Tax Bite: Consider Malta

Some businesses which are currently carried out in the UK could take place elsewhere and there is therefore an incentive to carry them out in lower tax jurisdictions such as Guernsey or the Isle of Man.

There is anti-avoidance legislation that stops this being viable because its effect is to tax offshore profits of low tax jurisdiction companies in the hands of an individual shareholder.

The anti-avoidance legislation has recently come under attack from EU law and it has been revised. In broad terms this means that genuine commercial activities can be carried out in EU jurisdictions without threat from the legislation.

Malta is particularly attractive because it is in the EU and as long as things are structured correctly it usually has an effective tax rate of no more than 5%. Maltese companies are also allowed to lend to shareholders without an equivalent to the loans to participators charge which is levied on UK companies.

This opportunity may be relevant for:

1. Internet based companies.
2. International logistics.
3. International holding companies.
4. Treasury companies.

In fact this could be relevant for any profit making activity which does not need to be based in the UK and is not a UK trade.

 

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