Questions about Property Taxes and Restrictions in Malta Often Have Simple, Positive Answers
Posted: 23/06/2011 Filed under: Living in Malta Leave a comment »
Purchasing real estate in Malta can be a promising proposition. There are many apparent benefits to seeking out property in the island nation, and those who find a good deal can walk away with enormous gains from their property investments. But most people have some pretty big questions they need answered before making a move on property in Malta. After all, considering the regulations about purchasing and reselling property can make the difference between a sound investment and a burden. Most importantly, understanding what sorts of property taxes may be involved with such an investment is crucial in making such a decision.
First and foremost, the Maltese government does not impose and property taxes, settling one of the most important questions of all right away. This means that, with a few exceptions, the property you own is yours, and you do not have to make payments to the state simply for holding property year after year. However, if a piece of real estate is rented out, this constitutes business activity, and a 15% tax may be leveled against any income from such an endeavour. If you eventually choose to sell the property, taxes may be charged on the eventual sale as well.
There are other important facets about property ownership in Malta that those interested in real estate should also consider. Mortgages are available for non-residents on property purchased in Malta through local banks if given permission from the Central Bank of Malta, which is typically not difficult to obtain. The resale of any property purchased is fully legal, and sales can be made for profit, although, as mentioned above, taxes will the taken from the income of such a sale. Finally, the renting out of owned or mortgaged property is allowed with few restrictions.
Buying property in Malta can be a great idea for some individuals. Such purchases may provide a place for expatriates to retreat to overseas or may provide an outlet through which profit may be obtained. And, of course, Malta does not charge property taxes on real estate. These things make property in Malta an appealing option for many individuals and can result in big gains – following careful decisions.
Filing Taxes in Malta May Be Best Left to an Accountant
Posted: 22/06/2011 Filed under: Business Setup In Malta, Investment, Malta Taxation Leave a comment »
When considering whether or not to open a financial account in Malta there are several important decisions that must be made. The act itself is perhaps the most difficult, and going through with such a plan requires careful consideration on its own. Of course, other details are important as well. Individuals must decide which accounts they want to transfer, whether they want to close out old accounts once transferred or keep them open, and even which establishments to move their money to. Of all these decisions, however, perhaps the most important is deciding whether or not someone should hire an accountant to handle their accounts and the specific details about them, especially with matters surrounding the filing of taxes.
Accountants can go a long way in simplifying the process of managing money overseas. After all, with money so far away, keeping track of it can be a significant hassle. Most of these can be handled by the average investor, so long as they are thorough in their research, but some matters are simply best left to professional accountants. Taxes are perhaps the most important aspect of holding money in Maltese accounts, as improper filings can cause individuals a great deal of money. Paperwork typically has to be filed with officials of both countries, and identifying which paperwork should be sent and how it should be filled out can be difficult for the average investor to keep track of. Hiring an accountant to file taxes in Malta and to carry out other duties gives individuals the peace of mind that comes with knowing matters have been reviewed by professional eyes and passed forward by professional hands.
The answers to questions surrounding Maltese financial accounts will be answered differently by each person who is looking to move their money to the island nation. Some are completely capable of handling all the details themselves. Many, however, need a professional accountant to file taxes in Malta, taking the difficult aspects of holding money overseas and making them disappear. When the stakes are high and governments are watching, making sure that whatever funds you have locked away are handled discreetly and without incident can be important.
No One Size Document for Filing Employer’s Taxes in Malta
Posted: 21/06/2011 Filed under: Uncategorized Leave a comment »
As an employer in Malta, understanding the tax process required of such companies can be a difficult and confusing ordeal. Different resources include different information, and finding sources with the same facts can be as difficult as starting a business in the first place. When trying to find the answers for your specific company, locating valid, meaningful data is necessary to ensure you follow out the right steps to see taxes completed successfully. There are several ways to find this information, and all of them require a bit of work on the part of the employer.
First, companies need to decide whether they want to tackle the tax process on alone or with the help of qualified professionals. This is not a simple task, and there are many things to consider in even this step of filing tax forms. Organizations that are flush with money are likely better off passing such duties on, while smaller companies with fewer resources may be off handling the challenge themselves.
Those who want to leave such difficulties to the professionals who understand how best to handle them need only hire a qualified accountant to handle the work for them. Most such organizations already have accountants handling certain aspects of their business, so adding the additional duties required in filing taxes should not be a horrible undertaking. Professional accountants have knowledge of forms and regulations that lead to successful tax procedures, keeping your organization in the clear and minimizing risk.
Those taking on the challenge of filing taxes alone should speak directly with government offices for advice on which documents suit their needs best. There is not a universal system to which all companies are expected to comply, but instead are specific requirements asked of specific companies. Finding the required information will take time and resources, but it can be done and is certainly less expensive than passing onto an accountant.
Employers struggling to understand which tax documents they need to submit are many in Malta. Yet by utilizing various resources, including government offices and professional accountants, any organization can stay safe and accurately submit the documents needed for tax purposes.
Promise of Sale Agreements in Malta Are Not as Complicated as They Seem
Posted: 20/06/2011 Filed under: Business Setup In Malta, Living in Malta | Tags: Home, Matla, Purchasing Property. Leave a comment »
Buying property in Malta is no small event. Finding suitable real estate, communicating and negotiating with a seller, and finally settling on a deal that both parties find acceptable can take a great deal of time and requires patience and perseverance on the part of the buyer. Unfortunately, many aspects of buying Maltese property can be confusing, and the terms used in such sales are often unfamiliar. Such may be the case with the Promise of Sale agreement used in property sales in Malta. Thankfully, fully understanding this aspect of a purchase takes only a few minutes reading to grasp.
What the Maltese refer to as a Promise of Sale agreement is often simply called a sales agreement in other countries. Rather than being some confusing document that requires buyers to sign away their lives, Promise of Sale agreements simply set the terms of a property transaction. They should include all important deals related to the transaction – who is buying what from whom, when, and at what price.
That being said, there are a few specifics that buyers and sellers should both be aware of before entering into a contract and crafting a Promise of Sale agreement. Buyers must pay provisional duties on the sale price of the property as the process enters the final steps towards sale. This begins with the presentation of the agreement to the Capital Transfer Duty Department of Malta within 21 days of the signing of the agreement, at which time the buyer must pay a duty of 1% of the market price . Once the contract has actually been signed by all involved parties, the agreement is reviewed to establish the market value of the property. Following the assessment, the buyer may have to pay further duties on the property, typically up to 5% of the market value of the real estate.
Promise of Sale agreements are not complicated contracts, but rather simple documents outlining the basics of the sale of any piece of real estate in Malta. By understanding the basics of such a contract, a buyer arms him or herself with the information necessary to make a wise purchase.
Filing Taxes in Malta and the U.K. is Tricky Business
Posted: 19/06/2011 Filed under: Malta Taxation, UK Taxation Leave a comment »
U.K. residents may gain from arranging some financial accounts to be managed in Malta. Unfortunately, doing so can raise some confusing questions about taxes. Taxes in multiple countries are typically fairly simple, but details are complicated in this case by the fact that individuals and businesses are subject to different regulations regarding Maltese and U.K. taxation.
Taxes for individuals are rather straight forward. One must first identify whether or not a person is either a resident of Malta, are domiciled in Malta, or both. A resident of Malta is described as any individual who is present in the country for at least six months out of a year. One who is domiciled in Malta, however, must actually release domiciliation in all other countries, meaning their primary residency for the yearlong period is in Malta. Those who fall under both categories are liable to be taxed for all income worldwide by the Maltese government. Those who are simply residents, however, pay a low variable tax only on income generated in Malta.
Generally speaking, individuals who are not residents or domiciled in Malta must pay some amount of taxes to each country. Typically, this will mean paying worldwide earning taxes in the U.K. while paying taxes only on Maltese earnings in Malta. Taxes may be filed directly through government offices or though an accounting firm.
Companies are a far different story. While things may have been different in the past, today a company that is registered in Malta or a foreign company that is fiscally managed from Malta is, in the eyes of the EU and the government, a resident of the country and must pay tax on any and all worldwide income, including capital gains. Taxes for such organization are steep. The standard income tax rate has been set at 35%, although some businesses may wrangle slightly lower rates.
Those who choose to manage financial accounts typically have accounting firms at their disposal. When it comes to handling tax time, working through these firms is probably a good idea. Those without such resources, however, need simply to contact representatives from the respective governments’ tax agency es to acquire the necessary paperwork.
Tips to Help Find Reliable Accountants in Malta
Posted: 18/06/2011 Filed under: Malta Taxation Leave a comment »
Certain organisations or individuals may feel drawn to offshore banking options in countries like Malta. This may be for various reasons, but in nearly every instance privacy and security are a top priority of those seeking such services. Unfortunately, identifying reliable accountants in Malta that can provide such services can be an extremely difficult task. At the distance most people are from the island nation, visiting the country directly is often not an option, and securing services quickly and quietly can be important in some cases as well.
When looking for reliable accountants in Malta, begin by looking for the same basic things you would seek out in an ordinary, domestic accountant. Begin by opening your ears and listening to what other people have to say about certain firms. You are most certainly not the only one interested in banking in Malta, so see what other people have to say. Get online and do some quick searching, keeping your eyes focused on matching any names you might have heard. Make a short list of candidates based on this research, and then pick up the phone and start dialling.
Contact each potential firm to ask specifics about what they can offer you. Different organisations may be able to offer different protections – look into this. Most importantly, get them to provide some sort of information that validates what they are saying. While they will be unable to refer you to past customers, they may be able to offer numbers or provide blind case studies about past business deals. After you have hung up, get back online and see if you can find proof for the things that they said. If they offer a specific service, see if you can find supporting evidence from another source. Make sure that others have not posted negative experiences with the accounting firm as well.
Finding reliable accountants in Malta is a difficult task. No one wants to be too direct or expose too much. Large, and sometimes private sums of money are floating around in such discussions just out of view, so step lightly. In the end, remember that a decision as important as this requires balanced, thoughtful decision making, so don’t rush into a situation you cannot back out of.
Bringing Your Family Pet To Malta
Posted: 17/06/2011 Filed under: Living in Malta Leave a comment »
While the majority of this blog is about Malta and the tax benefits, tax laws, and other monetary concerns, periodically I like to throw in some practical advice for those that are moving to Malta. In this instance we are going to be speaking about bringing your family pet to Malta.
You have decided to bring your family and your business to Malta, partially for the tax benefits for your business, and partially for the weather, but more than likely because Malta offers a lot of benefits for both your family and your business.
But packing up and moving to another country can take its toll, and there is a lot to do before you reach that point. Not only is there the house to pack up, permits to arrange, movers to book and a new home to find, but you will also need to make arrangements to bring your family pet as well, if you have one. And bringing a pet into a new country is not the same as bringing him or her down the road.
Believe it or not, bringing your pet to Malta is quite a bit more difficult than bringing yourself. There are several items that you will need to procure, mainly from your veterinarian.
- The Veterinary Certificate for Domestic Dogs, Cats and Ferrets Entering the European Community (Form No. 998/2003 This certificate is written in several different languages. The Maltese are very particular about how these forms are filled out, so be sure that your veterinarian signs the form in BLUE ink. In fact, you should probably request that he or she complete the entire form in blue ink.
- Certification of Treatment against Ticks and Tapeworms for Dogs, Cats and Ferrets
- Veterinary Certificate for Domestic and International Airline Travel
- Pet Permit from the Department of Agriculture in Malta
Luckily, when you come from the United Kingdom, you typical pet (dogs, cats and ferrets) will not need to be placed in quarantine. Animals coming from some countries are subjected to a quarantine of up to 6 months.
If your pet is not already micro-chipped with a EU standard micro-chip, you will want to make sure that he or she has one. In addition to that you will want to make sure that the vaccinations for your pet are all up to date, including any boosters that may be needed. Of course, all of this should be done several months in advance.
Finally, 6-8 weeks before you leave for Malta, you will want to apply for a Maltese pet license, using all of the above documentation. Believe it or not, you will need to deal with one person, Lucienne Cassar, who will meet you and your pet at the airport. Yes, you will be personally met at the airport, once you have contacted the appropriate officials and outlined all of the steps that you have taken to prepare your pet for entry into Malta. Once you are met at the airport, this official will let you know whether or not your pet is accepted immediately into Malta or if your pet needs to be put into quarantine.
Of course, as mentioned above, it is likely that if you are from an EU member country, your pet will more than likely be admitted into Malta immediately. However, this will only be the case if you have met all of the stringent entry requirements.
Capital Gains Taxes in Malta
Posted: 16/06/2011 Filed under: Malta Taxation Leave a comment »
Buying property in Malta is a long standing tradition. Locals do it, expats do it. It is just the thing to do. In that regard, locals and expats alike understand that when you rent, you are essentially giving money away. And much like purchasing property anywhere else in the world, purchasing property in Malta does come with certain benefits, above and beyond knowing that you have a roof over your head, and as long as you pay for it properly, meaning you pay your mortgage, you will not be asked to leave, whereas with renting you can always be asked to leave at the end of your rental period.
There are many benefits of purchasing a property, and even as an expat, you will be able to qualify for a mortgage. If you purchase a property, and wish to rent it out to those that are in the market for a rental, you can certainly do so. Despite the pull to purchase in Malta, there is still a thriving rental market, and a great deal of those that are renting will be expats just like yourself. However, if you do rent out your property and income is generated from that, you will still be responsible for a tax on that income of 15%. That is still a very attractive rate, so this is what many expats do if they own a home on Malta, but do not live there permanently.
However, purchasing a property in Malta is not as straightforward as it may seem at first glance. There are many steps to be taken, and quite a few obligations that must be met. Many of those obligations can be found in this document.
That being said, there subject of this article is what the capital gains taxes are for persons that are owners of a property in Malta. There is a tax that is payable when selling a property. It is approximately 12% on the transfer price. This applies to both private property and company property, ie a home vs a business location. This tax is brought to bear on property that has been owned by the individual or corporation for more than 7 years. For those that have owned property in Malta for less than seven years, the seller may choose to pay 12% tax on the transfer price, or 35% on the profit of the house. Of course, there are exceptions to every rule, and it is always best to speak with legal and realtor representation to make sure that you are taking advantage of any tax discount that might be available to you. However, no capital gains taxes are due if the premises that is being sold has been the primary residence of the seller for the three years prior to the sale of the house.
This is in line with the rest of the EU, though there are some quirks that are unique to Malta. If you are planning on purchasing a property in Malta, it will do you well to invest in the services of a qualified property agent as well as the services of an accountant or property attorney.
This is just a basic overview of the property tax in Malta when it comes to purchasing and selling. We will go into further detail on this in future blogs, as well as covering Inheritance tax, and other taxes that are relevant to property.
Corporate Tax Filing In Malta Can Be Complicated
Posted: 15/06/2011 Filed under: Malta Taxation Leave a comment »
Corporate tax filing in Malta requires solid accounting that is up to International Financial Reporting Standards (IFRS). IFRS is the basic standard to which all companies must adhere when keeping their accounts. There are two tax standards for companies in Malta, large and small business. A large company is required to submit more documentation when filing. Large companies must include a director’s report, with a balance sheet, that has been reviewed by the company shareholders. They must also include an auditor’s report that meets statutory guideline and an accurate book of accounts. Accurate accounting documentation should show all:
- Income and expenses, along with documentation of each transaction
- Company stock purchases and sales
- Assets and Liabilities
A small business is allowed to provide abridged account books. There are three criteria for determining if your business is considered small or large: 50 or fewer employees, net worth of less than €2,563,000, and turnover of less than €5,125,000. If your company falls underneath two of the three criteria then it is considered a small business. While small businesses are exempt from some of the more stringent filing requirements they do still have to provide their accountant with all the same information that would be presented to an auditor. The accountant is responsible for ensuring that the information provided on the tax return matches the financial documents of the company. In this way, no company is exempt from internal auditing. These requirements are even extended to companies that have no taxable income or companies that are dormant.
When your accountant begins to create your tax return one of the first things they must do is put together a Tax Index of Financial Data (TIFD). The only companies that do not use the TIFD when filing are Insurance Companies and Trusts. These types of companies have different reporting requirements that preclude the use of the TIFD. The TIFD is a standardized method of presenting information often found on financial statements. This standardization helps to simplify e-filing and speed up processing. By creating a highly organized format that all companies use to file taxes it becomes much easier to compare apples-to-apples.
Corporate tax filings in Malta are stringently controlled, so it is wise to hire outside counsel to ensure that you are meeting all of the requirements. Not meeting all of the requirements can result in steep penalties if you are not careful.
Offshore Banking In Malta
Posted: 14/06/2011 Filed under: Offshore Solutions Leave a comment »
Up until 1994 offshore banking was common in Malta. Since the creation of the European Union, Malta has made many significant changes in its banking industry. In 1994 Malta began the long process of abolishing offshore banking and only offered two options that included offshore, International Trading Companies and International Holding Companies. In 2002 Malta amended the 1994 Banking Act to start removing prejudicial tax regulations.
As part of Malta’s admission into the EU, they were required to amend their financial policies to treat local businesses the same as international companies, removing the unfair tax burden on local companies. As part of their financial reform Malta removed the offshore banking option and is no longer a tax haven in any sense. The Banking Act uses the EU as its main inspiration for the regulations and supervisory oversight it has enacted.
Since beginning financial reform in 1994 Malta has completed a reform program in all finance sectors. Malta was one of the first six countries world-wide to reach an accord with the Organization for Economic Co-Operation and Development and now uses international best practice, including the creation of a centralised regulatory agency.
The Malta Financial Services Authority (MFSA) was created to be the authority in charge of enforcement of the regulations and to act in a supervisory capacity to all financial institutions, including banks. It is a public institution that has full autonomy and reports directly to Parliament annually. The MFSA is the new single regulator for finance industry demoting the Central Bank of Malta, the Malta Financial Services Center, and the Malta Stock Exchange. The financial sector includes three basic industries; banking, investing and insurance. The MFSA is also the managing authority for the Registry of Companies and is responsible for the Listing Authority. The MFSA must function within strict legal limitations. The structure and organization of the Authority helps to make sure that the operational functions are within those limits. The Malta Financial Services Authority is empowered to:
- Establish regulatory requirements
- Monitor Risk
- Issue directives to Banks and other credit institutions
The creation of this regulator agency was a necessary building block toward creating a modern banking structure. This more flexible organization can handle the speedy changes needed in today’s business environment.
