there is a special rule for foreigners that basically says that you only pay tax on income and capital gains that you actually bring into the country.

So, it appears to be beneficial to become a resident there.

If you have an offshore company and are a director, I think the company is regarded as resident in Malta (if you as director are resident).

If you also do contracting (for example) as a fysical person, I believe all income is regarded as Malta sourced and thus taxable.

This after consulting a lawyer. I'm thinking of relocating myself.

Cynic :

In general, where you pay tax depends on where you are deemed to live.  My understanding of the Maltese tax system is that If you live in Malta for more than 183 days in any single tax year, then you are deemed as being resident and liable to pay the appropriate tax on any income earned in that period.  However, there is a special rule for foreigners that basically says that you only pay tax on income and capital gains that you actually bring into the country.

So, it appears to be beneficial to become a resident there.

But based on what you said, it would mean that i dont have to pay tax in Germany if i'm in malta for 183 days or more?

Additionally, how does this apply to me who holds a TCN passport but is married to a EU national living in Malta?

MrCowboyEast :
Cynic :

In general, where you pay tax depends on where you are deemed to live.  My understanding of the Maltese tax system is that If you live in Malta for more than 183 days in any single tax year, then you are deemed as being resident and liable to pay the appropriate tax on any income earned in that period.  However, there is a special rule for foreigners that basically says that you only pay tax on income and capital gains that you actually bring into the country.

So, it appears to be beneficial to become a resident there.

But based on what you said, it would mean that i dont have to pay tax in Germany if i'm in malta for 183 days or more?

Additionally, how does this apply to me who holds a TCN passport but is married to a EU national living in Malta?

You do have to declare all of your world-wide earnings in the country of your residence; in this case Malta.  The amount of tax you'll pay and where you'll pay it will be decided by Maltese law and the existing double-taxation agreement between Malta and Germany, you can access a copy at this link.  Basically, the Maltese will decide how much you pay, it just so happens that they treat non-Maltese residents differently to Maltese citizens.

The nationality of your wife has no bearing on your tax affairs; as a TCN, you should be treated exactly the same as any other non-Maltese citizen who is living in Malta, but earning a salary in Germany.

If your tax affairs are complicated, it may well be worthwhile consulting with a specialist tax advisor.

Hope this helps.

Cynic :

If your tax affairs are complicated, it may well be worthwhile consulting with a specialist tax advisor.

Hope this helps.

Yes it does help, my only question is where to find one?  A tax advisor that can help me with German and Maltese law?

MrCowboyEast :
Cynic :

If your tax affairs are complicated, it may well be worthwhile consulting with a specialist tax advisor.

Hope this helps.

Yes it does help, my only question is where to find one?  A tax advisor that can help me with German and Maltese law?

At the top of the page is our Handy Tools section, included in there is an article written by John Huber Tax Associates in Malta who are a member of this Forum.  This is a link to their website.  Because I have never used them, I can't personally recommend them, but I'd recommend you check them out and ask them the question; I suspect they will charge for their services.

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