Assets donation from individual to corporate

mallshtow · Apr 2, 2022

Hi, I was wondering where can I read some info (or if someone can explain to me) on which taxes (if there are) have to be paid if a donation of assets is done from an individual (not resident in Malta) to a Maltese resident company?

Sols · Apr 3, 2022

It would depend on type and value of the assets being donated, and how the donation is done (including the relationship between the giver and the company). It's not just taxes you need to worry about, but also how to reflect it correctly in the accounting of the company.

The general rule is it would be considered some form of taxable income, but it's best to speak with a tax adviser to be absolutely sure what would apply in your circumstance.

Have you considered having the company buy the assets instead? If it's a valid business cost, you could use it to incur a loss/lower the tax burden. Might be something also worth discussing with a tax adviser.

mallshtow · Apr 3, 2022

Hey @Sols, thanks for your answer

But in the case of the company buying the assets, the company must have enough cash to buy them (which it does not). Just think about it like a new company and an individual making the donation.

Regarding the type and value of the assets we are talking about crypto assets (I know there are different types as well).

Sols · Apr 3, 2022

fartinav said:
But in the case of the company buying the assets, the company must have enough cash to buy them (which it does not). Just think about it like a new company and an individual making the donation.

If the company isn't formed yet, you might be able to use the assets as share capital contribution or through some other means work it into the founding of the company. A good lawyer might be able to sort you out.

There wouldn't be any tax burden for the company in that case and normally none for the previous asset holder. Transfer of a personal asset into a company doesn't have to be a taxable event if the person giving the asset is involved in the company.

But these are very difficult questions where even the slightest bit of nuance can make a huge difference. Everything I'm telling you is based on experience, but could still be wrong/not applicable in your case.

fartinav said:
Regarding the type and value of the assets we are talking about crypto assets (I know there are different types as well).

You wouldn't be the first to put your own crypto into a newly formed company, but definitely seek legal advice first. It's important to get this right so there are no questions or surprises in the future.

CaptK · Apr 3, 2022

Where is the asset based and is the new company going to be in a different Jurisdiction?

mallshtow · Apr 3, 2022

Sols said:
If the company isn't formed yet, you might be able to use the assets as share capital contribution or through some other means work it into the founding of the company. A good lawyer might be able to sort you out.

There wouldn't be any tax burden for the company in that case and normally none for the previous asset holder. Transfer of a personal asset into a company doesn't have to be a taxable event if the person giving the asset is involved in the company.

But these are very difficult questions where even the slightest bit of nuance can make a huge difference. Everything I'm telling you is based on experience, but could still be wrong/not applicable in your case.

You wouldn't be the first to put your own crypto into a newly formed company, but definitely seek legal advice first. It's important to get this right so there are no questions or surprises in the future.

Thanks! Are you a Maltese tax lawyer? Or do you know anyone who could advise me?

Sols · Apr 3, 2022

fartinav said:
Thanks! Are you a Maltese tax lawyer? Or do you know anyone who could advise me?

I am not but here are some of the most popular firms on the island that I know have experience with crypto/blockchain and taxation:

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CSB Group is a Malta based corporate service provider with expertise in corporate tax structuring, financial services, Malta company formation and company services, back-office services, professional investor funds, corporate law firm and fiduciary, corporate services and general administration...

www.csbgroup.com

Malta Law Firm | Chetcuti Cauchi Advocates Malta Law Firm

Chetcuti Cauchi is a top tier Maltese law firm. Chetcuti Cauchi Lawyers in Malta specialise in Corporate and Commercial Law, IT law, Intellectual Property, Maltese residence and Citizenship Programmes, Property law, Malta Company Formation, Chetcuti Cauchi's Tax lawyers provide Maltese tax...

www.ccmalta.com