In its drive to eliminate economic double taxation, Malta has adopted a tax refund system to shareholders, upon a distribution of dividends by a company registered in Malta. Shareholders may claim the following tax refunds of the Malta tax charge of the distributing company:
6/7ths refund, i.e. 30% refund (6/7ths of 35%) of the taxable profits. Where we can claim double taxation relief, the effective Malta tax after tax refunds varies from 5% to nil.
We can not claim the 6/7ths refund on certain income such as profits resulting from royalties. Same applies for similar income arising outside Malta and from investments, assets and liabilities outside Malta on which we claimed DTR. In these cases we claim a 2/3rds refund.
Where the distributed profits come from passive interest or royalties, then the tax refund shrinks to 5/7ths of the Malta tax charge. Interest and royalties are passive when they don’t come from a trade or business and have suffered a foreign tax of less than 5%.
If you would also like to benefit from the refund system, get in touch and we help you set up a company, tailored to your individual needs!