When reading about tax burdens in Europe for the first time, you might notice that several countries are often lumped together. Since the economic crisis started, the European Union had to pay for some highly indebted countries to save them from bankruptcy. This lead to some countries being looked at more closely, and the bad situation was often transferred onto other countries without giving it much thought. The best example for this are the recent comparisons between Malta and Cyprus. However, with regards to a company formation, there are several reasons that are in favour of Malta and against Cyprus.
1. Secure and stable politics and economy
Both Malta’s former government and the current one do a good job in ensuring Malta’s economic stability. I have mentioned this in several other posts already that the expectations for economic growth and the efforts made by the Maltese government have a very positive effect on the economy. This is not the case in Cyprus at all. Cyprus is relying on financial help of other European countries, and its future is uncertain. Personally, I would not want to settle my company in a country that is in such a bad situation.
2. Better capital resources and structure of the banks and the capital market
The banks in Cyprus are known for having stashed a lot of money from Russian clients. The banks quickly lost several billions in funds when the government started having financial issues with repayments of interests. This problem has a profound cause, and is mainly connected with the business practice of the banks in Cyprus. These practices are entirely different in Malta, and such a situation could not arise here. The stable real estate market and other incentives for investors have a positive effect on the situation of the capital market.
3. The British system for simplified handling
What use is the low tax rate if it can only be accomplished through complicated and non-transparent applications? The structures in Malta are similar to those applied in the United Kingdom. This makes it easier for tax payers in many ways.
In my opinion, these are the three most essential factors that make Malta a better location than Cyprus. Nevertheless, when establishing a company you should always take into account more factors regarding the location of the company. We would be happy to advise you in a personal consultation at the office of Dr. Werner & Partner.
