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Company Formation Malta—Save Taxes with a Malta Limited

If you want to save taxes, you’ll come across the Malta solution again and again. Since this article ranks high in Google searches, interested parties often arrive at our homepage. However, since the laws have changed in recent years and new guidelines have been added, we regularly update the content. Today we would like to do just that and add some essential information.

Malta is not a Straightforward Tax Oasis

Is it worth setting up a company in Malta to save taxes? In our opinion, this is the wrong question. To be sure, in our day-to-day work, we often receive calls from entrepreneurs whose sole motivation is to save taxes and who therefore want to come to Malta. Since, in the context of the Malta Files or Paradise Papers the false image of a tax haven has been drawn too often, I would like to do some clarification work with this blog post. But first things first: Fact is, many companies in Malta take advantage of the corporate structure with a Malta Limited, which allows you to save taxes under certain circumstances. Every day we are contacted by interested parties who want to reduce their tax burden with a Malta Limited. However, there are some things that need to be considered before you move your company to Malta. Unfortunately, the company model is not suitable for all scenarios. For this reason, before incorporating a company in Malta, one must carefully consider whether the Malta Limited is the right vehicle for realizing one’s objectives.

Permanent establishment of the company must be transferred to Malta

If you incorporate a Limited in Malta, then it is necessary to transfer all permanent establishments to Malta. The tax saving is achieved by a refund of 6/7 of the corporate income tax, but only if certain criteria are met. The Malta Limited must be owned by foreign partners or a holding company and the permanent establishment must be in Malta. It is not possible to simply set up a letterbox company. The question of permanent establishment becomes particularly relevant for activities outside Malta. For example, if you continue to do business in Germany, you must pay particular attention to these guidelines. The German tax offices examine activity very closely. In this context, the decision-making power on certain entrepreneurial issues may be sufficient to trigger a permanent establishment in Germany. In any case, the consequence is a partial tax liability in Germany.

Malta’s laws must be followed—especially when applying for a gambling license

It is also important to comply with the laws of the country. If a company carries out business that is considered illegal in Malta, then you cannot establish a company in Malta. This is actually a matter of course, but especially in the context of online sports betting or online casinos we experience some borderline ventures. Especially here, it is of high importance for the licensing procedure to cover everything right from the beginning. Whether it’s a good idea to move your company to Malta will become clear after a little research and determining whether the corporate structure is suitable for your company. Alternatively, you can contact our law firm in Malta and discuss the matter with us.

Malta is a particularly good solution for ICOs and blockchain start-ups

In addition to the tax aspects, the legal framework for companies from the ICO and blockchain sector has also become interesting since 2018. Here, Malta has passed three legislative initiatives that have set a legal framework for digital currencies and the entire DLT industry. While other states shy away from legislation, Malta is creating data and is thus one of the pioneers internationally. As of today, major exchange exchanges such as OKx and Binance have relocated to the island. We at our law firm support companies in obtaining the appropriate license. Our team of experts will be happy to assist you.

Be sure to apply for the tax refund after incorporating a company in Malta

Once your Limited is established in Malta, you will initially have to pay 35% corporate tax. This is the general tax rate that every company in Malta has to pay. However, a foreign owned company can apply for a refund of 6/7 of this tax, resulting in an effective tax burden of 5%. When applying for this refund, it is important not to make any mistakes. Otherwise, one risks refusal.

The law firm of Dr. Werner & Partner specializes in company formation and the optimization of company structures. If you are interested in a personal consultation, please feel free to contact our office for an appointment. We have helped many clients reduce their tax burden and successful start their business in Malta.

Important: See Malta in context as a total solution

It has become increasingly important for the firm and its partners to look at the Malta solution in all its facets. I have already explained at the beginning that it should not be solely about reducing the tax burden. Rather, Malta offers an attractive living concept for internationally oriented companies. I have already had many conversations with entrepreneurs who wanted to move to Malta. The main reasons for moving the center of life to Malta can be summarized as follows:

  1. Mediterranean climate: over 300 days of sunshine a year and a seaside lifestyle.
  2. Growth-market Malta: the real estate industry sembodies the trend on the island. Prices are rising and Malta is putting in a remarkable performance.
  3. International orientation: With the securities that an EU member state has, Malta is the optimal port for investors. From here, many deals can be optimally carried out.

To sum up, I hope I have outlined why Malta is a great country in which to set up a business. In addition to the tax incentives, there is, above all, the unique lifestyle that one enjoys here.

Analyze/verify your potential

Does it make sense for me, personally, to set up a company in Malta? Within the framework of our DWP QuickCheck, you can test whether it makes sense to establish a company with your baseline conditions.

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