Malta corporate tax: 35% headline, ~5% effective.

Malta’s full-imputation system refunds up to 6/7ths of corporate tax to qualifying shareholders - one of the lowest effective rates on trading profits in the EU, under general law rather than a special regime. Here is how it actually works, and how to hold it together compliantly.

A Maltese trading company pays 35% on profits. When it distributes dividends, the registered shareholder - typically a holding vehicle - claims a refund of up to 6/7ths of the tax paid. The arithmetic lands at roughly 5% effective. Different refund fractions apply to passive income and treaty-relieved profits, which is why the structure has to be designed, not copied.

Shareholder tax refunds. The company pays 35%; on distribution, qualifying shareholders claim back up to 6/7ths - bringing the effective rate on trading profits to around 5%.

Participation exemption. Dividends and capital gains from qualifying holdings can be fully exempt - the backbone of Maltese holding-company structures.

Fiscal unity. Group consolidation can deliver the ~5% outcome at source, without waiting for the refund cycle - where the structure qualifies.

FAQ

Is Malta the lowest corporate tax in Europe?

On nominal rates, Hungary (9%) and Bulgaria (10%) are lower. But Malta’s ~5% effective rate on trading profits after refunds is among the lowest real outcomes in the EU - under a general-law system with full treaty and directive access, not a capped special regime.

How long does the tax refund take?

Refunds are claimed after the dividend and tax filings are in order; timing varies with the Revenue’s processing. A fiscal-unity structure can remove the wait entirely where it qualifies - we model both routes.

Does this survive EU anti-avoidance rules?

The imputation system itself is long-established EU-compatible law. What gets structures into trouble is missing substance and governance. ATAD, CFC and management-and-control tests are addressed in the design, not after a letter arrives.

I live in Portugal - does the 5% still work?

It can, but Portuguese CFC and residence rules must be engineered around honestly: real Maltese substance, defensible governance and correct personal positioning. We put the analysis in writing before you spend anything.