Malta Self-Sufficient Residency + Estonian OÜ

[hasby2023]

Nobody mentioning that he's fully taxable if he works from Malta? Non dom tax is for passive foreign income e.g. rent income, long term capital gains or royalties or a job physically done in another country

Theoretically, I agree with you. I also believe that any kind of freelance work—like jobs on Upwork or income from platforms like AdSense, ACX, or Amazon KDP—should be considered a green flag, as long as you're performing these activities as a private individual and not operating as a registered business.

If you have an LLC in the U.S., I believe it's highly unlikely anyone would know about it—as long as the money stays in U.S. accounts. Under the FATCA agreement between the U.S. and Malta, the balances of American bank accounts held by Maltese residents aren't shared with the Maltese authorities. Source: https://home.treasury.gov/system/files/131/FATCA-Agreement-Malta-12-16-2013.pdf

On the other hand, if you set up an Estonian OU, you're dealing with one of the most transparent corporate structures out there—virtually everything is publicly accessible on Google. And in the EU there is for sure a UBO register (that they don't have in the U.S. thanks to Trump). So if you're managing that company while sipping a mojito in Golden Bay, you could run into POEM (Place of Effective Management) issues. That said, CFC (Controlled Foreign Company) rules generally don’t apply in Malta if your accounting profits are under €750k.

To be honest, I'm not entirely sure how likely a POEM-related audit is in Malta. After all, it's a small island with infrastructure built for around 500,000 people, and it arguably lacks both advanced automated controls (like Italy or Spain) and a large number of personnel dedicated to these checks. That said, from a practical standpoint, you could reduce the risk by making key strategic decisions while in Estonia, and limiting your activities in Malta to routine operations—such as client communication and administrative tasks. I know it's borderline, but basically everybody in the island has a trading company incorporated in Malta and an holding company abroad to pay the famous 5%. Where do you think the POEM of that holding company is?

To the senior people out here, let me know what do you think. We are getting somewhere.

 

[10101]

Theoretically, I agree with you. I also believe that any kind of freelance work—like jobs on Upwork or income from platforms like AdSense, ACX, or Amazon KDP—should be considered a green flag, as long as you're performing these activities as a private individual and not operating as a registered business.

Nah, any kind of work tasks performed from Malta is considered maltese sourced income.
What you're talking about is not only tax fraud, but also breaks other laws in terms of work without registration, social security etc. It's actually really simple.

If you can't make passive income linked to a foreign asset, Malta is not for you unless you found a maltese company(+holding), pay 5% tax + full tax and social security on 35k income to you by your company.
The only other way is an offshore company with employees and director + PE in another country while you do not work and just get dividends. Someone correct me if I'm wrong, but I'm pretty sure I'm right.

 

[hasby2023]

Could be. I think they are very ambiguous to let everybody navigate in a grey area and for them it's OK unless you raise big red flags. (My speculation)

 

[aragon]

If you can't make passive income linked to a foreign asset, Malta is not for you unless you found a maltese company(+holding), pay 5% tax + full tax and social security on 35k income to you by your company.

Can you cite an official Maltese information source that supports this view?

 

[10101]

Can you cite an official Maltese information source that supports this view?

Like an official government source on how to avoid most taxation using offshore holdings and non-dom status?

Actually, the internet is full with info on this structure.

 

[aragon]

Like an official government source on how to avoid most taxation using offshore holdings and non-dom status?

No, this view of yours:

If you can't make passive income linked to a foreign asset, Malta is not for you unless you found a maltese company(+holding), pay 5% tax + full tax and social security on 35k income to you by your company.

Specifically I've never seen a formal requirement for "full tax and social security on 35k income to you by your company".

 

[JustAnotherNomad]

To keep initial setup and maintenance costs low, I’m considering starting with a simple Estonian OÜ, where I’d be the sole shareholder and director. The idea is to begin with this setup and transition to a more complex trading + holding structure (Estonia + Cyprus or similar) later on, once the company starts generating enough profit to justify the added costs — with the long-term goal of reducing corporate tax down to 5%.

This is a really stupid idea.

A salary will be taxed in Malta and/or Estonia.
If you change it to dividends later, you will be paying 20% CIT in Estonia, possibly more (they are already talking about raising taxes).
Also, the Estonian company could/would be taxable in Malta due to PE/PoEM, then you'll have to fight the taxman in both countries.

Just set up a Maltese company with a holding somewhere else and pay 5% and be done with it.
Or skip the holding, pay 35% and get the 30% refund later.

Some people also run US LLCs from Malta without paying tax - if this is legal or not is up for debate.

 

[hasby2023]

This is a really stupid idea.

A salary will be taxed in Malta and/or Estonia.
If you change it to dividends later, you will be paying 20% CIT in Estonia, possibly more (they are already talking about raising taxes).
Also, the Estonian company could/would be taxable in Malta due to PE/PoEM, then you'll have to fight the taxman in both countries.

Just set up a Maltese company with a holding somewhere else and pay 5% and be done with it.
Or skip the holding, pay 35% and get the 30% refund later.

Some people also run US LLCs from Malta without paying tax - if this is legal or not is up for debate.

I have talked with Xolo and they told me that salaries paid to non-residents do not face withholding taxes in Estonia.

 

[Don]

This is a really stupid idea.

A salary will be taxed in Malta and/or Estonia.
If you change it to dividends later, you will be paying 20% CIT in Estonia, possibly more (they are already talking about raising taxes).
Also, the Estonian company could/would be taxable in Malta due to PE/PoEM, then you'll have to fight the taxman in both countries.

Just set up a Maltese company with a holding somewhere else and pay 5% and be done with it.
Or skip the holding, pay 35% and get the 30% refund later.

Some people also run US LLCs from Malta without paying tax - if this is legal or not is up for debate.

Fiscal unit can get direct 5%
Regular holding setup can apply for refund (effective tax is still 5%)

 

[Marzio]

If you want my 0.2€ you are over complicating things.

Setup a US LLC, remit US LLC profits to a personal bank account outside Malta and pay 5K year in taxes if that income is > 35K / year

End of the story.

You are paying taxes, Malta is happy.

 

[JustAnotherNomad]

I have talked with Xolo and they told me that salaries paid to non-residents do not face withholding taxes in Estonia.

Yes, instead you pay the full tax in Malta. Very smart move.
And Malta can tax the Estonian company like a local entity.
And Estonia can say part of the salary were actualy director's fees, which are always taxable in Estonia.

You're really going for the worst of both worlds.
If anything, it would perhaps make sense to use a Maltese company with an Estonian holding company - but even that may be a bad idea as Estonia would tax the profits if you ever sell the Maltese company.

 

[hasby2023]

If you want my 0.2€ you are over complicating things.

Setup a US LLC, remit US LLC profits to a personal bank account outside Malta and pay 5K year in taxes if that income is > 35K / year

End of the story.

You are paying taxes, Malta is happy.

I will certainly do that for Adsense revenues in the US. The thing is that I also need a registered business somewhere in the EU for B2C sales in Italy, for which I need to pay VAT for sure. Or maybe I can just use the LLC and register to the OSS system to handle VAT ?

 

[hasby2023]

This is a really stupid idea.

A salary will be taxed in Malta and/or Estonia.
If you change it to dividends later, you will be paying 20% CIT in Estonia, possibly more (they are already talking about raising taxes).
Also, the Estonian company could/would be taxable in Malta due to PE/PoEM, then you'll have to fight the taxman in both countries.

Just set up a Maltese company with a holding somewhere else and pay 5% and be done with it.
Or skip the holding, pay 35% and get the 30% refund later.

Some people also run US LLCs from Malta without paying tax - if this is legal or not is up for debate.

I wonder, but all those that have the holding company abroad while living in Malta, doesn't it pose a POEM issue of the holding company, or do they outsource its management to a local CSP in Cyprus/Gibraltar?

 

[JustAnotherNomad]

I will certainly do that for Adsense revenues in the US.

Isn't AdSense revenue classified as royalties? Then a US LLC you don't pay tax on in Malta could be an issue.

The thing is that I also need a registered business somewhere in the EU for B2C sales in Italy, for which I need to pay VAT for sure. Or maybe I can just use the LLC and register to the OSS system to handle VAT ?

Yes, you can register a foreign entity for VAT - in fact, you have to. How else would you pay the VAT? You could probably even get an Italian VAT ID.
But it's really not clear if you can do this legally without paying tax for the US LLC in Malta.

 

[JustAnotherNomad]

I wonder, but all those that have the holding company abroad while living in Malta, doesn't it pose a POEM issue of the holding company, or do they outsource its management to a local CSP in Cyprus/Gibraltar?

Yes, management will probably be outsourced - you have to have a good explanation why you're not managing the company from Malta.
But for passive entities like pure holding companies, this shouldn't be difficult/expensive, there's not a lot to do.
Now, in most countries, CFC rules would kick in for such cases, but Malta's CFC rules have very high thresholds, so they probably don't apply to you. And even if they did, you could either pay for more substance, and probably Malta doesn't really care that much to begin with.

 

[hasby2023]

Isn't AdSense revenue classified as royalties? Then a US LLC you don't pay tax on in Malta could be an issue.



Yes, you can register a foreign entity for VAT - in fact, you have to. How else would you pay the VAT? You could probably even get an Italian VAT ID.
But it's really not clear if you can do this legally without paying tax for the US LLC in Malta.

Yes technically i think passive royalties from Adsense, KDP or ACX would not be an issue even if received as a private individual in Malta (not through a LLC), if not remitted on the island. Otherwise the self-sufficent regime would not have sense to exist.

 

[Marzio]

Yes technically i think passive royalties from Adsense, KDP or ACX would not be an issue even if received as a private individual in Malta (not through a LLC), if not remitted on the island. Otherwise the self-sufficent regime would not have sense to exist.

You are overlooking the fact that AdSense to pay out royalties needs an IBAN in the same country where your account is registered. If you register an account in MT as private individual guess which IBAN you will need to provide?

You can forget about having funds not remitted in Malta.

 

[hasby2023]

You are overlooking the fact that AdSense to pay out royalties needs an IBAN in the same country where your account is registered. If you register an account in MT as private individual guess which IBAN you will need to provide?

You can forget about having funds not remitted in Malta.

Nono any bank account in the EU will work. I know it for sure.

 

[ilke]

You are overlooking the fact that AdSense to pay out royalties needs an IBAN in the same country where your account is registered. If you register an account in MT as private individual guess which IBAN you will need to provide?

No. IBAN discrimination is illegal in the Eurozone. You can get AdSense payments to any Eurozone country, e.g. Maltese account to Lithuanian IBAN.

Isn't AdSense revenue classified as royalties? Then a US LLC you don't pay tax on in Malta could be an issue.

Only royalties from YouTube. Service income from AdSense for Web/Admob for Apps.

 

[Don]

You are overlooking the fact that AdSense to pay out royalties needs an IBAN in the same country where your account is registered. If you register an account in MT as private individual guess which IBAN you will need to provide?

You can forget about having funds not remitted in Malta.

I can confirm its not the case. Perhaps it used to be.