Tax in Malta
E&S Group has invaluable experience in offering clients the most comprehensive advice on the Malta tax implications of cross border transactions. We also assist clients with the implementation of international structures to achieve the most tax-efficient solution.
Summary of benefits of registering a Company in Malta:
- Possible refund of Malta Corporate tax to the non resident shareholder of a Malta company (Trading).
- Full tax refund of a Malta company holding a participating interest in another non resident Company.
- No withholding taxes, stamp duties or exchange control restrictions apply on distribution of profits from the Maltese Company to non resident shareholders.
- Low Company Formation costs.
Example of a Trading Company registered in Malta
‘Malta Company Ltd (A Maltese Company) makes €1,000 profit on trading activities. Malta Company Ltd pays 35% Tax on that profit. Malta Company Ltd then distributes its profit to a non-resident Shareholder. The non-resident shareholder is entitled to get a refund of 6/7ths of the tax paid by Malta Company Ltd.
Effective Tax Payable for a Trading Company
The effective rate of tax payable for shareholders of trading Companies in Malta (on trading activities) is therefore 5% due to the 6/7ths refund available to non-resident shareholders of the company registered in Malta.
A holding by a Maltese Company in a non resident company qualifies as a participating holding if any of the following is satisfied;
- The holding is 10% or more of equity share capital
- The Malta company has an investment of minimum €1.16million held for at least 183 Days
- The Malta company is entitled to appoint a director in the non-resident company
- Where the holding is a furtherance of the Maltese companies Business.
The Profits by the Maltese Company from a ‘Participating holding’ is exempt from tax if one of the following is satisfied:
- The non-resident Company, in which the Malta Company has invested in, is resident in an European Union State; or
- It is subject to foreign tax of 15% or more; or
- It does not have 50% or more of its income derived from passive interest and royalties
If none of the above conditions is satisfied, the both the below conditions need to be satisfied for the participation exemption to apply to the Malta Company:
- The holding of the Maltese company is not a portfolio investment. If the non resident company derived more that 50% if its income from portfolio investments this will be deemed as a portfolio investment.
- The non resident company has paid foreign tax of more than 5%.
No withholding taxes, stamp duties or exchange control restrictions apply on distribution of profits from the Maltese Company to non-resident shareholders, and these dividends can be expatriated without any res
By setting up a company in Malta, this would not affect business as usual of current trading activities. The only amendments required are:
- Change of Trading name (If a different company name is chosen) to that of the Maltese Company.
- Change of head office address to the Maltese registered office on all Company correspondence.
- Setting up of a Business bank account in Malta.
The content on this website is for information purposes only and should not be taken as tax, legal or any other professional advice.
Contact our CBDO on LinkedIn Deborah Vella or email us on [email protected] for more information as well as for a quote. We will happily guide you through the company formation process and also advise you on the solutions that would best suite your needs!