Malta is a tiny island nation in the Mediterranean.
It’s got a small economy and, according to The Tax Foundation, the highest statutory corporate tax rate in Europe.
So why is it becoming an increasingly popular spot for business registration?
There are actually quite a few reasons, but we’ll focus on the top five.
First, the statutory corporate tax rate is somewhat misleading; we’ll show you how it’s possible to pay between 0% and 10% taxes.
It is also cheap and easy to incorporate, inexpensive and profitable to incorporate in, part of the European Union, has low capital gains taxes, and has a variety of double-taxation prevention treaties.
1. The Real Tax Rate
The actual tax rate in Malta can be as low as 0% – but it’s complicated.
A shareholder can be reimbursed for 70%-100% of the corporate taxes paid depending on what type of company it is.
The result is that most businesses have an effective tax rate of 10% or less.
If you’re going to do business in the European Union, you’re going to have to set up shop somewhere.
Malta is part of the EU and has full access to the Eurozone.
Malta is a great choice for the aforementioned tax purposes – you’ll get your foot in the door of one of the biggest trading blocs in the world and save money on taxes at the same time.
2. Incorporation
Registering in Malta will help keep your Eurozone taxes low… but you’ll still have to pay taxes in your host country.
The solution?
Just make Malta your home country by incorporating your business there along with registering it.
After all, it’s been a part of the European Union since 2004, so it gives full access to the Eurozone.
Incorporation allows companies to avoid the relatively high tax rates of their host countries while losing few if any benefits.
Additionally, incorporation in Malta is cheap and easy.
The Maltese government has ensured that it’s an attractive option for companies to incorporate.
After all, receiving low taxes is better than receiving no taxes, and even if there are virtually no corporate taxes, run-of-the-mill employees will still be taxed and in general, more business is good for business.
3. The People and Economic Infrastructure
Malta has a well-educated supply of English speakers; English is actually one of the national languages of Malta, and about 88% of Maltese people can speak it.
The majority of Maltese people can also speak Italian.
These advantages are obvious; some are more subtle. Aside from solid education, the Maltese people share common western values.
Banking is easy and efficient, foreign cash flow is largely unrestricted compared to in the U.S., Malta is in the Central European Time Zone which is logistically convenient, and its banking and economic services are top-notch.
There are also very favorable logistical and legal frameworks for foreign investments; the Maltese government wants you there.
Many of these advantages are relatively intangible and they certainly aren’t the first things you look for when debating where to incorporate, but they really do add up.
One final note – these laws are all above-board, and Malta is a reputable destination.
There is little economic and political turmoil in Malta that could threaten the prosperity of a typical company, and their stability is backed by the economic and legal clout of the Eurozone.
4. Capital Gains Taxes
Malta technically doesn’t have any capital gains tax, per see.
Instead, there’s a 12% fee exacted from the sale of a given asset.
12% is very reasonable compared to many other countries, including a handful of global financial hubs like the United States, and there are a wide variety of tax breaks and loopholes that can be utilized as well.
5. Tax Treaties
Malta has a wide variety of treaties (over 40) with various governments and entities that help shield companies operating from within Malta from double taxation.
For example, in many cases, host companies tax profits that you make abroad.
If you make $100 million in global profits, that money could be taxed in your host country… and in the countries where you made the profit.
Needless to say, being taxed twice on the same profits isn’t good for a company’s bottom line, but Maltese treaties can help you avoid that scenario.
In Short
Companies incorporated in Malta for a reason.
Remember that registration is necessary for any company intending to operate in Malta.
As always, consult legal and tax professionals before making any decisions about the best way to meet your corporate needs
In this case, there are actually quite a few legal and tax professionals available for consultation in Malta that actually specialize in advising corporate clients on things like this.
This can make a relatively painless process even simpler.
Whether you’re looking to break into the European market, looking for tax breaks through incorporation, trying to dodge double-taxation, or just looking for a logistically sound headquarters, Malta has a lot to offer.
Business aside, Malta is also a gorgeous country and a wonderful place to live!
Looking for a more connected city with all the greatest aspects of a Maltese registered entity?
Consider registering in Hong Kong instead and plug in your business to the financial world.
