Close

Malta: top fiscally attractive destination for expats

Hello everyone,

Planning to settle in Malta? Here are some tax benefits to consider before moving.

Malta ranks as the top fiscally attractive destination for expatriates in a report published by Bradley Hackford firm. The country is followed by Antigua and Barbuda, the United Kingdom, Andorra, Portugal, Mauritius, Bahamas, Monaco, Bulgaria and the United Arab Emirates, especially Dubai.

This annual ranking takes into account several criteria, namely, the tax burden on individuals in the assessed countries, the quality of life, the country's legal and physical security issues, its geographical location, accessibility, centers interest, the quality of investment programs, etc.

Malta is especially preferred thanks to the “non-dom resident” allowing expatriates to pay tax only on their income from local sources. Foreign income, for their part, are exempted from tax if not repatriated to Malta. Moreover, the country has developed several residency programs allowing expatriates to obtain citizenship by investment.

European nationals have to be economically independent to qualify for becoming residents. Non-European nationals, for their part, are required to invest in the country.

Find out more here: www.bradleyhackford.com

That's pretty much the only reason that wealthy young people set up residence in Malta. Very few actually live there full-time as there's literally no enforcement of any residence rules in Malta.

not only "young" people  ;) and in case you are frequently working abroad (what is the basis to be eligible for the expat tax scheme), you cannot live in Malta "full-time"

True, I didn't word that right lol. :)

But basically consider this... totally hypothetical scenario.

1. At first, as a IT consultant, person A registered self-employed (self occupied or whatever they call it) and paid about 27-28% in taxes.

2. He/she then changed to a resident company structure and now pays anywhere between 12-16% depending on how well they do in a given year and how complex accounts get. This includes company maintenance, accounting, corporate tax, local income taxes, social security, banking fees.

So yea - Malta is a legal tax haven.

mantasmo :

He/she then changed to a resident company structure and now pays anywhere between 12-16% depending on how well they do in a given year and how complex accounts get. This includes company maintenance, accounting, corporate tax, local income taxes, social security, banking fees.

Are you saying the company pays corporate tax of 12-16%? What tax would be payable by the "hypothetical" consultant on salary/dividends received from the company?

Nope, that's total taxation including corporate, company maintenance, accounting, income tax on salary paid out to consultant and social security payments made by said consultant.

This is assuming a modest 25k salary and about 65-75k in net billings. If you bill more than that then you can either increase your salary and keep paying about the same amount of taxes or lower your taxes by retaining more money in either 1. a holding company or 2. a foreign company somewhere like Cyprus (that owns part of your trading company and receives dividends).

This is a very common structure used by most independent professionals in Malta. It makes sense.

Edit: from my personal experience Cyprus companies are more popular as dividend receivers because then money can be accessed without any further taxation by using a simple debit card. So people use it to book flights/stuff, pay for stuff online, withdraw cash and pay cash and so on...

Malta Holding companies are a bit more restrictive as you can't just draw cash out of them. But they can own things like property (anywhere), boats, luxury goods, blah blah.

It depends on your needs I guess. Mostly young people (so called digital nomads) shift profits to Cyprus and then spend the money without any further taxation in either Malta or Cyprus.

Many thanks indeed mantasmo for such a comprehensive and informative post. You certainly know your stuff. I presume both the Malta and Cyprus companies would need a bank account each? Which countries would these be in?

Please don't take offence, but is the set-up you describe completely legal?

New topic

Expatriate health insurance in Malta

Free advice and quotation service to choose an expat health insurance in Malta

Moving to Malta

Find tips from professionals about moving to Malta

Travel insurance in Malta

Enjoy stress-free travel to Malta