Tax Refunds

Malta has established itself as a lucrative and tax efficient jurisdiction for foreign-owned, Maltese registered companies. Apart from simple company formation in Malta, this relocation process can include a number of tax-related requirements.

Malta operates a full imputation system for companies whereby profits are taxed in the hands of the company and upon a dividend distribution, the dividend carries an imputation credit of the tax paid by the company on the profits so distributed. In response to changes made at a European level, various amendments have been made to the Maltese Income Tax Act in 2007, which include a provision that introduces a new tax refund system for companies registered in Malta.

GCB Malta Ltd can manage the entire process of preparation and submission of dividends and refund claims forms to ensure your business retains adequate levels of liquidity.

Refund on Specific Corporate Income

Under the provision of this updated Act, shareholders of Malta registered companies may claim certain types of refunds.

Companies can currently claim a tax refund on income that is held with their Maltese Taxed Account (MTA) and their Foreign Income Account (FIA).

The MTA houses income that has already been taxed in Malta or which has been exempt from tax under any provision in Maltese law. The FIA is used to manage any profits that result from royalties, dividends, capital gains, interest, rent and other economic activity arising outside of Malta.

Income ineligible for Tax Refund

Tax refunds may not be claimed on income that is allocated to the Final Tax Account (FTA) and the Immovable Property Account (IPA).

The FTA refers to corporate income which has been subject to final tax, while the IPA refer to corporate profits or gains derived from the alienation of immovable property located in Malta.

Who can claim a Tax Refund?

Tax refunds in Malta can be claimed by both resident and non-resident shareholders and both individual and corporate shareholders, and the refund amount will depend on the type of income derived by the trading company.

In general and if eligible, non-resident shareholders will benefit from a 5% NET EFFECTIVE taxation rate applied to income derived from dividends distributed by a Maltese company. Such shareholders may either apply a 6/7ths refund claim on taxes paid by the trading company on such dividends, or else use alternative methods such as the new fiscal unity system whereby a group of companies (which would include the trading company and the holding company, who would usually be in receipt of the Dividend) form a fiscal unity and as such, the group will be taxed on a consolidated net basis (in such example, 5%).

Get in touch with us if you’re interested in personal taxation advice.

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