A Malta Company Does Not Fix a German Tax Problem

The 6/7ths refund is real. It is also the least important part of a German founder’s decision, because German CFC and exit-tax rules do not switch off when a Maltese company is registered.

Summary Malta charges 35% on company profits, with a 6/7ths refund on trading profits that brings the effective rate to roughly 5% . That number is real, and it is the least important part of the decision. Germany applies controlled foreign company rules to low taxed passive income of foreign entities, and exit taxation on substantial shareholdings when a shareholder leaves. Registering in Valletta does not switch either off. What Malta genuinely offers a German founder is an EU operating base with real substance, treaty access and predictable compliance not a way to keep living in Munich while paying Maltese rates. The version that gets sold The pitch is always the same shape: 5% effective, EU member state, English speaking, done in three weeks. Every clause is true. The problem is what the pitch leaves out, which is that Malta's tax treatment applies to a Maltese company and whether your company is Maltese for tax purposes is decided by where it is actually managed, not by where the certificate was issued. What Germany still sees Two mechanisms matter, and neither is exotic. Controlled foreign company rules. Where a German controlled foreign entity earns passive income taxed below a defined threshold, that income can be attributed back to the German shareholder and taxed there. Passive income is the target. A genuine operating business with substance is a different case from a holding vehicle with a mailbox. Exit taxation. Where a shareholder with a substantial holding moves out of Germany, unrealised gains on those shares can be brought into charge on departure. This surprises founders who assumed relocation was the easy part. Alongside them sit EU level rules that apply everywhere: ATAD , transfer pricing, and economic substance expectations that banks apply before any tax authority gets involved. The specifics of German law change and depend on your facts. Confirm them with German counsel what follows is the Maltese side of the…