Home » Specializations » Non-Residents Taxation

• All Maltese companies are onshore companies.
• Fully compliant with OECD and EU standards.
• Annual audited accounts are a statutory requirement.
• An effective tax rate of 5 % in the hands of non-resident shareholders of trading companies.
• An effective NIL tax rate for holding companies (subject to certain anti abuse provisions).
• Over 50 double taxation treaties.
• Possibility of holding shares under "nominee" (having complete confidentiality of beneficial ownership).

Maltese companies are normal onshore companies at a flat corporate rate of 35% tax. All normal expenses in relation to the trading activity of the company are allowable expenses. Maltese companies owned by non residents have an 18 month reporting period from the date of closing of the financial year in which to submit their audited financial statements and income tax return, to pay the tax due.

Upon payment of the tax, the shareholders (individual or corporate) can claim a refund of 6/7 of the tax paid on the dividend distributed. That is, a tax refund of 30% on the tax suffered on the declared dividend. Therefore the net effective tax is of 5%. This refund is payable within a maximum period of 6 weeks from date of application.

It is important to note that it is the shareholder who receives the dividend and not the company. Therefore for double taxation purposes, the company is still being taxed at 35%. This is a very important advantage in double taxation planning.

Moreover in the case of income received from a participation holding, a full refund is applicable (so net effective tax is nil). In most cases, what is known as a participation exemption is also possible with the company not having to pay the tax in the first place at all, but even if eligible for this exemption the possibility exists for the company to pay the tax and get the full refund (again this may be an advantage for double taxation purposes).

In the case of passive income received from abroad, specifically, interest or royalties, a 5/7 refund of the corporate tax applies (i.e.: net effective tax 10%)

Additionally there are several other reliefs from corporate tax to further lower the net effective tax from 5%.

Download worked example here.

Download "Doing Business in Malta" presentation here.

| 08.09.2008 | |