Malta: the best Non-dom Regime in Europe

Malta: the best Non-dom Regime in Europe, with MALTAway advise and solutions

…from Finance Malta

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The UK General Election held in May brought about a surprise outright Conservative Party victory which has been swiftly followed by a Summer Budget from George Osborne which itself contained a few surprises of its own. Whilst some further changes to the ‘non-dom’ regime were expected it is perhaps without exaggeration to suggest that of all the announcements the swift cutting of permanent non-dom status may hurt those affected the most.

Non-dom status in the UK has hitherto provided a very attractive proposition for wealthy individuals able to attain that status and conferred upon them, rightly or wrongly, a number of tax benefits otherwise inaccessible to UK resident and domiciled individuals.  In broad terms, the changes announced in the Budget mean that a non-dom is no longer able to remain resident in the UK for any more than 15 years before paying tax in the UK on all of their worldwide assets.  The ability to previously shelter non-UK assets from UK tax coupled with all the non-tax benefits of living in the UK has made it a very attractive base for UHNWIs and their families to reside, invest and build businesses there.

So, if the tax changes erode the attractiveness of the UK as a place for non-doms to live, is there a viable alternative and where will this non-dom ‘flight of capital’ flow to?
Malta is consistently ranked as one of the best places in the World to live and offers a high quality Mediterranean lifestyle in a stress-free environment. Malta is a member of the EU and operates a favourable tax regime for individuals and businesses alike.

From a personal tax perspective, Malta offers an attractive non-dom regime whereby expatriates who take up residence in Malta are only taxed on foreign source income to the extent that this is remitted to Malta, whilst capital transfers into the country are not taxable at all.  This is a basic feature of Malta’s tax system which was inherited from the British, albeit Malta’s non-dom regime does not carry any annual charge and provides certainty insofar as an individual being able to maintain non-dom status permanently.

Many expatriates choose one of Malta’s attractive residency schemes to benefit from the non-dom rules.  As a resident of Malta, a primary residential address is required there.

However, it is not uncommon for many individuals to regularly travel overseas and simply use Malta as their home base.  There is no statutory, minimum limit on the number of days a person is required to be in Malta and so in general terms one simply needs to avoid spending too much time in any one other country to avoid the risk of being deemed a dual tax resident.

Below is a summary of the main residence options available in Malta:

  1. Ordinary residence in Malta: This is available to both EU/EEA/Swiss and non-EU/EEA/Swiss nationals, although the qualifying criteria are much easier for the former than for the latter.
  2. Special residence programme (for both EU and non-EU nationals): Beneficiaries are subject to a beneficial flat tax rate of 15% on foreign remitted income, with a minimum tax liability of €15,000 p.a.
  3. Malta retirement programme:  Beneficiaries are subject to a beneficial flat tax rate of 15% on foreign remitted income that is received by them or any of their dependants, subject to an annual minimum tax liability of €7,500 and an additional €500 for any dependant / special carer.
  4. Highly Qualified Persons programme (for senior professionals in the Financial Services, Gaming and Aviation industries, both EU and non-EU): Eligible applicants enjoy a beneficial 15% tax on their employment income for a specified number of years, and pay no income tax on any earnings exceeding €5,000,000.
  5. United Nations pensions programme (for both EU and non-EU nationals): This new programme exempts beneficiaries who are in receipt of a pension or a widow(er)’s benefit from the United Nations, and offers a beneficial flat tax rate of 15% on any other foreign remitted income.

In addition to the above, Malta offers an Individual Investor Programme (IIP) which allows for the granting of full citizenship status, through a certificate of naturalisation – subject to a very strict due diligence process – to individuals who make a contribution to the economic and social development of Malta.  This is an attractive proposition for wealthy non-EU citizens who wish to benefit from full EU citizenship, which confers a number of important rights, including the right to move freely in all 28 EU countries and visa-free travel to more than 160 countries.

So, whilst London may be seen as a ‘cooler’ place to live than Malta, you can still have your cake and eat it by moving there and enjoying its wonderful lifestyle and still being able to spend time in London, Paris, Milan …… Malta gives you choices that non-doms in the UK are fast running out of.

Algorithmic Trading: The Play-at-Home Version

Algorithmic Trading: The Play-at-Home Version

Building computer trading models has become the latest DIY craze

After more than 100 hours of coding over three months, Mike Soule was finally ready to switch on his project. He didn’t know what to expect. If things went right, he could be on his way to financial success. If things went wrong, he could lose his savings.

His creation wasn’t a new mobile app or e-commerce store. It was a computer program that would buy and sell currencies 24 hours a day, five days a week.

DIY’s newest frontier is algorithmic trading. Spurred on by their own curiosity and coached by hobbyist groups and online courses, thousands of day-trading tinkerers are writing up their own trading software and turning it loose on the markets.

“It’s definitely one of those things where you are like, ‘Is this going to work?’” said Mr. Soule, who is a student at University of Nevada, Reno, and a network administrator at Tahoe Forest Health system. “When it finally started trading, wow, wow. I don’t know if that is what I expected, but I did it.”

Interactive Brokers Group Inc. actively solicits at-home algorithmic traders with services to support their transactions. YouTube videos from traders and companies explaining the basics have tens of thousands of views. More than 170,000 people enrolled in a popular online course, “Computational Investing,” taught by Georgia Institute of Technology professor Tucker Balch. Only about 5% completed it, but at an algorithmic trading event in New York in April, three people asked him for his autograph.

“College professors very rarely get asked for their autographs,” Mr. Balch said.

To learn more about the fundamentals of algorithmic trading, Alexander Sommerwatched Mr. Balch’s video lectures.

Now, every weekday morning before work, Mr. Sommer wakes up in Vienna to an email summarizing his coming trades for the day. The email is generated by his custom-built trading platform, which automatically places trades throughout the day using the algorithms he and his three trading partners developed. The four jointly trade about $200,000 of their own money on S&P 500 and Nasdaq Composite stocks.

During the day, Mr. Sommer is a project manager for European oil producer OMV Group. Between 9 p.m. and midnight, the team works on improving its algorithms. Mr. Sommer generally double-checks everything right before the U.S. stock market opens at 3 p.m. his time. After the markets close, he makes sure the right trades were placed. Mr. Sommer and his partners each take turns monitoring their trading system.

Multibillion-dollar, computer-driven hedge funds have drawn scrutiny from congressional panels and regulators. The home-brewed version got attention this spring, when a trader who operated out of his home in West London was arrested by British authorities on U.S. charges that he helped cause the “flash crash” in which the Dow Jones Industrial Average plummeted 1,000 points before recovering somewhat on May 6, 2010.

Programming glitches happen. Mr. Soule was on a trip to Iceland in 2013 when, after a few days of limited Internet access, he logged into his computer at his home and realized something was wrong. His trading account was much smaller than when he started his trip.

“I realized this doesn’t really look right,” Mr. Soule said. “I just halted everything.”

Mr. Soule had updated his trading algorithm before he got on his flight. While he and his friends spent five days driving around the country, his trading software was busy programmatically losing more than $6,000—about 60% of his trading portfolio at the time. The problem turned out to be a typo. The program was accidentally buying twice as much of everything it sold.

“When I got back and saw how simple a bug it was, I was sort of frustrated with myself but I had no one else to blame,” he said.

Algorithms can help traders follow hundreds of stocks instead of just a handful. Strategies can be complex, taking into account breaking news and social media for instance, but they can also be pegged to more traditional price moves.

A very basic algorithm might work like this: If volume in a particular stock hits a certain minimum threshold and the 50-day moving average of the stock’s price crosses above the 200-day moving average, buy $100 worth of shares. If volumes hit the threshold and the 50-day moving average crosses below the 200-day moving average, sell $100 of shares.

Companies have emerged to offer online platforms and tools to retail algo traders. Quantopian, for example, lets users create their own algorithms free of charge and pays users for the ones that perform best. Another company, Rizm, offers a drag-and-drop tool that lets even nonprogrammers create, test and even trade using their own algorithms.

Traders also read online forums, look through Twitter and skim academic finance journals for ideas.

Some of the systems can be built on Microsoft Excel. Many strategies are themselves relatively simple to code. But the back-end work required to test and implement those strategies can be arduous.

“Some of your strategies can only have two lines of code,” Mr. Sommer said. “The work around it can have 5,000 lines of code.”

After his trading glitches, Mr. Soule stopped his algorithm for six months and went back to square one. He researched and began implementing new systems to check his code multiple times before using it again with real money. About a year ago, he said, his algorithms started to be “comfortably profitable,” with winning months starting to outweigh losing months.

“It’s still a hobby for me. It will be nice one day to have my passive income stream far outweigh all of my active income streams,” he said. “I’m not in a rush to get there. I still have enjoyment from having a full-time job.”