Maltese Tax System
The liability to taxation in Malta is based on the UK-model of residence and domicile. In this regard, individuals and entities are caught under the Maltese tax net in terms of being resident or ordinarily resident and/or domiciled in Malta and hence liable to taxation on either a world-wide basis of assessment or the remittance basis of assessment, or else a Malta source basis.
The above principles are relevant in a tax planning scenario and Malta provides for interesting tax vehicles and legislation that facilitate the efficient structuring of one’s business set-up.
With regards to the taxation of corporate profits of companies registered or continued in Malta, the full imputation system is utilized whereby the company is taxed at a flat rate of thirty five per cent (35%), and the underlying shareholder is given a full credit of the tax paid by the said company. There are no withholding taxes on distributions of taxed profits in Malta.
There are various advantageous tax situations for non-resident shareholders of Maltese companies to mitigate and further reduce the overall effective income tax rate of thirty five per cent. These tax provisions render Malta one of the most advantageous European destinations where to structure one’s tax affairs.
