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Are you an expat wanting to live in Malta?

If so, you may be interested to know that the country has a double tax treaty with the UK which can help you manage your taxation rates more effectively. The agreement between Malta and the UK allows expats to benefit from reduced taxation, making it easier to manage their finances.

This article will explain the details of the double tax treaty and how it can benefit those living in Malta.

How the treaty affects individuals moving from the UK to Malta

Moving from the UK to Malta as an individual can have various implications when it comes to taxation. However, thanks to the double tax treaty, individuals can benefit from reduced taxation rates and better financial management.

Under the treaty, individuals moving from the UK to Malta are generally not subject to double taxation on their income. This means that if you are a UK resident and earn income in Malta, you will only be taxed in one country. This can greatly simplify your tax obligations and help you avoid the hassle of dealing with dual taxation systems.

Additionally, the treaty provides specific guidelines on the taxation of certain types of income. For example, income from employment is generally taxed in the country where the individual is employed. So if you move from the UK to work in Malta, you will only be subject to taxation in Malta.

Furthermore, the treaty also addresses issues related to pension income, dividends, and capital gains. These provisions help ensure that individuals moving from the UK to Malta are not unfairly taxed on these types of income.


What income is subject to taxation in each country

When it comes to taxation, it’s important to understand which types of income are subject to tax in each country. Under the double tax treaty between Malta and the UK, there are specific guidelines on how income is taxed.

In Malta, residents are subject to taxation on their worldwide income; meaning that any income earned within or outside of Malta is subject to taxation. Keep in mind that the personal tax rate in Malta is 35%. On the other hand, in the UK, residents are subject to taxation on their worldwide income as well. This includes income earned from employment, self-employment, rental income, and investment income. The corporate tax rate in the UK is currently set at 19% for most businesses.

Under the double tax treaty, individuals and businesses can avoid double taxation by claiming relief or exemptions. This ensures that income is not taxed in both countries. It’s important to note that the specific provisions of the treaty may vary; depending on individual circumstances.


Tax relief and exemptions available under the treaty

Under the Malta and UK double tax treaty, there are various tax relief and exemptions available to individuals and businesses. These provisions help ensure that taxpayers are not unfairly burdened by double taxation.

For individuals, one of the key benefits is the ability to claim relief for taxes paid in one country against taxes owed in the other. This means that if you are a UK resident and have already paid taxes on your income in Malta, you can reduce your UK tax liability by the amount already paid in Malta. This helps prevent individuals from being taxed twice on the same income. Additionally, certain types of income may be exempt from taxation in one country if it has already been taxed in the other country. For example, under the treaty, capital gains on the sale of immovable property are generally only taxable in the country where the property is located. This provides relief for individuals who may be subject to capital gains tax in both Malta and the UK.

For businesses, the treaty also allows for companies to pay only 5% corporate tax rates! Our team are on hand to explain how you can make use of this setup; to take advantage of your profits instead of losing out to high tax bills.


Benefits for businesses operating in both countries

For businesses operating in both Malta and the UK, the double tax treaty offers several significant benefits. Firstly, it helps to prevent double taxation on income, ensuring that businesses are not burdened with excessive tax liabilities in both countries. This allows businesses to allocate their resources more efficiently and maximise their profits.

The treaty also provides relief from double taxation on dividends and royalties. This means that businesses can distribute profits to their shareholders without being subject to additional tax in the other country. Additionally, the treaty allows for the allocation of profits between related entities in a way that avoids duplication of tax. This is particularly beneficial for multinational companies.

How RHJ Accountants can help

Numerous people from the UK become curious about Malta’s low tax regime, and we’re happy to help businesses structure their setup to benefit from a 5% tax rate! As long as you create substance in Malta, it will prove to the UK Government that your setup is legitimate – we would never provide a service which would affect our business and yours. Begin setting up in Malta, by scheduling an initial consultation with our team so we can help.

When you liaise with our team, they’ll take time to explain the tax structure in Malta to ensure that you will benefit from the overall outcome. Our international tax expertise between the UK and Malta enable us to consistently provide comprehensive guidance to all!

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💬 PSA: between April & June our Portuguese team have limited meeting availability due to the Tax Return Submission Period 🇵🇹