Malta Tax Refunds
Malta’s taxation system has passed the test of time and managed to overcome various hurdles along the way. One of the most significant challenges where when Malta joined the European Union. At that point in time, the Maltese taxation system had a concept which was known as the ‘International Trading Company’ and the European Union wanted this to be abolished. As a response, Malta amended its regulations, making them more favourable to those within the EU to relocate to Malta and start benefiting tax rates as low as 5% immediately. This makes Malta a leading tax friendly jurisdiction, in the EU and in the rest of the world.
How much tax do you pay when in Malta?
Generally speaking, everyone in Malta has to pay 35%. Yet, companies which are owned by non-domiciled individuals, in 99.9% of the cases are eligible to benefit from Malta’s tax refund system. This has the potential to reduce the tax rate to as low as 5%.
What makes a company eligible for tax refunds?
Generally speaking, any company which is incorporated in Malta and owned by non-domiciled individuals can benefit from the tax refund. In a non political way of speaking, one can say that any company which is not owned by Maltese individuals can benefit from this. Yet a few restrictions still apply which mainly deal with the operations of the company. If a company provides services which are directly related to immovable property such as building houses, this activity disqualifies a company from benefiting from the tax refund system.
How does it work?
A tax refund claim form has to be prepared and submitted to the International Corporate Tax Unit (ICTU) by a tax professional. This service is usually provided by a company’s auditor once the audit of the financial statements has been concluded.
The tax refund is not an automatic process. For a company to apply for the tax refund it must declare dividends as well as pay taxes on the distributed dividends prior from receiving the tax refund.
How can we help?
Our team of qualified experts are warranted certified public accountants with numerous years of experience dealing with international companies. If you are currently considering setting up your structure in Malta or you are already in Malta and would like us to assist, do not hesitate to contact us.
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