An individual who becomes a Portuguese resident under the non-habitual resident (NHR) scheme in Portugal gains certain taxation advantages. However, in isolation, the NHR program might not be sufficient when it comes to dividends originating from a holding company.
In this article, we are exploring a long-term tax-efficient solution for high-net-worth individuals who are resident in Portugal and looking to establish a new Holding Company in a country which has a double taxation agreement in force with Portugal, and which compliments their non-habitual tax residency scheme in Portugal.
What is the scope of having such a solution in place?
With this solution in place, such individual would be exempt from taxation in Portugal on dividends coming from a jurisdiction such as Malta - which has a double taxation agreement in place with Portugal and which is whitelisted by Portugal.
Malta provides a solution away from the typical offshore setups namely because:
Malta is a full member of the European Union;
Initial and ongoing fees are typically lower when compared to other reputable jurisdictions;
Malta is considered as a whitelisted country for Portuguese purposes which is critical for this setup to work;
Malta does not impose withholding taxes upon the payment of interest, royalties and dividends irrespective of the country of residence of the recipient as this is by virtue of Malta’s domestic legislation.
What are the benefits of utilising Malta for such a solution?
In terms of benefits, apart from obviously having a tax-efficient structure in place, Malta enjoys a very favourable holding company regime. This allows for the holding of assets while benefiting of exemptions on dividends coming from underlying subsidiaries.
Click here to download the graphical representation of the above-mentioned solution