When it comes to optimising your company taxes you have probably come across the option of relocating your business in order to pay less taxes. Relocating the business is something that needs to be thought through, and the decision should not be rushed. Just opening a letter box company for tax purposes is usually frowned upon, and the tax authorities will scrutinise your company even more. Nowadays, these practices are considered tax evasion. However, there are methods to legally save taxes without evading them. Moving the company to a different country with more favourable taxation regulations is the most popular option. Depending on the type of company however, it is not always possible. When making the decision to move, you have to compare the different countries. Malta and Cyprus are among the most popular options, and many clients ask us why Malta would be the better alternative. I would like to elaborate on exactly these aspects a little more in this article.
First of all, Malta’s economy has been doing exceptionally well in the last years. The GDP has been rising, the unemployment rate is dropping, and the government has been investing heavily into creating new opportunities for entrepreneurs and companies thinking about moving their operations to Malta. The corporate tax in Malta is 35% for all companies. However, under certain circumstances it is possible to apply for a refund of 6/7 of this tax. In order to claim the refund, the company needs to be owned by a foreign shareholder or Holding company. The economy in Cyprus is still suffering heavily from the impact of the global economic crisis, as the country has strong ties with Greece, and is greatly affected by the Greek economic situation.
Another positive aspect about Malta as a company location is that the banks are stable, and they do not rely on foreign investments. This is a major advantage compared to Cyprus where the banks are not doing well. Last years ECB stress test showed that the banks in Cyprus are not ready to sustain themselves in a crisis.
Both countries are in the Mediterranean. When comparing access to and from the islands, Malta has the clear advantage. There are many flights to mainland Europe, and many of these connections are available multiple times a day. The Malta International Airport has a great reputation, and especially business travellers will benefit from the extensive route network. Cyprus on the other hand lacks regular connections, which will make it less flexible to travel internationally.
As you can see, Malta offers a better economy, more opportunities, stable banking, and a strategic location. If you are now interested in more details about relocating your company to Malta you are welcome to schedule a personal consultation with one of our partners at Dr. Werner & Partner.
