This document provides an overview of Malta's tax and legal environment for business and personal structuring. Some key points: - Malta has a stable economy and banking sector with favorable credit ratings and tax policies that have attracted investors and corporations. - The legal system combines civil and common law and provides settled commercial laws. Trusts and foundations offer tax benefits for estate planning. - Malta offers residency and citizenship programs for EU and non-EU nationals, including a global residency scheme and individual investor program for citizenship. - Corporations are taxed at 5% for trading income through tax refunds and exemptions. Dividends face no further taxation. The legal system provides flexibility

1. COMPANY FOCUS
ACUMUM – LEGAL & ADVISORY
Why Malta? Malta enjoys excellent
credit ratings – Moody’s A3 stable,
Standard & Poor BBB+/A-2 rating and
Fitch A+ – whilst the World Economic
Forum ranked Malta 13th out of 144
countries in terms of the soundness
of its banking sector.
Such growth is not solely the result
of Malta’s tax and fiscal policies –
there are other important factors
such as a multilingual workforce,
lower labour costs, a strategic location
and a sound telecommunications
infrastructure. As a result there has
been an influx of interest from
investors, high net worth individuals
and corporations, who desire a
stable, reputable environment in
which to structure their personal and
corporate affairs; as well as to reside.
Malta’s legal system is a mix of civil
and common law, with the commercial
laws – companies, trusts, financial
services – being modelled on English
and now EU law. These are settled
laws, providing comfort to clients.
Personal & wealth tax structuring
Trusts – both trusts and foundations
may be used for personal, as well as
commercial applications. Malta trusts,
which do not have to be governed
by Maltese law, offer protection,
security and estate planning benefits
and are transparent for tax purposes.
In other words, trust income may
be “looked through” and is
exempt from tax in the hands of
non-resident beneficiaries.
Foundations – because foundations
have a separate legal personality, for
tax purposes they are treated as a
company and are therefore subject to
Malta’s corporate tax rules, such as
use of the participation exemption
provisions (holding companies). As a
result beneficiaries may be entitled to
claim a refund of all or part of the tax
paid at the level of the foundation.
Alternatively, for tax purposes,
foundations can opt to be treated like
a trust and enjoy the “transparent”
tax rules of trusts, including the remit-
tance rules. This is the case if all of the
income of the trust arises outside
Malta and all beneficiaries are persons
who are either not ordinarily resident
in or not domiciled in Malta. Such
income is deemed to be derived
directly by the beneficiaries of the
foundation. A Maltese foundation is
therefore highly advantageous in cases
where it involves non-resident
founders, beneficiaries and assets.
Malta residency & citizenship
Malta is a member of the Schengen
Area, which allows for visa free travel
in participating European Member states,
and offers a number of options, for
individuals and investors, that allow
for residency in Malta, for both EU
and non-EU nationals.
Any person that is resident, but not
domiciled, in Malta is subject to Malta
tax only on income arising in or brought
into Malta, whilst capital (income held
for over a year) is not taxed in Malta.
Residency – The Global Residency
Scheme is aimed at non-EU nationals
and features: no income or wealth
criteria thresholds; low property
renting or purchase requirements;
allows for family members and staff
to live in Malta; and no minimum stay
requirements. The minimum tax
liability in Malta of €15,000 and a
15% tax rate is levied on other
income brought into Malta. Income
not brought into Malta is not taxed.
Citizenship – The Individual Investor
Programme (IIP) for Maltese citizenship
requires a contribution of €650,000 to
the Maltese National Development and
Social Fund. It also requires the holding of
property in Malta (minimum €350,000
if purchased or €16,000 annual rental
payments) and an investment of €150,000
in local stocks, bonds, debentures,
special purpose vehicles or other
investments for a period of at least
five years. Individuals must satisfy a
residency requirement of a minimum
period of 12 months and will be
subject to extensive due diligence
checks, including a personal interview
before naturalisation is granted.
ACUMUM – LEGAL
& ADVISORY
International Law
Firm and associated
Barristers Chambers.
Maltese, UK and
international lawyers,
advocates, tax advisers and accountants,
providing cost efficient, expert, Malta-
focused legal and taxation services.
Through an associated Barristers
Chambers we provide advocacy
services in Malta, UK, at EU level and
across The Commonwealth.
Specialisms – aviation, energy, financial
services, IP, gaming, maritime, personal
and corporate tax structuring, wealth
and estate planning.
Acumum is managed by Geraldine
Noel, a UK barrister registered in
Malta with over 20 years international
legal experience.
Malta – a fiscally
competitive European
jurisdiction
While other European countries’ economies have faltered
in recent years, since joining the European Union in 2004
Malta’s economy has grown from strength to strength.
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2. Acumum – Legal & Advisory | Company Focus
Corporate tax structuring
A company incorporated in Malta is
considered to be ordinarily resident
and domiciled in Malta for tax
purposes and is subject to Malta tax
on its worldwide income at an
effective corporate rate of 5% for
trading income, reduced from the
standard rate of 35% by the
application of certain tax refunds.
In addition, with limited capital
gains taxes, no withholding, entry or
exit taxes, and no transfer pricing or
controlled foreign company rules,
Malta provides a cost effective, tax
efficient and highly flexible
jurisdiction in which to structure
corporate and commercial affairs.
Tax refunds – In addition to a
number of total tax exemptions for
certain types of income, depending
on the type of income generated, the
standard corporate tax rate can be
reduced to 5% in the case of trading
income, 6.25% for narrowly defined
passive income and royalties or in
very limited circumstances 10%. Any
overseas tax suffered by a Malta
company would generally be eligible
for relief as a credit against the Malta
tax liability arising on the corresponding
source of income. Tax paid should, by
law, be refunded within four weeks.
Imputation system – Malta is one
of the few remaining countries to
retain the imputation system, as
opposed to the classical system of
taxation. This means that once tax is
levied on a Malta company on profits
that it distributes as dividends, no
further tax is levied on those
dividends at the level of the
shareholder – thereby completely
avoiding double taxation.
Remittance system – This provides
significant tax planning opportunities
for company income. Where a company
incorporated outside Malta is deemed
to be resident in Malta because its
management and control is exercised
in Malta, only income brought into or
arising in Malta is subject to Malta tax.
Malta Holding Companies –
Subject to certain anti-avoidance
rules, the application of the
Participation Exemption for Malta
companies with subsidiaries
(including permanent establishments
and branches) abroad, allows for
income derived from a participating
holding, or from the disposal of
such a holding, to qualify for a
participation exemption. This will
result in the subsidiary’s dividends
and gains being exempt from tax.
Sectors
In addition to numerous other grants
and incentives, Malta has implemented
a number of advantageous tax and
fiscal regimes with the aim of
attracting business across a variety
of different sectors.
Aviation – Malta has seen a surge
in the registration of aircraft and the
establishment of Aircraft Operating
Companies. As private aircraft are by
their nature used for private purposes,
no income is generated and therefore
no Malta tax obligations arise. For
commercial operations, flexible rules
apply through the application of
reduced tax rules and generous
deduction rules in respect of finance
and operating leases. These can be
combined with accelerated
depreciation periods for aircraft,
aircraft engines and related parts.
Funds and financial services –
Where a fund has 85% of its assets
outside of Malta, income and capital
gains will be zero-rated for tax
purposes, as are distributions to
non-resident investors.
Maritime – Subject to registration as a
shipping company and payment of the
appropriate and advanced, set tonnage
tax, a total tax exemption applies to any
income of a licensed shipping organisation
that owns, charters or operates a tonnage
tax ship. Income, profits or gains derived
from the (i) sale or other transfer of a
tonnage tax ship or (ii) disposal of any
rights to acquire a ship, which when
delivered or completed would qualify as
one, are exempt from Malta tax.
The reduced VAT scheme for yacht
leasing provides for reduced VAT rates
to be levied according to the time spent
in EU waters, which can then be paid
over a three-year period. Income
derived from a Maltese company
engaged in such activities will be taxed
at 5% in accordance with Malta’s
corporate taxation rules following the
application of appropriate tax refunds.
Intellectual property – Royalties from
patents, artistic copyright and trademarks
are 0% taxed for three years (renewable),
ensuring that Malta is a tax efficient
jurisdiction for IP holding companies
and royalty structuring. Amortisation
over the life of the IP is allowed, as is a
step up in value upon the transfer of IP
to a Malta company from book to fair
market value upon transfer, whilst
capital gains may not be levied upon
disposal in certain circumstances.
Highly Qualified Scheme – Certain
employees, both EU and non-EU
nationals, engaged in the aviation,
financial services or digital gaming
sectors can benefit from a 15% income
tax cap for a certain period of years, up
to a maximum income of €5 million.
Any excess is exempt from tax.
MALTA TAX REFUND SYSTEM FOR TRADING COMPANIES
Foreign Shareholder
Malta Co
Trading
Profits of 100
35% tax paid
to Maltese tax
authority
30% tax refund (4 weeks) resulting
in overall tax leakage of 5%
Dividend
of 65
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