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If you operate in Malta, the honest answer is: almost certainly yes – and not just for bookkeeping. Malta’s corporate tax system is generous and flexible, but it is also technical. The full imputation system, complex refund mechanisms and the Fiscal Unit (group taxation) regime can unlock very low effective tax rates – but only if they’re handled correctly. That’s where a professional, experienced accountant becomes less of a cost and more of a core asset.
Malta’s corporate tax system
At first glance, Malta’s corporate income tax looks simple: Corporate tax rate 35% on taxable profits for Maltese tax-resident companies. But that 35% is only the starting point.
Full imputation system: no economic double taxation
Malta operates a full imputation system of corporate taxation. This means: when a Maltese company pays tax at 35% and then distributes profits as dividends, the tax paid by the company is imputed (credited) to the shareholder. The shareholder is taxed on the gross dividend but receives a credit for the 35% already paid at company level, avoiding economic double taxation. This is already a major structural difference from most other EU systems.
Tax refund system: how 35% often becomes 5%
For many non-resident shareholders, Malta’s system goes further through tax refunds of the Malta tax paid by the distributing company. Depending on the nature of income and relief claimed, shareholders may be entitled to:
- 6/7 refund – typically on active trading income allocated to the Malta Taxed Account or Foreign Income Account
- 5/7 refund – often for passive interest and royalties
- 2/3 refund – where double taxation relief has been claimed
- Full refund / participation exemption equivalent – for certain qualifying participating holdings
For example, a 6/7 refund of the 35% tax leaves an effective Malta tax burden of around 5% on distributed trading profits.
This combination of full imputation + refund system is what makes Malta’s corporate tax regime uniquely attractive – and uniquely technical.
Why this system is not Do-it-Yourself-friendly
On paper, the idea is simple: pay 35%, distribute, claim a refund. In practice, it involves:
- Correct allocation of profits to tax accounts (e.g. Malta Taxed Account, Foreign Income Account, Immovable Property Account, etc.)
- Correct identification of income nature (trading vs passive; with or without double tax relief)
- Coordinating timing of dividend distributions and refund claims
- Ensuring all documentation supports refund claims and that anti-abuse provisions are respected.
A mistake in classification or documentation can: delay or reduce tax refunds, trigger interest, additional tax, or scrutiny from the Commissioner for Tax and Customs, and distort your effective tax rate and cash-flow planning. This is the first point where a professional Maltese accountant becomes indispensable.
The Fiscal Unit (group taxation) regime – Malta’s “hidden” complexity
Since the Consolidated Group (Income Tax) Rules (L.N. 110 of 2019), groups of Maltese companies can opt to be treated as a single taxpayer: a Fiscal Unit.
Fiscal Unit in simplified terms: when a group of companies merges into the most tax and cost-effective solution within the EU – Malta Fiscal Unit 5% Corporate Tax.
The result:
- One consolidated income tax return for the fiscal unit
- Simplified management of group tax payments and refunds
- Cash-flow advantages: pay 5%, no hassle with tax refund
Where a professional Maltese accountant adds real value
Given all the above, “doing it yourself” isn’t just time-consuming – it can be expensive in missed opportunities and unnecessary risk.
An expert accountant plays a key role in choosing and designing the right structure for your business. This includes guiding you on whether it is more efficient to operate through a single company or to set up a group of companies, and assessing whether an election into the Fiscal Unit regime is actually beneficial in your circumstances. In doing so, they consider factors such as shareholding percentages, alignment of accounting periods, the availability of foreign tax credits and the tax profile of your ultimate shareholders. They also help you design funding and profit-distribution flows that work in harmony with Malta’s tax refund system, ensuring that the structure supports, rather than undermines, your tax efficiency.
When it comes to Malta’s full imputation system and the related refund mechanisms, professional support becomes even more important. Your accountant will classify income correctly – distinguishing, for example, between trading income, passive income and income benefiting from double tax relief – and will maintain accurate tax account records so that 6/7, 5/7, 2/3 or full refunds are computed correctly and fully supported. They will prepare and file refund claims with all the necessary documentation and ensure that these claims are consistent with your filed tax returns, while also carefully managing the timing of dividends and refunds to optimise your business’s cash-flow.
Effective management of a Fiscal Unit requires another layer of technical expertise. A knowledgeable accountant will evaluate whether your group meets the eligibility conditions and oversee the registration of the Fiscal Unit through the principal taxpayer’s online profile in line with the Consolidated Group (Income Tax) Rules. They will then handle the consolidation of income, expenses and capital allowances of transparent subsidiaries, and correctly reconcile any “ignored transactions” within the group. At the same time, they ensure that the formulas and allocation rules for different income streams are properly applied and remain consistent with the Maltese tax framework, while continuously monitoring anti-abuse thresholds, such as the 95% rule, to prevent unintended deemed advances or deemed dividends.
Finally, in the area of accounts consolidation and reporting, an experienced accounting practice will prepare consolidated financial statements for your group under IFRS or local GAAP, ensuring that these are aligned with the tax consolidation achieved through the Fiscal Unit regime. They will make sure that the figures and disclosures reported to lenders, investors and regulators are fully reconciled with what is being submitted to the Commissioner for Tax and Customs. In addition, they will support you during tax audits and reviews by maintaining clear, well-organised documentation trails across all companies in the group, providing transparency and confidence to all stakeholders.
Practical signs your business needs an accountant in Malta
You probably need professional accounting support if any of these are true:
- You own or plan to own more than one Maltese company under common control
- You have foreign shareholders who expect an optimized, predictable effective tax rate (e.g. close to 5%)
- You are considering setting up a holding + operating company structure in Malta
- You are exploring whether to opt into the Fiscal Unit regime to simplify group taxation
- You are uncertain how Malta’s refund system interacts with: double taxation relief, foreign tax credits, your home-country tax treatment
In all these scenarios, the cost of a good accountant is usually far lower than the cost of: misapplied tax refunds, poorly designed group structures, delayed or reduced refunds impacting cash-flow, unexpected tax assessments or penalties.
So… does your business need an accountant?
In a jurisdiction with a simple flat tax and no special rules, you might get by with minimal help. In Malta, however, the very features that make the system attractive – full imputation, tax refunds and the Fiscal Unit regime – also make it technical and compliance-heavy. To truly benefit from the system while staying fully compliant, a knowledgeable accountant with Maltese tax experience is not a luxury; it’s part of the business model.
If your aim is to: keep your effective tax rate as low as legitimately possible, maintain clean, robust compliance, and use tools like tax refunds and Fiscal Units to your advantage, then yes – your business doesn’t just need an accountant. It needs the right Maltese accounting and tax expertise behind it.
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