The corporate income tax rate for a company incorporated in Malta is 35%. However, the effective tax rate incurred by a registered foreign shareholder could be lowered significantly if a refund is claimed upon the distribution of dividends (or bonus shares) by such company.

The rate of the tax refund which could be claimed by a shareholder could vary due to factors such as:

• the nature of the underlying profits out of which the dividend has been distributed

and

• the application of double taxation relief by the Maltese distributing company on the profits distributed

Generally, a shareholder would become entitled to 6/7ths of the tax due in Malta originally suffered by the Maltese company on the profits being distributed as dividends.

When the dividends being distributed are derived from profits consisting of passive interest or royalties, the refund is reduced to 5/7ths of the tax due in Malta. Distribution of dividends derived from profits which would have been allocated to the Foreign Income Account and in respect of which the company would have claimed double taxation relief, would entitle the shareholder to a 2/3rds refund of the tax due in Malta. A 100% tax refund is also possible upon the distribution of dividends consisting of income derived from particular investment.

Our corporate tax services include:

• Preparation and Submission of Income Tax Returns
• Preparation and Submission of Income Tax Refunds
• Transfer of Company Shares
• Capital Gains Tax and Stamp Duties
• Immovable Property Tax and Rental Income
• International Tax Planning and Restructuring
• Cross-border Tax Advisory