Question Regarding non domiciled but resident tax wise

Hello Yves81

I invite you to read relevant articles in our Living in Malta guide while waiting for other members to share some infos

Regards
Kenjee
Expat.com

I would wait for answers from expats already here and information from professional experts rather than go by the 'Living in Malta Guide' as there are many errors in it! (including tax information)

Ray

Contact one of the many, many, maaany tax lawyers/firms in Malta.

Hi!

see that there are not many replies on your question so i will try to help....
first of all 18.000 eur per year is not very high budget for malta... decent but not high.
Forget about consultants, because they are not cheap!
Good solution may be for You to form a company here, and do even other businesses next to your existing one.
Prices for lets are always the lowest end of the year. Do a long let contract for 1 year, that is the best.
Good luck!

Hi, thanks for the answers, but its not exactly what i was looking for.

Of course 18.000 is just a fantasy number and if i need more i would bring in more. Also i want to travel alot, so i will only be 6-7 month in Malta.

Still cant find out if i can use any form of offshore company and operate it out of malta legaly. But i guess i need to pay some tax lawyer for an answer. Just thougt perhaps someone has the same problem already answered.

Some of us have. Each and every case is going to be different. Contact a tax lawyer - consultations are not expensive. What is expensive is "forming a company" without proper legal help like someone else suggested^

Yes as i sayed i will of course consult with a local tax lawyer but i like to be informed as much as possible before i pay money and esp. in the offshore company business you have to be extra careful regardless if it is a lawyer or not. A lot of shady stuff is going on there. I have done alot of research already.

Hi Yves81,
Did you move to Malta? I'm just curious as I'm thinking of doing the same myself. Gathering info now after having used two lawyers. As usual with lawyers, confusing answers.

Not yet, but I read so much about the topic if you have questions just ask.

Basicly, for everyone interested in this. The best way to do it in most cases. Make a Malta company that is owned by a holding company in another EU country that has no withholding or any other tax. For example scottish lp.

Then you pay yourself a salary from the malta company. On this salary you pay normal social security and income tax. (dont make it high, just what you need for a living)

On the rest of your earnings you pay the malta 35% company tax. Then you pay the dividends to the holding company. The holding company claims a tax refund so in reality you only pay 5% tax.

This way it is completly legal, but if you dont earn alot it is not so good because operating the setup costs like 7000 euro and after that around 6000 Euro to operate depending how much accounting you need.

There is a little bit more to it but basicly this is the way it works.

Hi,
Thanks for answer. This is an extremely expensive setup and a lot of hassle, if you ask me. What if you set up a Seychelles company, make a nominee director, and pay a yearly dividend to Malta? The lawyer I talked to called this "more aggressive" than your setup, but still said chances are pretty low they (IRS) will dispute it.

First you have to undestand eveything you send to Malta or spend in Malta is treatet as income and has to be taxed. You need to keep the money outside of Malta!

Also their is a reason why its not that good to use a sychelle company:

1. You have big problems getting a decent company bank account. Dont let you get blinded by offers from companies who claim they get you a bank account. Chances are high you are not able to exept for some banks you really dont want to  use.

2. If you need paypal for your business. Good luck with making that work.

3. Its mostly better in the long perspektive to pay some tax. This also depends where you are domiciled.

4. Some EU countries like germany have rules that if you move your company to a low tax country you still get taxed for like 5 or 10 years in germany. That is also true for europe but you dont really need to pay it because its inside the eu. Dont know the english word.

5. You dont get a VAT Number. Can be a problem if you do any b2c.

6. Sychelles has a horrible reputation.

7. Sychelles will always sound fishy. Chances are higher, that malta tax authorities will look into you even malta has no cfc rules. Better ask MULTIPLE tax lawyers!

8 Its not future proof. Regulations esp. in the eu get tougher every year. Could be that it works right now but perhaps Malta needs money in 2-3 years. So they take a look from whom they can get this money. I doubt they will do it in reallity but well you never know for sure. It will be always right on the edge of what is allowed. It also really depends on your type of business though.

9. There is prob. more i cant think of right now.


I would never use the sychelles. They are basicly a synonym for money loundering and fishy stuff. If you go this way use RAK or some other better offshore solution. (RAK has some banking problems too, because you dont get apostille) The only advantage of the Sychelles is they are the cheapest. Its like everything in life. You get what you pay for.

It also depends on how much you earn per year which way to go. I guess under 80.000 per year its prob. not worth it to get a malta company with holding company setup. You can even look at other residencies, then Malta if you just go there for tax reasons.

For example in Cyprus you can have 19500 Euro per year tax free salary and have the cyprus company owned by an offshore company that pays 1% tax. This way you basicly only pay 1% tax. (you cant use 0% tax, as cyprus does not allow it) But its not cheaper to maintain. Cyprus is cheaper for a living but accountants are crazy expensive.

If you leave the EU you can have 0% tax through but i would not want to live in Panama or Paraguay. It can be interesting if you want to travel alot because they dont care how many days you are in the country.

For everyone who does not like the topic. Its not tax evasion i am talking about. Its about legal options, but i agree its ethical questionable.

I made a mistake with cyprus setup possibly, i cant remember right now who is the holding country

Hi,

Yes, I know all about Seychelles. However, luckily I don't do much business in the EU.  A Seychelle company is no problem for the little business i do, I presume.  I will of course check all  details before I do anything. That's why I'm here in the first place.   

There are always risk in taxing. Basically all EU countries are running deficits so future generations will pick up the tab. This will happen sooner or later. Malta seems to have this more or less a bit under control. Sooner or later you will be forced to pay direct taxes to EU, but I hope to be away from EU by then.

My business income is not very big, so for obvious reasons I'm not gonna set up complex company formations. I will transfer 20k every year anyway to Malta (for living) and pay taxes on that. The rest I thought about channeling to an offshore company with nominee director if that is feasible.

But we'll see, might not be worth it.

Yeah for 60k it would be to much cost. Still you will have some problems finding a decent bank account for a sychelle company. If you do most of your business in USD then it is even harder.

Funny thing is one of the few "ok" EU banks that accept Offshore companies is in Malta. :p

If you can easily split your income sources you can eventually be self employed in Malta and have an additional offshore company. I dont know if this is better though. This way you pay social security and you have maltese health insurance, which could be a plus, depending how important it is for you.

But if you set it up, please write here i am curious how it plays out. I am still unsure how to do everything but i wont become an expat before summer because i have to much work related stuff going on at the moment.

The most interesting part of using an offshore company if you are able to get a decent enough bank account, is that you dont have to do real bookkeeping. Its what i hate most about having your own company even if you have an accountant.

Just a question again:

Are income remitted to Malta taxable as social taxes as well? After all, I pay private health insurance and get no pension.

If I register as self-employed, I assume I automatically are taxed on world wide income and not remittance?

No money sent to malta is not income like salery. You only pay social insurance for salery as far as i know.

If you have pricate insurance anyway there is no reason to be self employed. Forget what i sayed.

You should double check every information i give you. I just read alot about the topic, i could be wrong about some stuff.

You can also ask questions here: http://www.talkgold.com/forum/forumdisp … amp;page=3 and you can also google for example Malta + talkgold.com to find some old topics.

But beware DONT use any providers there, its full of scammers. Also some pople there talk alot and have no clue, so double check.

Another good resource is streber.st. He is also active at talkgold sometimes.

Hi,
Thanks for link. I had a quick search and read for one hour.

Perhaps an offshore entity is a bit off and will raise questions. I will decide later. I perhaps rather just remit all my business income and pay taxes. My main aim is to avoid taxes on my passive income, which I believe is not that will be questionable at all.

Hey there,
I am having basically the same questions raised here.

I am planning in setting up a company in Estonia and for my understanding as long as I have a residency in Malta I only have to pay taxes on anything I do transfer or spend in Malta.

As Malta has no CFC Rules it should be no problem to have the company registred in any jurisdiction outside of Malta.

As far as Social Security Contributions go I have read conflicting things. Some say that you have to pay social security as well on the taxable income, others say that you don't.

For my understanding I would be taxable for my world income as soon as I become an employee or self employed in Malta. So the non domiciliated system probably only works for self sufficient residents, but I am not a 100% sure about that.

Really hard to find good information on this and even consulting with a tax professional can lead to different results depending on who you pick. Some of them try to make you set up a Malta Company, even if I see absolutely no benefit in doing so if you are a resident in Malta. Somebody has gone through those steps? Getting to Malta, registred as a self sufficient resident, payed tax for remitted income, etc.?

You can chose if you opt for self sufficiency or not. I assume you are EU citizen, so residency is not a problem. The non-dom is not dependent on self employment or not. You are a non-dom no matter what as long as you have no ties til Malta. However, if your income is generated from your activities and you are a resident there, it would be taxable in Malta (as it is sourced there).

I plan on moving there later this year, so have done some research. I don't think you should worry so much about this, the Malta taxation is very forgiving.

Why do you use an Estonian company?

By the way for anyone interested: https://home.kpmg.com/content/dam/kpmg/ … -malta.pdf

(KPMG is reputable company)

They write: "A company is resident if it has been incorporated in Malta or if its management  and control is exercised in Malta. A company is domiciled in Malta if it has been incorporated in Malta (i.e. Maltese company law applies to it).
Companies both resident and domiciled in Malta are taxed on their worldwide income.

Companies resident but not domiciled in Malta are taxed on their Maltese
source income and foreign source income received in Malta; however, they are
not taxed on capital gains arising outside Malta, even if they are received in
Malta.

This is what two independent lawyers told me. Whether or not Malta IRS cares, is another question, I doubt they have resources to check very much. But if you work freelance while you live in Malta, I think it's quite hard to argue income is not generated/sourced in Malta?

Personally I think it's better to incorporate somewhere outside Malta.