Malta: A Tax Effective Gateway into the EU

If you’re looking at for a potential location for your business or residence, Malta offers a great environment where you can relocate to with peace of mind knowing that the country is socially, economically and politically stable. Malta offers many benefits to its residents including:

  • Tax Effective Jurisdiction – businesses can benefit from a 6/7th tax refund making the effective rate of tax 5%. Moreover, there are tax residence programmes for HNWI and investors setting the tax rate at 15%.
  • Malta is an English speaking country with a highly skilled workforce.
  • Economic prosperity with Malta having constantly positivity GDP growth.
  • There are over 70 double taxation agreements in force.
  • Malta is renowned for being a hub to financial services, banking, iGaming, pharmaceuticals, Aviation and Blockchain companies.
  • Cost-effective jurisdiction for businesses making Malta a home for SME’s and international enterprises.

Let’s look at some of the top reasons why you should consider moving to Malta.

Company Formation and Holding Company

Malta is a popular jurisdiction of choice for setting up a company due to the extremely competitive tax system alongside many highly effective double taxation treaties. Malta has a skilled and professional multilingual workforce where English is a national language and Italian, French and Spanish are generally understood. Malta has also been a part of the EU since 2003, which comes with several benefits.

A limited company formation and registration in Malta is a corporate structure that is ideal for allowing business operations. It offers protection with a separation of assets and liabilities from the company’s shareholders. It takes roughly 2-3 working days to incorporate a company depending on the complexity of the structure.

A Malta holding company offers a great opportunity for businesses to not only centralise management and control but it consolidates the companies under one roof. This allows for great efficiency when meeting reporting obligations as well as offering a host of international tax planning opportunities and protection of assets.

Malta Tax Benefits

  • Malta tax refund system enables shareholders of a company registered in Malta to claim up to a 6/7th tax refund of tax paid in Malta. Therefore, we can set up trading companies in Malta to have an effective tax rate of 5%.
  • Participation Exemption is the relief from taxation for a shareholder in a company on dividends and capital gains received from the sale of shares. However, this occurs when a Maltese company holds shares in another entity (qualifying as a Participating Holding).
  • Full Imputation System means that company profits are taxed at the source, but dividends distributed to shareholders are not taxed again. This system is different from the classical system, whereby company profits are subject to tax and shareholders are taxed on dividends.
  • Intra EU-Malta Tax BenefitsMalta has come into line with the various EU directives and tax laws. However, this does open up various international tax planning opportunities for businesses. For example:
    • EU Parent-Subsidiary Directive – eliminates tax obstacles in the area of profit distributions between groups of companies in the EU.
    • Interest and Royalties Directive – eliminates withholding tax obstacles in the area of cross-border interest and royalty payments within a group of companies.

Malta Residence & Citizenship Programmes

  • Malta Residency and Visa Programme (Residency by Investment) – The applicant and any beneficiaries can reside, settle and stay indefinitely in Malta. Moreover, it offers all applicants the freedom to travel freely within the Schengen region and take full advantage of Malta’s membership to the European Union.
  • The Malta Residence Programme – EU/EEA/Swiss applicants are granted special tax status by setting the personal tax rate to 15% on external sources of income remitted to Malta.
  • Malta Global Residence Programme – Non-EU/EEA/Swiss applicants are granted special tax status by setting the personal tax rate to 15% on external sources of income remitted to Malta.
  • Malta Retirement Programme – Applicants are given a 15% flat tax rate on any foreign pension income received in Malta.
  • Highly Qualified Persons Rules – Individuals working within specific positions within financial, gaming and aviation sectors are offered a 15% flat rate of tax on their income.

Malta Citizenship by Investment Programme (also known as the Malta Individual Investor Programme, MIIP) allows high net worth individuals of good standing and repute to be naturalised and to receive Maltese citizenship.

Thomas Jacobsen, Managing Director of Papilio Services Limited, holds licence IIP 046 and has satisfied all requirements imposed by the IIP Regulations. The use of Accredited Agents ensures that the highest standards of quality and due diligence are kept throughout the application process, for the protection and benefit of applicants and the reputation of the Maltese Citizenship by Investment Programme.

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