Malta 5% scheme structure formation

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biz1

New member
What interest does the US have in Malta?

Also looking forward to your suggestions of any CFC issue mitigations in the separate thread
 

jackfrost

Entrepreneur
calculate 15 first year, then 10k going forward approx as a mean calculation. that does include the things you pay in all other countries too as explained (filings, book keeping, tax statements, refunds, virtual offices, whole thing)
 

biz1

New member
Hi everyone, can you please describe the design of the 5% (without refund) Malta setup? What criteria are needed for it to apply. I hear the term "consolidated accounting", is this really just a company group thing, e.g. you have A Ltd. >=95% owned by B Ltd. and Malta chooses to tax such constellations at a 5% total company tax?

(The next more advanced followup question would be, how can one set up such a structure *outside* Malta as a way to help a Malta CFC case.)
 

Paper Chaser

Active Member
Hi everyone, can you please describe the design of the 5% (without refund) Malta setup? What criteria are needed for it to apply. I hear the term "consolidated accounting", is this really just a company group thing, e.g. you have A Ltd. >=95% owned by B Ltd. and Malta chooses to tax such constellations at a 5% total company tax?

(The next more advanced followup question would be, how can one set up such a structure *outside* Malta as a way to help a Malta CFC case.)
I did not have it explained to me closer, but yeah, that's exactly what I suppose it works like.

Which CFC case are you referring to exactly?
 

biz1

New member
@Paper Chaser so what the Maltese CFC law says is, "if your CFC pays less than 50% (in its country of registration) of what it would have paid if it was based in Malta according to Malta's tax act, then it will be taxed in Malta".

The interesting thing here is that it looks to me like that if you are resident in Malta and you have that 5% setup, *but* on A Ltd.-B Ltd. which are incorporated *outside Malta*, then that will cancel the CFC rule with respect to them.

This is my best impression, I can't understand anything else from the law (@jackfrost thoughts? :) ), this was why i was curious about what the 5%-without-refund structure is made up of exactly really.
 

Paper Chaser

Active Member
@Paper Chaser so what the Maltese CFC law says is, "if your CFC pays less than 50% (in its country of registration) of what it would have paid if it was based in Malta according to Malta's tax act, then it will be taxed in Malta".

The interesting thing here is that it looks to me like that if you are resident in Malta and you have that 5% setup, *but* on A Ltd.-B Ltd. which are incorporated *outside Malta*, then that will cancel the CFC rule with respect to them.

This is my best impression, I can't understand anything else from the law (@jackfrost thoughts? :) ), this was why i was curious about what the 5%-without-refund structure is made up of exactly really.
You can't get the tax reduction without having at least one company incorporated in Malta.
 

Definy99

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


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.

I have seen you posting about that some times. I am currently thinking about moving to Malta (currently living in a high tax EU country). I am trading crypto and I was wondering if I really needed a corporate structure or if I could just go for the remittance tax, pay the 5k and not remit anything to Malta.

What I was wondering is if those crypto trading and staking (DeFi) activities I am doing can be considered as "income arising outside of Malta and not being remitted to Malta" if I hold them in my softwallet and staying in Malta as a non dom but resident...

An accountant adivsed me to create a corporate structure, but I was wondering if I would really need that structure. I guess no accountant would advise you just to pay the 5k and do nothing as they won't get you as a client by that. Also when I asked the tax advisor about that the answer was a bit blur.

Does someone have any experience or knowledge about that?

I guess one benefit of the corporate structure and paying the 5% tax would be to have a Tax Certificate which can proof the Source of your funds. But besides that - would one (from a legal point of view) really need a corporate structure when making profits by (crypto) trading?

And what means "remit to Malta"? If I trade crypto assets and the profits being realised into my hot wallet are they seen as remitted to Malta?
Or are they only seen as remitted to Malta, when I would remit them to a Malta Bank Account?

Thanks in advance!
 

Silvio

Entrepreneur
I have seen you posting about that some times. I am currently thinking about moving to Malta (currently living in a high tax EU country). I am trading crypto and I was wondering if I really needed a corporate structure or if I could just go for the remittance tax, pay the 5k and not remit anything to Malta.

What I was wondering is if those crypto trading and staking (DeFi) activities I am doing can be considered as "income arising outside of Malta and not being remitted to Malta" if I hold them in my softwallet and staying in Malta as a non dom but resident...

An accountant adivsed me to create a corporate structure, but I was wondering if I would really need that structure. I guess no accountant would advise you just to pay the 5k and do nothing as they won't get you as a client by that. Also when I asked the tax advisor about that the answer was a bit blur.

Does someone have any experience or knowledge about that?

I guess one benefit of the corporate structure and paying the 5% tax would be to have a Tax Certificate which can proof the Source of your funds. But besides that - would one (from a legal point of view) really need a corporate structure when making profits by (crypto) trading?

And what means "remit to Malta"? If I trade crypto assets and the profits being realised into my hot wallet are they seen as remitted to Malta?
Or are they only seen as remitted to Malta, when I would remit them to a Malta Bank Account?

Thanks in advance!
You don't need the corporate structure, don't fall for the story of an accountant that wants to inflate his yearly fees
Many people in Malta are doing exactly that, trading crypto on their personal name in accounts outside Malta. As long as it's not remitted back to Malta there is no tax apart from a 5k yearly payment.

Don't worry about a Malta bank account because almost no bank will open an account for a non-resident anyway. Just use cards\ATM for whatever costs you have.
 

biz1

New member
@maxmmm @Paper Chaser @jackfrost @BlueMist I have you a question: if you are personally non-domiciled resident on Malta , and you own and control a non-Maltese company (but still that company does not fall under Malta's CFC regulation) (e.g. company based in Cyprus, Cayman, Gibraltar, Cooks, UAE, Mauritius, etc.) and you receive dividends or normal payments (say a donation, a royalty, other remuneration) income from that company but still do not remit that payment to Malta, what will the total tax due be then - isn't it that then no tax applies on your own personal reception of those funds, and all taxes due are the taxes that apply to the company e.g. 0-20% company tax?

Please confirm. And then finally, for this to be legitimate however the income must not be due to work carried out by oneself in Malta, in which case it would count as Malta sourced income and be fully taxable in Malta, is it so? So for instance the income must not be due from an employment relation where one is payrolled for 9-5 work from office in Malta. Is there any further particular must-not-do, must-do for the non-taxability by Malta to apply.
 

sp00k

New member
I can give away a Maltese LLC for free as in a process of voluntary liquidating anyway, that will cost me extra.
It was selling digital photo stock nothing shady. Annual running costs under 2,5k with current accountant auditor. No debts, no risks, everything can be checked. Closing 2020 Audit right now. Vat registered.
 

Silvio

Entrepreneur
@maxmmm @Paper Chaser @jackfrost @BlueMist I have you a question: if you are personally non-domiciled resident on Malta , and you own and control a non-Maltese company (but still that company does not fall under Malta's CFC regulation) (e.g. company based in Cyprus, Cayman, Gibraltar, Cooks, UAE, Mauritius, etc.) and you receive dividends or normal payments (say a donation, a royalty, other remuneration) income from that company but still do not remit that payment to Malta, what will the total tax due be then - isn't it that then no tax applies on your own personal reception of those funds, and all taxes due are the taxes that apply to the company e.g. 0-20% company tax?

Please confirm. And then finally, for this to be legitimate however the income must not be due to work carried out by oneself in Malta, in which case it would count as Malta sourced income and be fully taxable in Malta, is it so? So for instance the income must not be due from an employment relation where one is payrolled for 9-5 work from office in Malta. Is there any further particular must-not-do, must-do for the non-taxability by Malta to apply.
Depends on CFC. AFAIK (for you to confirm this with an accountant) if your non-Maltese company makes less than 750K profits a year (or 75K passive income) then it is not CFC and then your company profits are not taxed in Malta.
Regarding your 2nd question, I don't know, best to ask a local accountant.
 

ghouldog

New member
Does anybody have any experience using a non-domiciled resident company in Malta? I.e. an operating company set up in another jurisdiction but resident in Malta for tax purposes. The reason I am asking is because setting up a Malta company seems like a huge and expensive hassle.
 

ghouldog

New member
Gibraltar makes a big fuss about declaring dividends, so my Gib accountant is recommending a take the profit out of my hold co. as a "consultancy fee". But I am worried that this fee may now be treated as income from work (rather than passive income), and taxed in Malta (where I am resident and technically managing the Gib company). Anyone have experience with this and know what to do? @jackfrost perhaps
 

fshore

Entrepreneur
Gibraltar makes a big fuss about declaring dividends, so my Gib accountant is recommending a take the profit out of my hold co. as a "consultancy fee". But I am worried that this fee may now be treated as income from work (rather than passive income), and taxed in Malta (where I am resident and technically managing the Gib company). Anyone have experience with this and know what to do? @jackfrost perhaps
What are the trouble with declaring dividends? Any specific requirements?
 
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