Jean Galea

Health, Wealth & Happiness

Monefit Review 2023 – 7% Per Year Returns with SmartSaver

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In this article, I’m taking a look at Monefit, a consumer loan platform designed to provide quick and convenient personal loans to customers in need of financial assistance.

Monefit was launched by Creditstar Group, an established financial services provider with over a decade of experience in the market. Operating across several European countries, Creditstar has built a solid reputation for offering short-term and installment loans to customers .

Register now at Monefit SmartSaver through this link and receive a 2% cashback on all your net deposits in the first 60 days.

Registration and Account Setup

Getting started with Monefit is a straightforward process. The registration and account setup are user-friendly, and once registered you can either deposit money and start investing (SmartSaver) or apply for a credit line (CreditLine).

Auto-Invest Feature

Monefit is a black-box platform. This means that you do not have visibility into the loans that you’re investing in, but are trusting the platform to make the best use of your money and allocate it in a responsible way. This is similar to how Bondora’s Go and Grow Unlimited system works. So to invest, you will need to use Monefit’s auto-invest tool called SmartSaver.

Monefit gives you a return of 7% per year, and boasts more than €850m invested and €83m in interest earned by investors on the platform.

Your SmartSaver account has no fees of any kind and no hidden cost, so you know exactly how much you will receive when you decide to withdraw your funds.

However, it is worth mentioning that there is a €50 minimum withdrawal limit in place. Moreover, withdrawals are not instant, however the platform promises to process them within 10 days.

Deposits and withdrawals can only be made in Euros.

One thing to mention is that while the interest is advertised at 7%, possibly hinting that it’s a fixed return, it can actually fluctuate at the platform’s will, as detailed in the terms and conditions. So take that with a pinch of salt.

Monefit and Creditstar

As I mentioned, there are very close ties between Monefit and Creditstar, so it’s worth spending some time on investigating Creditstar itself.

The Credistar Group is a prominent and audited European lending group that offers loans to borrowers across Europe, operating in countries such as Spain, the UK, Sweden, Denmark, Poland, the Czech Republic, Estonia, and Finland.

Although Credistar recorded a profit in its audited financial statement for 2021, the company’s commitment to meeting investor obligations has been somewhat inconsistent.

Credistar also sources funds for its loans through platforms like Mintos and Lendermarket. However, investors using these platforms have encountered considerable delays in payments, as Credistar was unable to repay investors due to insufficient liquidity to finance its loans.

Investments that had reached maturity on Mintos were shifted to “pending payments,” while those on Lendermarket saw their terms extended.

These circumstances heightened investor risk and significantly affected their liquidity.

Despite both P2P lending marketplaces advertising Credistar’s loans with the highest returns, investors have expressed dissatisfaction with the company’s methods and its failure to honor the buyback guarantee it had pledged on both Mintos and Lendermarket.

The underlying cause of Creditstar’s “liquidity challenges” could be attributed to the lender’s assertive lending approach and unforeseen fluctuations in financing.

To maximize profits, the lender must issue a greater number of loans and secure more funding. This rationale could explain why the financial group opted to introduce an additional “financing source” – Monefit SmartSaver.

Alternative Platforms

As an investor, it’s crucial to explore and compare different investment platforms to find the one that best suits your needs and preferences. Here are some alternative platforms I’ve considered or invested in:

  1. Mintos: Mintos is a popular peer-to-peer lending platform that offers a wide range of loan types from various loan originators across the globe. The platform provides a comprehensive auto-invest feature and a secondary market, making it a strong competitor to Monefit. However, Mintos’ extensive range of loan originators and countries may require more due diligence and research from investors.
  2. PeerBerry: PeerBerry is another well-regarded European P2P lending platform that focuses on consumer loans, similar to Monefit. The platform is known for its user-friendly interface, auto-invest feature, and competitive interest rates. However, PeerBerry’s loans also have a geographic concentration in Europe, posing similar risks to Monefit.
  3. Bondora: Bondora is a long-standing P2P lending platform that offers consumer loans in Estonia, Finland, and Spain. The platform is known for its simplicity and ease of use, with an auto-invest feature called “Go & Grow Unlimited” that targets a fixed return rate. Bondora’s main drawback is its limited geographic exposure, which may not suit investors seeking greater diversification.

Conclusion

This platform leaves me with mixed feelings. On the one hand, it’s not a platform that has to start from scratch, given that it’s backed by Creditstar, and the latter company has plenty of experience in the space. However, Creditstar itself does not have a stellar track record in its behavior towards investors.

Therefore, I would say that Monefit could be a good platform for you if you want absolute ease-of-use and high liquidity and you’re a fan of other similar products in the market such as Bondora’s Go & Grow. Monefit does in fact currently offer better returns than Bondora, but I would classify it as being riskier.

It’s always a good idea to explore and compare alternative platforms to find the one that best aligns with your investment goals and risk appetite.

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Egg Fried Rice with the Bosch AutoCook Pro

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Machine used: Bosch Autocook Pro multi-cooker

Today’s recipe is one of the easiest you can prepare and is ideal for those who are using the multicooker for the first time.

This should be enough to serve 4 to 6 people, depending on the portion size and if the rice is served as a side dish or part of a main course. I prepare it and use it myself for 2-3 days as a snack or as an accompaniment to protein and fats in my meals.

Ingredients (4 servings)

  • 2 cups jasmine rice
  • 3.5 cups water
  • 3 large eggs, beaten
  • 2 tablespoons vegetable oil
  • 1 small onion, finely chopped
  • 2 cloves garlic, minced
  • 1 cup frozen peas and carrots, thawed (optional, but recommended)
  • 3-4 green onions, thinly sliced
  • 3 tablespoons soy sauce (or to taste)
  • 1/2 teaspoon sesame oil (optional)
  • Salt and pepper, to taste

Directions for Plain Rice

The first thing to do is to cook the jasmine rice in the Bosch AutoCook Pro, follow these steps:

Ingredients:

  • 2 cups jasmine rice
  • 3.5 cups water
  • 1 tablespoon salt (optional)

Instructions:

  1. Rinse the jasmine rice: Place the jasmine rice in a fine-mesh strainer and rinse under cold running water until the water runs clear. This step helps remove excess starch and prevents the rice from being too sticky. My packet said that it’s best to rinse it just once, so I did it twice just to be safe. The water was still pretty murky.
  2. Add the rice and water to the AutoCook Pro: Place the rinsed rice in the cooking pot of the Bosch AutoCook Pro. Add 3.5 cups of water, and salt if desired. Stir gently to distribute the salt evenly.
  3. Select the program: Close the lid of the AutoCook Pro and select the “Rice” program from the menu options and select the short cooking time (2o minutes),
  4. Start the cooking process: Press the “Start” button, and the AutoCook Pro will begin cooking the jasmine rice. The appliance will automatically adjust the temperature for optimal results.
  5. Wait for the rice to cook: The AutoCook Pro will cook the rice and switch to the “Keep Warm” function when it’s done. Allow the rice to rest for at least 5 minutes after the cooking cycle has completed before opening the lid.
  6. Fluff the rice: After letting the rice rest, open the lid and use a fork or rice paddle to gently fluff the rice.

Note: The rice-to-water ratio and cooking time might vary slightly depending on the specific model of your Bosch AutoCook Pro. Adjust the ratio and cooking time as needed to achieve your desired rice texture.

Directions for the Rest of the Ingredients

Now it’s time to cook the rest. While you can use the AutoCook Pro for this part as well, I used a normal pan and kept the rice warm in the cooker in the meantime.

Ingredients:

  • 3 large eggs, beaten
  • 2 tablespoons vegetable oil
  • 1 small onion, finely chopped
  • 2 cloves garlic, minced
  • 1 cup frozen peas and carrots, thawed (optional, but recommended)
  • 3-4 green onions, thinly sliced
  • 3 tablespoons soy sauce (or to taste)
  • 1/2 teaspoon sesame oil (optional)
  • Salt and pepper, to taste

Instructions:

  1. Put the pan on medium heat. Add 1 tablespoon of vegetable oil and heat it up.
  2. Once hot, add the beaten eggs and cook them, stirring constantly to scramble them. When the eggs are fully cooked, transfer them to a plate and set aside.
  3. Add another tablespoon of vegetable oil to the pot. Add the chopped onion and minced garlic, then cook for 3-4 minutes, stirring occasionally, until the onions are soft and translucent.
  4. Add the thawed peas and carrots (if using) to the pot and cook for another 2-3 minutes.
  5. Stir in the cooked and cooled jasmine rice, breaking up any clumps, and cook for about 3-5 minutes until the rice is heated through and slightly crispy.
  6. Add the scrambled eggs back to the pot, along with the sliced green onions, soy sauce, and sesame oil (if using). Stir to combine all the ingredients.
  7. Taste the fried rice and adjust the seasoning with salt and pepper as needed.

Remember that you can customize your egg fried rice by adding other ingredients such as cooked chicken, shrimp, or tofu for added protein, or additional vegetables like bell peppers or bean sprouts for extra flavor and texture.

Viainvest Review 2023 – A Tried and Tested Platform

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Viainvest home

Viainvest is a European P2P lending platform that connects investors with borrowers seeking short-term consumer loans. The platform aims to provide investors with an easy and secure way to invest in consumer loans, offering attractive returns and a simple, user-friendly experience.

Launched in 2016 and based in Latvia, Viainvest is part of the VIA SMS Group, which operates in several European countries, including Sweden, Poland, and the Czech Republic. The group has been operating successfully since 2009, and this undoubtedly contributes to Viainvest’s trustworthiness.

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Account Opening and Verification

One aspect of Viainvest that I found appealing was the ease of opening an account. The registration process is straightforward and can be completed within a few minutes. You simply need to provide some personal information, verify your identity, and link a bank account to start investing. This hassle-free process makes it convenient for new investors to join the platform and begin exploring the investment opportunities available.

User Interface and Experience

After my account was verified, I gained access to Viainvest’s platform dashboard. I found the user interface to be clean and easy to navigate, making it simple to manage my investments. The platform offers a seamless user experience, with clear navigation menus and quick access to essential features, such as the loan listings, portfolio overview, and transaction history.

Investment Options

Viainvest focuses on short-term consumer loans, which typically have a duration of 30 days or less. The loans are issued by VIA SMS Group’s lending subsidiaries, ensuring a transparent and easy-to-understand investment process. Most of the loans on Viainvest come with a buyback guarantee, which means that if a loan becomes more than 30 days overdue, the loan originator repurchases the loan from the investor, providing an additional layer of security.

Auto Invest Feature

To simplify the investment process, Viainvest offers an Auto Invest feature that automatically invests available funds according to my chosen criteria, such as loan duration, interest rate, and maximum investment per loan. This feature allowed me to save time and ensure that my funds were consistently invested without the need for manual intervention. Additionally, I could easily adjust my Auto Invest settings whenever I wanted to modify my investment strategy.

Returns and Risks

Viainvest advertises average annual returns of around 12%, which I found to be competitive within the P2P lending market. However, as with any investment, there are inherent risks involved. In the case of P2P lending, the primary risk is borrower default. Viainvest mitigates this risk through its buyback guarantee, which, as mentioned earlier, provides an additional layer of security for investors. It’s essential to keep in mind that the buyback guarantee is dependent on the financial stability of the loan originator, so it’s crucial to assess the overall creditworthiness of the platform and its affiliated lending companies.

Secondary Market and Liquidity

One aspect of Viainvest that I appreciated was the presence of a secondary market, allowing investors to buy and sell their loan investments before the loans reach maturity. This feature can be particularly helpful for those looking for increased liquidity or wanting to adjust their portfolio quickly. However, it’s essential to note that the secondary market’s liquidity depends on the demand from other investors, and there’s no guarantee that you’ll be able to sell your loans immediately or at the desired price.

Transparency

One aspect of Viainvest that I appreciated is the platform’s transparency. Viainvest provides detailed information about each loan, including the loan originator, borrower’s credit score, and loan purpose. This level of detail enables investors to make informed decisions about their investments and helps build trust in the platform.

Moreover, Viainvest is transparent about its fees, which are relatively low compared to other P2P lending platforms. The platform does not charge investors any fees for using its services, which means that you can keep more of your earnings.

Loan Diversification

Although Viainvest primarily focuses on short-term consumer loans, I found that there’s still some room for diversification within the platform. Viainvest offers loans from different countries, such as Latvia, Poland, and Spain. By investing in loans from various countries, I was able to spread my risk geographically and reduce the potential impact of local economic fluctuations.

On the other hand, it’s worth noting that the platform’s focus on short-term consumer loans may limit the extent of diversification across different loan types and industries. If you’re looking for a broader range of investment options, you may want to consider alternative platforms that offer loans across various sectors.

Customer Support

Throughout my experience with Viainvest, I found their customer support to be responsive and helpful. Whenever I had a question or needed assistance, I could reach out to their support team via email or live chat. They were quick to respond and provided clear, concise answers to my queries.

Financial Performance and Growth

An important aspect to consider when evaluating an investment platform is its financial performance and growth. In the case of Viainvest, the platform has demonstrated consistent growth in both the number of investors and the volume of loans funded. This indicates a growing interest in the platform and a strong performance in the P2P lending market.

Furthermore, Viainvest is part of a profitable group, the VIA SMS Group, which has been financially stable since its inception. This stability further reinforces the platform’s reliability and attractiveness for investors seeking a secure investment environment.

Tax Reporting

Viainvest also simplifies the tax reporting process for its investors by providing an annual tax report. This report includes all the necessary information for investors to report their earnings to their respective tax authorities, making tax filing a less daunting task. The convenience of having this information readily available is a valuable benefit for many investors.

What I Like About Viainvest

  1. User-friendly interface: Viainvest’s platform is easy to navigate and manage, making the investment process smooth and efficient.
  2. Attractive returns: With average annual returns of around 12%, Viainvest offers competitive returns within the P2P lending market.
  3. Buyback guarantee: Most loans on Viainvest come with a buyback guarantee, providing an additional layer of security for investors.
  4. Auto Invest feature: The platform’s Auto Invest feature simplifies the investment process and allows for easy portfolio management.
  5. Secondary market: The presence of a secondary market provides investors with increased liquidity and flexibility.

What Could be Improved at Viainvest

  1. Limited diversification: Viainvest primarily focuses on short-term consumer loans, which may limit opportunities for diversification across different loan types and industries.
  2. Dependency on loan originators: The buyback guarantee is dependent on the financial stability of the loan originators, which may pose a risk if the originator faces financial difficulties.
  3. Currency risk: As Viainvest operates in multiple European countries, investors may be exposed to currency risk when investing in loans denominated in different currencies.

Alternative Platforms

For investors interested in comparing Viainvest with other P2P lending platforms, here are a few alternatives to consider:

  1. Mintos: Mintos is a leading European P2P lending platform that offers a wide range of investment opportunities, including consumer, business, and real estate loans. With a large number of loan originators and a secondary market, Mintos provides an opportunity for increased diversification and liquidity.
  2. PeerBerry: PeerBerry is another popular P2P lending platform in Europe that focuses on short-term consumer loans. The platform offers competitive returns, a buyback guarantee, and an Auto Invest feature.
  3. Bondora: Bondora is an established P2P lending platform that provides investors with various investment options, including consumer loans and a unique “Go & Grow” feature that allows for simple, low-risk investing with instant liquidity.
  4. Estateguru: For investors looking to diversify into real estate-backed loans, Estateguru is a solid option. The platform offers secured loans with attractive returns and a user-friendly interface.

Conclusion

Taking into account the stability and longevity of Viainvest as part of the VIA SMS Group, the platform’s transparency, and the opportunity for some level of diversification, my experience with Viainvest has been overall positive. While there are some limitations in terms of diversification and dependency on loan originators, Viainvest remains an attractive option for investors looking to explore P2P lending. If you’re considering investing in P2P lending platforms, Viainvest is a solid choice with competitive returns and an easy-to-use interface.

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Moving to Portugal for Low Taxation: The NHR Programme

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Portugal is one of my favorite countries in the world, and it also happens to have incredibly good conditions for those who wish to move there to optimise their tax situation.

In fact, combined with Malta for a corporate tax base, I believe it’s the best tax optimisation strategy in Europe for owners of small to medium businesses and location-independent entrepreneurs. Portugal is also great for high-net-worth individuals and high-earners within certain professions, as I will detail in this article.

The key to unlocking most of the benefits related to tax in Portugal is the NHR Programme.

The NHR programme was introduced by the Portuguese government in 2009 as part of its strategy to promote the country as a destination for highly skilled individuals, entrepreneurs, and investors. The programme aims to attract talent and investment by offering a favorable tax regime for a period of ten consecutive years, provided the applicants meet certain requirements.

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Under the NHR programme, qualifying individuals can benefit from a reduced personal income tax rate of 20% on their professional income earned in Portugal. This reduced tax rate is particularly advantageous when compared to Portugal’s standard progressive income tax rates, which can range from 14.5% to 48% depending on the level of income.

Moreover, certain types of foreign-sourced income may be exempt from taxation in Portugal under the NHR programme, depending on the country of origin and existing tax treaties. These exemptions can apply to income such as interest, dividends, pensions, and royalties. This benefit can be especially attractive for individuals with substantial income from abroad, such as retirees or investors.

The NHR programme also fosters a favorable environment for entrepreneurs and business owners. By offering a competitive tax regime, Portugal aims to stimulate innovation and economic growth, ultimately benefiting the country as a whole.

Eligibility Criteria for the NHR Programme

To qualify for the NHR programme, applicants must meet the following criteria:

  1. Be a tax resident in Portugal: To become a tax resident, you need to reside in Portugal for more than 183 days in a 12-month period. Alternatively, if you have a habitual residence in Portugal, meaning a permanent dwelling available to you on a continuous basis, you may also qualify as a tax resident.
  2. Not have been a tax resident in Portugal in the previous five years: This requirement is to ensure that the NHR programme targets new residents rather than those who have recently lived in the country. It is important to check your tax residency history to ensure you are eligible for the NHR programme.
  3. Qualify as a high-value-added activity professional or have foreign-sourced income: The Portuguese government has a list of high-value-added activities eligible for the NHR programme. This list includes, but is not limited to, professionals such as architects, engineers, scientists, artists, IT professionals, and senior managers. Additionally, individuals with a significant portion of their income derived from foreign sources may also qualify for the NHR programme.

Furthermore, the NHR programme has no minimum investment requirements or minimum stay requirements, making it a flexible option for those considering relocating to Portugal. However, it’s essential to keep in mind that tax residency rules and the criteria for qualifying as a high-value-added professional or having foreign-sourced income may be subject to change, so it’s crucial to stay up-to-date with the latest regulations and consult with a tax professional when considering applying for the NHR programme.

The Application Process for the NHR Programme

The application process for the NHR programme involves several steps, which are detailed below:

  1. Obtain a Portuguese tax identification number (NIF): Before you can apply for the NHR programme, you need a Portuguese tax identification number. This can be obtained by visiting the local tax office (Finanças) or through a Portuguese tax representative, who can help you with the entire process. To obtain your NIF, you’ll need to provide identification, such as a passport, and proof of address.
  2. Register as a tax resident in Portugal: Once you have your NIF, you will need to register as a tax resident in Portugal. This involves providing proof of residency, such as a rental agreement or property deed, and completing the relevant forms at the local tax office. Keep in mind that you’ll need to meet the tax residency requirements mentioned earlier, either by residing in Portugal for more than 183 days in a 12-month period or having a habitual residence in the country.
  3. Apply for the NHR programme: Within six months of becoming a tax resident, you can submit your NHR application to the Portuguese tax authorities. The application can be made online through the Portuguese Tax Authority’s website or in person at the local tax office. The process may require submission of supporting documents, such as proof of residence and evidence of professional qualifications, as well as information about your foreign-sourced income.
  4. Wait for approval: The approval process for the NHR programme may take a few months. If your application is successful, you will receive a certificate confirming your NHR status, which will be valid for ten years. During this time, you’ll need to maintain your tax residency in Portugal and comply with all applicable tax laws and reporting requirements.

If you’re new to Portugal, you should know that it’s a highly bureaucratic country and it is always much better to hire a Portuguese lawyer to take care of administrative stuff for you, unless you have a lot of time on your hands and you are a very patient person.

Advantages of the NHR Programme

The NHR programme offers several advantages for those considering moving to Portugal:

  1. Reduced income tax rate: As mentioned earlier, the 20% flat rate on professional income earned in Portugal is significantly lower than the standard progressive rates, which can be as high as 48%. This reduced tax rate can lead to substantial savings for qualifying individuals.
  2. Tax exemptions on foreign-sourced income: The NHR programme’s tax exemptions on various types of foreign-sourced income, such as pensions, dividends, interest, and royalties, can be particularly advantageous for retirees and investors with substantial income from abroad. These exemptions can help minimize your overall tax liability and protect your assets.
  3. No wealth tax: Portugal does not impose a wealth tax, making it an attractive destination for high-net-worth individuals looking to protect their assets.
  4. No inheritance tax for close relatives: While Portugal does have inheritance and gift taxes, close relatives, such as spouses, children, and parents, are exempt from these taxes. This can provide peace of mind and financial security for your family.
  5. Double tax treaties: Portugal has established double tax treaties with numerous countries, which can help prevent double taxation on your income and ensure you’re taxed only once on the same income. These treaties can help simplify your tax situation and reduce your overall tax burden.
  6. Attractive lifestyle and climate: In addition to the tax benefits, Portugal offers a high quality of life, with a warm climate, beautiful landscapes, rich culture, and excellent healthcare and education systems. The country’s safety, friendly locals, and relatively low cost of living further add to its appeal as a relocation destination.
  7. Low property taxes: Portugal has relatively low property taxes compared to many other countries. There are two main property taxes: the Municipal Property Tax (IMI) and the Property Transfer Tax (IMT). The IMI is an annual tax based on the property’s assessed value and varies between 0.3% and 0.45%, depending on the municipality. The IMT is a one-time tax paid when purchasing a property, with rates varying depending on the property’s value and type. These comparatively low property tax rates can be appealing to those looking to invest in Portuguese real estate or move to the country under the NHR programme.

Disadvantages and Considerations of the NHR Programme

While the NHR programme has numerous advantages, there are also some considerations and potential drawbacks to keep in mind:

  1. Limited duration: The NHR status is valid for a maximum of ten years. After this period, you will be subject to the standard Portuguese tax regime, which might be less favorable. It’s important to plan for the long term and consider the potential tax implications once your NHR status expires.
  2. Potential changes in legislation: Tax laws and regulations are subject to change, and there is no guarantee that the NHR programme will remain unchanged throughout its ten-year duration. The general principle however is that once you are in the programme your conditions will remain unchanged during the 10-year period.
  3. Compliance with reporting requirements: As an NHR, you are required to submit annual tax returns in Portugal, even if your foreign-sourced income is exempt from taxation. This can be time-consuming and may require the assistance of a tax professional. You may also need to continue filing tax returns in your home country, depending on its tax residency rules.
  4. Social security contributions: While the NHR programme offers reduced income tax rates, you may still be required to pay social security contributions in Portugal, which can be substantial depending on your income. It’s essential to factor in these contributions when evaluating the overall financial benefits of the NHR programme.
  5. Exit strategy: Before moving to Portugal, it’s essential to consider your exit strategy, as moving back to your home country or to another jurisdiction after benefiting from the NHR programme may have tax implications. Consulting with a tax professional can help you plan for potential scenarios and ensure a smooth transition when your NHR status expires or if you choose to leave Portugal.

Is the NHR Programme Here to Stay?

The long-term prospects of the NHR programme depend on various factors, including the evolution of Portugal’s economic, political, and fiscal landscape, as well as changes in international taxation standards and practices. As of now, the NHR programme has been successful in attracting individuals with high-value-added professional activities, retirees, and investors to Portugal, contributing to the country’s economic growth and development.

Keep the following points in mind when considering the long-term prospects of the NHR programme:

  1. Legislative changes: Tax laws and regulations, including those governing the NHR programme, may change over time. Changes may occur due to shifts in government priorities, changes in the political climate, or in response to international pressure to adopt new tax standards. It’s essential to stay informed about any legislative changes and consult with a tax professional to ensure you’re prepared for potential alterations to the NHR programme.
  2. International tax cooperation and transparency: In recent years, there has been a global push towards increased tax transparency and cooperation between countries to combat tax evasion and avoidance. This trend could potentially impact the NHR programme, as international tax standards evolve and countries may be required to share more information about their tax residents.
  3. Portugal’s economic situation: The long-term success of the NHR programme may also be influenced by the overall economic situation in Portugal. For example, if the country experiences a downturn or faces fiscal challenges, the government may decide to revise the NHR programme or introduce new tax measures to boost revenue.
  4. Public opinion and perception: The NHR programme may be subject to scrutiny and criticism, as some argue that it provides preferential treatment to certain individuals and may contribute to income inequality. Public opinion and political pressure could lead to changes in the programme or its eventual discontinuation.

While there will always be a certain level of uncertainty around such programmes, the programme has been in operation since 2009, so I wouldn’t be so concerned about it disappearing from one year to the next.

Is the NHR Also Good for Non-Europeans?

While the programme’s primary target audience is European citizens, the favorable tax regime and Portugal’s attractive lifestyle have made it appealing to people from various non-European countries as well.

I would particularly point out the big influx of people from the USA, especially from the West Coast. My understanding, based on many chats with immigrants from the US, is that Portugal and the NHR programme offer them a chance to reset their lifestyle when compared to the US. I would single out a few issues these people see in their home country:

  • Political polarization
  • Woke culture, especially in California
  • Unhealthy lifestyle
  • Lack of exposure to other cultures

If you take all that and in addition keep in mind the low-tax benefits of Portugal, and the climate similarity of Portugal to the West Coast of the USA, it’s easy to see why it becomes such an attractive proposition.

Here are the main factors that make the NHR programme appealing to Americans:

  1. Tax benefits: The NHR programme offers a 20% flat rate on professional income earned in Portugal and tax exemptions on certain types of foreign-sourced income, such as pensions, dividends, interest, and royalties. These tax benefits can help Americans optimize their tax situation and potentially lower their overall tax burden.
  2. Double taxation treaty: Portugal and the United States have a double taxation treaty in place, which helps prevent American citizens from being taxed twice on the same income. This treaty can simplify tax situations for Americans living in Portugal and ensure they are not subject to double taxation.
  3. Visa options: Americans can apply for various visa options, such as the D7 passive income visa, which allows individuals with sufficient income from sources like pensions, rental income, or investments to reside in Portugal. The Golden Visa programme is another option for American investors who make qualifying investments in Portuguese real estate or meet other investment criteria.
  4. Lifestyle: Portugal offers a high quality of life, with a warm climate, beautiful landscapes, rich culture, excellent healthcare and education systems, and a relatively low cost of living. The country’s safety, friendly locals, and English-speaking population make it an attractive destination for Americans looking to relocate.

However, there are also some unique challenges that Americans must consider when relocating to Portugal and benefiting from the NHR programme:

  1. U.S. tax obligations: As a U.S. citizen, you are required to file an annual tax return with the Internal Revenue Service (IRS) and report your worldwide income, regardless of where you live. While the double taxation treaty and the Foreign Earned Income Exclusion can help minimize double taxation, Americans benefiting from the NHR programme must still comply with U.S. tax laws and reporting requirements.
  2. Foreign Bank Account Reporting (FBAR): U.S. citizens living in Portugal may also need to file a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Department of the Treasury if they have one or more foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year.
  3. Foreign Account Tax Compliance Act (FATCA): U.S. citizens residing in Portugal are also subject to the Foreign Account Tax Compliance Act (FATCA), which requires them to report their foreign financial assets on Form 8938 if the total value exceeds certain thresholds.

Given these unique challenges, it is crucial for American citizens considering the NHR programme to consult with tax professionals experienced in both U.S. and Portuguese tax laws to ensure compliance and make the most of the available tax benefits.

Madeira – A Special Economic Zone

The International Business Centre of Madeira (IBCM) is a special economic zone established by the Portuguese government to promote economic development on the island of Madeira. The IBCM offers one of the most favorable tax regimes in Europe for companies and individuals, attracting both foreign and domestic investment. The main benefits provided by the IBCM are as follows:

  1. Reduced corporate tax rates: Companies licensed to operate within the IBCM can benefit from a reduced corporate tax rate of 5% on their taxable income, which is significantly lower than the standard corporate tax rate in Portugal (currently 21%). This reduced rate applies until December 31, 2027, under the current legal framework.
  2. Exemption from withholding taxes: Dividends, interest, and royalties paid by IBCM-licensed companies to non-residents are exempt from withholding taxes in Portugal. This exemption also applies to payments made between IBCM-licensed companies.
  3. Exemption from property transfer tax (IMT) and stamp duty: Companies licensed to operate in the IBCM are exempt from property transfer tax (IMT) and stamp duty on the acquisition of real estate for their business activities within the IBCM.
  4. Exemption from municipal property tax (IMI): IBCM-licensed companies are exempt from the annual municipal property tax (IMI) on real estate used for their business activities within the IBCM.
  5. Reduced social security contributions: Employees working for IBCM-licensed companies benefit from a reduced social security contribution rate of 7.5% on their gross remuneration, compared to the standard employee contribution rate of 11%.
  6. Access to Portugal’s extensive double tax treaty network: Companies operating within the IBCM can benefit from Portugal’s extensive network of double tax treaties, which can help prevent double taxation and facilitate cross-border transactions.
  7. EU and Madeira Free Trade Zone benefits: Madeira is part of the European Union, and companies operating in the IBCM can benefit from the EU’s single market and free movement of goods, services, capital, and people. Additionally, the Madeira Free Trade Zone offers customs exemptions and benefits for companies engaged in international trade.

The IBCM’s favorable tax regime is subject to specific conditions and requirements, including substance requirements, minimum investment thresholds, and job creation targets. If you’re interested in taking advantage of the IBCM’s tax benefits you should consult with a tax lawyer to make sure this is a feasible option for you.

Criticisms of the NHR Programme and Changes Over Time

The NHR programme has faced criticisms and pressure to change from various quarters. Some of the main concerns and criticisms include:

  1. Tax fairness and income inequality: Critics argue that the NHR programme benefits wealthy individuals, providing them with preferential tax treatment and contributing to income inequality. There is a concern that the programme may disproportionately benefit high-income individuals and foreign investors while leaving the general population to bear a larger share of the tax burden.
  2. Potential for tax evasion: Some critics argue that the NHR programme could be used as a tool for tax evasion or aggressive tax planning by individuals seeking to exploit the tax exemptions and reduced tax rates. This concern is heightened by the global push for increased tax transparency and cooperation between countries to combat tax evasion and avoidance.
  3. Brain drain and competition: Another criticism is that the NHR programme may contribute to a “brain drain” in other countries by attracting skilled professionals and wealthy individuals to Portugal. The programme’s benefits can create a competitive environment where countries try to offer more attractive tax regimes to lure talent and investment, potentially creating a race to the bottom.
  4. Loss of potential tax revenue: Some argue that the NHR programme may lead to a loss of potential tax revenue for the Portuguese government, as individuals and businesses benefiting from the programme pay lower tax rates or are exempt from certain taxes.

In response to these criticisms and pressures, there have been some changes to the NHR programme over time, such as updating the list of qualifying high-value-added activities and introducing a minimum tax on foreign pension income. The latter was mainly due to pressure from Nordic countries who saw a significant number of their pensioners move to Portugal to avoid paying any tax back in their home country and enjoy a better lifestyle.

Is the NHR for You?

The Portuguese NHR programme offers a range of tax benefits for individuals considering moving to the country, including reduced income tax rates and exemptions on certain types of foreign-sourced income.

I hope that this article has given you a good overview of how the NHR programme works. However, to understand your eligibility, the application process, and the potential implications of becoming a Non-Habitual Resident in Portugal, the next step is definitely that of contacting a competent Portuguese lawyer who can guide you further.

A Comprehensive Guide to Malta’s 5% Effective Corporate Tax Rate

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Malta is an attractive destination for setting up companies due to its unique taxation system, which offers several benefits for non-resident and non-domiciled individuals.

Over the years, I’ve delved very deep into the topic of tax optimization, and if you haven’t done so already, I recommend starting off with my article on low tax strategies in Europe, where I cover the basics and also suggest a few different setups involving other countries in addition to Malta.

In this article, I will discuss Malta’s full imputation system, how it impacts both resident and non-resident shareholders, and how to structure companies for maximum tax efficiency.

Malta’s Full Imputation System

Malta is the only country in Europe that operates a full imputation system for corporate taxation. This means that corporate profits are taxed to the company at a rate of 35%.

However, when dividends are distributed to individuals out of taxed profits, the dividend carries an imputation credit of the tax paid by the company on the profits so distributed.

Essentially, this system eliminates the economic double taxation that arises under the classical system.

Implications for Resident Shareholders

In Malta, personal taxation is based on a progressive system, with rates ranging from 15% to 35%.

Therefore, for shareholders who are residents of Malta, since the current rate of income tax applicable to companies is 35% and the maximum rate applicable to individuals is also 35%, the receipt of a dividend out of these tax accounts can never result in a shareholder having to pay additional tax on receipt of the dividend.

Implications for Non-Resident Shareholders

Non-resident shareholders, on the other hand, will not be taxed in Malta on their dividends but would still need to declare the receipt of the dividends in their country of residence and pay tax there.

This creates a situation where it would be very disadvantageous to set up a company in Malta if you’re a non-resident shareholder because you’d have to pay the 35% corporate tax plus the tax on dividends in your country.

To address this issue, Malta offers a 6/7ths refund on the corporate tax paid in Malta if the shareholder is a non-resident and non-domiciled person. This brings down the effective corporate tax rate in Malta to 5%.

Who is this Setup Good For?

With that basic knowledge of how the full imputation system works and how it affects resident and non-resident company shareholders, let’s dig deeper into who the Malta setup is ideal for. I will list a few eligibility criteria for setting up in Malta.

  1. Shareholder Structure: The company can be owned by individuals or corporate entities, either resident or non-resident. It’s crucial to understand the tax implications for shareholders in their country of residence, as they may be subject to additional taxes on dividends received from the Maltese company.
  2. Business Activity: The company must carry out genuine business activities, whether trading, holding, or a combination of both. Purely shell or paper companies without substance are not eligible for the 5% effective tax rate.
  3. Tax Residency: To benefit from Malta’s tax system, the company must be considered tax resident in Malta. This typically means that the company is either incorporated in Malta or, if incorporated elsewhere, managed and controlled from Malta.
  4. Compliance with Maltese Regulations: The company must adhere to all relevant Maltese regulations, including company law, tax law, and anti-money laundering regulations. This includes timely submission of tax returns, financial statements, and other necessary documentation.

Optimizing the Company Structure in Malta

To make the most of Malta’s tax system, I recommend the following structure with two companies based in Malta:

  1. Set up a Maltese Trading Company that generates income from its trading activities.
  2. The Maltese Trading Company pays Malta Corporate Tax of 35% on net profits.
  3. Upon distribution of dividends to the Maltese Holding Company, the latter may claim a 6/7 refund of Malta corporate tax paid by the Maltese Trading Company.
  4. Dividend income and the tax refund received by the Maltese Holding Company are not liable to any further tax in Malta.
  5. The Maltese Holding Company can distribute in full both the tax refund and the dividend income received to its foreign shareholder.
  6. No withholding taxes are applied on dividends paid to the foreign shareholder.

malta holding and trading company

This structure results in a net tax rate of 5% on company profits in Malta (after receiving the 6/7ths tax refund) plus the taxation on dividends received in the shareholder’s country of residence.

Keep in mind that as a shareholder, you will still need to pay taxes on dividends in the country where you are fiscally resident.

For example, if the shareholder is a resident of Spain, he would pay between 19% and 26% of tax on the dividends received from the Maltese company, since no withholding tax was applied at the shareholder level in Malta. As another example, if the shareholder lives in France, he will pay 30% (flat savings tax rate in France) on the net amount of dividends received from the Maltese company.

That is why I think pairing a company structure in Malta with living in Portugal is the perfect combination, since under the NHR program you’d be exempt for paying taxes on dividends for 10 years.

Can You Have Your Holding Company in Another Country?

It is not essential to have the holding company also based in Malta. There are many cases where having the holding company based in another country makes more sense.

The biggest two reasons not to have the holding in Malta would be the following:

  • The setup involves a big company that has been operating its holding company in another country for many years. Moving that holding company would be a big hassle, not to mention potentially causing the ire of the local tax authorities and attracting unwanted attention.
  • The ultimate beneficial holder might want to establish a presence in multiple countries (perhaps due to his flag theory preferences), or he might want to perform other investments from the holding company that are easier done if the holding company is placed elsewhere not Malta.

When structuring your business this way, the Maltese trading company would operate and generate income from its activities, while the holding company in the other country would own the shares in the Maltese trading company.

To determine the most convenient country for the holding company, consider the following factors:

  1. Double Taxation Treaties: Check if the chosen country has a double taxation treaty with Malta, as these agreements often help reduce or eliminate withholding taxes on dividends, interests, and royalties. This can enhance tax efficiency when distributing profits from the Maltese trading company to the holding company.
  2. Tax Regulations: Assess the tax regulations of the holding company’s country of residence, including taxes on dividends received from the Maltese trading company, capital gains tax on the sale of shares, and other relevant taxes. Ideally, choose a jurisdiction with low or no taxes on such income.
  3. Holding Company Requirements: Some countries have specific legal and regulatory requirements for holding companies, such as minimum capital requirements, local directorship, or annual reporting obligations. Be aware of these requirements and ensure they align with your business plans and resources.
  4. Substance Requirements: Consider the economic substance requirements in the holding company’s jurisdiction. Some countries may require a physical presence or a minimum level of economic activity to access their tax benefits. Ensure you can meet these requirements to maintain tax efficiency.
  5. Confidentiality and Privacy: Evaluate the level of confidentiality and privacy provided in the chosen jurisdiction. Some countries offer higher levels of privacy protection for shareholders and company ownership information.

Some popular jurisdictions for holding companies include Cyprus, the Netherlands, Luxembourg, and Singapore. Each jurisdiction has its own set of advantages, and selecting the most suitable one depends on your specific business goals, tax planning objectives, and the relationship between the jurisdictions involved.

Additional Benefits

There are two additional big benefits of operating a corporate structure in Malta, one of them fairly new. Let’s have a look at them.

Tax Payment Deferral

In Malta, companies with most of their income sourced outside of Malta can benefit from a tax deferral mechanism, allowing them to defer their tax payments by up to 18 months. This provision can offer significant cash flow advantages and flexibility for businesses, especially those that rely on reinvestments or are in a growth phase.

Here’s an overview of the tax deferral mechanism in Malta:

  1. Eligibility: To be eligible for the tax deferral, the majority of a company’s income must be sourced from outside Malta. The company must also meet all other tax compliance requirements, including accurate and timely filing of tax returns and the provision of necessary documentation.
  2. Tax Deferral Period: The tax deferral allows companies to postpone their tax payments by up to 18 months from the end of the accounting period in which the income was generated. This means that if a company’s accounting period ends on December 31, the tax payment can be deferred until June 30 of the following year, at the earliest.
  3. Application Process: To benefit from the tax deferral mechanism, companies must apply with the Maltese tax authorities, providing details about their income sources and the reasons for requesting the deferral. The tax authorities may ask for additional documentation to support the application.
  4. Cash Flow Benefits: The tax deferral can provide significant cash flow advantages for companies, allowing them to use the funds that would otherwise be paid as taxes for other business purposes, such as reinvestments, expansion, or working capital management.
  5. Interest and Penalties: It’s important to note that deferring tax payments does not mean avoiding them altogether. Companies must eventually pay the deferred taxes, along with any interest or penalties that may apply if the tax payment is not made within the allowed deferral period.

The tax deferral mechanism in Malta can be an attractive option for companies with income primarily sourced from outside the country.

Consolidated Accounts for Holding and Trading Companies

Starting from 2021, Malta introduced new rules that allow for the submission of consolidated tax statements by Maltese holding and trading companies. This change brought a significant improvement to the Maltese tax system, streamlining the process and providing certain benefits to companies operating under this structure.

Benefits of Consolidated Tax Statements in Malta:

  1. Simplified Tax Reporting: Under the new rules, holding and trading companies can submit a single consolidated tax statement, rather than filing separate tax returns for each company. This simplifies the reporting process and reduces the administrative burden on companies.
  2. Faster Tax Refunds: Previously, companies in Malta had to first pay the full 35% corporate tax and then wait for the 6/7ths tax refund, which could take around a year. With consolidated tax statements, the effective tax rate of 5% can be applied directly, eliminating the need to wait for the refund. This allows companies to access their funds more quickly, which can be especially beneficial for reinvestments and cash flow management.
  3. Reduced Compliance Risks: Consolidated tax statements reduce the risk of errors or inconsistencies in tax reporting between the holding and trading companies. By submitting a single statement, companies can ensure that all relevant information is accurately reported and consistent across both entities.
  4. Enhanced Transparency: Submitting a consolidated tax statement provides a clearer picture of the overall financial performance and tax position of both the holding and trading companies. This can help business owners, investors, and other stakeholders to better understand the financial health of the group.
  5. Potential Interest Savings: Since companies no longer need to wait for the tax refund, they can potentially save on interest costs associated with borrowing funds to cover cash flow requirements during the refund waiting period.

This change in the law further enhances the tax efficiency of Maltese companies for non-residents.

Is Malta Right for You?

While setting up in Malta is generally a very good idea to explore, and I know many companies who have gone down this route successfully, I would also like to make it clear that this setup is not for everyone.

There are certain situations where opening a company in Malta may not be a viable or advantageous option:

  1. Limited Substance: If the company would not have sufficient substance in Malta, such as a physical presence, employees, or genuine economic activities, it may not be considered tax resident in Malta and could face challenges in benefiting from Malta’s tax regime or accessing double tax treaties.
  2. High-Tax Jurisdictions: For individuals or corporate shareholders residing in high-tax jurisdictions with stringent Controlled Foreign Corporation (CFC) rules, the benefits of Malta’s tax system might be limited. In some cases, the income of the Maltese company could be attributed back to the shareholders and taxed in their country of residence.
  3. Unfavorable Tax Treaties: If the country of residence of the company’s shareholders or the countries where the company’s income is sourced have unfavorable tax treaties with Malta, it could result in higher withholding taxes or limit the benefits of Malta’s tax system.
  4. Regulatory Restrictions: In some industries or sectors, regulatory restrictions in either Malta or the company’s country of operation could make it difficult or even impossible to set up a Maltese company. For example, certain financial services, gambling, or cryptocurrency businesses may face stricter licensing requirements or prohibitions.
  5. Small Business or Sole Entrepreneur: For small businesses or sole entrepreneurs with limited profits, the added complexity and costs of setting up and maintaining a company abroad may outweigh the potential tax benefits. Establishing a company in Malta involves registration fees, annual expenses, and professional service fees for accounting, auditing, and legal support. Additionally, managing cross-border operations can be time-consuming and challenging. In such cases, it may be more beneficial to focus on growing the business domestically before considering international expansion or tax planning strategies.

The most common mistake I see is point number 5, and this doesn’t just apply to Malta. I see too many freelancers and small business owners that try to attempt such a setup prematurely. You will hear many stories of people and companies who are paying low taxes because of their setups, but establishing these structures and keeping them running is no joke. You have to be ready to spend money and deal with the additional complexity (cultural differences, language barriers, different laws etc.) that operating in another jurisdiction bring with them.

However, let’s say that your case is ideal for exploring a corporate setup in Malta. You should also be aware of certain important downsides of setting up a company in Malta:

  1. Size and Limited Market: Malta is a small island nation with a limited domestic market, which may not be ideal for businesses that rely heavily on local demand. However, its strategic location in the Mediterranean and EU membership can mitigate this issue for companies focused on international trade.
  2. Regulatory Complexity: Navigating Malta’s tax landscape can be complex, especially for businesses unfamiliar with the country’s tax laws and regulations. It’s essential to seek professional advice and ensure compliance with all relevant requirements when setting up a company in Malta.
  3. Reputational Risks: In recent years, Malta has faced criticism over issues related to money laundering, corruption, and financial transparency. While the Maltese government has taken steps to address these concerns, businesses operating in Malta should be mindful of potential reputational risks and maintain strong corporate governance practices.
  4. Limited Local Talent Pool: While Malta has a skilled workforce, its small population size may limit the availability of local talent in specialized fields. Companies in niche industries may need to invest in training or recruit professionals from abroad to meet their staffing needs.
  5. Increased Reporting Requirements: As a result of the country’s efforts to improve its financial transparency, companies operating in Malta may face increased reporting and compliance requirements. This can lead to additional administrative burdens and costs for businesses.
  6. Banking Challenges: Opening a bank account in Malta has become increasingly difficult, particularly for non-residents and foreign-owned companies. Due to strict anti-money laundering regulations and compliance requirements, Maltese banks have adopted stringent due diligence procedures, leading to lengthy account opening processes and higher rejection rates. This can pose a significant challenge for businesses seeking to establish a presence in Malta, as access to banking services is essential for smooth operations. It may be necessary to explore alternative banking options, such as international banks or fintech solutions, which could add additional complexity and costs to the company setup.

To finish off, let’s have another rundown of the benefits of setting up in Malta.

  1. Attractive Tax System: Malta’s full imputation system, combined with the 6/7ths refund mechanism for non-resident and non-domiciled shareholders, results in an effective corporate tax rate of just 5%. This is one of the lowest rates in the European Union, making Malta an attractive destination for businesses seeking tax efficiency.
  2. Consolidated Tax Statements: Maltese holding and trading companies can submit consolidated tax statements, simplifying tax reporting and enabling businesses to directly apply the 5% effective tax rate without waiting for a refund. This can significantly improve cash flow management for businesses operating under this structure.
  3. Tax Deferral Mechanism: Companies with most of their income sourced outside of Malta can defer their tax payments by up to 18 months, providing additional cash flow benefits and flexibility for businesses that rely on reinvestments or are in a growth phase.
  4. EU Membership: Malta is a member of the European Union, which means that Maltese companies can benefit from access to the European single market, free movement of goods, services, and capital, and reduced trade barriers with other EU member states.
  5. Skilled Workforce: Malta is home to a highly-skilled, multilingual workforce, with many professionals proficient in English, Italian, and other European languages. This can be advantageous for businesses looking to tap into the European market.
  6. Eurozone Membership: Malta’s membership in the Eurozone, having adopted the euro as its currency in 2008, offers additional benefits for businesses. Operating in a country that uses the euro eliminates currency exchange risks and simplifies cross-border transactions within the Eurozone. As a member of the European Union, Malta enjoys seamless access to the EU’s Single Market, promoting easier trade with other EU countries and enhancing a company’s credibility. This membership also provides the potential for businesses to access EU funding programs and grants, which can be particularly beneficial for startups and small-to-medium-sized enterprises seeking financial assistance.

I hope that I have been able to paint a good picture of what the setup in Malta looks like and who would best benefit from it.

If setting up in Malta sounds interesting, I would recommend getting professional advice early on to determine whether the structure is really suitable for your specific circumstances. The tax landscape can be complex, and it’s essential to understand the implications and compliance requirements before setting up a company in Malta.

To help you navigate this process, I am happy to connect you with my lawyers in Malta for a free consultation. By filling out this form on my website, you can receive personalized guidance on the potential advantages and challenges of establishing a Maltese company, tailored to your unique situation.

I think that Malta remains one of the top places in Europe for corporate setups, especially if the ultimate beneficial owner can move to Portugal to make use of the NHR setup. This gives the best of both worlds, with corporate taxation in Malta at 5% and 0% tax on dividends (for the 1st 10 years under NHR) received in Portugal by the shareholder in Portugal.

Get advice on a Malta setup

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Jean Galea

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