Malta Tax and Structuring
With a reputation built on years of industry expertise and sound industry knowledge, Aequitas Legal’s Tax and Structuring Department provides tailored, clear and innovative solutions to both local and foreign clients.
Our team of field specialists has extensive experience in multi-jurisdiction tax structures and regularly advise clients both on personal taxation matters as well as corporate taxation issues. We advise both on direct taxation as well as indirect taxation.
Corporate Tax is one of the key practice areas at Aequitas Legal. We are able to assist corporate entities plan and defer their tax liabilities, allowing the maximum possible utilisation of business profits for dividends and reinvestment.
We also provide representation with the Inland Revenue or VAT office in order to obtain advance revenue rulings or resolve assessments or challenges to tax returns.
Working alongside our corporate administrators, accountancy professionals and third party audit service providers our tax lawyers can ensure that your tax interests are addressed holistically.
The Maltese authorities have made a considerable effort to make Malta an attractive, onshore, jurisdiction for foreign investment. Malta is the only European Member State, which applies the Full Imputation System of Taxation, whereby tax paid by a company is fully credited against the tax otherwise payable by the company shareholders on dividends distributed by their company. This avoids the economic double taxation of business profits. Aequitas Legal offers tailored tax advice to help clients take best advantage of the Maltese full imputation system and the refunds available.
Malta has a network of double tax treaties that are designed to help companies avoid paying tax twice on the same income- for more information on cross border transactions see our international tax pages. To help you achieve your business aims in the most tax efficient way, we offer an integrated tax advisory service, providing tax advice, corporate administrative support and accountancy services.
Maltese Tax Refund System
To date, Malta has adopted a refundable tax system whereby tax paid by a trading company is, generally, refunded to a large extent to the shareholder upon distribution of a dividend. There are a number of available refund mechanisms but the most popular is perhaps the six sevenths refund. The shareholder of a Maltese trading company can receive six seventh of the tax paid by the company on most of its trading income. This refund system is payable to both resident and non-resident shareholders, and applies to the dividends derived from all companies, irrespective of the activity exercised or source (both local and foreign) of the income derived by such distributing companies, bar some exceptions such as dividends derived from profits generated through immovable property situate din Malta.
In addition, Malta does not impose any withholding tax upon distributions of outbound dividends. Neither does it tax the refund. However, the nature of this refund may be hard to determine from a fiscal point of view in certain jurisdictions, and require being determined in practice. Given the correct structuring, the overall tax leakage in Malta will be reduced to five per cent.
At Aequitas Legal we can advise the best way to make the most of the Tax Refund System, and look forward to collaborating with you on the matter.
Malta’s participation exemption or full refund system on holding activities
Malta enjoys a participation exemption which exempts gains derived from participating holdings of 10 percent or more, and tax dividends, from capital gains duties. In most cases, dividends distributed from subsidiaries (EU or non EU) and received in Malta will benefit from this exemption.
Alternatively, the company receiving the dividend can elect to pay tax at the normal rate of 35% and offer, the shareholder a 100% discount. A 35 percent tax rate is applied to dividends from holdings which do not qualify for a participation exemption. Nevertheless, the effective rate of tax can be reduced to less than 10% through a system of shareholder’s refunds.
Aequitas Legal has years of experience in transactions that have significant cross-border elements. Over the years we have worked closely with a number of international law firms advising clients on complex tax structures.
We work with our clients to minimise, and in some cases defer payment of tax, by taking advantage of Malta’s Double Tax Treaties as well as the country’s full imputation system and other tax incentives provided by Maltese Law.
When a company is incorporated abroad, we are able to register a branch of that company in Malta which will then be subject to Maltese tax law. This will enable the company to reap the benefits of the favourable Maltese tax environment without having to set up and administer a separate corporate structure. Furthermore, foreign companies can be re-domiciled into Malta if the law of the state of residence permits such re-domiciliation.
It is always preferable to take steps to avoid litigation, however wherever it is unavoidable we can represent clients in assessments or challenges to their income tax or VAT assessments. Our lawyers pride themselves on their extensive knowledge of Maltese Law and their commitment to providing comprehensive and successful solutions for their clients. All cases are dealt with in an expedient and efficient manner in order to ensure the best outcome for the client.
Capital Gains and Property Tax
Our lawyers have years of experience dealing with capital gains tax considerations, including those derived from immovable property, international property rights and shares.
In addition to property tax advice, Aequitas Legal also offers conveyance services for both international clients and those based in Malta. Our conveyance specialists are all experienced negotiators with a track record for fast, efficient transactions that maximise profit and minimise stress for the client.
Personal Tax & Wealth Management
We advise on a broad range of tax issues for international private clients who seek to take up residence in Malta. We believe in keeping the client at the centre of all operations, taking into account individual circumstances and goals. We have tendered advice on a variety of tax sensitive issues including Income Tax & VAT, pensions, insurance, inheritance, as well as estate planning and Maltese Residency.
Residency & Tax Registration
Malta operates a remittance basis of taxation. This means that expatriates, who are resident but not domiciled in Malta, will only pay Maltese tax on income arising in Malta and income arising abroad which is remitted to Malta. No tax is due on capital gains arising out of Malta or capital funds which are remitted to Malta.
EU citizens can freely move to Malta in terms of their Treaty based Freedom of Movement. Non-EU nationals need to obtain a residency permit in order to reside in Malta. Residency can be sought, amongst others, on the basis employment in Malta or economic self-sufficiency.
Furthermore, Malta has a number of programmes aimed at Attracting High Net Worth Individuals or highly qualified personnel to Malta, by granting them residence rights and/or favourable taxation regimes. The main residency scheme is the recently launched Global Residency Programme.
Malta has also adopted a citizenship by Individual Investment Program (IIP) which has satisfied the scrutiny of the European Commission. It has also recently adopted a Visa programme, whereby the right to reside in Malta is granted to non-EU citizens against a financial contribution and investment on the island.
After an initial consultation, our team is able to assist interested parties to choose which strategy best suits their expectations and requirements. Aequitas Legal may also assist you by smoothly attaining Maltese residency, sorting out details such as tax registration and ensuring that all tax affairs are handled in the most cost-efficient way possible.
In addition, our residency team assists clients throughout the relocation process that includes liaising with estate agents, schools, yacht marina operators as well as concierge service providers amongst others.