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Malta 5% scheme structure formation

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tacokai

Mentor Group Gold
Not bad if you ask me, sounds like a valid plan to setup a business in Malta if you can get away with only 5% corporate tax and the rest in dividends
 

Paper Chaser

New member
calculation for yourself is simple: 5% + 10k (upkeep active + holding ltd + bookkeeping + audits etc) + 5k yearly expat tax
Wait what, 5k yearly expat tax are additional to the 5% taxes? Can you elaborate on this one, please?

what do you mean exactyl?

I did the math and it make good sense for me to move to Malta if I can.
He means that you need to do good calculations upfront. If you don't pull a yearly profit of at least 200k, there might be better choices like Cyprus.
 

JustAnotherNomad

Mentor Group Gold
Wait what, 5k yearly expat tax are additional to the 5% taxes? Can you elaborate on this one, please?

I believe both Malta and Cyprus have some sort of minimum wage that you’d have to pay personal income tax and social security contributions on. On the positive side, this will earn you pension points and public EU health insurance.
The 5% is corporate income tax, not personal income tax.
 

Paper Chaser

New member
I believe both Malta and Cyprus have some sort of minimum wage that you’d have to pay personal income tax and social security contributions on. On the positive side, this will earn you pension points and public EU health insurance.
The 5% is corporate income tax, not personal income tax.
You do only pay (personal) taxes on what you're remitting to Malta, right? So why would there be a need of paying 5k straight and what would be the benefits of it exactly?
 

JustAnotherNomad

Mentor Group Gold
The others will be able to give you a better answer, but I believe there is some sort of minimum salary that must be remitted and taxed. I believe it’s part of their residency requirements. After all, you must have some sort of minimum income paid out to Malta to sustain your life there.
 

jackfrost

Entrepreneur
Malta usually beats all others at 100k+ -profits- a year.

As for minimum wage no you dont need to do that. The 5K expat tax pretty much takes care of everything and also means you dont even need to disclose your world wide earnings / holdings.

It is a law that if you earn more than 35k (i think no matter if locally or foreign sourced) that you need to pay the 5k no matter what. Also means they wont look any further into you.

If you do not pay that 5k expat tax then they will scrutinize you, make you declare all your world wide holdings / earnings etc. You could still easily get around paying the 5k but its just stupid. As said before... the system is so simple and cheap. Play by the rules, pay the entry free and enjoy it. Dont fuck with it.
 

jackfrost

Entrepreneur
AN ACT enacted by the Parliament of
Malta.

AN ACT to implement Budget Measures
for the financial year 2018 and other
administrative measures.



(d) immediately after sub-article (26) thereof, there
shall be added the following new sub-article:
"(27) Any individual who during any year preceding the
year of assessment:

(i) is ordinarily resident in Malta but not
domiciled in Malta (hereinafter "the non-domiciled
individual") and to whom provisos (i) and (ii) of article
4(1) apply, and who is not taxable in accordance with any
scheme under the Act effectively establishing a minimum
tax payable; and

(ii) derives income (including, in the case of a
married couple whose income is chargeable to tax in terms
of article 49 of the Act, the income derived by both
spouses) amounting to not less than thirty five thousand
euro (€35,000) or its equivalent in another currency, or
such other amount as may be prescribed, arising outside
Malta and referred to in proviso (i) to sub-article (1) of
article 4 of the Act, but which is not received in Malta,
shall, for any year of assessment, be subject to a tax
liability on his income amounting to not less than five
thousand euro (€5,000) per annum (hereinafter "the
minimum tax"), and should the income (excluding capital
gains chargeable in terms of article 5A of this Act)
chargeable to tax in the hands of such individual for any
year of assessment result in a tax liability (before taking
into account any relief granted in terms of articles 76 to 89
of the Act) amounting to less than the minimum tax, he
shall be deemed to have received in Malta additional
income arising outside Malta as shall result in a total tax
liability on his total income, wherever arising, amounting
to the minimum tax:

VERŻJONI ELETTRONIKA
A 179
Provided that in computing the minimum tax,
account shall be taken of tax paid under this Act, whether by
withholding or otherwise, in respect of all income (excluding
tax imposed in terms of article 5A of this Act), whether arising
in Malta or outside Malta:

Provided further that if the non-domiciled individual
can prove to the satisfaction of the Commissioner that if he had
been subject to tax without taking into account the provisions of
provisos (i) and (ii) to sub-article (1) of article (4) of the Act,
the total tax payable by him would have amounted to less than
the minimum tax, his tax liability shall be capped accordingly at
the said lower amount.".
 

jackfrost

Entrepreneur
It is called the expat tax since well it pretty much is geared to press at least the 5k of yearly tax out of non-doms which otherwise would not have to pay anything since you can also live on Malta from your previous savings + something that many dont know:

- after 6 months (better 1-2 years) ---you can remit your foreign sourced income to Malta tax free as it is now savings--

So in theory you never have to tax-remit a single Euro to Malta.
 

Paper Chaser

New member
You could have just edited your first post, would have saved me some time so I wouldn’t have to push that like button 2 additional times. ns2

Anyways, I do fully agree with you, let‘s just enjoy it while it lasts. I‘ll be happily paying those extra 5k keeping in mind all the benefits we are currently enjoying.
 

JustAnotherNomad

Mentor Group Gold
I’m not convinced it’s worth it for just 100k in profits. 10k + 5k + 5% x (100k - 15k) = 19,250.
That’s almost 20%. There should be several other places in Europe, even with better reputation than Malta, where you should be able to pay the same or less, and you wouldn’t have to spend 183 days there per year. The Baltics, Czechia, probably even Switzerland. Upwards of 200k I can see it making sense though.
 

jackfrost

Entrepreneur
Not really since the majority of it in the 10k is stuff you would need to pay everywhere else too. E.g. your company + accounting + maybe holding on cyprus is not g oing to be any cheaper. Quite the opposite probably more expensive for the single items.
 

JustAnotherNomad

Mentor Group Gold
Not really, maybe in Switzerland. Accounting shouldn’t be more than 1-2k in most other countries, especially since the structure would be much simpler.
But I don’t want to talk shit about Malta, I think it’s a great option and I’m glad you’ve found something that works for you.
 

jackfrost

Entrepreneur
Oh no im not trying to push Malta there i am not married to it and completely impartial when it comes to the simple numbers.

Quite the opposite always eager to learn the details about all current solutions. Imo Malta will not be the current Malta anymore in 1-7 years. Change is coming and the clock is ticking.

Its just that i looked at most options and the costs were not so different e.g. the holding in Gib only costs you like 1-2k incl. the address, filings audits etc.

The rest like the local company + quartlery VAT filing + accounting + audits + filing + office address and so on usually add up to the same in most countries. That 10k is rounded up with everything included + holding be it audits (thats something some countries do not need), filing fees, yearly account and so on. Most people would pay only like 5-7k or so for it but i like to put a buffer on top of it and not skimp on doing it properly.

It does get considerably cheaper if you dont need limiteds/corporation(s) in general and can go the sole trader route
 

georgio

New member
What about the 30% rule? I've heard in Malta you have to pay a 30% tax on top of the 5%, and then you get back the 30% if you are compliant with the rules.. I would never entrust someone with that..
 

jackfrost

Entrepreneur
You trust every IRS with it :rolleyes:

You pay 35% corporate tax but get a 6/7th refund depending on your setup. This is the law not based on some doods mood in a basement. You can even request the refund before you pay the 35%. Of course refund will only paid out after tax has been paid.
 
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