Strategically located at the centre of the Mediterranean, the Maltese Islands have been traditionally known for their booming tourism industry. However, their important location, the clear political commitment to ensure sustainable economic activity and the islands’ highly qualified workforce, have ensured that Malta has become increasingly respected in the areas of trade and investment.
Malta is now an internationally recognised financial services hub. However, due to the sector’s traditional and conservative approach, it never experienced a real financial crisis. Indeed, the strength of the financial services sector was a critical contributing factor to the speedy emergence of Malta’s economy from the recession. In fact, the reputation of the Maltese financial services sector improved considerably due to the resilience and stability it showed during the financial crisis. This did not go unobserved in the global scenario and the impeccable reputation of the local financial services is expected to fuel further growth in this sector.
There are many reasons why investing in Malta makes good business sense but it is not enough for the figures to add up and the stars to be aligned. In this day and age – where time, health, safety and true quality of life are precious commodities – Malta scores highly on all these aspects. Travelling distances are minimal, the healthcare facilities, which rank among the best in Europe, are first-class in both public and private hospitals and the crime rate is very low. However, the biggest selling point of the island nation is undoubtedly the lifestyle that investors and their families enjoy in the country. Indeed, those thinking of investing in Malta are highly recommended to visit the nation to explore and experience for themselves the wealth of history, culture, hospitality, bars and restaurants. That way they can also get a real taste of the flavoursome Maltese and Mediterranean cuisine that the country offers.
Companies established in Malta benefit from an attractive tax environment, a full imputation system and double taxation treaties with more than 58 countries. Malta’s tax regime together with the country’s extensive network of agreements help investors achieve high levels of tax efficiency.
Companies incorporated in Malta are subject to a flat rate of Malta income tax of 35% on their profits. However, following the distribution of dividends, shareholders are entitled to a refund of part of the tax paid by the Malta Company. This is what makes the Malta taxation system attractive, ingenious and unique.
The amount of Malta tax refunds is set at 6/7th of the Malta tax paid by the Maltese company. Thus the Malta company would be subject to taxation at 35%, but shareholders would be entitled to claim back 6/7 (30%) of this tax back. In such a scenario, the effective tax liability is of 5%.
E.g. If gross profits amount to Euro 100,000, the company would pay Euro 35,000 in tax, but the shareholder would typically be entitled to claim back Euro 30,000 in tax refunds.
A claim for refunds of Malta tax by a registered shareholder of a Malta company is paid by the Malta tax authorities within 14 days from the end of the month of a valid application being approved.
No, Malta does not levy withholding tax on distributions of dividends to non-resident shareholders. Moreover, as long as certain conditions are met, Malta would not levy any withholding tax on payments of interest and royalties to persons not resident in Malta.