Malta’s corporate tax system incorporates a full imputation system, whereby shareholders receive full credit for any tax paid by the company on profits distributed as dividends. All companies registered in Malta are subject to a 35% tax rate on their profits, with an effective relief of double taxation system. Foreign branches of companies in Malta are treated the same as local companies when it comes to taxation.
Certain types of companies in Malta may be able to benefit from reduced tax rates of up to 5% tax, including international trading companies and holding companies.
Companies in Malta can also benefit from 6/7 refunds of their corporate tax, leading to an effective tax rate of 5%. Malta holding companies are able to obtain a full corporate tax refund if it derives profits from holdings in a company registered outside of Malta.
As a member of the EU since 2004 Malta is inclusive in the EU VAT system, with businesses requiring to obtain an EU VAT number when registering a company in Malta. This VAT number allows companies to trade within the EU, provided that such companies are managed and controlled from Malta. All companies whose annual turnover falls between €12,000 and €28,000 are required to register for VAT, but if a company turnover is less then €7,000 it is not required to register.
Non-Maltese companies are subject to these same regulations excluding turnover requirements. Foreign companies are required by law to register for VAT if they sell supplies that go above €35,000 per year.
For advice on tax and VAT and company formation in Malta, SA Consult has years of experience in handling corporate legal requirements and can offer sound legal advice, ensuring that your company works within the law, but is able to take advantage of the legislation that is in place.