Tax and Regulation

Malta’s memberships to the European Union in 2004, as well as the adoption of the Euro as Malta’s currency in 2008, have made Malta a jurisdiction of choice with investors. Over the last decade, Malta has seen an increasing number of businesses relocated their businesses operations to Malta due to an advantageous corporation tax system.

A major benefit of incorporating companies in Malta is that the local tax legislation provides a number of incentives to shareholders of Maltese companies deriving income from their investments or trading activities. This applies irrespective of whether the income is derived from Maltese companies or companies registered outside Malta. Maltese registered companies also benefit from tax relief through the extensive network of double taxation agreements. This ensures that the same income will not be subject to tax twice in two different jurisdictions.

Maltese registered companies can also benefit from a tax refund on income that is generated from investments or trading activities and is distributed by way of dividends. The refund applies only to if such dividend or income distribution is paid out of profits allocated to foreign income accounts (that is, profits or related income which is generated outside Malta. This includes dividend income, interest, capital gains, royalties, income generated from rent, business profits and investment income) or to the Maltese taxed account based on whether the investment constitutes a participating holding as defined by the Income Tax Act. and the Income Tax Management Act. Tax refunds in Malta are also available to shareholders receiving dividends from their foreign companies, distributed out of profits arising in Malta through an overseas branch registered in Malta.

These statutory refunds are legally guaranteed and are payable efficiently by the Inland Revenue Department to the shareholders within 14 days from the last day of the month in which the request made to the Department. An exception for immovable property acquisition exists however.

Maltese tax regulations do not apply withholding taxes, stamp duties or exchange control restrictions on the distribution of profits or dividends to the shareholders. There are also no taxes or restrictions on the exportation of the dividends from a Malta registered company.