Category: Business

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E&S Consultancy nominated as ‘Legal Firm of the Year’

Categories Business, iGaming, Remote Gaming, MaltaTags , , , , , ,

E&S Consultancy, the Corporate and advisory arm of E&S Group, has been shortlisted as a finalist for the  ‘Legal Firm of the Year’ award, at this year’s Malta IGaming Awards. These will be held on the 22nd November 2017 during the Malta Gaming Week , which is organized by SiGMA. The Malta Gaming Week is an annual appointment where all major International stakeholders within the iGaming industry meet up to discuss all the latest developments and trends in the industry, as well as to discuss what to expect in the year ahead. They have an award process that recognises correct industry practise, innovation and positive contribution to the growth of the industry. This is very motivation for our team to ensure we maintain the highest level of service and constant improvement of our practices.

Even more importantly, The Awards’ Dinner  is a Charity event organized by SiGMA and hosted by BiG Foundation to support those in need. E&S Group is proud to be able to contribute to such a good cause. While wishing the best of luck to all nominees, we look forward to meeting you at the Awards’ Dinner.

www.ellulschranz.com

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Malta among the first countries in the world to regulate exchanges for cryptocurrencies, click the link below to find out more:

Categories Business, Modern, Economy, Blockchain, Cryptocurrency, MaltaTags , , , ,

Malta’s Prime Minister had recently discussed further opportunities in connection to Malta’s current Citizenship through Investment Program. Having attended and spoken at two biggest Citizenship conferences in the last month to promote the Program, the Prime Mister had announced that the scheme would become more exclusive in terms of eligibility of applicants.

 

PM Joseph Muscat also pointed out, that the Program’s intention was not and is not to raise funds, and therefore Malta has one of the most demanding due diligence process to confirm eligibility of the applicants to obtain access to benefits Malta Citizenship may open up.

 

Furthermore, Malta is one of the first countries to start working on development and implementation of regulations applicable to cryptocurrencies and blockchain to effectively control and regulate the new upcoming industry. Prime Minister also mentioned blockchain as one of the possible ways to collaborate with other countries offering Citizenship through investment to share best practices used for due diligence process for such programs:

 

“Malta will be the first EU member state to have a blockchain strategy and among the first countries in the world to regulate exchanges for cryptocurrencies”

 

www.ellulschranz.com

 

 

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Malta mentioned for the second time as the destination for 2018!

Categories Business, Modern, Residence, EconomyTags , , ,

Following Lonely Planet’s choice as one of the countries to visit in 2018, Malta is being chosen for the second time in one week as one of the main destinations of 2018. Malta has been mentioned in another respectable magazine, Architectural Digest. The AD Magazine follows the most attractive destinations to visit to explore culture, national heritage and natural beauty, has yet again chosen Malta as one of the places to visit in 2018. Architectural Design Magazine, stated the following:

“Named the 2018 European Capital of Culture, Valletta is a UNESCO World Heritage Site famous for its 16th-century fortifications created by the Knights of the Order of St. John of Jerusalem. The festivities planned will extend far beyond Malta’s capital, with some 400 events and 140 projects by 1,000 local and international artists, curators, performers, writers, designers, and filmmakers.”

AD also referred to the sunny and welcoming islands of Malta as “one of the most emerging and exciting destinations”. Malta’s Minister for Tourism, noted, that such positive feedback and recognition of Malta only proves once again that it is crucial to safeguard and preserve Malta’s heritage, traditions and culture. Consequently, MTA and the Ministry for Tourism will keep working together to ensure that Malta continues to stand out as one of the most culturally attractive destinations for travel.

www.ellulschranz.com

Posted on Block-Chain-Cryptocurrencies

Malta Stock Exchange wants to be one of the world’s first to use blockchain

Categories Business, Economy, Blockchain, Cryptocurrency, RegulatoryTags , ,

Blockchain Malta – MSE

With technological innovation and growing demand for efficiency and cost-effectiveness, businesses as well as relevant authorities have to establish procedures and regulations to ensure that interests of the involved stakeholders are protected.  Blockchain is now  an everyday buzzword. Blockchain is an efficient and secure method of recording and confirming transactions where participants hold complete records of transactions through peer to peer verification, without the need for a central clearing house, which simplifies the overall process, speeds it up and decreases associated possible costs. Its potential uses are immeasurable and could change the way business, as we know it, is done.

Countries are working on developing a way to properly and officially integrate  Blockchain into everyday way businesses and Authorities operate, but it is, of course a complicated process which needs to address a number of potential issues, as well as ensure that all the parties’ interests are protected.  Malta is currently on the forefront of the development of Blockchain and use of cryptocurrencies.   The strategy being implemented by Malta is to ensure  protection for investors, while at the same time being efficiently and transparently regulated.

The Malta Stock Exchange (MSE) has sensed the potential and has created a Blockchain Committee almost a year ago. This committee put Industry experts and leading consultants to identify ways in which the exchange could benefit from the use of Blockchain as well as exploit the opportunities arising from cryptocurrencies.  They now seem to be taking it to the next step by issuing a tender in the near future to evaluate whether Blockchain technology would be  suitable for its operations. Joe Portelli, Malta Stock Exchange Chairman, commented, that MSE  has “every intention of being one of the first exchanges in the world” to adopt it.  The MSE would also soon be listing institutional products like asset-backed securities, which would help the Exchange to compete with the Luxembourg and Irish jurisdictions, he said. By the end of 2018, the forecast is that the listing platform would contain about 20 companies, against today’s 5.

Malta at the forefront of Blockchain implementation.

This is further proof of Malta’s intention to develop efficient and effective  systems, regulations and procedures to ensure that the country moves forward together with the technological development rather than against it. Yet another reason for entrepreneurs and businesses to consider Malta as their destination of choice.

www.ellulschranz.com

Contact us to find out more about virtual currencies and blockchain on [email protected], by calling us on +356 20 10 30 20 or  via our live chat!

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MFSA Consults on Investments in Virtual Currencies

Categories Business, Modern, Economy, iGaming, Remote Gaming, Financial Services, Blockchain, Cryptocurrency, RegulatoryTags , , , , , , ,

With the fast pace of technological development in the world, Malta aims to become the first country in Europe to regulate virtual currencies. Changes are inevitable, and constant development needs to be embraced and adapted to. Especially for Malta being an iGaming and financial services hub, virtual currency can’t be ignored, therefore authorities representing the industries which are directly effected by technological development, and virtual currencies in particular, had to take this matter seriously, especially considering possible involved risks.

Malta Financial Services Authority has launched a consultation paper on the regulatory framework for regulation of virtual currencies. The paper proposes rules and policies to be introduced to ensure market integrity and investor’s protection.

Guidelines are being  developed to regulate PIFs (Professional Investor Funds), which objective is to invest in virtual currencies. Furthermore, the Authority is considering a possibility of AIFs (Alternative Investment Funds) to be able to invest into virtual currencies.

Considering the risks associated with the collective investment schemes including virtual currencies in their portfolios, the Authority decides that structures for PIFs opting for such investments should be limited to SICAV and INVCO structures. Reason for such decision being that such structures are required to have a board of Directors caring the responsibility for the overall conduct of business of these collective investment schemes.

The consultation paper is primarily developed on the existing background of rules applicable to PIFs, adding further rules which are designed specifically to limit and mitigate the risks associated with virtual currencies and investment in such. The proposed framework primarily aims at protecting the investors’ interests through imposing specific requirements on governing authorities of the collective investment schemes, as well as collective investment schemes’  service providers in relation to risk warnings, quality assessment, risk management and required competence level, besides others.

Proposals are still subject to revision based on the feedback to be received from the stakeholders of the industry. Stakeholders are to submit their feedback for further consideration by the Malta Financial Services Authority by no later than 10th November, 2017.

Contact us to find out more about virtual currencies and blockchain on [email protected], by calling us on +356 20 10 30 20 or  via our live chat!

Posted on VAT Advisory

Indirect Tax – European Commission proposes reform of the EU VAT System

Categories Business, Tax, Economy, Regulatory, VATTags , ,

Background

The European Commission (EC) estimates a loss in VAT revenue of €50 billion every year as a result of cross-border VAT fraud. In an effort to combat this issue and introduce a ‘more modern, robust and simpler’ system, the EC published a series of fundamental principles and key reforms which, if embraced, will have a significant impact on current VAT practices and the relevant stakeholders.

The EC envisions the implementation of the long-term plan with effect from 1 January 2022, which includes the introduction of a new definitive single European VAT Area. Meanwhile, in preparation for such major overhaul, ‘cornerstones’, ’quick fixes’ and the concept of ‘certified taxable persons’ have been proposed and are foreseen to come into force on 1 January 2019 subject to consultation at European Parliament and unanimous agreement by the European Council.

Cornerstones

The following fundamental principles, or ‘cornerstones’, being proposed by the EC will change drastically the transitional VAT rules currently in place for cross-border supplies of goods.

  1. The principle of taxation at the Member State of arrival for intra-European Union (EU) cross-border supplies of goods.
    Under this principle, the VAT rate of the Member State of destination is charged and the current VAT exemption on intra-community supplies of goods at the Member State of departure is abolished.

 

  1. The confirmation that, as a general rule, the responsibility of charging and collecting VAT in cross-border supplies of goods is vested upon the supplier.
    The proposed rules allow an exception to the general rule where the buyer is a reliable taxpayer and meets the criteria of a ‘Certified Taxable Person’ (CTP), in which case the liability for payment of VAT in the Member State of destination is shifted upon the customer.

 

  1. Extension of the One Stop Shop, through which businesses will be able to submit declarations, pay VAT which is due in the Member State of destination as well as claim deductions via a single digital portal in their home Member State, as currently in place for electronically supplied services.
    National tax administrations would transfer any VAT due to each other directly. This measure, in combination with a simplification of the VAT invoicing rules, whereby vendors would still be allowed to issue invoices in accordance with their local rules, shall facilitate VAT compliance and reduce red tape.

Quick Fixes

The EC presented the following four short-term quick fixes to improve the current VAT system:

  1. Simplifications of rules for ‘call-off stock arrangements’
    Where goods are moved from one Member State to the other for storage purposes before being supplied to the customer, who would be known in advance of the transfer, the transaction is considered as a single supply rather than two distinct supplies. Such measure removes the need for a separate VAT registration in the Member State where the stock is located. The simplification is limited only to CTPs.
  1. Chain transactions simplifications
    Applicable where supplies in a chain do not lead to the actual transfer of the goods. The simplification is limited only to CTPs.
  1. Simplification of the proof of transport required for the exemption of Intra-Community supplies
    The simplification is limited only to CTPs.

4. Confirmation that, in addition to the proof of transport, the verification of the VAT number of the parties involved as per the EU VAT-number verification system (VIES) is an essential requisite in order for the cross-border VAT exemption to be applied under the current rules.

Certified Taxable Person

A business established in the EU can apply for the status of CTP from its national tax authority, which would allow the trusted VAT taxpayer to benefit from the simplified and time-saving measures. The pre-defined criteria to obtain such attestation are:

  1. Regular payment of taxes and absence of serious criminal offences or infringements;
  2. Reliable internal controls; and
  3. Proof of solvency

Such status is comparable to the Authorized Economic Operator status for customs purposes and is recognized across all Member states.

Concluding Remarks

These proposals represent a positive step forward towards the notion of a Single EU VAT area. Having said this, in order for the new rules to come into force, Member States must reach unanimous agreement at the European Council level, which itself is no mean feat. The tangible impact of the proposed changes can be determined upon the issuance of the detailed provisions, which are expected in Spring 2018.

For further information, please refer to the official EC website.

Or contact our team on [email protected] or +35620103020

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Malta Budget Review 2018

Categories Business, Tax, EconomyTags

In his introduction to the 2018 Malta Budget Speech of October 9, 2017, the Minister of Finance, Prof. Edward Scicluna, presented the 2018 Budget. This summary provides a brief overview of the measures announced by the Minister of Finance and the Notional Interest Deduction Rules published on October 5, 2017.

Income Tax:

 A tax refund of between €40 and €68 will be granted to all employees with an income lower than €60,000 per annum. The rate of the said refund shall be based on the annual gross salary of the employee earned during the calendar year 2017. The reduction in tax shall be in the form of a cheque.

Pensioners whose pension income is not more than €13,200 shall not be subject to tax. A weekly adjustment of €2 to pensions was also announced.

Individuals who are under the age of 40 years and decide to continue their studies equivalent to a MQF7 and MQF8 will not pay any income tax for up to two years subsequent to finishing their studies.

Value Added Tax and other Indirect Taxes

 The concept of VAT Grouping for the Regulated Financial Services Sector and the Gaming Sector will be introduced. Through VAT Grouping entities having an independent legal personality, a Maltese fixed establishment, and are regulated to operate in the financial and gaming sector, can register as a single entity for VAT Purposes. This would mean that intragroup supplies will fall outside the scope of VAT.

The exemption threshold from the charging of VAT on services provided by SMEs shall be increased from €14,000 to €20,000.

The refund scheme on VAT paid on bicycles and pedelec bicycles will be extended by another year, and the scheme will also be opened for companies which offer such bicycles for hire.

No vehicle registration will be payable on electric cars, and the purchaser of such cars will also be exempted from paying a road licence for the first five years.

The excise duty rates of steel bars and rods under the HS Code will be adjusted in order to ensure a level playing field compared to similar products.

Duty on Documents and Transfer

 The tax scheme for first time buyers introduced in 2014 and resulting in no duty due on the first €150,000 will be extended for another year.

Individuals, termed second time buyers, who sell their residential home, being their sole owned immovable property, and acquire another, shall receive a refund up to €3,000 of the duty on documents paid on the acquisition of the second home. The said refund shall amount to €5,000 if the buyer is a person with special needs.

The rate of duty on documents applicable on the acquisition of immovable property in Gozo will remain at the rate of 2% instead of the default 5%.

Other measures

Changes to the MicroInvest and Business START Schemes were announced. Assistance under the MicroInvest scheme will be increased from €30,000 to €50,000 for companies based in Malta, and to €70,000 if the company is based in Gozo or predominantly owned by women. The scheme will also be extended to companies that employ more than 50 full-time employees.

The Individual Investment Programme will be extended for another year to attract more investment into Malta.

The benefit for families where only one of the parents is in employment will be increased from €350 to €450 for each child.

The Government will be setting up a Task Force as a centre of excellence in Blockchain technology.

A working group has been set up to explore the opportunities that may come about with Brexit.

An extra day of leave will be granted to all employees, from 24 days to 25 days.

Notional Interest Deduction

 The awaited rules relating for the Notional Interest Deduction (‘NID’) was published by the Minister of Finance on October 5, 2017. The provisions regulating NID can be found in Article 14(1)(o) of the Income Tax Act, and in Legal Notice 262 of 2017. The rules regarding NID came into force with effect from year of assessment 2018.

Under the concept of NID the ‘undertaking’ (a company or a partnership resident in Malta or a permanent establishment situated in Malta of a company or a partnership that is not resident in Malta) have the option to claim a deduction of notional interest deemed to be incurred on the risk capital against their chargeable income. The NID is calculated by multiplying the ‘notional interest rate’ and the total ‘risk capital’ of the undertaking as at financial year end.

For the purpose of calculating NID, the notional interest rate shall mean the risk free rate set by reference to the current yield to maturity on Malta Government Stocks with a remaining term of approximately 20 years plus a 5 % premium, and the risk capital of the undertaking includes mainly share capital, share premium, reserves and interest free loans.

Election for the NID is at the discretion of the undertaking. The maximum deduction in any given year cannot exceed 90% of chargeable income. Any excess can then be carried forward to the following year.

 

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The Fundamental Restriction to Establishment

Categories Business, Tax, EconomyTags , , , ,

Dr Christian Ellul,  Director of E&S Group  contributed an article to Finance Malta on Single Market and fundamental rights which it should provide.

The European Union Single Market has been described as one of the EU’s greatest achievements insofar as it grants Member States and its nationals the free movement of goods, capital, services, and labour within the EU. Many countries have decided to join the European Union on the basis of such fundamental freedoms as enshrined in the EU Treaty.

In particular, the freedom of establishment should operate to eliminate all the restrictions for nationals of a Member State’s territory to establish themselves in another Member State, as well as the restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established within the territory of another Member State.

Such freedom of establishment is granted under the conditions laid down for its own nationals by the law of the country where such establishment is effected. A number of ECJ judgements have rightfully confirmed that such establishment should not be fictitious and should therefore not constitute ‘wholly artificial arrangements’ and should carry out real economic activity.

On this basis, a lot of international companies have benefited from the right of establishment and opted to set up companies throughout the European Union which in turn has allowed for increased trade and economic growth within the European Union as a whole.

The main reason for an EU national to make use of the freedom of establishment is to maximise returns on their investment and increase their profits. For instance, companies might set up a subsidiary in a particular Member State which is geographically located in a way that would make sense for their operations from the logistics’ point of view. Likewise, companies might set up a subsidiary in a Member State where the languages spoken would best suit their operations. Amongst other reasons, companies have also set up subsidiaries in Member States that operate under more favourable tax systems than their home Member State.

Malta tax rates and its favourable tax system present themselves favourably in a regulated onshore centre, one of its many redeeming qualities. Furthermore, Malta has a key geographical position in the middle of the Mediterranean Sea facilitating trade with Southern Europe and North Africa, and along all the main shipping routes. Malta offers English as one of its official languages which gives it a competitive advantage over other Member States, as well as its laws being drafted in English, allowing for added certainty. All these factors make Malta a very appealing option. These advantages, coupled with an EU framework which allows Member States to decide on their respective tax systems, allowed Malta’s financial services industry to flourish.

Recently, however, Malta, together with other Member States which operate under favourable tax systems have come under attack. Malta has been accused of operating as a ‘tax haven’ which leads to facilitation of the process for international companies to avoid or evade tax. A Regional German Finance Minister went as far as to say that a data leak showed that Malta has 70,000 offshore companies. Notwithstanding the fact that Malta’s Company Registry is public and no data leak is needed to obtain such information, this claim would mean that every single company incorporated in Malta, including companies utilised by Maltese nationals themselves, would somehow be offshore. No need to mention that such claims have been rebutted by the Maltese Government.

Unfortunately, such politically driven comments and efforts to undermine Malta and other Member States that operate favourable tax systems would make one wonder how supreme the fundamental freedoms really are nowadays. We have come to a sad point that exercising one’s right to freedom of establishment has led to being branded as a criminal and a tax evader.

With Malta’s accession to the European Union, Malta restructured its financial industry which meant that it had to do away with offshore companies, while still managing to continuously attract foreign companies, due to the reasons mentioned previously. Ex-Finance Minister Tonio Fenech stated that it is unfortunate that Malta’s attractive tax rates are deemed to make it a tax heaven, when all EU Member States, likewise, have the possibility of developing competitive tax rates, which would put them on the same level as Malta’s generous tax system.

For as long as one of the fundamental freedoms allows for nationals to set themselves up in another Member State and such establishment is not wholly artificial, and for as long as tax policy remains the competence of each Member State, then politically driven attacks by certain Member States simply wishing to undermine other Member States due to a loss of tax revenue for them, should be condemned. The European Union Single Market has been a success story for decades. Let’s let it continue unhindered in its stride.

Dr Christian Ellul

[email protected]

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E&S Group becomes a strategic ICO partner to RefToken

Categories Business, New ICO - Reftoken, Blockchain, CryptocurrencyTags , , , , , ,

RefToken has launched the pre-sale of its Initial Coin Offering (ICO) on 2nd October, 2017 with E&S Group as one of its strategic partners. Furthermore, Dr Christian Ellul, one of E&S Group’s Directors, has joined RefToken’s Team as its Legal and Compliance Officer.

RefToken aims to become the world’s first decentralized affiliate platform based on smart contracts and the blockchain concept. The platform will provide opportunity for developers of blockchain-based apps to connect with investors, marketers, brands and other main stakeholders in order for the projects to receive the necessary funding to come to live and go mainstream. Such relationship will be built using latest technology- smart contracts and blockchain, which would allow for the parties to connect without further intermediaries hence allowing efficient and timely execution, while ensuring legitimacy and reliability of such relationships. Furthermore, through use of smart contracts instant and secure transactions will be possible, eliminating the possibility of fraud by any of the involved parties.

While the pre-sale will end on 17th October 2017, the ICO will run from 17th November until 17th December 2017 and the auction will be governed by a smart contract whose code will be open for public review.

Visit www.reftoken.io for further details.

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Malta climbs up the WEF Global Competitiveness Index

Categories Business, Economy, Financial ServicesTags , , , ,

The World Economic Forum has reaffirmed Malta’s continued growth and competitiveness in the business world in the Global Competitiveness Index 2017-2018. Malta moved up in the ranking three places from the previous release, now ranking 37th out of 137 countries.

This publication ranks these countries on 12 main pillars. Of these Malta performed exceptionally well in the areas of higher education and training (30th), labour market efficiency (29th), business sophistication (31st) and innovation (38th).

The reduction of public debt and deficit is a major contributing factor to Malta’s economic performance. The increase in female participation in the labour force is having a further positive impact on Malta’s Economic Performance. The World Economic Forum Report is a highly respected global publication and as such its positive ranking of Malta encourages the Government to carry out further positive changes in this field.

One of the challenges still facing Malta moving forward is the lack of a better-skilled workforce. As Malta’s economy has only recently made a shift to these fields there is a lack of employees who have a high enough level of training and expertise. Moving forward this is a challenge that the Government is working on addressing to ensure that Malta continues to experience economic growth.

This positive ranking from the World Economic Forum further indicates Malta is likely to sustain its continued positive economic growth in the long term.