Malta Tax System
Over the past 18 years, Malta has developed into a very attractive jurisdiction for international businesses and entrepreneurs. The main reasons for this are the extensive tax benefits that are exclusively offered to such foreign investors. Amongst such benefits are;
- 5% income tax rate on trading income: by far, the lowest within the EU
- 0% income tax (ie; no tax, full exemption) on dividends received in Malta from a foreign subsidiary
- 0% capital gains / stamp duty (ie no tax, full exemption) on the transfer of shares of a Malta Company: ideal for start-ups and businesses that aim to grow value for a future sale
- Extension on the tax payment date: 18 months after year end.
History
Malta joined the European Union in May 2004 and is the smallest member state. As part of its treaty with the E.U. Malta negotiated the use of its tax refund system. Malta argued that its lack of resources required that such systems be put in place to allow for Malta to be able to compete with other member states. The system is therefore approved by the E.U. and 100% legal.
Eligibility
The Malta tax system can only be used by business owners that are not domiciled in Malta (ie: are not Maltese citizens)
Eligibility to the Malta Tax System requires a two-tier corporate structure to be put in place whereby;
- A Malta trading company will be set up to carry out the company’s trading activities. The trading company must always be based in Malta
- A holding company will be set-up to hold the shares of the Malta trading company. This holding company will in turn be held by the structure’s owner (whether a company or individual)
Furthermore, the structure must include at least one non-resident. As a result, we include a foreign based holding company into the structure when the shareholder intends to personally reside in Malta. When the shareholder does not intend to reside in Malta, we may opt to include a Malta holding company within the structure.
FAQ: Where would the foreign holding company be set-up? Can you handle this too? Technically speaking, the foreign holding can be set-up anywhere in the world, except Malta. Having said that, there are several factors to keep in mind when choosing the ideal jurisdiction. Including jurisdiction repute, tax efficiency and costs. We would provide our recommendation and handle the process in its entirety.
Incorporation Process / Due Diligence Requirements
Our Promise
Our firm is made up of professionals that can assist with both the incorporation process and ongoing maintenance of the corporate structure. We will take full responsibility to ensure that your company is compliant with all its reporting and tax obligations.
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