Prikhodko&Partners
Services
International corporate law
Fintech
Business registration and support in the EU
Business setup and support in Malta
Opening a business and accounts Tax system in Malta

Mykola Sirenko

Lawyer

E-mail

sirenko@prikhodko.com.ua

Phone numbers

Expert in corporate and international corporate law. Has extensive experience in supporting the acquisition of financial licenses in Ukraine, as well as business incorporation in the EU, the United Kingdom, Switzerland, the UAE, and key Asian jurisdictions.

Tax system in Malta

The first thing to understand is when a person becomes a resident of Malta. This is important because resident status can affect the way taxation is done, as residents are required to pay tax on their global income in Malta.

An individual is considered a tax resident in Malta if he resides there for at least 183 days during a calendar year.

Also, a person can be recognized as a resident if he is present in Malta for less than a period of time but has a “connection with the country”, which includes a permanent residence.

Malta has an attractive tax system that attracts many foreign investors. Characteristic features often include low corporate tax rates and the possibility of obtaining a refund of part of the taxable profit.

Corporate tax in Malta is quite high – 35%, but due to the unique tax refund system, companies can get a refund of up to 6/7 of the tax paid.

This makes the effective corporate tax rate just around 5%. This tax refund system applies to corporations that are resident in Malta.

Note: The tax refund system is seen as a way to ensure fairness and encourage investment.

Let’s consider what other potential problems there may be:

The complexity of the tax system. Dealing with Malta’s tax system, with its various incentives and structures, can be challenging.
International scrutiny: Malta has faced scrutiny from other countries and international organizations over its tax practices. There are countries that are concerned about aggressive tax planning and the possibility of tax evasion.
Changes in tax laws: Like any other country, Malta may change its tax laws. These changes may affect businesses and individuals, requiring them to adapt their tax strategies accordingly.
Risk of abuse. Although Malta offers incentives to attract business, there is a risk that some organizations may abuse these incentives for tax evasion. This could lead to problems with Malta’s reputation and increased scrutiny.
Compliance and reporting requirements. Compliance with tax laws and compliance with reporting requirements can be complex. Failure to comply with these requirements can result in significant fines.

Tax on dividends

Dividends received from foreign investments may be taxed, but there is a possibility of obtaining a refund of part of the taxable amount.

Or, for example, dividends received by a Maltese company from foreign sources may be fully exempt from taxation.

Personal tax

Personal tax is determined based on an individual’s income and resident status.

Personal tax includes tax on income from work, dividends, interest, lease payments, and other sources of income.

Personal tax in Malta can be divided into two categories:

Residents: Individuals who are residents in Malta are taxed on a global basis, which means that all their income, regardless of source, is taxable in Malta. Tax rates may vary depending on the amount of income.
non-residents: individuals who are not residents of Malta are taxed only on income derived from Maltese sources. Such income may be taxed at different rates depending on the type of income.

Value Added Tax (VAT)

The VAT rate in Malta is 18%. Some goods and services may be exempt or subject to a reduced rate.

Real estate tax

There is a property tax that is calculated based on the assessed value of the property.

Regarding personal taxation, the system is also attractive for residents and non-residents. Individual tax rates may vary depending on income and residency status.

Although the stake may seem high on the surface, considering the additional elements of the taxation system, Malta can remain an attractive place for business and investment.

Of course, consulting with a tax and legal professional is important to determine the best approach for your particular case.

By contacting the law firm “Prikhodko and Partners”, you will receive a qualified answer to all your questions.

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1 question

Would you like to receive individual advice on taxes in Malta?

Yes

2 question

Are you planning to open a business in Malta?

Yes

3 question

Are you planning to buy a ready-made business (company) in Malta?

Yes

Can a non-resident register a company in Malta?

Yes, a foreign national may be a shareholder and director of a Malta Ltd. During registration, corporate KYC must be completed and documents confirming identity, residential address, source of funds, professional experience and the company’s future activities must be provided.

Do I need to travel to Malta in person?

No, the company can be registered entirely remotely. We prepare the necessary powers of attorney under which our local partners and lawyers carry out all registration actions on your behalf.

Can a Maltese company really pay only 5% tax?

The standard corporate tax rate is 35%. After payment of the tax and distribution of dividends, a shareholder may, in certain cases, receive a refund of part of the tax, which may reduce the effective burden for certain qualifying income. The 5% rate is not automatic and depends on the type of income, structure and compliance with procedural conditions.

Is it mandatory to appoint a Malta-resident director?

There is no general requirement for an ordinary Malta Ltd to appoint a local resident director. However, the composition of the board and the place of effective management affect substance, tax residence, banking compliance and the ability to use certain tax mechanisms.

Who is a local company secretary and why is one required?

Every Malta Ltd must have a company secretary. The company secretary ensures the maintenance of corporate registers, preparation of resolutions and monitoring of deadlines for filing the Annual Return and other documents with the Malta Business Registry. This is not the same as a director or nominee owner.

Successful cases on the topic: