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Money matters

bank accounts/tax - split from other thread

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Postby Playbyte » Sat 28 Sep 2013 19:39 GMT

Having read lots of posts on the forum I think that I am getting most things sorted in my head so thanks to all who have contributed.

My latest question is about Malta tax. We intend to be self sufficient relying on our collective pensions that will be paid into our UK bank account. I understand that we can use an ATM on a daily basis to draw fund from our UK account and that it will cost for each transfer.

My question is, If we have a Malta Bank account and arrange to transfer funds from UK to Malta would we have to pay Tax on the amount arriving in Malta, taking into account that we would have paid tax in the UK on some of it, and how much tax would that be?

We have read in another post about using offshore accounts to transfer funds but if we are able to transfer funds using the internet what advantage would there be to pay for this other transfer service?

Anyhow, we now wait for the response to this post with bated breath and our thanks for you all helping us.

Playbyte
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Postby steveclv » Sat 28 Sep 2013 20:01 GMT

That is a very complicated issue because it depends upon your "Tax Residency" - as you were born in the UK and still have ties there (UK Bank Account) then the UK will treat you as Tax Resident for any income arising in the country - you will therefore be taxed by the Inland Revenue on it. When you remit money to Malta where you are also Tax Resident as you live there for more than 6 months of the year, then you will be taxed by Malta on it.

HOWEVER, a double taxation treaty is in place which means that you will declare the taxes paid to Malta who will deduct them from the taxes due - typically that means that if you paid Tax in the UK then you don't pay (much) tax in Malta on that money.

You will need to get professional advice however as individual circumstances and mitigations may apply.
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Postby gozomark » Sat 28 Sep 2013 21:33 GMT

Playbyte wrote:, If we have a Malta Bank account and arrange to transfer funds from UK to Malta would we have to pay Tax on the amount arriving in Malta, taking into account that we would have paid tax in the UK on some of it, and how much tax would that be?


it depends :-)

are you tax resident in Malta ?
is it capital/capital gains or income you are importing ?

if you are tax resident and its income, then you are liable to taxation BUT you have a tax free allowance, and probably can offset the tax already paid on it through the double taxation treaty
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Postby Playbyte » Sun 29 Sep 2013 06:19 GMT

Thank you Steve and Mark, your replies help a lot.

There are still issues around this as once we move to Malta we will have sold our house and therefore not have a UK address as a point of contact but we will have a Malta address which I presume we will have to inform our UK bank of if we want to keep the account open.

In order to open a bank account in Malta we would have to have an address in Malta so that would make us Malta Tax residency.

The money being imported, or perhaps being paid direct into the Malta bank account, will be from pensions only and not from any other income.

I am not sure if the UK State pension could be paid directly into the Malta Bank account either so we have that to establish with them as well.
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Postby JJ » Sun 29 Sep 2013 07:51 GMT

I have an 'ex-pat' bank account with one of the main banks in Malta. It's registered to my UK address and they send paperwork there. They were quite clear that they weren't interested in me having an address in Malta or an identity card. Obviously this requires you to have at least a correspondence address outside Malta.

Interesting point in this article http://www.bbc.co.uk/news/magazine-24135021 that apparently banks around the world are refusing to allow US citizens to open accounts because they would then have to report back to the US government.
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Postby gozomark » Sun 29 Sep 2013 11:00 GMT

Playbyte wrote:In order to open a bank account in Malta we would have to have an address in Malta so that would make us Malta Tax residency.



No, having a Malta address doesn't make you Malta tax residency - spending more than 6 months in a calendar year in Malta does
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Postby gozomark » Sun 29 Sep 2013 11:01 GMT

Playbyte wrote:but we will have a Malta address which I presume we will have to inform our UK bank of if we want to keep the account open.



and when you do, they may well tell you that you will have to close your account
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Postby gozomark » Sun 29 Sep 2013 11:02 GMT

Playbyte wrote:I am not sure if the UK State pension could be paid directly into the Malta Bank account either so we have that to establish with them as well.


yes, it can :-)
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Postby Playbyte » Sun 29 Sep 2013 11:39 GMT

Thanks again for the responses.

We intend to live in Malta permanently and become a resident processing all the paperwork once we have a place.

Because we will have sold our UK house, and we have no family, we wouldn't have a UK address that we could use for official purposes which may well also affect our driving licences but as we don't intend to drive in Malta we don't see that as an issue.

So reading Marks response to the address for the Malta bank does that mean we could come on holiday to Malta, open a Malta bank account using our UK address then when we make the final move to Malta change the details of the address with the bank?
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Postby gozomark » Sun 29 Sep 2013 11:42 GMT

Playbyte wrote:
So reading Marks response to the address for the Malta bank does that mean we could come on holiday to Malta, open a Malta bank account using our UK address



it depends - they are getting very strict on opening accounts, but it depends on the banks, the branch, and the mood of the person you see !
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Postby steveclv » Sun 29 Sep 2013 15:07 GMT

If you attempt to open an account at HSBC (Malta) then you will need a Malta address and proof of residence - I know because we just tried it and they informed us that we must be in country before they will consider us.

I even tried to open a EURO account with a UK bank so that I could use a Euro denominated debit card to reduce exchange fees but the new banking laws would not allow that either - the UK banks will now only issue debit cards that are processed in Sterling unless you work with an offshore account which then has crazy fees unless you have very significant wealth on deposit with them.

So until we land in Malta and can establish a local bank account we are having to carry travelers checks (max $10,000) and use a USD debit card and pay the exorbitant exchange rates and fees.

It was better in the 'old days' LOL

It does sound in your case as if you might be better off severing all ties with the UK and becoming non-resident especially if you are planning a permanent move to Malta. The pensions can be paid into any account worldwide and do not affect your resident status. You will simply declare them as income in Malta and pay tax on them after personal tax-free allowances and any mitigations.
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Postby JJ » Sun 29 Sep 2013 18:07 GMT

Steve: I don't know if you can get them in the US or if you have any financial ties with the UK but check out pre-paid Euro debit cards. You transfer money onto the card when you want so you can take advantage of exchange rate fluctuations, and use it as a regular debit card in Malta and the FX rates and fees are competitive. I think they allow balances up to €5,000 or €10,000 and you can have more than one card. More info and recommendations in, yes, you guessed it, the Recommended Suppliers forum.

Also, for the ex-pat account, try a Maltese bank.
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Postby steveclv » Sun 29 Sep 2013 21:36 GMT

Thanks - I'll take a look at them but I know we can't get them here in the US, maybe I can get my UK family to get one. The US ones that I have seen in the supermarkets here have a $500 limit and USD only.

Appreciate the info.
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Postby JJ » Sun 29 Sep 2013 21:50 GMT

Sounds like those are the ones intended for internet purchasing, gifts to young people or for people with poor credit ratings and that sort are available in the UK also.

I have both of what I think are the best two FX cards and I've written up a comparison in the RS forum including which was easier on the ID requirement - but as ever I can't risk the wrath of the rottweiler. You might be able to get one on the basis of a correspondence address in the UK which could be worth a try. Also some of them offer a 'family and friends' card (although they work in slightly different ways) so you might be able to get a relative to get one and even let you in on the on-line access for topping-up.
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Postby PeaCakes » Mon 30 Sep 2013 06:46 GMT

I have an HSBC account in Malta with a UK address only, and it was no problem opening it.
We will change our UK and Malta bank account addresses to Malta/Gozo once we move. We will need to keep a UK account open for a number of reasons, not least our pensions will go there initially before transferring funds over to the HSBC account periodiccally.
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