Owners of Malta-based companies now have a choice:
1. Pay 35% corporate tax — which can later be claimed back in part by shareholder(s), resulting in an incredibly low (5%) effective tax rate!
2. Under the new tax consolidation rules, they can be treated as part of a fiscal unit and only pay 5% corporate tax without having to pay 35% Maltese tax and without the need to wait for a subsequent tax refund.
These updated rules bring a significant cash flow advantage compared to the previous system.
The funds that would previously have been locked-in are now available for reinvestment or distribution. The new rules enable shareholders of Malta-based companies to pay just 5% corporate tax if they form a fiscal unit and elect to do so.
If paying 5% corporate tax works for you, then a Malta-based company is perfect!
You just need to decide if you prefer:
a) using a foreign company as well as a Maltese company. or
b) you wish to run two Maltese companies.
Setting up a subsidiary company in Malta and forming a fiscal unit may be a better option if you can utilise a suitable foreign company.