Trading Companies

trading companies

Malta’s unique corporate tax system provides very advantageous tax platform for non-resident persons to trade within the ambit of the European Union, or also perhaps trading outside of Europe via a solid and robust legal and regulatory framework which is the Maltese Trading Company.

“Trading Companies” refer to companies trading in goods and services, within the vast spectrum which is encompassed by such a term.

The headline rate of income tax is applicable to the profits of such companies, i.e. 35%. However, the interesting element of Malta tax law provides for a tax refund which may be claimed by a shareholder on the tax paid by the Maltese company, upon a dividend distribution.

Such a tax refund, which is typically applicable at 6/7ths of the Malta tax paid, is repaid to the shareholder within fourteen days of a submission of a valid refund claim, and in essence enables an effective income tax rate of 5% in Malta.

There are no withholding taxes on any dividends paid by a Maltese company to any non-resident shareholders of a Malta company, so the global tax leakage would be limited to such a low effective tax rate.

Highlights of a Trading Company:

•    Effective rate of 5% on its profits

•    Possibility to have a VAT number and trade in goods and services

•    Benefit from Malta’s double taxation treaty network