Incorporate in Estonia, Residence in Malta

[NicolasMaduro]

I have been looking into the following setup and concluded the following;

Incorporate in Estonia
Self-Sufficiency visa in Malta

When I live in Malta on a self-sufficiency visa I am only taxed on money I bring to Malta. So I can just take dividends from Estonia to my TransferWise account in Germany,
and then pay 0% dividend tax.

Taxes I have to pay:
Then there is a mandatory 5000 EUR tax I have to pay to Malta no matter what.
And then there is the profit distribution tax in Estonia that is 20%.


Have any of you used this setup, and do you know if I understand it correctly?

 

[Tax Cow]

This is an excellent solution until you find out that Malta and Estonia have a bilateral DTA agreement where they specify slightly different conditions.

Ask the Maltese tax office about it for a definitive answer, but unless the EE company is controlled and managed from Estonia, the agreement allows Malta to tax the Estonian company as if it were their own.

Rent an office and hire a few locals in Estonia (approx 50K a year) to make the company "sufficiently" managed and controlled from Estonia. Then it will work.

 

[JohnLocke]

What is the actual personal income tax in Malta if you live there as an foreigner, say you just moved there?

 

[Tax Cow]

What is the actual personal income tax in Malta if you live there as an foreigner, say you just moved there?

He could just pay a flat EUR 5K every year if he doesn't do business in Malta. His situation without the corporation would probably come out on top.

 

[NicolasMaduro]

Thank you for your input xzars.

I guess I will have to spent some money on a tax lawyer in Malta, and make sure
there is PE in Estonia.

 

[Martin Everson]

When I live in Malta on a self-sufficiency visa I am only taxed on money I bring to Malta.

You are taxed only on untaxed income you bring into Malta not capital or capital gains brought in.

So I can just take dividends from Estonia to my TransferWise account in Germany,
and then pay 0% dividend tax.

Where is the Estonia companies place of operation, control and management? Would that happen to be in your bedroom in Malta?

Then there is a mandatory 5000 EUR tax I have to pay to Malta no matter what.

That's on offshore income greater than 35,000 euros a year not received in Malta.

Have any of you used this setup,

No

and do you know if I understand it correctly?

Not quite. You can just hope that Malta will not care about you which is normal.

 

[NicolasMaduro]

Exactly ;-) So now I would need to find out how to make sure that place of operation, control and management is in Estonia. Do anyone have an article about this, or a white paper on it?

 

[jscargo]

Sorry about my ignorance, but as far as I understand, you will have to pay the 20% dividend tax, or 14% maybe from now on, when the money leaves the company in EE.
Does it matter if you are in Malta, or somewhere else?

 

[NicolasMaduro]

Sorry about my ignorance, but as far as I understand, you will have to pay the 20% dividend tax, or 14% maybe from now on, when the money leaves the company in EE.
Does it matter if you are in Malta, or somewhere else?

Most countries in Europe charges capital gains tax on top of that, but in Malta you can pay a flat tax of 5k eur.

 

[jscargo]

Most countries in Europe charges capital gains tax on top of that, but in Malta you can pay a flat tax of 5k eur.

Can you show some link showing this? Having lived in Latvia for example, they did not charge capital gains tax after you already paid the dividend withholding tax

 

[JustAnotherNomad]

Don't do it. It's a stupid setup. Way too many uncertainties and way too high cost for the structure, considering you will still be paying 20%+ in taxes.
Find a better solution. If you want to actually live in Malta, talk to some tax advisors in Malta. They will know which structures work well.

 

[NicolasMaduro]

I understand there probaly is better setups. However the location needs to be in EU, and that location need to support Stripe,
so I went with Estonia.

I understand Cyprus could probaly have saved me alot of percentages.

 

[JustAnotherNomad]

I didn’t say don’t use Estonia, I said don’t use that structure (unless you really want to live in Malta).
If you absolutely want to use an Estonian company, there are much better options.
You could even use the Estonian company only for payment processing for your actual business.

 

[clemens]

When I live in Malta on a self-sufficiency visa I am only taxed on money I bring to Malta. So I can just take dividends from Estonia to my TransferWise account in Germany,
and then pay 0% dividend tax.

Won't you be forced to pay tax in Germany?

 

[NicolasMaduro]

Won't you be forced to pay tax in Germany?

Sorry the confusing sentence. I just have a TransferWise account with EUR balance. I don´t have any connection to Germany.

 

[JustAnotherNomad]

No, where your bank account is means nothing for your tax residency.
Many people from other European countries (probably Germans too) use Maltese banks because they pay higher interest. That doesn’t mean they have to pay tax on that interest in Malta.

 

[clemens]

Sorry the confusing sentence. I just have a TransferWise account with EUR balance. I don´t have any connection to Germany.

ahh I thought you had any connection to Germany! If that isn't the case I understand your situation better.

As suggested already I would simply spend a few thousand to consult a tax advisor in Malta to help you with the best setup for your situation. From Cyprus I know it's pretty easy if you consult the right firm to help you.

 

[Spinat]

What's the better option, to relocated to Cyprus or Estonia considering that you will do business abroad and not locally?

 

[JustAnotherNomad]

Cyprus definitely. Estonia has higher taxes.
But the question is too simple really.
It’s not like you can just work from home in a country and expect not to be paying any tax.

 

[lonizzita]

Rent an office and hire a few locals in Estonia (approx 50K a year) to make the company "sufficiently" managed and controlled from Estonia. Then it will work.

if i follow this pattern, when i pull out dividends from estonia, will they be taxed in Malta?