Tax Dodger or Tax Man Dodger?

Whenever, on a professional or nonprofessional level, you tell people what you do and where you live, people tend to throw you into the same drawer: tax dodger. I have been writing many articles about so many other reasons why a move makes sense, so I will give you, in bullet points, a very small repetition:

1. To establish substance in Malta for the Malta company
2. To profit from the NON DOM STATUS
3. To live in a sunny place
4. To live by the sea in a very healthy climate
5. To live in the second most secure place on earth in terms of natural disaster

And so forth – please refer to the following article if you would like to know more advantages.

Everybody has to follow rules

I would like to come back to the “tax dodger” accusation. First of all, no one has the power to determine what is a lot of tax and what is too little tax. Therefore, to argue that 50% or more is too much or that 25% is too much or too little makes no sense whatsoever. We have states and we have laws, we have contracts and agreements between those states and whatever the law prescribes has to be followed by everyone in that particular country or under these particular laws. If you decide to live in country A you will have to follow the rules in that country full stop.

Transparency: 0-taxation is nearly impossible

Modern frameworks like CRS and BEPS, CFC, Anti Avoidance Rules etc. are getting stronger and stronger and paying NO tax, which undoubtedly IS too little, is close to impossible these days – on “new” and “old” money. The new money will eventually be taxed at least once on a corporate or personal level and income from old money (illiquid assets) will be most probably will be taxed at source (lex situs, exit tax, withholding tax or tax by “subject to tax clauses” in double tax treaties). Yes, even if you live in Monaco. Very aggressive structures are now getting attacked by various inland revenue departments (HMRC, for example), while “BEPS” is making sure that substance is profound and/or not artificially avoided, that activity is a key criteria for taxation, (e.g. that warehouses are permanent establishments) and so forth. On top of that sits the automatic exchange of information, which means, that basically every Revenue Department in the world has access to every bank account in world if required.

Those type of rigid controls and mechanisms paired with a very strict and intrusive inland revenue department (e.g. Germany, Poland, France etc.), on entrepreneurs and individuals make a very “exhausting tax life”. Even with nothing to hide, nothing done wrong and no bad intentions: in some countries you are treated as a criminal by default at least this is how it feels like. Some people obey to that, some people accept it, because it’s the rules in that country they are living in and some people even like it. But some people, some people like myself, love their freedom and love a country with less instead or with more controls. Don’t get me wrong, Malta is not the wild west, there are laws and rules to abide to and the Inland Revenue is a powerful opponent. However, it is nowhere near the methods and measures that you are confronted with in stricter countries. Live and let live is the best way to put it. This means that the officers from the IRD that I dealt with so far, have much more reason and apply it. Yes, there are arguments and discussions but you always find a solution that is best for everyone – if within the line of the laws of course!

Not tax dodger but tax man dodger

Entrepreneurs cannot believe it when I tell them that close to none of our Malta resident clients had a tax investigation ever. We do have them, but by far not as often and as harsh.
Personally, I feel more free than (in my case) in Germany. You are not scared when the IRD calls you or sends a letter – you deal with the issue and that’s it.
Therefore, I think, even if taxation in Malta was different e.g. higher, most of the people would still remain residents. It’s not only the tax but also the way how the tax man treats you. So probably a fair and right term, if you want, would not be tax dodger but tax man dodger, for clients who want to relocate to Malta and setup a Maltese company.

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Über Philipp M. Sauerborn

Philipp Maria Sauerborn ist diplomierter Steuerberater und Experte für International Tax & Blockchain. Als CEO der Kanzlei Dr. Werner & Partner in Malta hat er bereits über 3000 Mandanten zu deren persönlicher Steuersituation beraten.

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