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.