Презентация с международной налоговой конференции «Жизнь после Кипра: налоговый апгрейд» (taxconference.ru) Сессия 3: Деофшоризация: глобальный тренд

1. The Malta alternative
Tax planning opportunities using
Maltese corporate structures
Moscow 4 June 2013
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2. About Malta
• Malta is located 93 km south of Sicily and 288
km to the north of Africa
• Population around 415,000
• English is an official language in Malta and is
the language of business.
• EU Member since 1 May 2004 and part of
Eurozone since 1 January 2008.
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3. Characteristics of Maltese companies
• Companies Act of Malta based mostly on English Law and
EU directives
• Main form: the Limited Liability Company.
• Also partnerships en commendite and en collectif
• Incorporation time: two to three working days
• Full due diligence required
• Minimum authorised share capital is €1200 or equivalent in
any convertible currency
• Shares may have different classes and rights
• Must have at least one director which can be a body
corporate
• Must have a company secretary
• Annual accounts and audit required
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4. Basis of Taxation
• Taxation on a world-wide basis
- Companies that are incorporated in Malta are deemed resident and domiciled
in Malta and are taxable on their world-wide income at the flat rate of 35%.
• Source and remittance basis of taxation
- Companies that are incorporated outside Malta but are managed and
controlled in Malta or vice versa (resident but not domiciled) are taxable on
income arising in Malta and income arising outside Malta that is remitted to
Malta. Capital and capital gains arising outside Malta are not taxable even if
remitted to Malta. Rule applies also to individuals. This creates various tax
planning opportunities.
• Source only basis
- Persons who are neither resident not domiciled are taxable only on Maltese
source income
• Full Imputation system
- Income tax paid by the company is a prepayment of tax due by the shareholder
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5. Double Taxation Relief
• Treaty or Unilateral Relief based on an Ordinary Credit
- Applies to foreign taxes suffered on foreign income – for resident companies
and registered branches
- Credit for withholding and underlying tax (for dividends) of direct subsidiaries
and 10% sub-subsidiaries.
- If foreign taxes ≥ Malta tax charge (35%), Malta tax is NIL
• Flat Rate Foreign Tax Credit (FRFTC)
- Applicable to foreign income account (FIA) income deemed to have suffered
foreign tax of 25% of foreign income received
- Reduces tax suffered to between 7.47% and 18.75% (note interaction with
2/3rds refund)
- FIA: royalties and similar income arsing outside Malta; income/gains derived
from a participating holding, dividends, interest, rents, capital gains and other
income derived from investments situated outside Malta; PE profits; profits
from foreign assets/liabilities of Malta licensed banks and financial institutions;
profits of Malta licensed insurance companies related to risks situated outside
Malta.
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6. The Special Tax Refund System
• Malta operates a unique tax refund system
under which the Maltese tax authority refunds
generally 6/7ths of the corporate tax to (duly
registered) shareholders upon request following
a distribution of dividend by the Maltese
company.
- This results in an overall effective tax rate of 5%.
- This is the lowest effective tax rate on trading
profits in the EU
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7. Example: 6/7ths Tax Refund
Taxation of MaltaCo
Chargeable Income 100
Tax at 35% (35)
Distributable profits 65
Taxation of the Shareholder
Gross Dividend 100
Tax at 35% (35)
Full Imputation Credit for
Tax Paid by MaltaCo 35
Net Dividend 65
Refund of 6/7ths of Malta
Tax Paid 30
Income from MaltaCo
(Dividend + Refund) 95
Overall Malta Effective Tax 5%
Shareholder
MaltaCo
Income from
MaltaCo
(95)
6/7ths Tax Refund
(30)
Tax (35)
Income
(100)
Dividend
(65)
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8. The Special Tax Refund System
• If underlying profits of the Maltese company are generated from certain
passive interest or royalties, the tax refund is 5/7ths.
- Overall effective tax rate is 10%.
• 2/3rds refund applies where double tax relief has been claimed on
certain foreign source income.
- Malta tax suffered reduced to between 2.49% and 6.25% when FRFTC is
claimed, or to zero when other type of DTR claimed is 11.67% or more
• Applications for tax refunds may be made within up to four years from
the date of the distribution of profits.
• Tax refunds are guarantied by law and must be paid within 14 days of
the filing of a request for refund.
• The tax is paid in the currency in which the share capital of the
distributing company is denominated and tax refunds are also paid in the
same currency.
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9. Malta two-tier trading structure
Foreign
Shareholders
Income from International
trading activities ex. Provision
of services, intermediation,
active financing activities,
purchase and sale of goods.
Equity
Dividends
Malta tax at
company level :
35%
Tax treatment:
• Malta Trading Co taxed at 35%
• Foreign Shareholders may claim
6/7ths refund (effective overall tax
burden reduced to 5%)
• 2nd Malta Holding may be
interposed, in case of taxation
refunds in shareholder’s country of
residence, to collect dividends and
refunds.
• Malta Holding is not taxable on
dividends received from Malta
Trading Co (imputation credit). Tax
refunds are exempt from tax.
• Malta Holding may hold on or re-
invest money or distribute dividend
to Foreign Shareholders.
• No withholding taxes apply on
distribution of dividends from Malta
Trading or Malta Holding.
6/7ths tax
refund
Malta
Hold Co
Malta Trading Co
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10. Malta Holding Companies
Benefits of Malta as a holding jurisdiction:
 (60+) double tax treaties based on OECD Model
 Treaty with Russia signed not yet in force
 Effective system of double taxation relief
 Efficient participation exemption regime with light anti-
abuse provisions
 No withholding tax on outbound dividends, interest or
royalties to any country
 No CFC, transfer pricing or thin-cap legislation
 Access to EU treaty freedoms and EU Directives
 Excellent international reputation and relations with
OECD
 Not restricted to holding activities
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11. The Participation Exemption
Participation exemption applies on income or gains derived by a
Maltese company from a participating holding
i.e. a holding in another company (or the transfer thereof) which confers at least
two of the following:
1. The right to vote;
2. The right to profits available for distribution;
3. The right to assets available for distribution on a winding up
and:
(a) it is a direct holding of at least 10% of shares of company; or
(b) holding company entitled to entire balance of the shares not held; or
(c) holding company entitled to first refusal on shares not already held;
or
(d) holding company entitled to a seat on the board of directors; or
(e) investment is equivalent to €1.2 M and held for 183 days; or
(f) shares held for the furtherance of business (not held as trading
stock).
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12. Participation Exemption (anti-abuse)
One of the following criteria must also be satisfied by company
held in the case of a dividend:
1. It is an EU company; or
2. it is subject to foreign tax of at least 15%; or
3. it does not have more than fifty per cent (50%) of its income
derived from passive interest or royalties;
Where none of the above conditions are satisfied the participation
exemption would still apply if :
a. the holding by the Malta company in the non-Maltese resident
company is not a portfolio investment; and
b. the non-Maltese resident company or its passive interest or
royalties have been subject to any foreign tax of at least 5%:
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13. Holding w. Participation Exemption
Foreign Hold Co
Dividends and gains
derived from a
participating holding
Participating Holding Dividends
Malta tax: 0%
participation
exemption
No withholding tax
on dividend paid to
Foreign Hold Co
(even if offshore or
low tax jurisdiction)Malta Hold Co
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14. EU Exit Route via Malta
Participating Holding
Dividends
Malta tax: 0%
participation
exemption
No WHT on dividend
paid to
Offshore/Non-EU Co
Malta Hold Co
EU Co
Offshore/Non-EU
Co
Dividends
No WHT: application
of Parent Subsidiary
Directive
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15. Resident non-Domiciled companies
Remittance basis of taxation:
A foreign incorporated company that has shifted
its residence / effective management to Malta
(becomes resident but not domiciled) is only subject
to Malta tax on:
• Income and gains arising in Malta;
• Income arising outside Malta which is
remitted (received) in Malta; and
No Malta tax on:
• Foreign source Capital Gains
• Foreign source Passive Income not remitted to
Malta
Applications: Financing/Passive foreign
investments/Aircraft leasing or operation
Foreign
Hold Co
Foreign co.
managed and
controlled in Malta
Foreign Passive
Income or
Gains/Financing
activities
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16. Substance requirements
• Company incorporated in Malta is deemed
resident in Malta
• No formal substance requirements from a
Maltese perspective/Required from foreign
country perspective
• Management and control in Malta: Meetings of
BOD held in Malta. Directors with sufficient
experience based in Malta
• Employees/premises/technical resources
commensurate with activities of the company
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17. Professional Investor Funds (PIFs)
PIFs are non-retail funds aimed at financially
literate, high-net-worth-investors.
Subject to quicker regulatory procedure and less
investment restrictions than retail funds
May take form of a limited liability company SICAV
or INVCO
PIFs may be self-managed
May take form of an umbrella fund with multiple-
sub funds with different investment objectives and
segregated patrimonies
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18. Self-managed PIF (SICAV) Structure
PIF
Fund
Administrator
SPV
BOD
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Investment
Committee
Foreign Target
Company/Investment
Promoter
(controlling
shares
Unit
Holders
Investors
Advantages:
• PIF income is exempt from tax
• Redemption and transfer of
units in the Fund quicker and
simpler than transfer of
shares in normal company
• Investors can invest through
regulated financial
intermediaries
• PIF may be divided into sub-
funds held by different
investors and pursuing
different investment
objectives
• PIF is a regulated entity: Adds
substance to the structure
Disadvantages:
• More expensive to run than
normal holding company
• Subject to regulatory
oversight and restrictions
Custodian
Dividends
Dividends

19. Redomiciliation of Companies to Malta
• Malta allows the re-domiciliation of companies (including funds) to
Malta from approved jurisdictions.
• A company established in another jurisdiction may be transferred and
continue to exist in Malta without having to wind up in its country of
incorporation.
• The assets, rights, obligation and liabilities the company had in its
original country of registration are retained
• A fund can also move to Malta without having to re-negotiate contracts
with service providers in the country of origin (provided these are
approved by MFSA).
• Likewise, companies incorporated in Malta may redomiciled out of
Malta to another jurisdiction.
• Possibility of ‘step-up’ of base-cost of assets situated outside Malta
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20. Other Reasons to Choose Malta
 Its proximity to most European and Middle Eastern capitals with
many direct flights available
 Convenient time zone (GMT+1)
 English is the language of business.
 A sophisticated, European business environment
 Highly educated and productive local work force
 Reasonable set-up and operational costs
 A solid banking system largely unaffected by global financial crisis
 A stable political situation
 State-of-the art communications infrastructure
 Good weather and high standard of living
 Well-equipped ports and Freeport
 Excellent international schools
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21. THANK YOU FOR LISTENING!
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22. Dr Silvio Cilia
silvio.cilia@cclegal.com.mt
Dr Jonathan Corrieri
Jonathan.corrieri@cclegal.com.mt
Level 1, Blue Harbour Business Centre,
Ta’ Xbiex Yacht Marina, Ta’ Xbiex XBX1027 Malta
Tel: (+356) 21491840/1 Fax (+356) 21499920
www.cclegal.com.mt
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Contacts
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