Malta adopts the Full Imputation System where dividends paid by a Maltese resident company carry a tax credit equivalent to the tax incurred by the company on the profits out of which the dividends have been paid.
Shareholders are taxed on the gross dividend they receive at the applicable tax rates. But they are entitled to deduct the tax credit against their total income tax liability.
This means that company profits are taxed at the source, but dividends distributed to shareholders are not taxed again.
The full imputation system ensures that there is not any double taxation on profits earned by a Company as is typical in a classical tax system, whereby company profits are subject to tax and shareholders are taxed on dividends.
We advise and assist private individuals seeking tax advice on cross border tax implications on employment income, business profits, passive income, capital gains and other income.