Malta has become an ideal commercial centre for foreign investments since it’s accession to the European Union in 2004, as well as joining the Eurozone in 2008. Malta has become one of the top destinations for investors after many years of promotion by the Maltese government.
The strong economy of the country, the huge drop in unemployment levels, and the diverse economy can be accredited to the government’s efforts in establishing a clear-cut attractive tax regime for local and worldwide investors.
Malta has a major competitive tax incentive as it has a ”full imputation tax system” for Maltese companies’ shareholders. This means that dividends distributed to shareholders, will not be subject to personal tax since the corporation has already paid the due taxes on their generated profits. This prevents double taxation on these dividends which generally incur in the normal taxation system. The full imputation system is currently implemented only in Malta, Australia and New Zealand.
One of the other reasons why Malta has one of Europe’s most attractive tax regimes for foreign investors, is the participation exemption for Maltese companies acting as a holding company for EU and Non-EU resident companies. Any dividends received by Maltese holding companies from a EU-resident company will not be taxed and is fully exempted in Malta. If the company was a non-EU resident, the holding company will be taxed at a rate not less than 5%; this rate was reduced from 10% in 2018 by the Budget Implementation Act (Provided that anti-abuse provisions are met).
Malta enjoys double taxation treaties with around 70 countries around the world as of 2019. Investors and business owners consider this as an advantage which minimizes the amounts taxed worldwide.
Malta also does not charge capital gains tax on the sales of shares in Maltese companies, and does not impose any withholding taxes on the distribution of dividends to shareholders or parent companies.
It is also important to note that those companies operating in manufacturing, export, industrial, Refurbishment of Hotels and Restaurants (Tourism) and Energy efficiency projects, that add economic value to the country, are also offered investment tax incentives by the Maltese government
Furthermore, other tax credits schemes have been introduced to encourage Small and Medium Enterprises, Family businesses, and female-owned undertakings.
Malta’s tax regimes are benefiting the country’s inbound investment sectors allowing the economy to develop rapidly, becoming the golden standard for countries around the world.
Investors are seriously looking to Malta and this interest has led to more applicants of the Malta Residency and Citizenship programmes.