Malta as Residence and Canada LLP as Business?
A warm, safe and pleasant place to live in Europe? And tax-optimized as well? Let’s take a closer look at Malta and the opportunities that arise with foreign companies there.
Is Malta a good choice?
To live, Malta is certainly interesting in the European sphere. English is the 2nd language next to Maltese, only in court you can insist on Maltese. School English is really sufficient in this former British colony.
Malta is the second safest country in Europe – here on Gozo (Malta’s sister island) the keys are still in the front doors’ lock, or bicycles are left unlocked in front of the door overnight… You can take part in fiestas including fireworks without getting into fights or becoming the victim of pickpockets.
300 other good arguments are the sunny days. Rain almost never falls from May to September, a summer storm can, but doesn’t have to occur and if it does, it’s early June or September. The temperatures are often beyond 32 degrees Celsius, with the Sahara wind it sometimes cracks the 40 degrees. Then it becomes hot but not humid. The sea provides fresh air.
Fruit and vegetables are produced locally (especially on Gozo) despite water scarcity (Malta is one of the top 10 most arid countries in the world). There is for example a factory for processing tomatoes – whether as ketchup, pulp, sauce – the whole process can be visited.
Water is won beside the ground water mainly with osmosis plants from sea water, the tap water should be drinkable, I myself use my private osmosis plant, because I don’t get along with the taste.
Left-hand traffic is not everyone’s cup of tea, but getting used to it is usually quite fast. If you want to be on the safe side, just take a few driving lessons – at about 10€ per hour. A driving license made in Malta is valid throughout the EU (even if there are no motorways, roads or night drives).
Moving to Malta for EU citzens is as simple as moving from one city to another. The requirements for a Maltese ID-Card are manageable and there is a good reason to get one.
What about taxes?
Those who live in Malta are subject to local territorial taxation. In plain language: only income that is earned in Malta or funds that reach Malta are taxed. All other foreign income does not have to be declared and is therefore tax-free. I am talking about the “Non-Dom Status”.
Its owners are only taxed on income arising in Malta, on income outside Malta which is transferred to Malta and on gains from real estate in Malta.
Assets and investment income
Assets are not taxed and non-domiciled residents can receive investment income outside Malta and bring it into Malta tax-free, so separate bank accounts for capital and income are recommended.
Income earned outside Malta and remaining there is not subject to taxation (if you use your foreign income to buy a home from a Maltese person, ask them to open a bank account abroad and they will bring the money to Malta and not you).
However, capital gains arising in Malta will be taxed in Malta for individuals resident in Malta.
Malta, for whom is it suitable?
Digital nomads, affiliate / online marketing specialists, MLM / networker, blogger, dropshipper are in good hands in Malta, but also those who derive their income from rentals, dividends or similar sources should take a closer look at Malta.
Malta is often presented as a “tax haven” with an effective tax rate of 5%. Which is true if a holding company is used in addition to a trading company. The trading pays 35% corporation tax.
Benefits for foreign shareholders
Foreign shareholders (i.e. persons or companies not resident in Malta) can now reclaim 6/7 (30%) which is then redistributed to the holding company. However, on the one hand it takes much longer than two weeks (currently up to 8 months) and on the other hand the cost factor for 2 companies is not insignificant.
If the shareholder now lives in Malta himself, a holding company abroad is inevitable. A tax refund to the shareholder living in Malta is subject to a maximum of 35% income tax.
To avoid this, the “Malta Holding Model” is recommended. A foreign company – preferably a Hong-Kong LTD or UK LTD – will be used as a shareholder to receive a 0% tax refund in these countries.
Do I need Malta in a double package?
It is obvious that the agencies providing a Malta LTD almost without exception additionally offer the establishment of the holding company. They earn two times. Both, due to the establishment as well as the annual service fees. A comparison is worthwhile. On Malta, I see prices between 4,200 and 20,000 EUR.
Many tax authorities get to be suspicious only because of this constellation. Yes, it is legal and works if it is set up and maintained properly, but the disadvantages already mentioned show the potential for optimization for entrepreneurs.
This is where Canada comes in!
With only one Canadian LLP including its good reputation (the reputation of the Maltese LTD is already quite battered), its 0% taxation, lack of accounting requirements and easy incorporation (which is not really true for the Maltese LTD), it should be the tool of choice for the location-independent online entrepreneur.
The formation costs are about the same, but the low annual maintenance costs clearly speak in favour of the LLP.
The smart combination
As much as I favor Malta as the center of my life, I would be just as clearly in favor of an LLP solution. With Dennis as my main contact person I feel in good hands. He has prepared an information package that clarifies all the essential questions. HERE you can get it for free.
Gozo, 25. Feb 2020
Less bureaucracy with the Canada LLP
Now it is Your Turn
What questions and additions are on your mind right now? Share them with us!