Tax Law

1. How does the Maltese corporate tax system work with a 5% effective tax rate?
Answer: The Maltese system utilizes the full imputation system, which is fully recognized by the EU and the OECD Imputation System in combination with the Tax Refund aswell as Tax Unit (Steuerkonsolidierung bei dem Principal Taxpayer).

• The procedure: An operative Malta Limited initially taxes its earned profits nominally at the standard corporate tax rate of 35 %.

• The refund: As soon as the taxed profits are distributed as a dividend to an overarching holding entity (e.g., a Maltese parent company), the holding company acquires a statutory claim to a refund of 6/7 of the corporate tax paid.

• The result: Through this mechanism, the effective corporate tax burden at the operational level decreases to exactly 5 %. For passive income (e.g., interest or royalties), a 5/7 refund applies, resulting in an effective tax rate of 10%.

2. What exactly is the “remittance basis” for non-dom residents?
Answer: Individuals who establish their tax residence (Tax Residence) to Malta, but are not domiciled there by birth or origin (Non-Dom), are subject to the Remittance Basis System.

This draws a strict distinction based on the source of the income:

1. Local income (Malta-source income): Is taxed progressively at rates of up to 35%.

2. Foreign income (e.g., dividends from abroad): Is taxable in Malta only if the funds are physically remitted to a Maltese bank account (remitted) or brought into the country. If the funds remain in foreign accounts, they attract 0 % Tax an.

3. Foreign Capital Gains: completely tax-free, even if the proceeds are remitted to a Maltese bank account. completely tax-free—even if the proceeds are remitted to a Maltese bank account..

Please note: For non-domiciled individuals with worldwide foreign income exceeding €35,000, a statutory minimum income tax of €5,000 per year applies.

3. Does relocating to Malta automatically protect against exit taxation in the home country?
Answer: No, quite the contrary. Relocating your tax residency abroad is an open-heart tax procedure. If you hold a substantial shareholding (at least 1%) in a corporation in your home country (e.g., a German GmbH), the physical relocation generally triggers the Exit Tax (§ 6 German Foreign Tax Act / AStG). The tax authorities treat the departure as a deemed sale of your company shares at fair market value on the day you move, immediately levying income tax on the built-in unrealized gains (hidden reserves).

4. What does “local substance” (substance over form) mean for my corporate structure?
Answer: Under international standards (OECD BEPS) and domestic foreign tax laws, mere letterbox companies (Letterbox Entities) or nominee arrangements are by no means sufficient to shift taxing rights to Malta. If the tax authorities of your home country refuse to recognize the Maltese company due to a lack of substance, you face the risk of CFC taxation (controlled foreign corporation rules / *Hinzurechnungsbesteuerung*) or the deemed existence of a domestic permanent establishment (*Betriebsstätte*).

Genuine economic substance requires:

• A dedicated, adequate physical office in Malta (not merely a hot desk or virtual co-working space).

• Qualified local directorship on the ground who verifiably take key commercial decisions in Malta.

• A verifiable commercial purpose and autonomous operating infrastructure (e.g., local supplier contracts, servers, and banking arrangements).

5. Does Malta levy inheritance, gift, or wealth taxes?
Answer: No. Malta does not levy a general wealth tax, inheritance tax, or gift tax.. Nor does any local trade or municipal business tax exist.

This makes Malta one of the most attractive locations for long-term wealth accumulation, the protection of family businesses and family offices, as well as cross-border estate planning via private Maltese foundations (Foundations) or holding vehicles.

6. What is the process for an initial tax consultation and structuring at your firm?
Answer: We do not offer generic, off-the-shelf solutions. Our tax advisory process is structured into four distinct phases:

1. Current Status Assessment & Risk Analysis: Detailed analysis of your existing corporate structures, assets, asset classes (equities, crypto, real estate), and your private relocation plans.

2. Tax Blueprint: Preparation of an individual legal and tax opinion that precisely compares the tax consequences in your country of origin (exit/disentanglement taxation, Foreign Tax Act/AStG, double taxation treaties) with the optimal corporate target structure in Malta.

3. Legally Compliant Implementation: Company incorporation, preparation of banking onboarding, leasing of office premises, and drafting of all relevant contracts (Intercompany Agreements).

4. Ongoing Compliance Monitoring: Ongoing monitoring of substance requirements, management of annual audits, and deadline management for filing tax returns and tax refund claims.