Click here to view the February newsletter
Think you know everything about Malta’s advantages? You might be right, but here’s something that may have slipped under your radar: the innovative combination of a Private Foundation and a Malta Company into a single fiscal unit. This one-of-a-kind structure offers unmatched benefits – from safeguarding your assets in a stable jurisdiction and managing wealth with absolute confidentiality, to accessing Malta’s impressive tax perks. Yes, we’re talking about 5% – the lowest corporate tax rate in Europe, participation exemptions, and so much more.
Let’s break it all down and discover why Malta is the perfect place to bring this forward-thinking concept to life.
What Is the Malta Fiscal Unit?
The Fiscal Unit, also known as the Malta Tax Group, is built on Malta’s progressive fiscal framework. It allows multiple entities to be treated as a single tax group. By pairing a Malta Private Foundation with a Malta Company (a standard business vehicle), entrepreneurs can streamline governance, simplify taxation, and maximize efficiency. Your business gets to operate smarter.
Malta Foundation and Company Merging Into a Fiscal Unit
In Malta, foundations are typically used for wealth protection, asset management, estate and succession planning, and sometimes for philanthropic purposes. Traditionally, a Malta Foundation is treated as tax-transparent, meaning it doesn’t pay tax directly.
However, what happens when a Malta Foundation wants to join forces with a Malta Company, and both of them form a Fiscal Unit?
Well, Malta allows the Foundation to opt to be treated as a company for tax purposes. This doesn’t alter its core function as an asset protection tool, but it also allows the Foundation to take a role of a parent company within the group and to merge into a Fiscal Unit with another company, which acts as a trading subsidiary.
Why Choose the Malta Fiscal Unit?
Incredible Tax Efficiency
This structure is a game-changer. It lets your Foundation and Company consolidate tax obligations, essentially acting as one taxpayer.
The Malta Foundation acts as the “parent company,” while the Malta Trading Company is a subsidiary. The Malta Company generates all the taxable income for the group.
The biggest highlight? A super-low 5% corporate tax rate applied right from the start! There’s no waiting around for tax refunds, which saves you time and keeps things simple. Plus, the Malta Foundation continues to serve as a powerful tool for asset protection and wealth management while leading the fiscal group.
Consolidation of Income
The Malta Foundation being treated as a parent company means the income of the entire group is handled together, making it easier to manage financials and tax obligations in one go.
Unmatched Asset Protection and Wealth Management
The Malta Foundation is your ultimate shield for protecting assets and planning your legacy. It’s a separate legal entity, keeping your assets safe from external risks while ensuring long-term control.
When combined with a Malta Company, this structure becomes a powerhouse for managing wealth, generating revenue, and securing your future – all within a regulated and trustworthy framework.
Estate & Succession Planning – a proper use of a Malta Foundation ensures the smooth transfer of assets to future generations while maintaining control over distributions to beneficiaries.
It’s important to note that while the fiscal union happens at the tax level, the Foundation and the Company remain independent and fully functional business entities.
Access to EU and Global Markets
As a proud member of the European Union, Malta opens the door to the EU’s single market. This means seamless movement of goods, services, and capital.
Add to that Malta’s extensive network of double taxation treaties, and you have a golden opportunity to expand your business across Europe and beyond. The Malta Fiscal Unit is the perfect launchpad for your global ambitions.
Let’s consider an example based on a real-life scenario:
Let’s say Sarah is an entrepreneur who has successfully built a business in Europe and wants to protect her family’s wealth. To do so, she establishes a Malta Foundation, which holds her personal assets, including real estate, stocks, and investments. The Foundation is set up as a long-term wealth management tool, ensuring that her assets are protected and properly managed.
As Sarah’s business grows, she decides to establish a separate Malta Company to handle her trading activities. The company will focus on manufacturing products and selling them internationally. Over time, Sarah realizes that the tax process could become quite cumbersome and potentially costly.
To simplify things, Sarah opts for the two entities – her Foundation and Company – to be treated as a single tax group. The Foundation now assumes the role of the parent company, while the Malta Company becomes the subsidiary within the group.
Here’s how it benefits Sarah:
- Simplified Filing: Sarah only needs to file one consolidated tax return and consolidated accounts for the entire group.
- Efficient Taxation: A reduced 5% corporate tax rate is paid directly on the income generated by her active LTD company, without the need to wait for refunds of overpaid tax. This was not possible earlier when the Malta LTD Company was not part of the Fiscal Unit! Prior to this, Sarah was paying the standard 35% corporate tax and had to wait up to 6 months to receive a refund of those overpaid 30%.
- Asset Protection: The Foundation continues to serve its primary role of protecting Sarah’s family assets, but now it’s also engaged into this magic of simplified tax. Prior to this, the Foundation was not being used to its full potential.
Things to Keep in Mind
While this structure offers tremendous advantages, there are a few key things to consider:
- Make sure your Foundation and Company comply with Malta’s legal and regulatory requirements. Professional advice is essential to ensure everything is set up correctly. Don’t worry – we’re here to guide you!
- Tax planning doesn’t have to be complicated! With the right guidance, you’ll fully understand the benefits and responsibilities of your fiscal unit, make taxation of dividends paid to your Foundation, and distributed from the Foundation clearcut, unlocking maximum efficiency while avoiding pitfalls.
- Both the Foundation and the Company require regular governance and upkeep. Let us help you keep everything running smoothly!
Creating a Fiscal Unit in Malta, where a Foundation merges with a Company, opens up a number of unmatched benefits.
For those looking to streamline their operations while maintaining their wealth protection strategies, this setup is definitely worth considering. Whether you’re a seasoned investor or an entrepreneur just starting out, Malta gives you the tools, stability, and expertise you need to bring your vision to life.
Ready to explore this incredible opportunity? Partner with professionals to make the most of Malta’s endless potential. We’re here for you – every step of the way!
Click here to view the February newsletter