World’s Best Tax Haven: Malta — Advantages and Peculiarities for Entrepreneurs and Investors

Malta is a small island in the Mediterranean Sea that attracts many entrepreneurs and investors from all over the world. Why is it? Well, Malta is one of the most profitable jurisdictions for business in Europe and a tax haven. You will find everything here to gain success: low tax rates, benefits for start-ups, special residence programs, and access to the European market. Let’s consider then how Malta’s tax system makes it a real haven and what advantages for businesses and investments it may offer.

World tax haven - Malta

Malta in International Ratings

Malta has been a full member of the European Union since 2004, and in 2008 it joined the European Zone. The country is also a part of the Schengen area, Commonwealth of Nations, and UN. In simple words, Malta is fully integrated into the European system.

However, different international ratings can give us full information about the country as they make it possible to analyze the conditions for business and life in different tax havens using certain criteria. This information makes it easier to choose a potential place for relocation or company registration. Let’s have a look at the place Malta takes in the most popular international ratings used to evaluate the conditions for business and see whether it is a real tax haven.

Malta in the Corporate Tax Haven Index 2021

This rating by Tax Justice Network evaluates the participation of countries in corporate taxation abuse. Malta takes the 21st place here among 70 jurisdictions. Such a high position means that there are good conditions for tax optimization in the country and it may well be your tax haven.

Malta in the Financial Secrecy Index 2022

This is one more rating by the Tax Justice Network. It evaluates the degree of the country’s assistance in hiding financial flows, and Malta occupies the 38th place among 141 jurisdictions here. The fact that the insular tax haven is located in the upper part of the Financial Secrecy Index 2022 testifies to a high confidentiality level, which allows foreign businesses to reliably protect their financial flows in Malta.

Malta in the Index of Economic Freedom

This rating is annually made by Heritage Foundation, an American research center that evaluates the degree of business freedom in different countries using 12 criteria, including taxation. Malta takes the 41st place in the latest version of the Index Of Economic Freedom 2023, which testifies to a moderate level of economic freedom in the insular tax haven. 

Analysts note that Malta’s openness to international trade and investments had a positive influence on competitiveness. However, some institutional foundations remain weak in this tax haven despite relatively good indicators in many areas of economic freedom, which undermines the prospects for Malta’s sharper growth. The judicial system is transparent and quite free from corruption, but it is not very efficient. Malta has one more problem, bureaucracy, which continues to hamper dynamic entrepreneurial activity.

Malta in the Global Sustainable Competitiveness Index

This international rating shows the competitiveness of countries on the basis of 189 criteria that are grouped into 6 subindexes: 

  • Natural capital
  • Efficiency and intensity of the use of resources
  • Social cohesion
  • Intellectual capital
  • Economic sustainability
  • Management efficiency

The latest version of the Global Sustainable Competitiveness Index (2022) shows that Malta occupies the 39th position, between Greece and Singapore. This is quite a good result as there are 180 countries in the rating.

It should be noted that Malta is not a leading tax haven but it occupies quite high positions in different international ratings. This indicates that the conditions for business in Malta are quite comfortable and even promising. 

One more strength of Malta is its stable economy. According to the latest Fitch Ratings report, Malta’s long-term foreign exchange liabilities rating is A+, outlook stable. It reflects a high level of income per capita in this tax haven, pre-pandemic dynamics of an active growth, and a considerable debt reduction.

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Peculiarities of Malta’s Taxation System

Malta is not only a picturesque island in the Mediterranean Sea but also a profitable jurisdiction for tax planning and optimization. Malta’s taxation system has a number of peculiarities, which make the tax haven attractive for international business and investments. These include:

  • The imputation tax system makes it possible to reduce the effective income tax rate to 0-10% if the company receives income outside Malta and distributes the dividends among non-resident shareholders that can get a cashback on a part of paid tax. Why is it so important? The matter is that the standard corporate income tax rate in Malta is 35%, which is one of the highest values in the world. However, different benefits and deductions can help reduce taxes in Malta to 5%.
  • Tax benefits for holding companies make it possible to exempt the sales income or dividends from affiliated companies if the Malta company is a participant of the holding structure that complies with certain conditions.
  • Tax benefits for highly-skilled professionals make it possible to apply a reduced income tax rate of 15% in Malta for those employed in certain spheres of activity, such as finances, gaming, aviation, etc.
  • Tax benefits for innovative companies in Malta make it possible to get a tax credit in this tax haven in the amount of up to 50% from the cost of research and development, and also exempt royalty income for the use of patents and other intellectual rights from taxation.
  • Tax benefits for resident programs in Malta make it possible to apply a reduced income tax rate in the amount of 15% for the persons that received a resident’s status under one of the tax haven’s special programs, such as Malta Permanent Residence Programme, Nomad Residence Permit, Malta Startup Residence Programme, Malta Residency for Self-Sufficients.
  • A wide network of Malta’s double taxation treaties makes it possible for tax haven entities to avoid the double taxation of income received from different countries and also reduce or get exempted from tax payment at the source of income. Malta concluded 81 double taxation treaties with different countries.
  • Application of EU taxation directives makes it possible to use the advantages of the European taxation laws in Malta, such as tax exemption when the dividend or interest is distributed among related companies in different US countries.

These and other peculiarities of Malta’s taxation system make this insular tax haven one of the most profitable and competitive jurisdictions in Europe and in the world.

Who Selected Malta for Business: Examples of Successful Companies and Investors

Malta is a very promising jurisdiction for the development of business and investments. The tax haven attracts companies and investors from different spheres of activity with its tax benefits, legal stability, high level of innovation and living standards. Some examples of successful companies and investors that opted for Malta as their jurisdiction:

iGaming in Malta 

This is one of the most dynamically developing industries in Malta that provides online games and bets. Malta is one of the first countries in the world that adopted special laws and licensing for iGaming companies. Today over 300 iGaming companies are registered in Malta, and they ensure about 12% of the tax haven’s GDP and create more than 10 thousand jobs. Well-known iGaming companies in Malta include Betsson, Unibet, DraftKings, PokerStars, Betfair, LeoVegas, and many others.

Fintech in Malta 

Malta is one of the European leaders by the development of the fintech industry, and the tax haven offers progressive regulation and high accessibility of banking services and highly-skilled specialists. According to the research by McKinsey & Company made in 2022, Malta occupies 3rd place (after Great Britain and Switzerland) in the list of countries that created an adequate and efficient environment for establishment and development of fintech companies. The company analysts noted that Malta as a jurisdiction stands out by three key aspects of the European fintech sector: creation, financing, and scaling. It means that Malta helps fintech companies start working, get access to the capital, and then continue to grow and prosper.

Successful fintech companies in Malta include Moneybase, Binance, Truevo, Maxpay, Entercash, and others.

Blockchain in Malta 

Malta has become one of the first countries in the world that adopted complex laws to regulate the blockchain industry and was even dubbed the “Blockchain island.” Besides, the insular tax haven became the first country to set up a register of blockchain-based IP addresses and transmit 60,000 records using the blockchain network. Following that, Malta’s government launched three new blockchain projects: 

  • Certification of food products manufactured on the island of Gozo
  • Blockchain-based property planning system to ensure transparency of processes
  • Blockchain-based copyright and intellectual property right system

In 2019, Malta also became the first country in Europe that issued its education certificates using blockchain. 

It should be noted that Malta ranks 3rd in The 2022 Global Crypto Regulation Index which evaluates the level of digital assets regulation among 42 countries. Malta attracts a lot of blockchain companies and projects with its flexible rules, support of innovations, and accessible financing. Such well-known companies as Binance, OKEx, BitBay, ZBX and others have their offices in the tax haven.

Tourism in Malta 

This is one of the key industries in Malta’s economy that brings about 30% of the tax haven’s GDP and creates about 50 thousand jobs. The island attracts tourists by its sunny climate, rich history and culture, and various opportunities for rest and entertainment. Malta is also a popular destination for studying English, medical tourism, and conferences. The number of foreign tourists in Malta restored in 2022 after a sharp decrease with the start of the coronavirus pandemic (COVID-19). On the whole, the country was visited by about 2.3 million of travelers last year as compared to 968,000 in 2021. 

Real Estate in Malta 

This is one more important sphere of Malta’s economy that accounts for about 10% of the tax haven’s GDP and creates more than 20,000 jobs. The real estate on the island is in great demand on the part of local and foreign investors. It should be noted that buying a property in Malta is also one of the conditions to be met to obtain citizenship or residency by investment.

Malta took 37th place among 56 countries in the Global House Price Index for quarter 3, 2022 by Knight Frank. This index shows changes in the cost of real estate per year, and Malta demonstrated a growth of 5.2%.

These are just some examples of successful companies and investors that selected Malta as their jurisdiction. There are also many other spheres of activity and possibilities for business development and investments in this unique insular tax haven.

Main Advantages of Malta’s Residency for Individuals

Malta is a country that can offer a lot to those who want to live and work in Europe. An individual that received the local residence can take advantage of the following benefits:

  • Safety and living standards. Malta is one of the safest countries in Europe. You will find everything for a calm and comfortable life here: a warm climate, friendly people, rich culture and history. The level of healthcare and education is also on a sufficiently high level.
  • Tax benefits. Malta has one of the most profitable taxation systems in Europe. Individuals pay a fixed tax of 15% on the income received or transferred to Malta. The capital gains income is free from fiscal load. You will also be able to avoid double taxation in Malta thanks to a large number of double taxation treaties concluded with more than 80 countries.
  • International mobility. Malta is a member of the European Union and the Schengen area. It means that individuals can freely move across Europe without a visa for 90 days out of 180.
  • Innovations and development. Malta is a country with progressive and stable economy that supports development in such areas as blockchain, fintech, gambling, and others. It opens up considerable opportunities for business and career in Malta and gives access to the European market.

If you are looking for a way to reduce your tax burden and expand your opportunities on the European market, Malta may become an ideal solution for you. Malta is known for its profitable residency and citizenship by investment programs that give an opportunity to work and travel around Europe without any limitations. Malta is also known for active support of such business directions as blockchain, fintech, gaming, low taxes, and a large number of various benefits.

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