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Tax & financial seminars in Portugal

By Portugal team
This article is published on: 21st September 2023


Are you an expatriate living in Portugal and looking to understand
more about your tax and financial situation?

Join us, and our panel of guest speakers, for informed guidance on Portuguese resident tax and financial planning opportunities, commentary on investment markets and to meet like-minded people in your local area.

10th October 2023
Magnolia Hotel
Estr. da Quinta do Lago, 8135-106 Almancil
10am – 1pm

11th October 2023
Boavista Golf & Spa
Quinta da Boavista, 8601-901 Lagos
10am – 1pm

Tax & financial seminars in Portugal

Engage with our chartered financial planners and tax advisers

  • Demystifying jargon: Understand key terms like residence, domicile, NHR, visas, day counting, and where and to whom taxes should be paid
  • Avoiding costly pitfalls: learn from common mistakes and discover strategies to prevent them
  • Real-life case studies: Business and property sales, personal investments, UK ans offshore pensions, inheritance tax, domicile and personal taxation.
  • Investment fundamentals: Understand risk and volatility, investor psychology, tips and traps of investing and portfolio building
  • Interactive Q&A: Have your questions answered during our open session

Experience a unique opportunity to ‘look over the shoulder’ of a fund manager with RBC Brewin Dolphin

  • Find out how they create and build portfolios: the principles, processes, data and tools
  • Discussion: current markets, trends and forecasts
  • Interactive Q&A: ask anything during the open Q&A
RBC Brewin Dolphin

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    Top tips for expat finances – Spain

    By Chris Burke
    This article is published on: 18th September 2023


    Well, thank goodness that heatwave is over and I can venture out during daylight hours again! September and October for me are the absolute best times of the year here in Spain, great comfortable temperatures, less people (tourists) around and the sea has been warmed up over the summer.

    This month’s Top Tips are as follows:

    • 7P tax exemption rule – do you travel outside of Spain at least two weeks a month?
    • Property price forecast UK & Spain for the end of 2023/2024
    • Why should I speak to a Financial Adviser (a good one, that is 😊) in one sentence?
    • 90’s nostalgia advert

    7P Tax Rule

    One of the most common questions people ask me is ‘As I am not on the Beckham Law, how can I reduce my taxes?’ One of the first questions I ask them is ‘how much time do you travel for work outside of Spain?’ If you travel for 2 weeks or more every month, in simple terms you might not to have to pay tax for those days you are away – a significant saving and you may have a tax exemption of up to €60,100 per year.

    The key qualification factors are as follows:

    • You must be a Spanish tax resident
    • The company you are performing the work for must not be Spanish, must be based abroad and not a Spanish entity (but you can be employed by a Spanish company and have been instructed to carry out this work outside of Spain)
    • You must physically be outside of Spain when conducting this work
    • The country you are working in must have a similar tax system to Spain/have a double tax treaty

    If you adhere to all these points then this tax exemption could be applicable for you – please ensure you take professional advice.

    Property price forecast for the UK & Spain, for the end of 2023/2024

    Property price forecast for the UK & Spain, for the end of 2023/2024

    Property is, in my opinion, a great asset to hold and one that every investment portfolio should have. Just like ‘non-property’ investments, the value can go up and down. It can be more ‘hassle’ to manage taking into account tenants, taxes, issues with the property etc. but long term it has usually been a good investment. Governments are starting to make being a landlord a more expensive venture in the UK now – let’s see if Spain follows suit.

    Since covid we have seen that property prices have generally boomed. However, the last 12 months or so things have started to change. New Zealand is in the midst of a property crash, down approximately 18% in a year. Canada is also in a property ‘recession’, down by approximately 15% year on year (most of you probably won’t have heard about these – the news outlets tell you what they want you to hear). Property, just like investment portfolios, does not only go one way, as in up. This year, for the first time in a long time (probably 15 years), I have been advising some clients to sell their UK property investments if they don’t think they will go back there, and it makes sense from a tax perspective. If you are living outside of the UK, at some point you are going to have a decent sized taxable gain/event on that property, (more so in Spain) and even if it is inherited by someone else, it’s unlikely that even then the tax will be avoided/mitigated.

    In the UK, properties valued at up to around £600,000 are ‘still moving’, estate agents tell me. Many people over the next year or two will be coming off fixed rate mortgages they took out during covid (when interest rates were low) and their new mortgage repayments will at least double under current rates. They will have the choice to either swallow this extra monthly cost or sell (some will have no choice). Taking all of this into account, forecasters are predicting the UK property market will decline – it is already stumbling at best, with a slow down in sales and asking prices not being achieved generally.

    In Spain things are slightly different, and one of the driving factors is that you can fix your mortgage rate for life, meaning you have much more stability of payments moving forward – they can only reduce (if you re-mortgage when rates come down…if and when they do). Research says that the property market is booming in Spain. However, with approximately 15% of the property bought in Spain last year acquired by foreign buyers, taking into account what’s happening elsewhere an economist might say this impact will inevitably have a ripple effect at some point.

    Some professions will always be able to be performed from home, however many companies are also starting to ask employees to return to the office. This could put an end to ‘we can work from anywhere, let’s go and live on an island/in the countryside’.

    In summary I would say the Spanish property market is at best coming to a slow down, at worst a decline of some proportion. Of course, if you are holding this property for the long term then this will be of less importance. But considering the prices are the highest now they have ever been, and mortgage rates are much higher than they were, taking on a property now might mean you ‘have’ to hold it for a long time to realise its value.

    Why should I speak to a Financial Adviser, in one sentence!?

    Why should I speak to a Financial Adviser, in one sentence!?

    A good adviser will make you more knowledgeable, financially organised, take the strain away from your finances, make your money work hard for you and always be there for you with sound advice whenever you need it (even if they don’t know all the answers, they will do their best to get them for you), always putting your needs first.

    If you would like any more information, or to talk through your situation initially and receive expert, factual advice, don’t hesitate to get in touch with Chris.

    Le Tour de Finance in Italy

    By Gareth Horsfall
    This article is published on: 16th September 2023


    I’m going back on the road!

    As a resident in Italy, do you make the most of your finances? Join us and our panel of guest speakers, for informed guidance on Italian resident tax and financial planning opportunities, commentary on investment markets and to meet like-minded people in your local area.

    Tuesday 17th October 2023
    Castello Semivicoli

    Wednesday 18th October 2023
    Villa Anitori
    Le Marche

    The event starts at 10.00am with a welcome coffee, followed by brief presentations from international experts on a range of topics that could affect you now, or in the future. The morning ends with a complimentary buffet lunch and wine.

    For those of you who have known me for sometime, you may remember the days when I was out on the road holding seminars and bringing experts from the world of finance to various places around Italy. After a hiatus, I was about to restart in 2020 and then the dreaded lurgy raised it’s ugly head. Well, now that all seems to behind us, I decided that since my world is more commonly becoming a series of daily video and phone calls, that I wanted to get back out and talk to people in person again.

    I miss these events and am really keen to get out and listen to your comments and concerns from a financial planning point of view, for residents in Italy. So, I decided to restart them and and as you can see from the flyer above, I am doing so in Abruzzo and Marche on the 17th and 18th of October, respectively. I would love to see you if you are in the area or would just like to travel and listen to some people from the world of finance and what they have to say on past, present and future events.

    In this Tour de Finance, I have organised an all female line-up
    (which will make a nice change from the usual panel of men in suits):

    Stefania Falcone from Currencies Direct to talk about foreign exchange and the possible direction of currency movements

    Lorraine Reddaway, Business Development Manager and Joy Callender, Senior Investment Manager, Dublin from RBC Brewin Dolphin Asset Managers to talk about the risk of investing in the world today and their view on the direction of world markets and asset classes

    Judith Ruddock from Studio del Gaizo Picchioni commercialisti

    The dilemma: cash or investment markets?

    By Portugal team
    This article is published on: 12th September 2023


    With rising interest rates, we have seen banks offering interest rates in excess of 4% or even higher with 1-year fixed terms. This coupled with the perceived risk of investment markets and the constant stream of negative news has left many wondering whether staying in cash is best.

    Short term goals
    Cash certainly has a place as an emergency “buffer” to allow for life’s unexpected events, and it is also sound financial planning to set aside sufficient for your short-term needs. Likewise, holding cash as part of an investment portfolio is important and it can help reduce the effects of volatility often seen in markets.

    Cash as a long-term investment
    Interest rates offered by banks to customers rarely beat inflation, so using this as a long-term savings strategy is not ideal.

    Even with rising interest rates, the returns from cash are still negative when you consider that inflation currently sits at 7.9% in the UK, so investors are not getting any real returns. As an example, the negative effect of a modest 2% inflation on £100,000 over 10 years is £82,035 and £67,297 over 20 years.

    However in the longer term, interest rate cuts are likely as the Bank of England is starkly aware that keeping interest rates high risks triggering a recession and destabilising the UK housing market. Central banks globally are also now close to pausing and then reversing recent rate hikes.

    Protect yourself against inflation
    Investing in high-quality company shares has been shown to offer inflation protection. Looking at long-term figures, Credit Suisse show that over a 123-year period starting in 1900, shares in developed equity markets have generated returns of 5.1% above inflation and emerging equity markets have achieved 3.8% over inflation.

    The Credit Suisse figures also show that shares have outperformed cash (and bonds) in every one of the 21 countries its data covers over that 123-year period. This is quite remarkable given this period covers two world wars, two global pandemics, the great depression, the 2000 dot-com bubble, and the 2008 global financial crisis.

    Opportunities elsewhere
    Falling interest rates will provide opportunities elsewhere. For example, bond prices move in the opposite direction to interest rates so a future fall in interest rates is likely to result in capital gains on bonds, or holding shares allows investors to not only benefit from the increase in share price over time but income from dividends too.

    If we look at the top 100 shares in the UK, analysts are expecting a dividend yield of 4.1% this year and 4.4% in 2024 and with the possibility for share buybacks added into the mix, this could be as high as 6% for 2023.

    Tax considerations
    Always consider the net interest rate you will earn. For example, a relatively attractive rate of 5% becomes a somewhat mediocre return of just 3.6% for a standard Portuguese tax resident who must pay 28% tax.

    Also be cognisant that some of the more attractive rates being offered by banks in Guernsey and Jersey will have a higher tax rate applied of 35%, even if you are a Non-Habitual Resident.

    The solution – balance
    We believe a balanced approach of cash and investments makes most sense. The split however really comes down to your short- and long-term goals.

    In short, cash is still king for short-term needs but for meeting longer-term income and growth objectives, stack the odds in your favour by using a sensible and well-diversified portfolio of shares, bonds and property. Coupling this with effective tax planning can lead to even more savings.

    Lastly, Warren Buffet’s advice as one of the world’s most successful investors is, “The one thing I will tell you is that the worst investment you can have is cash. Cash is going to become worthless over time but good businesses are going to be worth more over time”.

    Are you thinking about moving to Italy?

    By Gareth Horsfall
    This article is published on: 9th September 2023


    If you are thinking of moving to Italy to become a full time resident, or even a resident for part of the year, then it make sense to understand your tax and other financial liabilities before you make the move.

    When you buy a house in Italy, you will very likely receive competent and complete advice regarding the cost of buying and renovating a house. The agent may also explain the difference between the cost of buying as a resident in Italy and a non resident. But, the buying process should be accompanied by a clear and concise longer term financial plan to minimise tax liabilities.

    Italy has its own tax code and its own preferred set of tax efficient savings and investments products and whilst you may think that you can take advantage of the same financial benefits as you have done in your home country they may not represent the best and most efficient ways to hold your incomes and assets, whilst living in Italy. Tax efficient accounts in one country often have no relevance in Italy. But there are alternatives available which could save you money.

    Sadly, and all too often, expats fail to do sufficient tax and ongoing planning for living in a country which has a very different set of rules to their own and as a result end up paying more than they need to, getting fined for simple and honest mistakes and in the worst case scenarios needing to return home.

    At The Spectrum IFA Group (Italy) we can help you to not just look at the initial financial aspects of moving to Italy, but also to help you look at the longer term consequences and avoid any inevitable surprises once you have made the decision to purchase property in the country. We want to ensure that your dream move continues to be a dream.

    We can help you look at the most tax efficient ways of holding your assets and incomes taking into consideration both Italian tax law and that of your home country and ultimately help you to minimise your tax liabilities.

    Cross border Tax Planning involves a complete overview of your types of income, e.g pension, rental income and interest from savings, and also a look at how your assets are structured.

    In the majority of cases we can show you how to simplify your financial affairs in an Italian compliant manner without needing to bring your money into Italy.

    Italy Tax Flow Chart

    The end of succession tax in Valencia

    By John Hayward
    This article is published on: 6th September 2023


    On 28th May 2023, Carlos Mazón was elected president of the regional government of Valencia as leader of the Partido Popular. On 21st July 2023 he announced that his government had approved the initiation of a bill to reduce succession and gift tax (ISD – Impuesto de sucesiones y donaciones – Inheritance Tax to the UK reader).

    The draft bill was placed on the urgent pile with Les Corts on 3rd August 2023 and it awaits absolute approval.

    Mazón’s reasoning was that the income from ISD represents around 1% of the region’s total revenue and that charging tax on money that has been taxed before was not fair. He wants to reduce the tax burden to prevent an inheritance from becoming a “serious economic loss for many families, who have to face its payment, without the inheritance entailing any economic benefit or real increase in their assets.” This seems a very refreshing attitude although his opposition have argued that the wealthy will avoid tax that would generate around €400 million a year. This assumes that the timing of deaths and gifts matches their statistics.

    Succession Tax

    There are conditions to this bonificación in that only close family members and spouses will benefit but that is the same with the existing reduction. The improvement is that, for the majority of spouses and close family members, they will receive a reduction of 99% on the tax bill. Currently it is only 50%.

    All this being said, there is still room for inheritance tax, and gift tax, planning. We experience many complicated situations where, for example, couples are not married or there are children from different marriages. Keeping assets away from the inheritance and gift tax net in Spain, in a legal way, is key, especially for beneficiaries who do not live in Spain.

    We await absolute approval of the bill but, and although this may sound a little insensitive, any deaths, and gifts made, since 28th May 2023 will be eligible for this new law.

    And like buses… Abolition of Wealth Tax in Valencia?

    One at a time, please!

    More to follow…

    To find out how Spanish inheritance and gift tax will affect you and your beneficiaries, as well how we can help you with your existing investments and tax planning, and provide you with ideas for the future, contact me today at or on +34 618 204 731 (WhatsApp)

    Financial update – France September 2023

    By Katriona Murray-Platon
    This article is published on: 4th September 2023


    I hope you all had a good summer. We spent ten days in Andernos and then enjoyed a much cooler ten days visiting family in the UK. Whilst I was in the UK I saw an advert in the paper for a bank savings account offering around 5% interest on amounts up to £50,000.

    However, I noticed that in order to benefit from this rate you would have to commit to leaving the money there for two full years otherwise if you took the money out you would only get around 2% interest. A quick scan of the finance section of the paper showed similar offers. Now, leaving aside the fact that once you are French resident you can’t open a UK bank account, with inflation in July being 6.8% in the UK these rates are still far below inflation. IF you were to have one of these accounts and be a French resident you would need to reduce the interest rate by 30% because that is the French tax that you would have to pay on any gains. Also there is exchange rate risk that needs to be considered.

    Some other accounts were brought to my attention in Jersey. However there is no double tax treaty between France and Jersey so any interest earned would be taxable in both countries.

    I always advise people to take advantage of the French tax free savings accounts like the LDDS and the Livret A and the LEP if you meet the income threshold BEFORE investing. If you add the CEL account to this list it effectively means you can hold around €50,000 readily available cash earning tax free interest. These rates are reviewed quarterly on 1st of February, May, August and November. You will be pleased to hear that there have been no changes to these rates as at 1st August 2023.

    One of the key points about investments is diversification. Not only are the investments we recommend very diversified in terms of geographic location and asset class but if you have invested with us this is usually only a part of your assets.

    finance up in France

    All investments whether it is your house, your bank accounts, or your other investments, involve some level of risk. You only have to look at the history of the rates on the savings accounts HERE or the current concerns about house prices and mortgage rates in the UK, to see that nothing is guaranteed in the long term. But what we can show you from the past performance of the investments we offer is that over the past three or five years they have performed well. And the longer the investment term, the greater the likelihood of strong, positive returns ahead of the rate of inflation.

    Another thing we managed to do at the end of July was to complete our wills and make stipulations about the guardianship of our children. I wrote about guardianship HERE but I admit I never got round to doing anything about it until now. The husband of a French financial adviser that I recently met is the Notaire in an office in our neighbourhood so we were able to make an appointment with him. We hand wrote our wills before the notaire, signed and dated them and then handed them in with a cheque for them to be registered. It was all very easy and I’m glad that it is now sorted.

    By now you should have been able to view your tax statements in your online tax account, if you have any questions about the figures please do let me know.

    After a long and much needed break, I am excited to be back at work and arrange appointments with my clients and those who have contacted me. If you want to speak to me about something please do let me know.

    Looking forward to speaking or hearing from you soon!

    Preparing for the inevitable

    By Richard McCreery
    This article is published on: 4th September 2023


    A few tips on how planning ahead, as well as looking back, can make a difficult time much easier on our loved ones. It comes to us all, but we devote relatively little time to thinking about it: death.

    Unsurprisingly, most people prefer to avoid thinking about their own mortality, but they are keen to ease the pain for loved ones who are left behind. In this short article I’ll take a look at some tips to make this time a little less hard on your family and I’ll even give you an idea of how you can leave behind a moment of happiness for your closest relatives.

    Make ‘The Folder’

    My colleague Gareth Horsfall has written about the importance of ensuring your paperwork is in order and stored where your relatives can find everything they’ll need to get through the formalities that inevitably ensue from your passing. The Folder is a central location (digital, physical or both) where you keep a record of all your assets, your bank accounts, your pensions and investments, as well as a copy of all your important documents like birth certificates, marriage certificates, your social security number etc. And, finally, a list of all your internet and device passwords, of which there could be a lot!

    Modern life can be extremely complicated whilst we are still alive and it becomes even more so when you have to deal with someone else’s affairs that may not be entirely familiar to you. By collecting all the important paperwork and information in one place, you can ease the inevitable administrative burden and show your loved ones that you were thinking about them. And don’t forget to tell them where they can find The Folder.

    the folder

    Close old overseas accounts and companies

    I was once asked to help the wife of a client to deal with some of the inheritance formalities that were required for the settlement of his estate after he died. Wealthy people often have assets in various countries and this can lead to significant extra time and expense when attempting to transfer everything from the deceased’s estate to the beneficiaries.

    For example, the ownership of a British Virgin Islands company can’t be transferred to someone else before probate is granted in that jurisdiction, which entails securing the services of a local qualified lawyer. If that company is no longer needed once the deceased is gone then further fees will be incurred in BVI for closing that company. Multiply this scenario across various foreign jurisdictions and it can become quite costly and time consuming in order to settle the full estate.

    Conclusion: if you can simplify your affairs by closing underutilized overseas companies or dormant bank accounts, it can save your family a lot of hassle and money later.

    Avoid paying more tax than is necessary

    Ironically, inheritance tax is a fact of life. It is often only considered when it has to be paid and it can be surprisingly substantial – in France a house can swallow up any allowances you may benefit from, leaving the remainder to be taxed at up to 45% for children and up to 60% for non-family beneficiaries. By using an assurance vie policy as a vehicle for managing some of your wealth you can substantially increase the tax-free sums your loved ones inherit, they may pay a lower tax rate on the amount that is taxed, you can use the beneficiary clause to choose who gets what and the money can grow free of tax during your lifetime if not withdrawn.

    Everyone hates paying inheritance tax, so when you know that your children can inherit an extra 152,500€ each tax-free if the money is coming from an assurance vie policy, it quickly becomes apparent how much you can save them (don’t forget: in order to get the maximum benefit, you should start your policy before you turn 70). They say there are only two things that are certain in life: death and taxes. Whilst you can’t avoid the first, your family might avoid the second with a bit of foresight and planning.

    Finally, leave them something really personal

    You’ve finished tidying up the loose ends of your life, you’ve done all you can to minimize the tax your family will pay and your affairs have been put ‘in order’. You have made every effort to ensure your passing will be as little of a burden on your beneficiaries as is possible, you have made a difficult time less difficult by thinking ahead. There is also a way to use this moment to bring some joy into the lives of those who love you: by thinking back on your life.

    A memory journal is a little treasure that helps you to record some of the most precious moments of your life, to be passed on to your children or grandchildren. It is a guided book that contains prompts and questions such as ‘How did you meet my mother?’, ‘What was your favourite subject at school?’, ‘Tell me about the happiest or greatest memories of your life’ or ‘What did you feel when you first saw me after I was born?’ It gives you the opportunity to leave your family the story of your life, your most intimate thoughts and feelings, perhaps alongside a few photos.

    Money and paperwork are important, they have to be dealt with. Put everything in order, in advance, and you will be doing your family a big favour. Leave them as much money as you can tax-free and you’ll ensure they will be better off. And finally, a few of your own words left alongside the admin makes this difficult time more bearable. These things are easily put off, you may not even want to think about them, but if you take action sooner rather than later, I promise you will never regret it.

    If you would like to speak me about planning ahead and putting your family affairs in order, please get in touch. I’m here to help and happy to answer any questions with no obligation.

    Expatriate life in Malta

    By Jozef Spiteri
    This article is published on: 31st August 2023


    When expats think about possible destinations for settling down and retiring, several factors come into play. Apart from Malta’s attractive Mediterranean climate, English-speaking locals and great connections to other European cities, the financial advantages associated with living here should also be considered.

    When looking at Malta, apart from the obvious desirable features of the island, there are various visa programs available, offering a range of tax-efficient solutions specifically aimed at expats.

    The following are just some of the options available:

    Malta Retirement Programme (MRP)

    This program is available to EU and non-EU nationals (including EEA and Swiss nationals) who are not employed and receiving a pension as regular income.
    Beneficiaries of the MRP will be granted a special tax status with pension income remitted to Malta taxed at a flat rate of 15%, whilst other income arising in Malta will be taxed at a flat rate of 35%.

    This can be very attractive for expat retirees who are paying significantly higher tax rates on their pension incomes in other countries.
    Although they cannot be employed as such, those retirees on the MRP can hold non-executive roles on boards of companies based in Malta, and they can also engage in activities related to any institution, foundation or trust of a public nature (for example educational, philanthropic, or research and development work in Malta)

    Professional advice should always be sought on suitability to personal circumstances.

    Digital Nomad Visa

    Many professionals are now working remotely – why not do so from a sunny island in the Mediterranean? This visa is valid for ‘third country’ individuals (non-EU, non-EEA, non-Swiss) who are either partners or employed with a company located outside the country. Consultants advising entities outside Malta are also eligible to apply.

    The main requirement is that applicants must be earning a minimum of €2,700 per month.
    Applicants who are accepted will also be allowed to bring over spouses and dependent children to live in Malta. These individuals will be able to take advantage of all that Malta has to offer, including hassle free travel to other Schengen countries.

    A key advantage of this program is that no tax is payable within its first year. Again, professional advice is recommended.

    Citizenship by Investment

    This program is targeted at ultra-high net worth individuals who are willing to make a minimum contribution of €600,000 to the national development fund set up by the local government and who have been Maltese resident for 36 months. Another option is also available, requiring a contribution of €750,000 but with a lower residency condition of 12 months. Additionally, applicants must contribute a further €50,000 for each dependent included in their application.
    €700,000 will also have to be invested into residential real estate or a rental contract of €16,000 per year will have to be established and maintained for five years. A donation of €10,000 will also have to be made to a registered philanthropic, cultural, sporting, scientific, animal welfare or artistic non-governmental approved organisation/society.

    This will lead to citizenship and a Maltese passport after one to three years of residency, which by default also brings European citizenship, enabling these individuals to live, work and study anywhere in the EU.

    Malta Permanent Resident Scheme

    This program is a straightforward residency by investment program. The processing time for applications is four to six months from the submission of a correct and complete application form. The program is particularly valuable for prospects intending to make Malta their second home.
    To be eligible for the MPRP, applicants should:
    • be a third country national (non-EU, non-EEA, non-Swiss)
    • not hail from sanctioned countries, as announced from time to time by the Community Malta Agency
    • not benefit under other pertinent regulations and schemes
    • have sufficient financial resources to maintain themselves and their dependants without recourse to the social assistance system of Malta
    • show they have capital assets of not less than €500,000, out of which a minimum of €150,000 must be financial assets
    • be fit-and-proper individuals and have a clean criminal record
    • not pose any potential threat to national security, public policy, public health or public interest

    Global Residency Program

    The GRP is designed for non-EU, non-EEA or non-Swiss nationals who are not long-term Maltese residents. Individuals applying for the program can work in Malta if they satisfy the necessary conditions to obtain a work permit.

    Successful applicants may also have household staff providing services in their qualifying property if all requisite conditions are met.

    If you would like to know more about these programs feel free to contact our team in Malta. We can outline the various options and determine suitability to your circumstances. All initial meetings and discussions are free of charge and carry no obligation to proceed.

    How do I get maximum benefit from my share options?

    By Barry Davys
    This article is published on: 29th August 2023


    There are many different share option schemes and this can cause confusion. A simple google search “employee share options explained” gives 79.1 million results. Most of these results try to cover the multitude of scheme constructions, variations and possibilities; an almost impossible task.

    Share option schemes vary from country to country, from company to company and even to level of employee seniority or skill. The reality is, despite all these search results you will only know the full details of your share options arrangement when you get your contract.

    Share options are, however, becoming more and more a part of pay packages. I have a reasonable proportion of my clients with these options and several have been able to exercise the right to sell at a generous profit. The tech sector is particularly keen on share options and their employees are keen too as they are fast growth companies which increases the chance of selling the options at a profit. Other sector companies also run share option schemes.

    What is it about share options that is significant for you as an individual (and your family), especially if you are lucky enough to have a significant profit?

    share options
    • Before you leave your company, check what the rules are for your particular scheme. Leaving clauses can include

    → loss of your options
    → Compulsory sale of shares back to the company
    → Sale of the shares in the open market but within a set time

    • Shares you are entitled to can be for a parent company of your employer, the regional company e.g. XYZ Europe of the parent company and even the shares of the company that directly employs you e.g. XYZ SA. It is critical to know which company you have your share options in. I have seen a very sad error when someone sold options based on XYZ Europe share price when the shares were for actual only in XYZ SA. It resulted in a loss instead of profit on the sale of the share options
    • Tax on share options schemes is based on where you as an individual live, not where the company that issues the scheme is based
    • In Spain, profit from share options is added to your employment income and taxed at the corresponding top rate
    • Tax planning is a possibility when selling the shares. However, you must do this before you sell the shares
    • Also, before selling your shares, view the sale as a business owner. You may only be a minority owner but the shares do give you ownership. Assess the sale as if you own and are selling the whole business. This means looking at the likelihood of future growth, increase in profits, and how healthy the balance sheet is. As an employee you will have insight into the company prospects. You will have a gut feel about the prospects for the next year or two. Use this insight to help you decide when to sell for the best profit
    • Options in a US company can result in you having assets in the US. Whilst inheritance tax (estate tax) is only payable on estates valued at more than $12.29 M (2023) for US citizens, the starting value for non-resident, non-US citizens is only $60,000. This is not a typo, it is $60,000. Above this figure, inheritance tax starts at 18% and rises to 40%If you have options over this figure you can mitigate the problem by selling some of your options. Before doing so, take professional advice from a financial planner who is familiar with this problem. Your personal circumstances will dictate whether you should reduce your US inheritance tax liability by selling some options.

    Share options can give a valuable boost to your financial security. Yet, I often see the proceeds of a sale be treated as a windfall and spent quickly and inadvisably. Treats are fun and a healthy part of life. Perhaps, however, use only part of the proceeds for treats. This related article, What to consider when you have sold “your” business gives excellent insight on how to benefit from the proceeds of a sale.

    What next?
    If you are considering selling your share options or if you have share options and wish to discuss your situation, you can book a call with me Barry Davys, using my online system. The system allows you to choose a time that is convenient for you for the call.

    Internal Revenue Service (IRS), USA