Malta Tax and Tax Advantages

Malta offers a number of interesting features as a tax jurisdiction and is appearing in a number of international structures being used for tax planning purposes: it does not impose any withholding tax on dividends, interest, royalties, discounts and premiums paid to non-residents.  In addition, Malta has an increasingly wide treaty network and being a member of the EU since 2004, has adopted the Parent-Subsidiary Directive and the Interests and Royalties Directive. 

Whilst Maltese corporate tax rate is thirty five percent, tax refunds exist so that upon dividend distribution, depending on the nature of the taxable profit, a 6/7ths, 5/6ths or 2/3rds tax refund of the corporate tax paid by the company may be given to the shareholder.  This makes Malta the most tax efficient jurisdiction in the EU.

Malta is currently the only EU member which allows a full imputation system to completely eliminate the economic double taxation of company profits; thus the tax charged to the company is imputed to the shareholder upon dividend distribution by the company and shareholders will not suffer any additional tax on the receipt of dividends.

Furthermore, Malta’s tax system grants a full participation exemption with respect to dividend income received by a participating holding and to capital gains derived from the transfer of said holding.  Several anti-abuse conditions must be satisfied before a company may be classified as a participating holding.

Malta has signed numerous double taxation agreements with various countries thus eliminating the occurrence of double taxation in a number of cases.  Where no such agreement exists, there are other forms of double taxation relief that may be availed of.

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Key Experts

David Gonzi
David Gonzi
Managing Partner
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Melanie Miceli Demajo
Melanie Miceli Demajo
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