Good Morning Switzerland,
yes the 183 days in no country perpetual traveller setup is BS, I agree.
But what I wrote was, that you are a non-dom resident in Malta AND do not reside more than 183days in another country; thats different.
https://www2.deloitte.com/content/d...s/dt_mt_tax_alert_resid_prog_rules_270814.pdf
The information was double-checked with several tax advisors.
The TRP program requires to pay a minimum tax of 15k EUR/yr and you need to rent an apartment for 9600 EUR/yr
So, the setup with becoming non dom in Malta makes sense for people who actively trade bigger sizes and are not officially 183days in another country and would have to pay more than 25k EUR/yr in taxes.
It is very much different than the usual PerpetualTraveller thing one can read in the internet which in times of CFC Rules, ATAD and CRS will sooner or later not be possible anymore.
There is a lot of confusion apparently:
- The 183 days that Malta uses are not accepted by the country you are living in. It has only to do with your tax situation regarding Malta tax offices.
- The country you are living in will not use these same rules.
- the 183 days rules are used in article 15 of the OECD Model Convention and are only used regarding the "economic employer priciple". So this has NOTHING to do with the 183 days Malta speaks about as teher is no "economic employer" in your case.
Confusion about the 183 days rule: it is about working or an employer.
183 days rule & the economic employer principle:
Based on article 15 of the OECD Model Convention,
the remuneration of a seconded employee is in principle taxed in the country
where the work is actually exercised. However, the right of taxation remains with the country of residence if the
employee:
- is not present in the working state more than 183 days; and
- the salary is not paid by a subsidiary of the employer in the working country; and
- the salary is paid by an employer, or on behalf of an employer, who is not resident in the working country.
Even if the above conditions are met, the employee’s remuneration may still be taxed in the working country if the company in the working country qualifies as the “economic employer”. Under the economic approach, important criteria for assuming an economic employment are:
- the employee is integrated into the business of the host entity;
- the employee is under the control of that entity;
- the activities of the employee form part of the business of the host entity;
- the risks of the activities are with this employer.
Self employed or not working, and the 183 days rule:
If that country (MALTA in this case) has concluded a double tax treaty with the country you are domiciled in, the problem will usually be dealt with by this treaty (Article 4 of the OECD Model Convention), which successively includes the following treaty criteria:
- the taxpayer is regarded as a resident of the country where he has a permanent home, possibly being the country where he has the closest personal or economic ties (= center of his life interests);
- if the country in which the center of vital interests is situated cannot be determined or if it has no permanent home in any State, the taxpayer is regarded as a resident of the country where he usually resides;
- if the taxpayer habitually resides in two States or does not habitually reside in any State, he shall be regarded as a resident of the country of his nationality;
- if that person is a national of both States or of none of these two States, the competent authorities of the Contracting States shall settle the matter by mutual agreement.
If that country has not concluded a double tax treaty with the country you are domiciled in, the taxpayer is regarded as a resident of the two countries. This means that he runs the risk of being taxed twice on all or part of his income. In this case, the country you are domiciled in will take into account a proven double valuation by, in this case, reducing the personal income tax that is proportionally related to the foreign income.
In short: you will pay taxes, no matter where you go. And to use Malta you will have to be there physically and being able to proof that for every day you claim to have been there.
Proof like:
- boarding passes (NOT bought tickets as they don't proof you went there!)
- paid rent
- tickets from shops, restaurants, bars and other expenses
- healthcare insurance
- detail of all trading transactions you did when you where in Malta
- etc, etc
I am not a professional advisor so go to one and don't just search internet as you might read articles from KMPG, Deloitte, PWC...
in the wrong context.
