Company Tax & Incentives

Malta offers a number of interesting features as a tax jurisdiction. Malta registered companies regularly feature in a number of international corporate structures used in part also for tax planning purposes. Malta 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. In addition, being a member of the European Union since 2004, Malta adopted all EU tax Directives including the Parent-Subsidiary Directive and the Interests and Royalties Directive.

Companies which are incorporated in Malta and/or whose management and control are exercised predominantly in Malta are taxed at a flat rate of 35% on their worldwide income and capital gains. However, there exists a system of tax refunds whereby a shareholder who receives a dividend from a Maltese company out of profits allocated to its Maltese Taxed Account or its Foreign Income Account, may claim a refund of a portion of the corporate tax paid by the company. The value of the refund depends on the nature of the profits out of which the dividend is being distributed.

Furthermore, Malta is currently the only EU member which allows a full imputation system to completely eliminate the economic double taxation of dividends.

In addition to the above, subject to certain conditions, 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.

Finally, Malta has also 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.