Malta in 2022+ still a Bitcoin Tax haven for individual...?

[Horeskal]

So last few years Malta was thrown around as bitcoin tax haven for individuals. As you dont pay taxes there from your sale of cryptocurrency.. But years went by and recently i read on several places various information alleging that Malta is no longer a BTC tax haven for individuals... I read also something that you had to (newly have to?) hold BTC for 3 years (time test) and only then u were (are?) free from tax... I also read something (heard from some youtube interview with european (Maltese...?) lawyer) that Malta generally dropped the ball on crypto overall, and in many aspects (not just tax) is NOT bitcoin friendly really anymore...

My question is simple- Is Malta in 2022 (and onwards) still a Bitcoin tax haven (0 tax on selling your BTC)...? Are there any "restrictions" ("BUTs" and "IFs") what you can or cannot do with your bitcoin for it to be tax free...? Like that u have to hold it for certain ammount of time...? Can make only few trades per year or u are considered a profesional and taxed or whatever... Are there any "limits" like these or something similiar...?

Thank you

 

[carz]

Malta has never had 0% tax on crypto, they’ve had guidelines on crypto since 2018. The general view is you don’t pay tax on long term holds (general taken as > 1 year). Other then “financial tokens” there’s no capital gains, but income tax - max 35%. The normal rules allowing you to get a refund of up to 30% remain… so you essentially pay 5% tax.

The guidelines on crypto-crypto are that they are not taxed unless it is business activity and/or trading activity (badges of trade tests can apply). I believe there’s even a general clause saying that it depends what the intention behind the transaction is to aid in this classification.

Nothing really black and white, but the safe approach-> i. No tax on long term holds; ii). If financial token see if capital gains apply; iii). Anything else is at max 35% income tax (unless you have some special circumstances- talk to an advisor).

The big problem in malta is that all banks rely on correspondent banks who prevent them from onboarding crypto clients. So if your setup requires a local bank account, forget about it.

Edit: also check if there are special laws about income generated abroad and not remitted to Malta. But I’d guess that crypto income generated from Malta, is obviously taxed in Malta.

 

[Horeskal]

Thanks.
You wrote about "financial tokens"... whats that, what do u mean by it...? I might have not understand correctly what you mean...?

 

[carz]

Thanks.
You wrote about "financial tokens"... whats that, what do u mean by it...? I might have not understand correctly what you mean...?

They classify tokens into 2: financial (those that resemble equities) and utility tokens. I’m not sure what exactly classifies as a financial token, seems like a broad definition (google it a bit you’ll find some articles).

Try and get in touch with some advisors, there are no shortage of service providers. I’m pretty sure there’s a way to reduce tax to 5%, it is very obvious that whoever designed these rules was catering to foreign individuals and threw Maltese domiciles under the bus.

 

[Mr Gus]

Under the non-dom program if you have owned your crypto in your personal name before you moved to Malta and can prove it, you can remit it to Malta tax free, also if you hold crypto assets outside of Malta you can remit the capital gains tax free, this only goes for holding it passively so not TRADING!

Also let's say you have a crypto business you can setup in Malta and pay 5% corporate income tax on the profits and then pay out the remaining 95% as dividends to a foreign holding company and keep it there for 1 or 2 years and it will be seen as capital gains and you can remit it to Malta again.

So yes Malta can be no tax / very low tax but it would require you to already have some net worth before you moved to Malta.

 

[AMD]

So last few years Malta was thrown around as bitcoin tax haven for individuals.

has it ever been, I doubt.

Under the non-dom program if you have owned your crypto in your personal name before you moved to Malta and can prove it, you can remit it to Malta tax free

how would you be able to prove that? just a screenshot from the wallet?

 

[maxmoney]

how would you be able to prove that? just a screenshot from the wallet?

second that question ?

 

[Mr Gus]

has it ever been, I doubt.

how would you be able to prove that? just a screenshot from the wallet?

Not sure about this, maybe transaction ID or tax return of the previous country you lived in stating that you owned x amount of BTC, however you would only have to show them this if they where to ask about it. And as far as I know the Maltese tax authorities are not actively coming after you to check if everything is going by the rules.

But if you where to remit that BTC to Malta in the form of buying property here or selling the BTC to fiat and sending that to a Maltese bank account you could expect to get some questions about the source of funds, and that can be proven by tax returns from your previous country for example.

 

[Marie Manila]

how would you be able to prove that? just a screenshot from the wallet?

Make a personal message (e.g. your name and date of birth) and sign it with your wallet address. So you can prove at least that you own the wallet.

If you are an eresident of Estonia, you can put the message and signature on a PDF and sign that one again with your Estonian ID (you can use Dokobit for signing).
In that case it would get a time stamp also.

If you skip the time stamping the authority could allege "You haven't owned the crypto before moving! You bought the whole wallet with deposited crypto after you moved to Malta!".

 

[maxmoney]

Make a personal message (e.g. your name and date of birth) and sign it with your wallet address. So you can prove at least that you own the wallet.

can we do that? wasn't aware of it.

 

[Marie Manila]

can we do that? wasn't aware of it.

With most wallet software this should be possible.

Look into your wallet software and search for a sign and verify tool.

If you use Electrum go to the Addresses tab, pick an address there, do a right click and choose "sign/verify message".
Enter some personal details to the message field and click the Sign button.
Don't forget to save the message, used address and signature!

 

[AMD]

Make a personal message (e.g. your name and date of birth) and sign it with your wallet address. So you can prove at least that you own the wallet.

thanks for the hint.

 

[mallshtow]

I'm having a hard time to understand how to categorise crypto assets according to the Maltese authorities. I understand there are two types: coins and tokens. If I'm not mistaken, coins would be, for example, BTC or stablecoins.
Then, tokens can be:
- Financial tokens (like securities or equities)
- Utility tokens

- If I have ETH, for example, would that fall on the Utility tokens category?
- What if I'm staking ETH somewhere, for example in Lido and I have stETH? That would not be considered a security, right?
- Would wrapping ETH to stETH be a taxable event?
- And what if I deposit my stETH into some other protocol like Curve and not I have crvstETH?
- Are NFTs just coins? or utility tokens?
- A DAO token, would that be considered a security?

Thanks!

 

[Mr Gus]

I'm having a hard time to understand how to categorise crypto assets according to the Maltese authorities. I understand there are two types: coins and tokens. If I'm not mistaken, coins would be, for example, BTC or stablecoins.
Then, tokens can be:
- Financial tokens (like securities or equities)
- Utility tokens

- If I have ETH, for example, would that fall on the Utility tokens category?
- What if I'm staking ETH somewhere, for example in Lido and I have stETH? That would not be considered a security, right?
- Would wrapping ETH to stETH be a taxable event?
- And what if I deposit my stETH into some other protocol like Curve and not I have crvstETH?
- Are NFTs just coins? or utility tokens?
- A DAO token, would that be considered a security?

Thanks!

I believe this goes for domiciled residents, or if you hold crypto in Malta. However if you are a non-dom resident and keep your assets outside of Malta then it will be untaxed no matter what kind of asset unless you remit it to Malta (but you can remit any capital gains tax free to Malta)

Outside of Malta means holding your crypto assets on a foreign exchange or having your hardware wallet in a foreign country.

However if you move to Malta you can bring any excisting assets with you tax free.

 

[mallshtow]

Hi @WIE7, thakns for your answer! So, some clarifications I forgot. The assets are part of a Maltese resident company's portfolio, so AFAIK, the document provided in my post applies. Part of the assets are in a hardware wallet (which is in a foreign country) and other part are in Kraken exchange and in Vauld.

 

[CaptK]

Under the non-dom program if you have owned your crypto in your personal name before you moved to Malta and can prove it, you can remit it to Malta tax free, also if you hold crypto assets outside of Malta you can remit the capital gains tax free, this only goes for holding it passively so not TRADING!

Also let's say you have a crypto business you can setup in Malta and pay 5% corporate income tax on the profits and then pay out the remaining 95% as dividends to a foreign holding company and keep it there for 1 or 2 years and it will be seen as capital gains and you can remit it to Malta again.

So yes Malta can be no tax / very low tax but it would require you to already have some net worth before you moved to Malta.

Is this under the rebate scheme?

If so you would need a offshore entity, UK LTD is a favoured one. Then on paper you would pay the 35% tax but shift the profits to the UK LTD Holding Company. Apply the rebate and then only pay 5% to the Maltese tax office.

You don’t need a bank account for the LTD but you do need to do the accounting.

 

[JackAlabama]

I believe this goes for domiciled residents, or if you hold crypto in Malta. However if you are a non-dom resident and keep your assets outside of Malta then it will be untaxed no matter what kind of asset unless you remit it to Malta (but you can remit any capital gains tax free to Malta)

Outside of Malta means holding your crypto assets on a foreign exchange or having your hardware wallet in a foreign country.

However if you move to Malta you can bring any excisting assets with you tax free.

The hardware wallet does not hold any coins. It is not holding anything but the private keys. It is more like the atm card of your offshore bank account.

 

[Mr Gus]

Hi @WIE7, thakns for your answer! So, some clarifications I forgot. The assets are part of a Maltese resident company's portfolio, so AFAIK, the document provided in my post applies. Part of the assets are in a hardware wallet (which is in a foreign country) and other part are in Kraken exchange and in Vauld.

I don’t know about crypto assets for companies. I am not sure how they are seen, maybe best thing to do is get in touch with a tax specialist in Malta or contact the Maltese tax authorities and simply ask them.