Being resident and non-domiciled in Malta

Maltese law provides the possibility for companies incorporated outside Malta but effectively managed and controlled in Malta (which is relatively easy to prove so) to be taxed only on a source and remittance basis.

This means that such company will only be taxed in the following instances:

on income and capital gains arising in Malta; and
on foreign income (excluding capital gains) which are remitted into a Maltese bank account.

Therefore such companies do not incur any Maltese tax on foreign income which is not remitted to Malta or on any foreign capital gains (irrespective if remitted to Malta or not). Obviously, should any Maltese tax trigger in, the possibility for tax refunds which lower the effective corporate tax rate to only 5% (the lowest in Europe) would still apply.

The use of resident non-domiciled companies could be very useful in particular for the following activities:

for companies with a considerable cash balance for investment purposes
for loan and financing operations (under Maltese legislation no transfer pricing regulations exist with respect to inter-company loans)
for companies deriving royalty income

For any queries about the aforementioned issue or other matters, kindly contact Mr Joseph Gauci (Managing Partner) at: jgauci@ksimalta.com or Mr Benjamin Griscti (Senior Advisor) at: bgriscti@ksimalta.com