CORPORATE SUPPORT SERVICES
MAURITIUS TAX TALK
Tax Planning and Business Optimization
“For every tax problem there is a solution which is straightforward, uncomplicated-and wrong.”
We often think that tax optimisation only makes sense for rich people and big companies, but this simply isn’t true; practically anyone can do it.
There are many different situations, as well as options, for tax optimization.
In today’s article, we’d like to leave you with some of them so you can better understand what well-applied “Flag Theory” and the life of the “Perpetual Tourist” can do for you.
Below you will find some examples of people we’ve advised and helped to optimize their taxes and situation. Of course, we’ve changed their names and simplified the cases and, to protect the confidentiality of our clients, we’ve ve presented them in such a way that you cannot infer to whom they refer.
NHR PROGRAMME IN PORTUGAL
Alex is a freelance graphic designer residing in France. Most of his clients reside in France, Austria, and the UK. His annual profits of €50,000 represent a large outlay in social security and income tax. Alex has a weakness for cannabis and does not mind moving somewhere else, but it would have to be a country where he doesn’t have to worry about his penchant for cannabis. Alex is looking for a country to stay in and he doesn’t want to travel all the time. His customers are big companies, and they’d need an invoice to be recognisable as tax deductible without any problems and that includes a VAT identification number.
Alex moves to Portugal, a country where drug use and possession have been decriminalised. He values the quality of life in a country he can easily emigrate to as an EU citizen. As a graphic designer, Alex falls under the professions included in the Portuguese NHR programme. This means he will be able to benefit from a fixed 20% tax on income from most countries, at least for the first 10 years as a resident in Portugal. Income from certain countries is completely tax-exempt, as is the case with income from the UK, for example.
NON-DOM IN ITALIA FOR BIG FORTUNES
Christoph is a world-famous German football star and is considered one of the best players on earth. His salary is tens of millions, but in reality, he earns a lot more with his intellectual property rights abroad. He was recently convicted of tax evasion in Spain for continuing to apply the now abolished Beckham law, under which foreign income was exempt from taxation under certain conditions. Since the fans of his current club are always booing at him, he wouldn’t mind a change of scene.
Christoph transfers from his Spanish club to an Italian one after paying a record sum. His even higher salary is now taxed in Italy at a slightly lower rate than in Spain. However, his main concern was his income from his intellectual property, as well as no longer having problems with his fans. In Italy there has been a little-known non-domicile scheme since 2016. Just as in the UK, Ireland or Malta, non-doms don’t pay tax on foreign income that isn’t brought into the country. Christoph pays the annual fixed fee of 100,000 euros so he can benefit from this scheme in Italy, a derisory sum compared to what he saves.
FINALLY FREE – HOME-SCHOOLER FAMILIES
The Le Carres, a typical French family, with the father in early 50s, are all happy, except for the fact that they’ve decided they don’t want to send their children to school. They think the French education system isn’t a good one, that only tries to brainwash children to think how the state wants them to. However, compulsory education laws in France prohibit them from giving their children the education they want to give them, and the news of a close family who do not send their children to school and to whom social workers are making life impossible has given the last push they needed to decide to leave France. They’ve decided they want to see the world, but that they also need a base, preferably somewhere with a lot of nature. The Le Carre family have an online business and make money selling digital goods. They sell their products through the German provider Digistore24.com.
After weighing up the different options, the Rodriguez family opt for residence in Mauritius, a popular destination amongst expat families who home-school their children. As well as having incredible nature, they can also get organic products, and it’s a safe place. Another advantage of Mauritius over other options is the exemption of double taxes on foreign income that they can easily meet upon immigration requirements. They only have to spend 6 months a year over in Mauritius and deposit 18,000 dollars a year in a local bank account. After 3 years the family will have a permanent residence permit for 10 years. As for the business, they set up an offshore company and open a company bank account in Mauritius. They have the advantage that the Digistore sales platform handles VAT wherever necessary and can seamlessly transfer its customers’ money to virtually anywhere in the world.
LEAD ADVISORY: EXPAT & IMMIGRATION e.swanepoel[AT]templegroup.mu