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Working in Malta

Tax status of work done over Internet from Malta?

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Postby gozomark » Thu 6 Aug 2009 15:02 GMT

I wasnt fully sure if this accountant was on the side of the tax payer or the maltese tax department

Based on my dealings with him, he is on the side of the tax payer, and has helped me (legally) minimise my tax bill - I believe others on the forum have posted the same
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Postby doc » Thu 6 Aug 2009 16:06 GMT

gozomark wrote:I wasnt fully sure if this accountant was on the side of the tax payer or the maltese tax department

Based on my dealings with him, he is on the side of the tax payer, and has helped me (legally) minimise my tax bill - I believe others on the forum have posted the same


Good to know - such advice is invaluable and sometimes hard to find. (It was hard for me to tell with the limited context. As I said I realized on reflection I asked the wrong question - he just provided me with the answer to my questions)

Maybe when he's back from holiday I'll run the non-CFC route past him and maybe he can charge me next time. Or ask a better question: how to minimize tax liability in my friends scenario :) (I'm sure its like people going to the doctor self-diagnosed...)

btw paying Maltese corporation tax might not be as bad as it sounds according to this site the tax rates are 35% but there are tax refunds bringing it to 4.17% effective tax.

http://www.escapeartist.com/efam/72/Off ... dvice.html

However that is for Maltese International Trading companies, so I'm not sure if that refund is available to an offshore company that is deemed to be a CFC and so charged corporation tax on income deemed to arise in Malta. A nice question for the accountant fellow.

Man the more I read the more Malta looks like a full-on tax haven! Offshore company management (non-dom company concept), non-dom remittance tax, 4.17% effective tax of Malta trading company, even 0% effective tax for holding company.

-doc
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Postby Matt989 » Wed 8 Dec 2010 21:29 GMT

doc - I was just wondering whether you'd found out anything new about the non-cfc route?

I'm in a similar position as the original poster as I'm now based in Malta but work for UK clients over the internet. I've spoken to 2 accountants and they've both recommended I go down the setting up a company in Malta and having a BVI company route, however this is going to cost me €5k to setup and €5k in yearly fees. Their quotes also differed by as much as €1k, which has me asking questions. My business is growing, but I dont know if I like the idea of taking on yearly accountancy fees of €5k
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Postby doc » Thu 9 Dec 2010 05:36 GMT

doc - I was just wondering whether you'd found out anything new about the non-cfc route?


No I never followed up because my friend decided for the moment to stay in his high tax European country of domicile :)

I didnt quite understand why you are advised to setup both a BVI and a Maltese company?

On cost, maybe Panama would be lower cost than BVI - I think it is considered one of the better low cost ones. Maybe you could compare with like a big 4 accounting company in Panama and see what they charge for non-CFC management.

Some of these offshore jurisdictions dont require you to file company accounts - one less accounting expense.

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Postby Matt989 » Thu 9 Dec 2010 11:05 GMT

If I setup a trading company in Malta (which invoices my clients in UK) i can then pay all the profits to an offshore company and I'd be entitled to a 6/7 refund of the tax I've paid. This page explains it in more detail:

[Link removed by Site Admin - Dave]

The only drawback is the huge setup and compliance costs involved. I'll probably give it a miss this year (because I currently get 77% of my work from one client, and if I lost them I'd be facing a huge drop in earnings + €5k in accountancy fees), but might have another look next tax year as I've been told it's perfectly legal.

Tax evasion/tax planning seems to be a very grey area.
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Postby Dave » Thu 9 Dec 2010 12:42 GMT

Matt989, I've removed your link - as our Posting Guidelines explain, we don't allow newcomers to post links except in a few limited circumstances. Otherwise we'd be swamped with people spamming the forum with links to their own company.
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Postby Kay » Thu 9 Dec 2010 12:57 GMT

Hi Matt

Welcome to our forum. Yes, I agree that tax avoidance and tax evasion seem to be a bit of a grey area at times. The former being legal and the latter illegal, of course.

Sorry your link had to be deleted, but we simply don't allow newbies to post links in such a way. We have no way of knowing if you really want to discuss the issue or are simply raising it as an excuse to get a link for your company. I'm sure that's not what you're doing, but you have to understand that a lot of people try some very sneaky tricks and we have to be quite vigilant about keeping our place clean for the majority of users.

At the risk of sounding like I'm giving you the hard sell - I'm not, it's not worth getting into an argument over £25 :lol: - if you become a premium member you will have access to our forums where you can speak more freely, post links, and use the recommended suppliers forum where people recommend (or otherwise) suppliers of goods and services. (50% of your subs fee would also go to help the animals at Gozo SPCA.)

We don't mind if you decide not to become a premium member. In which case I would ask that you don't post links to company formation services and the like. Please read the posting guidelines for how this place works.

Thanks

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Postby Matt989 » Thu 9 Dec 2010 13:45 GMT

Ok, sorry.
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Postby doc » Thu 9 Dec 2010 14:00 GMT

If I setup a trading company in Malta (which invoices my clients in UK) i can then pay all the profits to an offshore company and I'd be entitled to a 6/7 refund of the tax I've paid. This page explains it in more detail:


Hmm that sounds a bit like the things I was mentioning skimming in another post the 6/7 refund of 35% corp tax.

Also I went to visit smart city earlier in the year (point south of Valletta across the grand harbor.) I forgot what the guy told me, but it sounded like there were beneficial loans, profit offset or something. Maybe I even have some slides somewhere. Ah here we go from their slides:

Tax credits equivalent to 30~40% of investments
Tax credit for R&D projects
Aids to reimburse over 80% of training costs
Loan guarantees, soft loans, loan interest subsidy
Funds to finance R&D, e-biz projects & start-ups

(some of those things are general, others are tied to getting an office in smart city - kind of free trade zone).


What you said sounds interesting though leads on from what the KPMG guy was telling me - work done from Malta, for clients eg in UK would be subject to either corporation tax or income tax. The trick - pay the corporation tax its only 5% after refund. He could've volunteered that!

Kind of interested in reading how the censored link explains it if you would be willing to email it to doc@hush.ai

(Smart city is a joint venture between dubai and maltese government, trying to replicate the successful smart city in Dubai).

-doc

ps grumble, grumble - link censoring - grumble
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Postby Kay » Thu 9 Dec 2010 14:59 GMT

We don't censor links in the premiums areas. We do remove links in the public areas for a number of reasons which, as a BE supporter, I thought you'd know.

I can post the usual canned message to reiterate why we do so if you like.

We spend a heck of a lot of time keeping this place clean. Most people appreciate it. We, and the vast majority of our members, appreciate not having to wade through spam. Yes, some other places have different rules and many of them don't censor anything at all. The choice is up to the user which type of forum they prefer.

If we have to achieve the spam-free environment by censoring postings by people who, on their second posting, post links to a site selling company formation services, then so be it. That's how it is - until or unless our established members tell us they want it to be run otherwise.

We do allow newbies and freebies to post links to government and academic sites.

Anyway, as I said, I'm sure that Matt is a great guy but how do you know he didn't make that posting just to get a free link (advert) for his site? I don't believe he did - but it's been attempted countless times before.

It ain't easy to get the balance right, and I'm sure I get it wrong sometimes, but ultimately we have to draw the line somewhere and for now that includes not allowing newbies to post links to companies.
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Postby doc » Thu 9 Dec 2010 15:16 GMT

Dont really want to be seen to be critical - I do appreciate spam freedom and the work and very helpful contributions of the moderators in organizing and generously taking their own time to themselves to answer questions. Makes this place what it is.

But isnt the no links more about pushing towards the donation (which is fine by me, just saying)? (Eg if that wasnt about that one could have a non-paid group for recommended suppliers, like the one accessible to subscribers and restrict links to that).

I subscribe to a number of moderated internet mailing lists. The moderators stop spam but they dont remove commercial links from things which look sensible.

Someone could sneak something through such policies as you've mentioned, but thats rather different than unmoderated internet lists (which I've also subscribed to - and there you really do see spam in ridiculous volume - or try USENET news if you want to see spam!)

Anyway its y'all's list and you're the moderators. The above are just my internet views/experience.

And this itself is now off-topic to this subject (I'd move it to another if I knew how).

-doc
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Postby Kay » Thu 9 Dec 2010 17:08 GMT

We have a forum dedicated to FAQ, Questions, Problems, Suggestions. That's the most appropriate place to discuss how the forum works (or sometimes doesn't!) and to give your feedback on how we might improve things. Here's a direct link for your convenience:
http://britishexpat.com/expatforum/gene ... m.php?f=31


Let's stop discussing those issues here on the Working in Malta forum and get back on topic.

I believe the issue being discussed was taxation for those living and working in Malta.
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Re: Tax status of work done over Internet from Malta?

Postby Emhood » Fri 13 Mar 2015 17:44 GMT

Hi,

I am brand new in the forum and I am happy to join you (even if I am not British!).

I have a question on Malta taxation system.
I am in EU national entrepreneur in the consulting business with two companies set up in two differnt countries and with clients all over Europe.
I am thinking about taking up the Ordinary Residence in Malta, becoming a resident non-dom.

Having said that:
A) If I work as a freelance consultant for my two firms, how will be my activity considered for the Maltese Inland Revenues? As a foreign source income (ie on a remittance basis) or as an income generated in Malta?
B) ... And if I get money as a Director of them?

Thanks a lot for your answers (consultants reached so far gave me conflicting views :( :-( )
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Re: Tax status of work done over Internet from Malta?

Postby gozomark » Sat 14 Mar 2015 01:53 GMT

The devil is in the detail :-) in general, if you are earning the money whilst physically in Malta, then you pay tax on it in Malta, but you should really discuss it with a local accountant , based on your exact circumstances.
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Re: Tax status of work done over Internet from Malta?

Postby doc » Sun 15 Mar 2015 10:37 GMT

gozomark wrote:The devil is in the detail :-) in general, if you are earning the money whilst physically in Malta, then you pay tax on it in Malta, but you should really discuss it with a local accountant , based on your exact circumstances.


The other factor is remitted income is taxed, while remitted capital is not, so you'll have more flexibility for tax planning if you have some capital you can live on.

-Doc
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