Malta: The tax efficient EU intellectual property location

In the modern world, intellectual property (IP) can be one of the most valuable assets of any organisation. Choosing the right location to hold and develop your IP is, therefore, a key-strategic decision for any company to make.

Why are more and more companies considering Malta for tax planning purposes? Probably because Malta is the perfect European jurisdiction to manage intellectual property (IP). On one hand, companies potentially don’t have to pay taxes on income from royalties and on the other, Malta can provide IP protection and safeguard, helping optimise IP management in a tax efficient manner.

Malta is a jurisdiction which satisfies all of this key criteria.

 

Key benefits of a Malta IP holding company

  • Potential tax exemption for certain royalties derived from qualifying patents, copyrights and trademarks.
  • Very low effective tax rate where the exemption does not apply (potentially as low as a 5% effective tax rate).
  • No withholding tax on dividends paid by the Malta IP holding company.
  • Access to an extensive double tax treaty network which is essential for tax efficient IP management
  • Access to the EU interest and royalties directive.

 

Typical Malta IP holding structures

Below is a typical structure for IP holding companies in Malta.

Under the Malta imputation system, the Malta IP Holding Company is taxed on its royalty income at a rate of 35%. However, the Malta Holding Company can claim a 6/7th refund from the Malta Inland Revenue. The net result would be an overall effective tax rate in Malta of only 5%.

Furthermore, certain royalties from qualifying patents, copyrights and trademarks would be exempt from tax in Malta, meaning an effective tax rate in Malta of 0%.

 

How Abacus can help?

At Abacus, we understand the importance of intellectual property rights and their increasing significance to business. We are geared to meet the demands of our clients by offering focused and strategic expertise in a professional and proper manner. We have a diverse international client base and specialise in setting up tax efficient structures to maximise our client’s future earnings.

For further information, please email Kevin Loundes at kevin.loundes@abacusiom.com.

To discuss over the phone, please call Kevin on +44 1624 689608.