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Maltese tax policy for tax optimization

Optimizing taxes through Maltese tax policy

04. 04. 2023

Business in Malta in 2023 is attractive because of the tax policy, which is great for cost optimization. First of all, it is advantageous in that most of the fees can be recovered through deduction. All that needs to be done is to obtain for the company the status of a resident taxpayer. This is granted if the firm has been established in the country or if its governing bodies are located here.

What you need to know about the fees for businesses

The main taxes in Malta 2023 that a resident company pays are:

  • VAT is 18%. For the sale of real estate, as well as insurance and banking services do not have to pay. The same applies to goods that are sold off the island.
  • Income tax is 35%, affects all profits, including those made in another country, but a resident company can get a deduction.

For profits from dividends and exports to the EU do not have to pay. The same applies to the authorized share capital of the organization, which was registered in Malta.

When an income tax deduction is available

A local organization is entitled to a deduction if the following conditions are met:

  • The business has claimed an exemption from double taxation if it has paid tax in another state. It will get a refund of 2/3 of the amount paid.
  • The company receives money for patents, copyrights, etc. In this case, most of the amount will be refunded (5/7).
  • The company will get a 6/7 deduction for tax on income from trade.
  • 100% exemption from income tax are holding companies that meet certain conditions (eg, the parent company is located in another country, owns 95% of the shares of the Maltese company, etc.).

Deduction is available only after the company has paid the tax in full. When the inspectorate conducts an inspection (about 14 days), the money will be returned to a special account. The refund will be in the currency in which the firm paid the tax, so the business will not lose because of the exchange rate.

What you need to know about double taxation

Malta has signed an agreement with 70 countries, including the U.S., China, Britain. Its essence is that for profits in the form of interest, dividends or royalties need to pay no more than 15% of the state in which it was received. Thus, if the money will be credited to a bank account of a Maltese resident, you do not have to pay.

Tax optimization for non-residents

Malta is also attractive for investors who do not want to be residents of the island. This is the case if a foreigner lives here for less than six months. In this case he must pay taxes on income and capital gains, which was obtained in the country. If an investor lives here longer than this period, he automatically becomes a resident, and must pay taxes.

The rate for a non-resident depends on the annual income:

  • Up to €700 - 0%;
  • €701 - €3100 - 30%, €140 deduction;
  • From €701 - 35%, €840 deduction.

Non-residents do not pay tax on interest, dividends, and royalties.

How to lower your tax burden

For tax optimization in 2023, contact IT-OFFSHORE experts.

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