Malta Tax Rebate 6/7

[Jay Hastings]

Hello again,
I contacted an accountant regarding malta company formation and 6/7 refundand they informed me of a NEW Substance Rule at the OECD level, I quote:

"It is important that you create value for your Malta company by ensuring that you have some form of substance here in Malta. Due to changes in tax law at a European level (OECD), having a Malta company without substance could be considered to be a “sham” company whereby you simply have a Malta company with an address in Malta though everything else is being handled outside of Malta and this could be considered to be tax avoidance by the foreign tax authorities although that is not your intention. When we talk about substance, we are looking at 3 aspects which you must keep in mind;

• Assets – any assets of the company must be owned by the Malta company and held in Malta – domain name, servers or a real time replica of the server, office ect
• Risks – all legal risks must be borne by the Malta company and this is done through a legal contract/agreement
• Functions – 50%+ of the board of directors must be individuals resident in Malta, to ensure that the management and control and decision making is being done from Malta. A minimum of 1 employee in Malta would be recommended also.

Therefore, although from a legal perspective it is fine to have a Malta company without substance, from a tax perspective this would not be possible and could result in future tax challenges by foreign tax authorities."

Anyone know if this is a real thing? They can appoint me a local director for a very expensive fee of 8,000 euros, plus all the other fees involving my company.

 

[speedster]

Which country are you from? Read up on your local CFC rules to see if this applies (it most likely does).

 

[BlueMist]

@Jay Hastings your accountant is correct on this. Also frankly speaking this is the only way these days that some banks in Malta will even consider your application, unless you don't need a bank account in Malta. And we are not talking here about top banks, as those say "straight no" to the newly incorporated companies.

 

[Martin Everson]

Therefore, although from a legal perspective it is fine to have a Malta company without substance, from a tax perspective this would not be possible and could result in future tax challenges by foreign tax authorities."

Thank you. This is common sense and I have said this from day one if anyone follows my posts . I do not even need to check if it is factual as this is how it works in general like in Netherlands, Ireland, UK etc etc...lol