Malta

Tax System Overview

Malta utilizes a unique "full imputation" corporate tax system, which, while complex, results in one of the lowest effective corporate tax rates in the European Union for non-resident shareholders.

The 6/7ths Refund System

A Maltese trading company pays a headline corporate tax rate of 35%. However, when a dividend is distributed to a non-resident shareholder (or a Maltese holding company owned by non-residents), the shareholder can claim a refund of 6/7ths of the Malta tax paid by the company.

• Gross Profit: €100
• Malta Corporate Tax (35%): €35
• Net Dividend Distributed: €65
• Shareholder Refund (6/7ths of €35): €30
• Effective Tax Paid: €5 (or 5%)

This system requires careful structuring (often using a two-tier Malta holding/trading structure) and cash flow management, as the 35% must be paid first before the refund is processed.