Malta’s Tax System

Malta is fast becoming a significantly important financial centre within the European Union. A long history of fiscal and investment incentives for foreigners wishing to set up shop in Malta have led to an very attractive package for both investors as well as for non residents wishing to use Malta in their international tax planning structures.


•    Net tax payable  of 5% on company profits.

•    NIL tax payable on incoming dividends from subsidiaries situated outside Malta(subject to certain conditions)

•    Possibility to opt to be taxed at 35% on incoming dividends and subsequently apply for a full refund or 6/7 refund on the Malta tax paid (ie: 5% net tax) This might be beneficial in cases where the foreign shareholders would need to show that income has suffered tax.

•    Net tax payable  of 10% on passive income received from outside Malta (such as interest and royalties)

•    A Maltese Company can act as both  a holding company and a trading company with no negative tax consequences thus eliminating the need to open separate companies.

•    A branch of a non resident company carrying out activities in Malta will be treated in the same way as a resident company with resultant tax m the same net tax rate of 5% as companies

•    No Withholding taxes on outbound dividends, interest or royalties

•    Three or more tier Malta companies are now possible.

•    Relief on tax suffered abroad on incoming dividends possible up to full amount of Malta tax payable (35%) (if such dividend does not satisfy the conditions for exemption mentioned above)

•    Possibility to claim relief  on Malta  tax payable on  income received from outside Malta even if such income has not been subject to tax abroad or if such income has suffered tax at a lower rate.

•    Full exemption on stamp duty and capital gains upon the transfer of shares between non residents (Subject to certain conditions)

•    Possibility of re organization relief , wherein a company can be amalgamated,split,or merged without loosing any accumulated tax losses. (In fact tax losses can be surrendered or claimed within a group and set off against any other type of income . Such claimed losses can be carried forward indefinitely.)

•    All costs incurred in the production of the income is allowed as a tax deductable expense, there are no disallowed expenses. (except for formation expenses)

•    Possibility to hold shares under fiduciary (nominee). In order to hold shares under fiduciary a fiduciary agent must be a specially licensed company. Such company is bound by law NOT to reveal the identity of the ultimate beneficiary owners of a company to ANY party including the financial regulatory body (Malta Financial Service Authority) Indeed the only authority who has the right to ask for this information are the Courts of Malta and then only in cases of serious suspicion of Fraud or Money laundering.

Malta currently has over 50 double taxation agreements in place including with all EU countries and with the US. Moreover the number is increasing yearly.

Other Benefits:

•    Member of the EU
•    Member of the Euro Zone
•    A sound banking system with representatives of some major banks like HSBC and Lombard Plc. ( the banking sector has been practically unaffected by the current crisis due mainly to their low exposure to international finance)
•    Maltese Legislation conforms fully to EU law, EU code of conduct of business and abides to the Organization for Economic Co-operation and Development (OECD) standards.
•    Possibility of redomiciliation  of companies from anywhere in the world as long as such redomiciliation is allowed in the jurisdiction of the country of incorporation of the company and the country is not a black listed country.
•    English being one of the two official languages.
•    A democratic and stable government.
•    A well established legal system based on UK law .
•    A professional English speaking work force with a European mentality .
•    A relatively low cost base.
•    One of the best IT infrastructures in the EU.
•    Good flight connections to all  Major EU cities.

Click here to read the benefits in more detail.