Malta’s status as a member of the European Union, as well as the adoption of the Euro as Malta’s currency in 2008 have made Malta a jurisdiction of choice with many investors, many of whom decide to locate their businesses in Malta due to the advantageous corporate tax system. One of the attractive benefits to persons who choose Malta as the jurisdiction where to set up their companies, is the income tax system available to any business in Malta.
Malta’s tax legislation provides a number of incentives to shareholders of Malta companies deriving income from their investments and/or trading activities, whether derived from Maltese companies or companies outside Malta.
Four forms of relief from double taxation are available including Malta’s far reaching double tax treaty network, so that the Malta company is granted a relief from double taxation in cases where the income of the Malta company would have also suffered tax in a foreign jurisdiction. This ensures that the same income will not be subject to tax twice in two different jurisdictions. When income received from investments and/or trading activities is distributed by companies by way of dividends, a refund of the tax paid by the companies becomes due.
The amount of the tax refund depends on whether the investment constitutes a “participating holding” or otherwise. Tax refunds 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.
Income derived from a participating holding or from the disposal of such holdings will qualify for a participation exemption, which is intended to exempt from tax dividends and gains derived from such holdings. In the case of income deriving from a participating holding and which thus qualifies for a participation exemption, one may opt to pay the Malta tax due and claim a 100% tax refund. Upon receipt of a dividend from companies, shareholders will become entitled to a refund of 6/7ths of the total tax paid (i.e. including the overseas tax).
The total tax refund will however be limited to the Malta tax paid, so that the total effective tax rate paid in Malta will be 6/7ths of 35% flat rate of income tax which the Malta company is to pay before applying for a refund.
VAT Compliance and Advisory
Value Added Tax is perhaps the most complicated and often dangerously ignored tax. We can take the burden of VAT compliance off your business shoulders by completing your quarterly or annual VAT returns and ensuring their timely submission to the VAT Department. Our VAT specialists are always ready to advise on the right VAT treatment of a particular transaction.
Our VAT team can also assist with the setting up of internal systems and procedures which assist in the generation of VAT returns. They can also conduct reviews of VAT returns and accounting records. The team has also experience with businesses and entities which are partially exempt, exempt without credit or undertake non-business activities.
Partial exemption and non-business calculations add another layer to an already complex tax regime. Our team will ensure that your accounting systems are set up to deal with these intricacies.
Malta VAT Compliance: Our Services
Through our Malta VAT tax experts we provide the following services:
- Advice on whether to register for VAT
- VAT registration
- Most beneficial method of VAT accounting
- Preparation and submission of VAT returns to the Malta VAT Department
- Intrastat and EC sales reporting
- VAT planning and advice in connection with complex transactions
- Liaison with the Malta VAT Department in connection with compliance visits and disputes
- Deregistration process
Malta VAT Compliance: Our Commitment
Our Malta VAT compliance team can help you ensure that your business complies with all statutory obligations under Malta VAT law. The team will also make sure that your business is using the most efficient VAT structure and that all refunds are applied for appropriately. Our firm provides a number of important services to its clients with respect to VAT matters, including VAT registration, management of relations with the VAT department and handling of periodic VAT returns.
Should clients wish, we can also carry out a VAT scan which consists of an evaluation of the VAT processes and procedures within a business activity. The main reason would be to propose to the client recommendations to update and reorganise the VAT affairs of the corporation and reduce possible forthcoming complications with the VAT Department. Through this exercise we also seek to detect potential opportunities of achieving VAT savings and optimisation.