Malta with Portuguese NHR: Operating vs. Holding company

[bandanna]

Hello, I'm looking to get incorporated in Malta while residing in Portugal under NHR. I bet you heard this track many times. I understood that if the company is a holding company, I'd pay 5% tax on dividends directly vs. 35% with 6/7th (30%) return if it was an operating company.

Could you help me understand what are the differences between each route? ... a Holding company costs a bit more yearly, but I wonder if there're certain cases where one is better than the other?

If anybody is registered in Malta with an operating company, could you please tell how long it takes for the 30% refund to be processed? Is it a 6-12 months thing, or more of a 2 weeks thing?

While at it, last question would be around EMIs vs. Finance Institution. Is any considered safer? ... I'd love to get a feedback on Finductive and Airwallex if anybody tried them.

Thanks!

 

[johnwickert]

A holding company pays 5% tax on dividends while an operating company pays 35% with a 6/7th (30%) refund. Holding company costs a bit more yearly, but there may be certain cases where one is better than the other. Processing time for the refund varies. As for EMIs vs. Finance Institution, there is no clear answer as to which is safer. It's important to do your own research and due diligence, and consider factors such as regulatory compliance and reputation.

 

[bandanna]

Thanks @johnwickert !

Do you know how long the refund process takes?

Any recommendations on finance institutions or EMIs able to onboard Maltese companies?

 

[johnwickert]

Thanks @johnwickert !

Do you know how long the refund process takes?

Any recommendations on finance institutions or EMIs able to onboard Maltese companies?

The processing time for the refund can vary and it's difficult to provide an exact timeline. It may depend on factors such as the complexity of the tax return, the workload of the tax authorities, and the accuracy of the information provided. It can take several months to a year or more to receive the refund.

For the EMI, you can look at Blackcatcard.

 

[gamblerman]

There is actually a way to avoid paying the 35% and reclaim 6/7. It is called "fiscal unity" and even if I don't know the details, you register the trading and holding company as one reporting unit. Some limitations, but your service provider should be able to answer if you qualify.

In practice, it works that you can make a dividend of 95% of profits from the operational company and then from the holding to yourself (and then only pay the 5% tax - both companies liable). It costs a little bit more (as you need to consolidate the accounts and register the fiscal unity), but can be worth it if you need the money fast (always good ) and it is much easier as well.

For the refund, it is, as stated above hard to give an exact time as many factors play in, but the higher the refund the faster you get it paid out. Service providers normally say 4-6 months, but that can vary. From what I have seen, refunds over 100KEUR are normally processed within 3-4 months (even shorter if very high), but lower amounts tend to take longer time (up to 12 months).

 

[bandanna]

Thanks @gamblerman for the explanation!

Can you help me understand how does it work, since I'm quite a newbie tbh.

Assume yearly profit is 500k, and I distribute dividends in Q2 and Q4, with 50% each. The way I understand it plays like that: In June and December, distribute 250k - 35%= 162.5k. And by EOY pay the 35% retained in the account then claim them back. Once returned, whenever that comes, all them 30% of the total 500k would come together. Is that how it works?

Do we claim the 6/7ths aka 30% back only by end of year, or right after each dividends distribution?

Sounds to me that registering a Holding company might cost a few extra pennies but would make things much smoother.