Several countries in Europe offer a relatively low corporate tax when foreign companies decide to settle on the islands. Low tax countries are usually countries that charge an effective corporate tax of lower than 25%. The lower tax rate is not the same in every country, and there are other factors that should influence the decision to move he company to a different country as well.
Some of the most popular low tax countries are Malta, Cyprus and Ireland. Due to freedom of establishment companies in Europe are allowed to settle their company where they wish and to benefit from the taxation of the respective country. However, when doing so it is important not to make mistakes, as mistakes could have repercussions in your home country, and you could be prosecuted for tax evasion. It is important that you consider the economic situation to ensure that the future of your company and that of your employees is secured. The banks and their stability are also playing a major role. With regards to the banks, Malta has a clear advantage over Cyprus, as the conservative banking ethics made the banks stable, and they passed the ECB stress test last year — in contrast to the banks in Cyprus.
Some countries — among them Luxembourg — are also currently under investigation, as it came to light that some companies received a favourable taxation. This practice is against the European laws, that states that all companies should be treated the same. This is the case in Malta and all companies have to pay 35% corporation tax. If the company is structured correctly and it can be proven that company operations are based in Malta and revenues are actively generated, then it is possible to apply for a refund of 6/7 of this corporation tax.
Malta has the lowest effective corporation tax in Europe. Compared to Cyprus, Malta can also provide for excellent connectivity to the European mainland. Many airlines offer multiple flights every day to all major European cities. Compared to Ireland, I would like to point out that the weather in Malta is considerably better. Malta has hot summers and mild winters, and if you love the Mediterranean, this is your place to be.
For more information about Malta as a location for your company, and how to proceed, you are welcome to schedule a personal consultation at our legal office in Malta.
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