Worldwide:
What Are The Advantages Available To Companies Established In Malta?
17 December 2021
Dixcart Group Limited
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Background
Malta has the geographical advantage of being situated in the
middle of the Mediterranean Sea, at a crossroads between
Europe, North Africa and the Middle East. This
island offers a fully developed open market economy, and has a
hardworking and multilingual population (88% of Maltese
people speak English). It also offers a low rate of corporate
tax.
Malta is one of a few ‘lucky’ countries where the
weather is temperate all year round. In Malta, average summer
temperatures range from +28 to +38 ° C. The summer begins
in May and conventionally ends in October, but even the
“winter” weather is very comfortable and the air
temperature rarely drops below +12 ° C.
International Status of Malta
Factors contributing to and enhancing the international status
of this jurisdiction include:
- Malta is a member of the EU and therefore has access to
European Union Directives. - Malta is a full Schengen Member state and has access to all the
benefits that this brings. - It is a Sovereign Independent State, enjoying political,
economic and social stability. - Malta has friendly relations with the majority of countries
across the world through its policy of non-alignment. - Companies operating in Malta are subject to a corporate tax
rate of 35%. However, non-resident shareholders enjoy low effective
rates, as Malta’s full imputation system of taxation allows
generous unilateral relief and tax refunds.
Malta’s Full Imputation Method of Taxation
The unilateral relief and refund system provides a low effective
Maltese tax rate of 5% for active income and 10% for passive
income:
- Active income – in most instances non-resident
shareholders can apply for a tax refund of 6/7ths of the tax paid
by the company on the active profits used to pay a dividend. This
results in an effective Maltese tax rate of 5% on active
income. - Passive income – in the case of passive interest and
royalties, non-resident shareholders can apply for a tax refund of
5/7ths of the tax paid by the company on the passive income used to
pay a dividend. This results in an effective Maltese tax rate of
10% on passive income.
What Other Tax Advantages are Available to Maltese
Companies?
Other tax advantages are also available to companies established
in Malta:
- No withholding tax on dividends, even
if they payment is made to a non-European jurisdictions.
- Qualifying dividends and capital gains derived from
a “participating
holding” are, at the option of the
taxpayer, exempt from Malta tax. In order for a holding to be
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