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UK Malta VAT Structure help

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Sep 25, 2022
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#1
I am a UK citizen with a UK LTD which I trade from.

I provide services on a B2B basis to non-UK companies therefore, the work I do, is “out of scope” for the purposes of VAT in the UK. That is not controversial or a grey area, it is just a fact.

I would like to move to Malta for personal reasons (sunshine mainly) and to achieve 5% effective rate corporate tax versus the UK 25%.

This will presumably involve having a Malta Ltd (or two)

I have had a look at the Maltese VAT rules and it seems as though exports are VAT exempt much like the UK, however, a slight quirk in the situation is that one of my main customers trades through a Maltese company and as far as I can see this will mean that I have to charge VAT, either making me 18% more expensive or causing me to take an 18% hit on my margin - neither are desirable.

Is there a way I can continue to trade through a UK LTD in Malta to take advantage of the VAT export situation perhaps by having a two UK LTD’s “sandwiching” the Maltese setup?

i.e. a UK LTD holding company > Malta company setup > UK LTD trading company

Perhaps I am over complicating matters, and I definitely will take professional advice, but it would be nice to try and get a handle on possible solutions before approaching accountants/lawyers about this
 
#2
VAT rules are similar across EU. I am not sure how much the have changed in UK after brexit.
Exports are VAT exempt (actually 0% VAT) ONLY if the buyer is also VAT registered. Otherwise local rate applies. In case of physical goods it is pretty straightforward. In case of services things are a bit more complicated but the principle is the same.
If inside country (Malta) both parties are VAT registered, then VAT is neutral.
If you customer is not, then your input would be more expensive to him but there is no difference in case he buys from a UK entity.
 
#4
I think for a useful analysis:
  • Are all your EU clients VAT registered? They are if their turnover is above 100k EUR. Check their website, most list the VAT number somewhere.
  • What is being traded? Physical goods, digital goods or at you providing personalised consulting etc.?
Beware of UK exit taxes on the company level.
 
Last edited:
#6
daniels27 said:
I think for a useful analysis:
  • Are all your EU clients VAT registered? They are if their turnover is above 100k EUR. Check their website, most list the VAT number somewhere.
  • What is being traded? Physical goods, digital goods or at you providing personalised consulting etc.?
Beware of UK exit taxes on the company level.
Click to expand...

The services are technically “digital goods” but they are treated as services for the purposes of VAT as per the UK rules. I’m guessing/hoping (but will find out) if it’s the same in Malta.

Most of my clients are VAT registered, not all, but 17/20 and the 2 or 3 that aren’t only purchase a very small and irregular amount of services from me: a few thousand pounds per year at most.

Looking into exit taxes for the UK company, this particular company hasn’t really traded, it was always intended to be the holding company and will stay live after I move.

I was providing these services as a sole trader and then it got to a level where it was no longer tax efficient, plus had crossed the VAT threshold, and then I started considering not only using a limited company, but moving abroad also
 
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