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Corporate & Tax

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Taxation of companies in Malta

Maltese companies are subject to tax at the rate of 35% on their worldwide income and capital gains. The Maltese Government has created various fiscal incentives to both companies and their shareholders upon distribution of a dividend. 

Double taxation network

Malta also has a comprehensive double taxation treaty network and has to date concluded more than 65 double taxation agreements for the avoidance of double taxation. Malta’s treaties are largely based on the OECD Model Convention and grants relief from double taxation using the credit method.

Full Imputation System

Malta operates the full imputation system whereby the tax paid by the company is imputed towards the shareholders’ tax liability upon receipt of a dividend, meaning that no further tax is due by the shareholder upon receipt of a dividend.

Holding Companies in Malta

Holding companies registered in Malta that are in receipt of dividend income or capital gains from a ‘participating holding’ or from income arising from the disposal of that same holding, may apply for a participating exemption and consequently the dividend income will not be subject to income tax in Malta.     

Distribution of interest and loyalties

No tax is withheld upon the distribution of interest and royalties to non-resident beneficial owners of such income.  No tax is withheld upon the distribution of dividends irrespective of the residence and nationality of the shareholders.

EU Directives

Since Malta is a member of the European Union, it has access to EU directives such as:

  • the EU Parent Subsidiary Directive: the aim of this directive is to set a common system of taxation applicable in the case of parent companies and subsidiaries of different Member States;
  • the Merger Directive: the objective of the Merger Directive is to remove fiscal obstacles to cross-border reorganisations involving companies situated in two or more Member States;
  • the Savings Directive: aims at implementing the European Union withholding tax, requiring member states to provide other member states with information on interest paid to achieve effective taxation of the payments in the member state where the taxpayer is resident for tax purposes; and
  • the Interest and Royalties Directive: the purpose of this directive is to set a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States.

Disclaimer: This marketing material has been issued by Nexia BT, having registered address at The Penthouse, Suite 2, Capital Business Centre, Entrance C, Triq taz-Zwejt, San Gwann SGN 3000, Malta. Any information within this brochure should be taken as a general guide only and should not be taken as advice and its application to specific situations will depend on the particular circumstances involved. Readers are recommended to seek professional advice and should not rely on information provided in this brochure as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Nexia BT accepts no responsibility for any errors or ommissions it may contain, whether caused by negligence or otherwise, or for any losses, however, caused, sustained by any person that relies upon it. BTI Management Limited is a registered as a Company Service Provider by the Malta Financial Services Authority. BT International Limited is authorised by the Malta Financial Services Authority to provide fiduciary services which do not include acting as a Trustee. Both companies form part of Nexia BT Group.

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