Subsidiaries are legal entities with capital that is partially or totally owned by foreign companies. However, the management of the subsidiary is not conditioned by the foreign capital, and the entity is able to handle business contracts, hire employees or issue and transfer shares.
Double taxation refers to the fact that two countries collect simultaneously taxes on the same company. This situation often arises when companies have subsidiaries or branches in various countries.
Malta is not only for its low tax rates, but it is also one of Europe’s fastest developing countries. Part of this development is due to the introduction of the citizenship by investment program, accepted by the EU. In addition, Malta also introduced several residency by investments programs, to help foreigners significantly reduce their taxes.
Although corporate taxation in Malta is not low, shareholders are entitled to claim back part or even the whole tax paid by the Malta company. This is why the Maltese taxation system is unique and very ingenious.
Malta does not apply a separate system of corporate tax, making a company chargeable to income tax in Malta in much the same way as an individual, at the flat rate of 35%. However, Malta does apply a full imputation system to relieve the economic double taxation arising on the taxation of dividends received by shareholders from distributions made from tax-retained earnings of Maltese companies.