Unraveling Offshore Tax Strategies: Malta’s Status as a Tax Haven Explored

Malta offshore

The Positioning of Malta as an Offshore Destination

Malta, despite being a traditional tax-based jurisdiction, is often classified as a tax haven owing to a variety of benefits it provides to foreign corporations and stakeholders. Its strategic geographical location, coupled with advantageous tax rebate policies and easy access to the European Union (EU) trade agreements and markets, have made it a favored destination for many international companies.

In the Global Competitive Index by the World Economic Forum, Malta was lauded for its bank reliability and market efficiency, ranking 10th and 24th respectively (2014). Further reinforcing its credibility is the stable banking system, modeled after the UK Company law, and its English-speaking population. Furthermore, Malta’s corporate legislation aligns with the EU company law and standards, making it a viable and cost-effective alternative for offshore trust management, banking, and financial administration.

The transformation of Malta’s offshore sector came about with its acceptance into the EU. This compelled the country to reform its international financial industry to adhere to EU legislation, resulting in the revocation of its ‘tax haven’ status. However, Malta has succeeded in retaining the desirable aspects of its offshore system, luring international corporations and investments due to its solid reputation, attractive tax and rebate policies, and robust banking infrastructure.

Examining the Advantages of Malta as a Tax Haven

Malta’s advantageous geographical location, proximate to Europe, and access to EU ports and trade treaties are significant factors that elevate its status as a tax haven. Other perks include the availability of single-member company ownership, the ability to re-domicile, and access to nominee services.

Malta’s language flexibility, administrative versatility, and modern corporate legislation further enhance its appeal. With over 70 Double Tax Treaties, Malta doesn’t carry the stigma of negative offshore tax haven associations and provides non-resident companies with benefits similar to resident companies.

Deep Dive into Malta as a Tax Haven: Location, Political Structure, and More


Located 80 kilometers south of Sicily in the central Mediterranean, Malta is an archipelago comprising three small inhabited islands and numerous uninhabited ones. Despite its small size, Malta has been of great maritime strategic importance throughout history.

Political Structure

Having been occupied by several foreign powers, Malta’s political history is rich and varied. Independence from the last occupying force, Britain, was granted in 1964, leading to Malta becoming a republic a decade later. It joined the EU in 2004 and became part of the Eurozone in 2008.

Modelled after the British Westminster system, Malta is a parliamentary representative democratic republic with the President playing a mostly ceremonial role and the Prime Minister wielding the actual decision-making power.

Economy and Infrastructure

Malta’s economy is modern and heavily reliant on trade, manufacturing, tourism, and financial services. Its critical resources include limestone, a strategic location, and an educated labor force. Despite being largely dependent on imports, Malta attracts significant foreign investment due to its well-trained workforce, lower labor costs, and EU membership.

Exchange Control and Law Type

Upon its admission into the EU in 2004, Malta abolished exchange controls and adopted the Euro as its currency in 2008. Maltese law, influenced by civil law, common law, and local traditional law, is subject to EU law.

Principal Corporate Legislation and Taxation in Malta

The Maltese Companies Act 1995, modeled after the UK Company Law, is the primary corporate legislation in the country. This legislation replaced the Maltese Commercial Partnerships Ordinance to align with EU regulations.

Malta operates a ‘full-imputation’ tax system, taxing corporate profits at 35%. However, when dividends are paid out from the company’s taxed profits, the shareholders’ tax burden reduces significantly, falling within the 0% – 5% range. This is primarily due to the tax that has already been paid by the company.

However, it’s essential to note that Malta’s tax law considers all income from a company qualifying as a ‘participatory holding’ company eligible for a full refund of taxes paid when dividends are paid back to the company’s shareholders. But companies trading within the EU are liable to an 18% Value Added Tax rate. In addition, Malta offers other tax benefits such as no inheritance, wealth, annual property, interest, or dividends tax, and no withholding on dividends. These policies further strengthen Malta’s position as a favorable offshore destination.

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