Taxation

One of the main attractions of the Maltese jurisdiction is the favourable tax opportunities which Malta has to offer. Malta has over the past 25 years developed into a reputable, onshore, full EU member state and offers good tax planning opportunities.

Advocates Primei is very strong in tax planning and tax structuring. We provide assistance in relation to both personal and corporate tax and also indirect taxation (VAT).

Personal Tax

Individuals who are both resident and domiciled in Malta pay tax in Malta on their worldwide income and capital gains. Personal tax is levied at progressive rates ranging between 0% to 35%. The 35% is levied on income which exceeds €60,001.

Persons who are either not domiciled or not resident in Malta pay tax on income arising in Malta and on income arising abroad and remitted to Malta. Hence, income arising abroad and not remitted to Malta is not subject to Maltese tax. Capital Gains arising abroad are not taxable in Malta even if the money is remitted to Malta. This rule provides excellent tax planning opportunities for people who take up a Maltese residence but do not transfer their domicile here. Such individuals usually opt to bring to Malta only a portion of their foreign income – mainly such funds which permit them to live comfortably here – whilst the rest is retained in overseas accounts which would not suffer any Maltese tax.

Attaining a Maltese residence for EU nationals is very easy in view of the freedoms under the EU treaties. Henceforth people may take up residence in Malta for employment or study purposes, or alternatively under the self-sufficiency rule. Malta offers a number of tax planning opportunities. We have substantial experience in helping clients analyse the tax opportunities which Malta has to offer.

View also the information provided under ‘Residence in Malta‘ 

Corporate Tax

Companies, registered or resident in Malta, are subject to income tax on chargeable income at a standard rate of 35% – known as Advanced Company Income Tax (ACIT). However, in view of Malta’s full imputation system of taxation any income tax paid by the company is credited in full to the shareholder upon a distribution of profits, so as to avoid any double taxation of corporate profits. The full imputation system, which has been utilised since 1948 and which is fully compliant with EU directives and ECJ case law, ensures that both resident and non-resident shareholders are entitled for a refund of any tax paid by the company which is in excess of the shareholder’s income tax liability.

Holding companies which satisfy the requirements of a participating holding may also apply the participation exemption and not pay any tax in Malta. 

Detailed information about the tax benefits and tax treatment of Maltese companies can be found in the Article ‘Taxation of Maltese Companies’

Value Added Tax (VAT)

VAT has nowadays become one of the major considerations in cross border deals. Malta has fully adopted the EU VAT directives and hence any Malta based commercial entity needs to comply with the VAT laws. The standard VAT rate in Malta is 18% with other supplies being at 5% and others being exempt with credit. 

Other Tax features

– Malta does not levy any withholding taxes; 

– Malta has no thin capitalization rules or debt-to-equity ratios;

– Malta has no specific transfer pricing rules;

– Malta has no capital duty and wealth taxes;

– No stamp duties on share transfers in companies owned by non-residents;

– Non-residents are exempt from any capital gains on certain share transfers;

– Malta has an extensive treaty network;

– As an EU Member State Malta has adopted the EU’s Parent-Subsidiary Directive and the Interest and Royalties Directive;

– Under the re-domiciliation provisions it is possible to migrate companies into and out of Malta;

– No exchange control regulations and business may be conducted freely in any currency;

– Malta’s financial services legislation and tax laws are complaint with EU directives;

– Malta has strong and effective Money Laundering Laws and Regulations

– Malta’s legislation offers regulated professional trustees which may provide fiduciary and trust services.