Malta Corporate Tax Rates, Special Tax Rates and Tax Losses
Corporate Tax Rates
All companies resident in Malta are subject to income tax on company profits at a rate of 35%. However, this is subject to Malta’s full imputation tax system, wherein tax paid by a company in Malta is, on the distribution of a final dividends, imputed to the shareholder as a tax credit against the shareholders’ tax liability. Therefore, a shareholder will, upon a distribution of the dividend, be entitled to a refund in part or in full of any advance tax levied on the distributing company.
The full imputation tax credit thereby renders Maltese companies highly efficient tax vehicles, with a number of applicable refunds to shareholders possible: (6/7ths refund, 5/7ths refund and 2/3rds refund)
Click here for a more detailed illustration of the Malta Full Imputation Tax System.
Special Tax Rates
As a rule of thumb, income and corporate tax rate is at 35%. However, different tax rates apply in accordance to bespoke tax regimes. A concise summary of special tax rates, derogating from the aforesaid bespoke tax rate, is set forth in the table below:
|Applicants under a Permanent Residence Scheme:
(minimum EUR 4,200) p.a
10% of gross payments
|Collective Investment Schemes
||15% withholding tax on bank income
10% on any other investment income
Losses incurred in any trade, business, profession or vocation during the year preceding the assessment, which may not be set off against capital gains or income, may be carried forward and set off against total income for any subsequent years in succession.
This provision is especially helpful for start-up businesses, thereby allowing them to amortise their losses over subsequent years.
Group Tax Relief
The Malta Income Tax Act permits tax consolidation and sets forth circumstances in which members of a group of companies may surrender trade (but not capital gains) losses to one another.
Read full article for a more thorough understanding of group tax relief.
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