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lory

Active Member
@BlueMist that is super interesting. What about declaring taxes because you hold a Malta ID card, Malta will expect that won't they, if you don't file a tax return they'd fine you or??
do you really think they will go after you if you don't live there?
 

BlueMist

Entrepreneur
Just curious, the Maltese consolidated accounts setup, how does it work out in practice - so you have A Ltd. and B Ltd. both on Malta, A owns B, and you own A Ltd., and you are a tax resident on Malta only. B can then conduct any business (e.g. sell consulting services, facilitate sales, whatever), and you then pay out the profits as dividends to yourself, with 5% total company tax. Are you due any other taxes on top of this in Malta e.g. personal income tax?
I don't think that Malta trading + holding setup is advisable for residents living in Malta. It is fine to use such setup of Malta holding + Malta trading if you are not living in Malta. That's why usually the most common scenario for people living there is Malta trading + Cyprus holding. Such dividends received from Malta trading company should not be remitted back to Malta to your personal account. You should pay them out somewhere else to your personal account and wait some time if you necessarily want to bring them back to Malta.

But honestly I have yet to see Maltese authorities cracking down on people breaking these rules. There are people who gets dividends to Cyprus holding, withdraw to personal account outside of Malta, use ATM to get cash from these non Malta accounts and nobody has questioned anything.
 

jackfrost

Entrepreneur
always foreign holding. dont do holding + active trading both on malta just for the instant 5% and not paying 35 + getting refund scheme if you live there (which you should for the whole thing). there are ways to do it but not worth it especially given the current climate.

you can remit the money to malta tax free after some time as savings. officially something like minimum of 6 months is being floated but most decent accountants / lawyers will advise you to 1-2 years.

like bluemist said i have not found anyone cracking down yet either but there is zero reason to own a maltese bank account really... you likely will not get one anymore anyways without considerable expenses / knowing someone.
 

Paper Chaser

Active Member
I don't think that Malta trading + holding setup is advisable for residents living in Malta. It is fine to use such setup of Malta holding + Malta trading if you are not living in Malta. That's why usually the most common scenario for people living there is Malta trading + Cyprus holding. Such dividends received from Malta trading company should not be remitted back to Malta to your personal account. You should pay them out somewhere else to your personal account and wait some time if you necessarily want to bring them back to Malta.
always foreign holding. dont do holding + active trading both on malta just for the instant 5% and not paying 35 + getting refund scheme if you live there (which you should for the whole thing). there are ways to do it but not worth it especially given the current climate.

you can remit the money to malta tax free after some time as savings. officially something like minimum of 6 months is being floated but most decent accountants / lawyers will advise you to 1-2 years.
Seems like no one really appreciates the instant 5% taxation scheme, which ofcourse is quite a bit more expensive yet you will be done with taxes in no time. I might overthink going for the 3-way-structure I guess.

What do you guys think of some Asian Holding+MT Trading, like a HK Holding? Might be better for businesses involved in Cryptos. I'm currently thinking about a HK+MT-way, because EU regulations seem to get worse by the day and I'd lose most of my clients if it really does get worse.
 

BlueMist

Entrepreneur
always foreign holding. dont do holding + active trading both on malta just for the instant 5% and not paying 35 + getting refund scheme if you live there (which you should for the whole thing). there are ways to do it but not worth it especially given the current climate.
It doesn't seem matter if you have MT holding + MT trading or CY holding + MT trading for instant 5% taxation scheme.

What do you guys think of some Asian Holding+MT Trading, like a HK Holding? Might be better for businesses involved in Cryptos. I'm currently thinking about a HK+MT-way, because EU regulations seem to get worse by the day and I'd lose most of my clients if it really does get worse.
That's interesting, I would also like to hear about such setup in practice. I once thought about making Singapore holding for my Malta company, but never really ventured into details of doing it. It still seems Cyprus holding is the more popular choice.
 

jackfrost

Entrepreneur
It doesn't seem matter if you have MT holding + MT trading or CY holding + MT trading for instant 5% taxation scheme.


That's interesting, I would also like to hear about such setup in practice. I once thought about making Singapore holding for my Malta company, but never really ventured into details of doing it. It still seems Cyprus holding is the more popular choice.

I have not looked into it in detail yet but i was being told MT trading + GIB holding does not qualify or has problems tax wise with the instant 5% scheme as in not even paying the 35%.

PS: that might have been in context of tax credits / 0% income tax / foreign income etc so the 5% scheme might be working with those constellations anyways.
 
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biz1

New member
@BlueMist @jackfrost @Paper Chaser thank you for your excellent thoughts.

So for me, I will have a Malta ID. This automatically means that I am "ordinarily resident" for tax purposes in Malta doesn't it, even if I only am on Malta even just 2 days per year, doesn't it.

This in turn means that likely any activity I do in any country, will be deemed a "permanent establishment in Malta" and a "significant function" is in Malta and therefore any business I own or control will be subject to Malta CFC rules (per legal notice 411: presuming its tax rate is <50% of Malta's and its profit exceeds 750k€/75k€ and profitability is >10%). I guess this is pretty crap really - as long as I'm below the 750k€ threshold it's fine but I'd need to time unregistering from Malta well before hitting that cap.

Do you see any way that I can keep my malta ID while not having my "whole business realm" sucked into the Malta CFC black hole??

Just to invent an interesting example, say I would also concurrently be a legal resident in Dubai, could that somehow offset this drama of all-of-me becoming CFC-taxable in Malta.

Also, is there some structural feature I could apply to any company/entity anywhere in the world that I control, that at least would bring it down to being taxed at 5% by Malta? E.g. "have all your structures out there conform to the consolidated tax method by simply having any company ownerd by another company, this way Malta CFC will prescribe a 5% tax rate just in case the structure is based in a jurisdiction with <2.5% tax"

Please let me know what you think. I also presume this is such a specific situation that normally it wouldn't even come to mind for advisors.
 
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jackfrost

Entrepreneur
I cant really give specific advice on your cfc problem but just holding an ID does not automatically make you tax resident. It makes you tax liable for your time that you spent on Malta depending on DTTs with your citizenship country etc.

Being considered fully tax resident on Malta needs the tax certificate which comes with providing receipts etc that you actually live on the island and have spent the 183+ days there unless you opt for one of the other residency schemes which will give you that after 3 days or so per year for the exchange of approx 25k + 20k rent or i think 400k or so buy.

This will usually also be the rules in the DTT.

You will get a tax id however (if you request one) either way so in theory you could tell other countries you are tax resident there and provide a tax id. What happens if anybody does indeed check that e.g. your home country - i have no idea.
 

biz1

New member
(I presume I don't care about tax credits, why would I.)


@jackfrost thanks for sharing your thoughts. Interesting. As for me, I am already resident from before in a pretty-much-zero-tax jurisdiction, so I don't have the problem most have of "what about when my home country wants taxes/asks questions", which could motivate them to stay 183 days in one place only for that reason - I moved out years and years ago.

What you are asking me in a way is the nomad's dilemma, "to want to be counted as being 183 days on Malta per year, or not to be counted as being".

I think mostly in Europe you can stay as a tourist with no tax obligations for 179 or 89 days per year, so if you are going around like that, you don't get sucked into tax residency in Europe - successful nomadism.


When I read Malta's materials, it appears to me like they kind of presume of me as ID card holder, that I am "ordinarily resident" as they call it. They don't even have a definition for ordinarily resident, so I simply "am if I say I am" plus I don't spend more than 6 months away from Malta (some rule says something to that effect doesn't it), so come for a weekend every 179 days.

Do you see any reason why I would *not* be ordinarily resident on Malta, while never spending more than 179 days away from Malta, though while not paying the "Global Resident" program's 15k€+9.6k€ rent?

I guess to keep the ID I would need to maintain that I am indeed ordinarily resident on Malta?

If I like to make a case that I'm *not* ordinarily resident on Malta, what would I fill out on the self-assessment tax form?


Last, if I am counted as ordinarily resident, how should companies I control (in zero and low tax jurisdictions) be structured, is the point to structure them just like the Malta 5%-without-refund-procedure is setup?

Your thoughts on these points are much appreciated.
 

xipoid

New member
Btw planning for more than 5 years with any EU setup is
unrealistic. Expect things to change 2025 on. Of course MT & Co will try to uphold similar structures for longer but it will likely be a lot harder. The time is ticking for these budget setups that you can pull off so easily with so little money.
Case in point, Cyprus now has an 8 billion euro hole in its budget thanks to having to suspend its passport for sale program.

The leaks are all coming from Al Jazeera, so there's speculation that this is an even easier way for Turkey to inconvenience its neighbour than drilling for oil off its shores.
 

Osleak

Active Member
I just got the response about both strategies! So let me make it short but clear.

Option 1 (slow way): establishing one Malta LTD as the operating business and one UK LP as the Holding. This is probably the way 95% of all people know and use. Positive thing about this setup is it's cheaper than option 2. Negative thing is you'll have to wait up to 12 months to get the 6/7 tax refund - you can watch the first pages of this thread and find other people complaining about long waiting times for tax refunds!

Option 2 (fast way): establishing one Malta LTD as the operating business, one Malta Holding and one UK LP as the main Holding. There have been many changes in 2019(+), one of them actually allows setups like this to avoid the 6/7 tax refund but to pay the 5% effective tax rate directly. Like I already mentioned, this way is pretty new so only people use it yet or even know about it. Negative thing about this setup is higher costs and more connections to watch over. Positive thing is you won't have to wait for the tax refund and will be way more flexible with your money.

I'm not sure yet which way I'll go, so I'd love to hear your opinions about this matter. I tend to prefer option 2 since being more flexible with money - especially in times like this - is a pretty damn good argument. However, I f*cking hate having additional businesses, bank accounts or pretty much anything that's actually unnecessary.
I’ve heatd about option 2, btw in my case Option 1, I’ve never wait more than 2 weeks to get refund the point is when your accountant made accounts and fill all papers for refunds... I usually wait the ok from accountant to pay taxes...
Example:
You must pay tax of end year 31/12/2019 till 30th june 2021 (earlier your accountant make accounts and fill refund documents earlier you will get approval for refund) as soon as you get approval you can pay taxes and you will get refund in 7/14 days maybe 20 last time... that’s my experience on first and second year (2017 and 2018 accounts, still waiting confirmation for 2019)

Your right. btw CfR would not even ask you as your lawyer as part of DAC6 since 1 July 2020 would have reported the crossborder structure arrangement already. You would just get a tax bill for unpaid taxes for such a non-genuine arrangement smi(&%. It's far simpler to get a letter of confirmation from CfR for such an arrangement in advance of doing it or stay well away from rolling the dice or blaming a tax advisor servicing you from the back of a malta barber shop.

I’m been in contact with cfr Officer with this scheme they have not tell me anything, it’s normal setup in Malta
You can be a resident of Malta, living there, running LTD company which shares are held by CY holding. LTD pay full 35% tax which 6/7 gets refunded to CY holding. The important part is not transfer the dividends from CY holding back to Malta if you are a resident there. I think some time need to pass before you can do that, can’t remember how long. You would need to check that.

However I still don’t get what structure allows to pay 5% directly by LTD without having to wait for the refund. Maybe something has indeed changed, I would need to check that with my accountant.
I think you can transfer back to Malta next year from the financial accounts, this is what i heard from a consultant, next year it will not transfer like dividend but as capital...

You guys are making it too complicated, or some agent is making some BANK off you

The laws (and top 4 accountants) clearly say that CFC doesn't apply to companies that don't make 750K in yearly profits. Just open any offshore anywhere and don't fuck with complex expensive structures.
Exactly and CFC is applied ONLY to maltese company that own and manage foreign companies (with the threshold described) CFC is not applied at all when a Person (not a company) own and manage foreign entity...

Btw i’ve read of accounting cost are expensive here in Malta 10/12k for structure for tax refund, so I’m lucky that i’m paying around 4/5k per year for accounting/holding/refund and so on?
 

Paper Chaser

Active Member
Btw i’ve read of accounting cost are expensive here in Malta 10/12k for structure for tax refund, so I’m lucky that i’m paying around 4/5k per year for accounting/holding/refund and so on?
Mind telling what’s your setup and who‘s your agency?
I‘ll finally relocate in a few weeks and use some offshore company for the first months being there. However, I will need a Maltese company anyways since I need Paypal (onshore) along some other perks.

How long have you been waiting for your approvals?
There are some folks on this forum who wrote they had to wait for many weeks or months.
 

blizz

Mentor Group Gold
Would be interesting to learn about what agent in Malta to use.
 

Osleak

Active Member
Mind telling what’s your setup and who‘s your agency?
I‘ll finally relocate in a few weeks and use some offshore company for the first months being there. However, I will need a Maltese company anyways since I need Paypal (onshore) along some other perks.

How long have you been waiting for your approvals?
There are some folks on this forum who wrote they had to wait for many weeks or months.
My accountant told me to not share his contact on Forums, btw there are many in Malta, if you want i can suggest some in pm.

the main problem in Malta is Bank Account, i’ve opened BOV on 2018 waiting time it’s been around 3/4 months, but now it’s even more hard to get approval for bank account, i’m waiting from February for approval with BNF.

First year accounts made on july (6months after finacncial year end) around and approval for refund comes 1 month later , and refunded after 7/15 days from my payment.

Second year accounts made on july (6 months after financial year end) approval got on mid of February and refund after 15/20 days from payment
 

Paper Chaser

Active Member
Unfortunately I can‘t pm in here anymore, so which agencies do you recommend? Do you know of their prices and services?

I won‘t bank with Maltese banks in the beginning since I am considered a high risk client and I don‘t have the necessary turnover yet. Don‘t even think I will bank with them anyways.
 

Osleak

Active Member
Unfortunately I can‘t pm in here anymore, so which agencies do you recommend? Do you know of their prices and services?

I won‘t bank with Maltese banks in the beginning since I am considered a high risk client and I don‘t have the necessary turnover yet. Don‘t even think I will bank with them anyways.
Google “accounting malta” you will find a lot from the bigger (csbgroup it’s local looks not to expensive, pwc, rsm, kpmg, granthtoronton and so on)And there are many other smaller... Which banks you will use ?
 

Paper Chaser

Active Member
Google “accounting malta” you will find a lot from the bigger (csbgroup it’s local looks not to expensive, pwc, rsm, kpmg, granthtoronton and so on)And there are many other smaller... Which banks you will use ?
Do they offer company formation too? I would like to have my company structure set up and managed by just one single agency.

For the first few weeks/months I will use Bankera. Once my business grows I will switch to a real traditional bank alongside a neo bank. Not quite sure which ones to aim for yet.
 

Osleak

Active Member
Do they offer company formation too? I would like to have my company structure set up and managed by just one single agency.

For the first few weeks/months I will use Bankera. Once my business grows I will switch to a real traditional bank alongside a neo bank. Not quite sure which ones to aim for yet.
Yes sure they offer also company formation service and tax refund process
 

fartinav

New member
@paperchaser @blizz @Martin Everson any tax lawyer to recommend for setting up "no refund waiting" 2-maltese-company structure? I received an offer from a consultant and they charge me 20k EUR the whole setup. Is that expensive? The highest costs were Director fees.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
@paperchaser @blizz @Martin Everson any tax lawyer to recommend for setting up "no refund waiting" 2-maltese-company structure? I received an offer from a consultant and they charge me 20k EUR the whole setup. Is that expensive? The highest costs were Director fees.

Sounds a lot. But what percentage was the directors fees? That sounds like what Chetcuti Cauchi would ask. The pricing might be normal depending on how much is made up of directors fees.
 
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