Maltese non-dom resident + fiscal unit

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Hi! In one of the threads I found a statement, that if a shareholder of the Maltese fiscal unit lives in Malta and is a non-dom, the effective tax rate is still 5% and the dividends from such fiscal units are not taxed.

Is that correct? Aren't these dividends are considered Maltese-sourced income that would have to be subject to taxes in Malta?
 
Cari said:






Hi! In one of the threads I found a statement, that if a shareholder of the Maltese fiscal unit lives in Malta and is a non-dom, the effective tax rate is still 5% and the dividends from such fiscal units are not taxed.

Is that correct? Aren't these dividends are considered Maltese-sourced income that would have to be subject to taxes in Malta?

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Fiscal unit between a Maltese TradeCo and for example Cyprus HoldCo leads to effective 5% group taxation (without the need to wait for the 30% refund).

However you'd need to do also a group audit in addition between the Maltese TradeCo/ CY HoldCo.



The money could be sent from Malta TradeCo as Divs to the CY HoldCo.

If you then do NOT remit the dividends from CY to yourself to Malta, as a Maltese NonDom you'd not be taxed on that div payment from the CY HoldCo.
 
That sounds very good with the Maltese Trading and CY Holding, do you have any idea how much it will cost for the audit for a small company with an turnover 2 million euro ?
 
EliasIT said:






That sounds very good with the Maltese Trading and CY Holding, do you have any idea how much it will cost for the audit for a small company with an turnover 2 million euro ?

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A base fee would be around 13k eur for the whole set up. Includes a consolidated audit.
 
EliasIT said:






That sounds very good with the Maltese Trading and CY Holding, do you have any idea how much it will cost for the audit for a small company with an turnover 2 million euro ?

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Depending if you want to be director yourself or would need nominees in addition





If for example you're director of the Maltese TradeCompany and would need CY HoldCo with one local nominee director, depending on number of transactions you can get it for around 8k EUR/yr including group audit, group tax filing, virtual office, CY director, bookkeeping



Transferwise/Revolut Business for example caters to Maltese Companies and CY HoldCos



Audits/tax filing alone are like 3-4k EUR for Maltese company including group tax audit and 1.5k EUR for CY HoldCo audit/tax filing (depending who you work with)
 
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PhantomOf ThePits said:






Audits/tax filing alone are like 3-4k EUR for Maltese company including group tax audit and 1.5k EUR for CY HoldCo audit/tax filing (depending who you work with)

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Thank you, that's reasonable and not much for 2 active companies.
 
I’ve experimented with this setup before. Many Malta non-doms typically opt for either a Maltese trading company with a Cypriot holding or a UK holding. Personally, I prefer the UK holding structure,it’s generally seen as more reputable, banking tends to be more straightforward and less scrutinized, and it’s also easier to find nominee directors if needed.
 
Cari said:






Hi! In one of the threads I found a statement, that if a shareholder of the Maltese fiscal unit lives in Malta and is a non-dom, the effective tax rate is still 5% and the dividends from such fiscal units are not taxed.

Is that correct? Aren't these dividends are considered Maltese-sourced income that would have to be subject to taxes in Malta?

Click to expand...



From my understanding, correct.



However, the way you’ve worded the question sounds as though you are also asking about your personal tax situation…



As a non-dom you won’t be taxed on income not remitted to Malta. However, you will be taxed on income remitted to Malta, regardless of the source.



So, just to be clear, dividends sent from your Cyprus holding company to you in Malta would be taxed at the 15% flat rate if you have special tax status.



Remitted meaning, any use of the funds in Malta, i.e. using a foreign bank account in Malta. Now, I’m not sure exactly how well Malta police this, I imagine if a small amount of money was spent in Malta on groceries or entertainment etc using a foreign credit/debit card whilst your Maltese bank account had most of the legitimate activity it would probably not be picked up - but that would be tax evasion of course
 
Capital gains arising outside Malta (for example, gains from selling shares in your company or other investments) are not subject to Maltese tax, regardless of whether they are remitted to Malta or not.



Foreign income (such as dividends, interest, or rental income) is taxable only if remitted to Malta. A minimum tax of €5,000 per year applies to non-domiciled individuals whose foreign income (excluding capital gains) exceeds €35,000 annually but who do not remit any of that income to Malta. This applies if you're following the standard non-dom regime,not the special residence programmes that allow unlimited remittances at a flat 15% tax rate (but with a higher annual minimum).



Under the standard non-dom regime, given the €5,000 minimum annual tax, it makes sense to remit roughly €31,260 of foreign income each year to Malta. This way, you're paying tax on actual income received, effectively "breaking even" rather than paying tax without any remittance.



Hope this clarifies. Malta's residency system remains quite attractive for Europe, especially now that the UK has closed its non-dom option, Portugal faces complications, Spain’s system remains unpredictable, and Italy has introduced absurdly high minimums



To add to what @Eurocash mentioned, keep in mind that basically anything you spend with your card while physically in Malta,regardless if the card is linked to an EMI or traditional bank abroad,will usually count as a taxable remittance. Honestly, it's not worth taking too many risks here. The only decent workaround I've noticed is that many people set up a Maltese LTD and route certain expenses through it, which is pretty common practice anyway. Having chatted extensively with local Maltese tax advisors and lawyers, the good news is that they all tend to agree Maltese tax authorities are generally quite flexible when it comes to allowable expenses,think of a US-style pragmatism rather than the stricter approach seen elsewhere in Europe.
 
When you say “hope this clarifies” are you a qualified accountant/tax advisor/lawyer based in Malta? If not, just bear in mind you aren’t actually clarifying anything, you are giving your opinion.



You are correct re: capital gains, but that is the only foreign source of income which isn’t taxed. Everything else is.



And under the global residency program the tax rate is 15% flat rate with 15,000 minimum tax payable each year. Maybe you are referring to another scheme?
 
I’m referring to the standard non-domiciled scheme, which has a €5,000 minimum tax. This is distinct from the GRP, RP, or similar programmes that require a €15,000 minimum and apply a 15% flat rate, as previously explained. And yes, I am an international tax advisor.
 
I imagine this is for EU citizens then.



I’m a British citizen therefore this is not open to me, that’s why I was asking in case I had missed something.



Thank you for your input.
 
alpakiwi said:






I’m referring to the standard non-domiciled scheme, which has a €5,000 minimum tax. This is distinct from the GRP, RP, or similar programmes that require a €15,000 minimum and apply a 15% flat rate, as previously explained. And yes, I am an international tax advisor.

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Maybe it's a stupid question but how does this work for the family. Do all of them pay 5k year minimum tax or adults only etc?
 
It applies per individual tax resident, not per family unit. Individuals under 18 are not considered tax contributors
 
Eurocash said:






I imagine this is for EU citizens then.



I’m a British citizen therefore this is not open to me, that’s why I was asking in case I had missed something.



Thank you for your input.

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Why do you think that EU citizens cannot use this non-dom system?
 
lacomaco said:






Why do you think that EU citizens cannot use this non-dom system?

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For "third country" nationals, such as UK citizens, the closest alternative would be the Global Residency Program which would need to be applied for, and then 15% flat rate tax subject to a minimum of 15,000 per year. Still quite good, but definitely not the same process as it is for EU citizens.
 
Eurocash said:






For "third country" nationals, such as UK citizens, the closest alternative would be the Global Residency Program which would need to be applied for, and then 15% flat rate tax subject to a minimum of 15,000 per year. Still quite good, but definitely not the same process as it is for EU citizens.

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Sorry but both EU and non-EU citizens can use the non-dom system perfectly well. The GRP needs to be renewed every year so it is not convenient at all. The non-dom with a €5k is quite good for many of us
 
lacomaco said:






Sorry but both EU and non-EU citizens can use the non-dom system perfectly well. The GRP needs to be renewed every year so it is not convenient at all. The non-dom with a €5k is quite good for many of us

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Not sure why you are saying sorry.



But you are wrong.



The issue is not non dom status, it is residency. A non-eu citizen cannot simply “show up” and live in Malta.



They must apply for residency, and GRP is one option, employment is another, and the permanent residency option is another.



None of these options enable a non-EU citizen to pay €5k minimum, it’s €15k



I suggest you read up on this
 
Eurocash said:






Not sure why you are saying sorry.



But you are wrong.



The issue is not non dom status, it is residency. A non-eu citizen cannot simply “show up” and live in Malta.



They must apply for residency, and GRP is one option, employment is another, and the permanent residency option is another.



None of these options enable a non-EU citizen to pay €5k minimum, it’s €15k



I suggest you read up on this

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Looking back to the original question the OP did not mention anything about residency as he was asking about non-dom taxation but anyway

- Single permit application

- Digital nomad visa

- Malta Residency Programs for HNWIs

- Unied Nations Pensions Program

could work for you without investment but the

- Malta Residency Program

- Malta Retirement Program

- Self sufficient residency are available only to EU/EEA citizens.

And of course there is the

- MPRP and

- MGRP.



I am not sure I need to read upon these as I have been a Maltese resident since 2017 and an official agent of the residency and citizenship programs since 2014 amongs others...



Have a good evening
 
lacomaco said:






Looking back to the original question the OP did not mention anything about residency as he was asking about non-dom taxation but anyway

- Single permit application

- Digital nomad visa

- Malta Residency Programs for HNWIs

- Unied Nations Pensions Program

could work for you without investment but the

- Malta Residency Program

- Malta Retirement Program

- Self sufficient residency are available only to EU/EEA citizens.

And of course there is the

- MPRP and

- MGRP.



I am not sure I need to read upon these as I have been a Maltese resident since 2017 and an official agent of the residency and citizenship programs since 2014 amongs others...



Have a good evening

Click to expand...



I wasn't referring to the OP in my last response, I was referring directly to your comments about non-eu non-doms, which were inaccurate.



Being a resident of Malta since 2017 means absolutely nothing. I am resident of the UK, that doesn’t make me an expert on British immigration.



Anyway…..
 
Eurocash said:






I wasn't referring to the OP in my last response, I was referring directly to your comments about non-eu non-doms, which were inaccurate.



Being a resident of Malta since 2017 means absolutely nothing. I am resident of the UK, that doesn’t make me an expert on British immigration.



Anyway…..

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You can never let things go right? Still, have a nice evening!
 
CyprusLawyer101 said:






A base fee would be around 13k eur for the whole set up. Includes a consolidated audit.

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Are you able to help with the setup ?
 
Cari said:






Hi! In one of the threads I found a statement, that if a shareholder of the Maltese fiscal unit lives in Malta and is a non-dom, the effective tax rate is still 5% and the dividends from such fiscal units are not taxed.

Is that correct? Aren't these dividends are considered Maltese-sourced income that would have to be subject to taxes in Malta?

Click to expand...

Can I ask you do you live in Maltha since you ask or do you consider relocating ?
 
alpakiwi said:






It applies per individual tax resident, not per family unit. Individuals under 18 are not considered tax contributors

Click to expand...

Like in most european countries
 
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