With more than a 100% increase in 2016, the number of newly established securitization vehicles in Malta is on the rise making Malta more and more attractive in the securitization market. Below are just some of the benefits of setting up this type of structure on our sunny island. Seruritisation: Why Malta?
Maltese legal framework offers a unique combination of benefits for investors. All securitization transactions are regulated by several regulations:
- The Securitization Act (chapter 484 of the laws of Malta)
This Act is also supported by:
- Securitization Transaction (Deductions) Rules, Subsidiary Legislation number 123.128 of the Laws of Malta, and
- Securitization Cell Companies Regulations, Subsidiary Legislation 386.16 of the Laws of Malta.
How does it work?
Securitization is the financial practice of pooling various types of contractual debt or other non-debt assets that generate receivables into a single asset-backed security (or mortgage backed in case of bonds), and selling their related cash flow to third parties.
What type of structure can be used?
The types of securitization transactions that can be included within a Maltese securitization vehicle are vast: from synthetic risk transfer securitization to multiple asset-classes such as credit card receivables, lease/charter payments for aircraft and ships, passing through income/loyalty streams for intellectual property assets like copyrights, trademarks and patents, present assets or future assets, movable or immovable. These are just some of the types, the range of possibilities is much broader, and they all are covered under the license of the MFSA.
What are the rights for securitization creditors?
Some enforcement power on the sale?
The Act requires a “true sale” in asset securitization transaction. The transfer of a securitization vehicle is valid and enforceable on its term, and at the same time it is not subject to the claims of the originator’s creditors in insolvency or otherwise.
Bankruptcy risk?
Securitization vehicles established under Maltese law are bankruptcy remote from the originator by operation of the law. There is an express disposition in the Act which states that no proceedings taken in relation to the originator under any law will have effect on the securitization vehicle, on the securitization assets acquired or any other asset of the securitization vehicle.
Any priority right?
Under Maltese Law, creditors and investors can also benefit from a first ranking privilege with regards to all assets held by the securitization vehicle (except for other securitization creditors to whom the priority was given with the consent of the investors).
Contact
Simona Angotzi
Corporate Administrator
simona.angotzi@whitenovember.com
Simona Angotzi is a Corporate Officer in White November Group Corporate Department.
European Commission proposes new approach to business insolvency in Europe: promoting early restructuring to support growth and protect jobs. The European Commission is for the first time presenting a set of European rules on business insolvency.
Main Elements
The proposed Directive focuses on three main elements:
- Common principles on the use of early restructuring frameworks, that will help companies continue their activity and preserve jobs.
- Targeted measures for Member States to increase the efficiency of insolvency, restructuring and discharge procedures, which will reduce the excessive length and costs of procedures in many Member States. That results in legal uncertainty for creditors and investors and low recovery rates of unpaid debts.
- Rules to allow entrepreneurs to benefit from a second chance. They will be fully discharged of their debt after a maximum period of 3 years. Currently, half of Europeans say they would not start a business due to fear of failure.
New Rules
The new rules will observe the following msin principle in order to ensure insolvency and restructuring frameworks are efficient and also consistent throughout the EU:
- Training, specialisation of practitioners and courts, and also the use of technology (e.g. notifications to creditors, online filing of claims) will significantly improve the efficiency and length of insolvency, restructuring and second chance procedures.
- Companies in financial difficulties (especially SMEs) will have access to early warning tools in order to detect a deteriorating business situation and ensure restructuring at an early stage.
- New financing will be specifically protected increasing the chances of a successful restructuring.
- Flexible preventive restructuring frameworks will simplify lengthy, complex and costly court proceedings. Additionaly, where necessary, national courts have to be involved to safeguard the interests of stakeholders.
- Dissenting minority creditors and shareholders will not be able to block restructuring plans on one hand. On the other hand their legitimate interests will be safeguarded.
- The debtor will benefit from a time-limited” breathing space” of a maximum of four months from enforcement action to facilitate negotiations and also successful restructuring.
- Workers will enjoy full labour law protection in accordance with the existing EU legislation throughout the preventive restructuring procedures.
Russia and Hong Kong double tax treaty will apply from 1st January 2017 in Russia and from 1st April 2017 in Hong Kong.
Treaty Benefits and Tax Incentive
The treaty shall open new opportunities for Russian and foreign investors utilising treaty benefits and Russian tax incentives (participation exemption, Eurobond withholding tax exemption, CFC rules).
The treaty is applied with following conditions:
Interest – 0%
Dividends – 5% under the condition that the recipient of the dividends is a company (other than partnership), holds 15% of the capital; all other cases 10%
Royalties – 3%
Capital Gains – 0% as general rule; 20% – capital gains derived from alienation of immovable property, capital gains derived from alienation of shares of a company deriving more than 50% of its assets value directly or indirectly form immovable property , exemption applies in case of companies listed on the Stock Exchange.
The Initiative provides fast-tracked service to highly-specialised third-country nationals who would like to work in Malta. The scheme facilitate work/residence permits issued to prospective employees within five working days from the application submission.
The Key Employee Initiative
New programme for highly-specialised Third-Country Nationals endorsed in Malta
Please see the following conditions:
- Annual gross salary of at least €30,000 per annum.
- Certified copies of the relevant qualifications, warrants or the necessary work experience.
- Declaration by the employer stating that the candidate have all necessary credentials to perform the duties.
- Health Insurance.
- Property rental declaration form.
Don’t hesitate and contact White November for more information!
Send us an email info@whitenovember.com, give us a call +356 2010 4000 or fill a Contact back request in our website whitenovember.com/contact-us/.
In accordance with the OECD BEPS Action 5, Cyprus has abolished the existing IP box scheme, with effect from 30 June 2016, with transitional rules applying until 30 June 2021 for companies already using the old scheme (applicable with restrictions). The new Cyprus IP box scheme which has been introduced and is effective as from 1 July 2016 provides for a 80% deduction for profits from qualifying IP.
Effective tax of 12.5% on 20% of the qualifying profits as a result
This results in an effective tax of 12.5% (same as corporate tax rate in Cyprus) on 20% of the qualifying profits.
Qualifying IP types include intellectual property assets developed by a person as a result of research and development activities such as patents and copyrighted software. Marketing related IP such as trademarks, image rights and brand names do not qualify.
Currently all Polish investment funds – open-ended and closed-ended – as well as their equivalents from the EU and EEA have been fully exempt from Polish taxation on all types of profits derived in Poland.
The exemption covers income tax, capital gains tax and withholding tax. It is proposed that the exemption shall be cancelled. Instead it is proposed to exempt only certain types of profits derived by open-ended funds only or by their equivalents from the EU or the European Economic Area Member States. The exemption would cover only the following types of profits:
- interest
- dividends and dividend-like distributions
- capital gains from the sale of receivables, shares and stocks as well as other securities, including derivative financial instruments and foreign exchange gains
The new proposed legislation would fully exclude all closed-end investment funds from tax exemption. All profits of such funds derived from Poland would become subject to Polish taxation at the 19% rate.
It is proposed that the changes will come into force on 1 January 2017.
Do not wait for the change and passport your license to Malta. White November can help you! Send us an email info@whitenovember.com, give us a call +356 2010 4000 or fill Contact back request in our website whitenovember.com/contact-us/.
Cyprus is well established as a favourable jurisdiction in Europe for business structuring and international tax planning. By ensuring proper long-term oriented tax planning and structuring are optimised of the Cyprus Company in the International Tax plan is in place that will provide tax optimisation and thus having a return on investment. Due to the fact, that Cyprus has a distinctive combination of advantages including a unique location, solid legislation and strong professional environment, these factors and more have resulted in Cyprus becoming one of the most attractive countries for the incorporation of International Business Companies (IBCs) in Europe over the last decade.
Management and Control
Principally, all Cyprus Tax Resident companies are taxed on the worldwide income accrued or derived from sources in Cyprus and abroad. A company is considered as a Resident Cyprus company if it is managed and controlled in Cyprus.
Corporate tax
The Corporation Tax in Cyprus is 12.5% which is uniform and it applies on trading profits, making it one of the lowest in Europe.
Taxable losses
If a company incurs a loss during a tax year, then this loss can be carried forward and used for tax relief of next year’s profit. Similarly, in case the company does not make profit then it can utilise the accumulated losses against the first available profits. The offset against the profit must arise during the next 5 years that the losses were created, otherwise this carry forward opportunity will be lost.
EU Directives
Cyprus having EU membership, and therefore use of EU Directives is also allows benefits to other Third countries. Application of some key EU directives are as follows:
1. Merger Directives –Resident and Non-Resident Companies have no taxation obstacles or consequences relating to reorganisation, mergers, divisions, transfer of assets and exchange of shares
2. Parent / Subsidiary Directive – Withholding tax is not paid on dividends and has immediate effect as long as there is 10% minimum shareholding and 2 years of holding. The tax is withheld abroad and the dividend is exempt in Cyprus (subject to conditions)
3. Interest / Royalty Directives – Withholding tax is not paid on the interest to Non–Residents and has immediate effect provided there is 25% minimum shareholding (only in case of royalties) Royalties are subject to corporation tax.
