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Malta Corporate Structures and Company Taxation

Setting-up Maltese Corporate Structures

A pro-business climate, its strategic location, attractive tax system, a highly educated multilingual workforce and superior infrastructure are just some of the many advantages of setting-up shop in Malta.

The Maltese Company

By default, the Maltese company would be a limited liability entity made up of shares held by subscribers. In general, business income is taxed at the rate of 35% after allowable expenses, but through different structuring and combination with a number of tax measures, the effective tax burden can be lowered significantly.

The traditional tax refund system

For a number of years Malta has offered very low effective tax rates ranging between 0% and 6.25% mainly owing to a refundable tax credit system working on the basis of the diagram below:

Such a structure is still very much applicable and generally results in the overall tax burden suffered in Malta to be just 5% in case of normal trading/business activities, 6.25% in case of foreign non-trading activities or even 0% in case of income from foreign dividends or branches.

Moving forward… taking advantage of fiscal consolidation

As part of its efforts to continuously adapt its taxation system, Malta is now also enabling group/consolidated taxation. Consequently, companies forming part of a group may elect to be treated as one single. This would be achieved by allowing a parent company to elect that its subsidiary/ies and itself will form a fiscal unit, resulting in the subsidiary/ies being treated as transparent. While administrative costs to setup and maintain will be in the same lines as the above structure, consolidation could offer additional benefits, particularly from a cash flow point of view.

But why Malta?

Jean Paul Apap Dougall

Senior Manager - Tax & Corporate Services

Petra Magro

Senior - Tax and Corporate Services

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