It is no coincidence that many European citizens and especially entrepreneurs buy homes in Malta in order to qualify for a Maltese citizenship. Because of this, Malta has gone through a positive development and ensured that a double taxation agreement exists with 40 countries which mean that taxes are never paid twice on the same income. These countries include, for example, Sweden and Malta is described in a positive way. Moreover, the rest of the EU laws and regulations apply which make Malta a safe place for a business establishment.



                                                 Malta - Valetta     

For EU citizens two different citizenship can be obtained, either a regular or permanent which provides access to various tax structures, but you have to live up to some different demands.

For a married couple an ordinary citizenship and the following tax table for an annual income are involved.
EUR          0 – 11.400          0%
EUR     11.401 - 20.500     15%
EUR     20.501 - 28.000     25%
EUR        over 28.000        35%

This should be compared to a Maltese permanent citizenship which includes a flat tax of 15 percent that is paid regardless of income size, but where the requirement for an annual minimum tax should be paid with 4,500 EUR.

These two different forms of citizenship include some obligations that you need to be aware of.
A permanent citizenship requires you to be the main owner of a Maltese company, and you may not receive employment in another Maltese company.  You may not sell services or products on Malta, in order to not be competing with other Maltese companies. If so, the citizenship entails a flat income tax of 15 percent.

However, there is no requirement on how much time you need to spend on Malta each year, and no restrictions on when you can enter and exit the country. You should be attentive and have control of your own country's rules and regulations.
This is a good citizenship primarily for entrepreneurs in e-commerce, gaming industry, hosting companies and various forms of consultancy, providing services and products to customers outside the borders of Malta.

Regardless of the type of citizenship that is applied for, the requirement is that a fixed residential address must be obtained within one year of the approved citizenship, and according to the following principles.

• A house with a purchase value of at least EUR 120,000
  

• An apartment with a purchase value of at least EUR 72,000

• Alternatively, a house can be rented with an annual rent of at least EUR 4,300
  

In addition to low income taxes, it becomes even better if we take a look at a tax shelter applied to the EU citizens with a Maltese company. This design has come to attract foreign companies with new jobs.

The regular corporate tax rate is 35 percent but this is not the whole truth, then this tax design entails a refund system to the shareholders with Maltese permanent citizenship, which means that the real and effective corporate tax rate is 5 percent.

The example below describes the tax structure for corporation taxes and the contract is renewed every five years.
              Profit                              100,000
              Corporation tax 35%     - 35,000
              Earnings after tax            65,000
              Refund (6 / 7)                  30,000
(A Refund packet addressed to the shareholders)
              Effective tax 5%              - 5000
              Shareholders receive     95,000

Malta has other types of tax structures, both for capital and special activities that are not mentioned here. These designs are targeted to activities where, for example, different types of royalties are involved, and these tax structures involve favorable conditions.

                                                                           Tony Harkén
                                                                          Text & Picture