Tax Assurance


 

Who we are

CCPS Malta is a boutique assurance and accounting firm offering high-end professional services including audit, tax, advisory, corporate and back-office services to companies and individuals, both local and foreign. CCPS Malta comprises an energetic and dynamic team, currently led by two partners.

We strive to team up with our clients and become their  primary business advisor. In return our clients benefit from a high level of partner involvement and accessibility, our expertise, a personalised approach aimed at creating value, timeliness, sound investment advise and innovative solutions.

Excellence is our pledge and our commitment to our clients, to our community, to our employees and to ourselves. We strive to provide the highest quality of service to our clientele, providing support consistent with their goals. We believe in the value of relationships, as we consider our relationships with our clients to be partnerships. Our success is a reflection o the success of our clients. Years of advanced training, technical experience and financial acumen allows us to make a commitment to provide personal attention to our clients’ needs. Our continuous investment of time and resources in the continuation of professional education and the expansion of business relationships demonstrates our pledge to providing our clients with excellence.

Why we are different

At CCPS Malta, we are aware of the impact that our support could have on our clients’ activities. We believe that good business has a direct impact on the client’s portfolio and is therefore not realised solely on a strong reputation. This is why our mission is to partner our clients, understand their needs and provide them the highest level of support they deserve.

Our key strengths remain our personalised approach and our limitless time and energy we invest to deliver high-quality service, namely service which will add value to clients’ businesses and thus promote their success. We pride ourselves in having set up an organisation which is able to assist clients in all areas of corporate law, taxation and accounting requirements. We offer an array of multiple services which allow our clients to experience unparalleled service. We believe that we can best meet your needs in the following ways:

• Active partner involvement: the audit partner will participate in the entire process and in the continuing communication and assistance throughout the year.

• Expertise: we will assist you in accounting matters and the preparation of financial statements in the light of new accounting and reporting requirements and standards.

• Commitment to meet your deadlines: we will work together to ensure that our work is performed smoothly and within agreed-upon timeframes.

The Partners

Clive Caruana

Clive Caruana is founder and managing partner at CCPS Malta, where he manages a wide portfolio of international corporate and private clients. His main areas of expertise are local and international taxation, VAT, accounting and corporate services. He also assists foreign individuals and companies to set up business in Malta and provides tax advice to clients engaging in cross border commerce. Clive is a registered mandatory under the Malta Retirement Programme and Malta High Net Worth Scheme. In his career, Clive held various accounting positions with several medium-sized local companies. In 2006, he joined a worldwide audit firm, eventually also heading its corporate and fiduciary team while working closely with the tax partner and director. In 2012, Clive moved to a reputable local law firm as manager of the tax compliance and accounts department and held such position for almost a year before setting up CCPS Malta. Clive is a fellow of the Chartered Association of Certified Accountants, a fellow of the Malta Institute of Accountants, and member of the Institute of Financial Services Practitioners. He also holds a practising certificate in auditing, a diploma in banking from the Chartered Institute of Bankers and a diploma in taxation from the Malta Institute of Taxation.

David Sammut

David Sammut joined CCPS Malta as audit partner in 2015. With over seven years experience in audit and accountancy, David is responsible for the planning, execution and supervision of statutory audits under IFRS and GAPSE for a variety of local and international clients. His work also includes the preparation of financial statements in accordance with IFRS, GAPSE and the Companies Act (Cap 386) and management letters to clients, highlighting weaknesses in or failures of internal controls and making recommendations. After successfully completing his studies at the University of Malta in 2009, David joined a secondtier international audit firm where he held the position of an audit and assurance manager, acquiring considerable knowledge and experience on a wide range of audits in both the public and private sectors. Occasionally he also travelled abroad to service foreign audit clients and on business advisory assignments. David holds a Bachelor of Commerce, Bachelor of Accountancy (Honours), and also has a Masters’ degree in Financial Services from the University of Malta. He is also member of the Malta Institute of Accountants, a Certified Public Accountant, and holds a practising certificate in auditing.

Our experience

CCPS Malta currently services a number of local and international clients including those which operate in the following industries:

• Aviation

• Shipping and yachting

• Import and retail

• Manufacturing

• Micro-financing

• Investments and SICAV’s

• Hotels and restaurants

• Property and construction

• Corporate services and management

• Gaming

What we do

CCPS Malta offers a personalized, confidential and tailor-made approach to its clients. From tax optimisation to statutory compliance and daily administration, we provide a wide range of services to local and international clients, including:

• Taxation, personal and corporate advisory and compliance

• VAT

• Advisory and Consultancy

• Accounting and Payroll

• Back-office support

• Audit and Assurance

• Yacht and Aviation registration and management

• Corporate Services, including Malta Company formation, re-domiciliation of companies to and from Malta, registered office, directorship and general administration.

• Trusts and Foundations

• Offshore Incorporations

• Fund formation

• Estate planning

• Immigration and Residence services

• Virtual office

Malta and its tax system

Malta lies at the heart of the Mediterranean, a few hours’ flight from most European cities and from North Africa. The advantage of living in Malta is that you can work and enjoy life to the full at the same time. Malta has been a member of the European Union since May 2004, is politically stable and is strongly oriented towards the outside world. Malta is a signatory to many important internationalagreements, mainly in the economic and financial domains, but also with regard to maritime, transport and cultural matters. Malta has proved to be an attractive tax and cost-efficient Eurozone jurisdiction for financial services, trading and holding activities. The Maltese economy is a very open one in which foreign direct investment in many of its sectors is vital to its continued growth. The overriding climate is one of encouraging and assisting inward investment particularly in key and targeted sectors such as financial services and related industries. It has a strong, yet flexible single regulatory body in the Malta Financial Services Authority (MFSA). The MFSA is responsible for all licensed financial services activity on the Islands. The MFSA is structured in line with world best practice. Malta is a leading force in the development of regulatory policy and is fully involved with OECD, the EU and the Commonwealth in policy development.

Malta has one of the lowest OECD compliant tax rates within the EU area. Investors can set up tax efficient structures in Malta and benefit from the interaction of the full imputation system of company taxation (whereby dividends carry a tax credit equivalent to the tax paid on the profits out of which the dividends are paid), the general tax refund system which was also approved by the European Commission in late 2006, and of its extensive double taxation treaty network, including all EU Member states.

Repatriation of profits is tax free as Malta does not charge any withholding taxes on payment of dividends to non-residents. In addition, interest and royalties paid to non-residents are also free of tax, increasing the potential for efficient tax planning. The absence of transfer-pricing rules, thin capitalisation regulations, CFC regulations or annual wealth taxes is an added bonus to investors. Other tax related benefits in setting up a company in Malta include:

• Dividends received from a participating holding are exempt from tax in Malta so long as certain conditions are satisfied. Proper structuring enables compliance with the said conditions in the vast majority of scenarios.

• Gains on the sale of a participating holding are exempt from tax in Malta.

• Where the holding of shares in a foreign company does not qualify as a participating holding, tax on dividends and gains is reduced with the application of double taxation relief, namely treaty relief, unilateral relief and flat rate foreign tax credit

• Non-residents are not taxed on gains realised on the sale of securities in Maltese companies, provided that they are not held in a company whose assets consist principally of immovable property situated in Malta.

• So-called “non-dom” companies benefit from the taxation of foreign income solely to the extent it is remitted to Malta. Foreign gains are not taxed in Malta • Companies may be continued or re-domiciled to Malta and from Malta; no exit taxes are chargeable • Malta has a wide treaty network with over 60 countries.

Malta tax facts

Maltese law contains international tax measures which make Malta a very competitive, cost and tax efficient basis for setting up structures to carry out international trading, investment and holding activities. Besides being the only EU member state with a full tax imputation system, Malta’s tax laws allow shareholders of a Maltese company to claim certain tax credits and refunds of all or part of the tax paid by the company on its profits which reduce the overall tax burden to between 0% and 10%. Economic double taxation is relieved through the full imputation system. Malta also applies the participation exemption in respect of dividend income or capital gains received from a qualifying subsidiary and any overseas tax suffered by a Malta company would generally be eligible for relief against the Malta tax liability arising on the corresponding source of income. Through the application of this refund mechanism, the combined overall effective tax rate in Malta is reduced.

Tax refund provisions

The corporate income tax rate in Malta is a flat 35%. However, upon the distribution of dividends, the shareholder may claim a refund of six-sevenths (6/7) of the tax credit if the dividend is distributed from active trading income and five-sevenths (5/7) when it is distributed out of passive interest and royalties.

Alternatively one may claim flat rate foreign tax relief whereby the effect is that the initial rate of tax is reduced from 35% to 18.75%. A tax refund may also be claimed but this will amount to 2/3rd of the Malta tax credit.

We generally set up a two-tier structure in Malta, a holding company and a subsidiary. The subsidiary may carry out both trading activities and investment activities. Consider a structure where EU Co holds the shares in Malta Co. Assuming Malta Co’s trading profits amount to 100, tax payable in Malta is 35. Malta Co distributes all post tax profits and EU Co claims a tax refund of 30. Such a structure will not work since even though the dividend may not be taxed in the hands of EU Co as a result of the participation exemption provisions, the tax refund received by EU Co will be taxed as other income in such foreign EU jurisdiction. The tax refund is not a dividend. For this reason a double tier structure is used in Malta which could reduce effective corporate tax to 5%. By having a double tier structure in Malta, the tax refund received by Malta Hold is converted into a dividend when it is distributed to EU Co. In a number of structures that we have in Malta, profits are “parked” in Malta Hold. The funds are loaned back to Malta Co free of interest (no transfer pricing rules) for further investment. The adjacent structure can also be used for captive insurance operations set up in Malta.

Double Taxation relief

Apart from relief in terms of a double taxation treaty Maltese tax legislation contains domestic rules aimed at ensuring that income originating from overseas is not subject to double taxation even if there is no double taxation agreement in existence. Relief is provided on a unilateral basis (Unilateral Relief), through a Flat Rate Foreign Tax Credit (FRFTC), underlying relief and Commonwealth Relief.

Unilateral Relief is available where treaty is not available. With regard to investments held by Maltese companies in foreign companies, the relief also extends to underlying taxes suffered abroad, that is, the taxes suffered by the foreign company on the profits distributed to the Maltese company. The FRFTC may be claimed instead of treaty relief and the unilateral relief. The FRFTC assumes a deemed foreign tax of 25% of the income received in Malta, regardless of the amount of tax actually paid abroad and this may be claimed even where no tax abroad has actually been suffered. The 25% deemed foreign tax is allowed as a credit against the Malta tax due on the gross income after allowing for any deductible expenses. The combination of the FRFTC and tax refunds available to shareholders (see above) may produce very interesting tax-efficient results.

Participating Holdings

A holding of shares in non-Maltese entities (companies and partnerships en commandite the capital of which is divided into shares) qualifies as a participating holding when any of the following conditions is satisfied:

a) a company holds directly at least ten per cent of the equity shares of a company not resident in Malta whose capital is wholly or partly divided into shares, provided that where the shares held confer different percentages of entitlement with respect to votes, to profits available for distribution and to assets available for distribution on a winding up, the lowest percentage figure shall be deemed to be the percentage of equity shares held; or

b) a company is an equity shareholder in a company not resident in Malta and the equity shareholder company is entitled at its option to call for and acquire the entire balance of the equity shares not held by that equity shareholder company to the extent permitted by the law of the country in which the equity shares are held; or

c) a company is an equity shareholder in a company not resident in Malta and the equity shareholder company is entitled to first refusal in the event of the proposed disposal, redemption or cancellation of all of the equity shares of that company not held by that equity shareholder company; or

d) a company is an equity shareholder in a company not resident in Malta and is entitled to either sit on the Board or appoint a person to sit on the Board of that company as a director; or

e) a company is an equity shareholder which invests a minimum sum of one million, one hundred and sixty-four thousand Euro (1,164,000) (or the equivalent sum in a foreign currency) in a company not resident in Malta and that investment in the company not resident in Malta is held for an uninterrupted period of not less than 183 days; or

f) a company is an equity shareholder in a company not resident in Malta and where the holding of such shares is for the furtherance of its own business and the holding is not held as trading stock for the purpose of a trade. Investments by Maltese companies in the capital of partnerships en commandite the capital of which is not divided into shares qualifies as a participating holding so long as any one the conditions set out above is satisfied.

Participating Exemption

The participation exemption rules provide for the following exemptions:

Gains on the sale of a participating holding – gains are always exempt from tax in Malta wherever the foreign entity is situated. Most of the Malta double taxation treaties provide that gains realised by a Malta company on the sale of shares in foreign companies, provided that the assets of the foreign companies do not consist mainly of immovable property situated in that other contracting state, are taxable solely in Malta. With the provisions of the participation exemption, the gain is not subject to tax. The gain may then be distributed by the Maltese company to a non-resident without the imposition of withholding taxes.

Dividends received from a participating holding – dividends received by a Malta company from a participating holding are exempt from tax when:

• The foreign company or partnership (hereinafter referred to as “entity”) is situated in another EU member State; or

• The income of the foreign entity does not consist of more than 50% of passive interest and royalties; or

• The profits of the foreign entity are taxed at the rate of at least 15%; or

• The holding is not a portfolio investment and the income and interest and royalties received by the foreign entity is subject to foreign tax of at least 5%.

Note – a foreign company carrying on treasury functions or IP licensing for the group may be deemed not to be one which is in receipt solely of passive interest or royalties. A ruling may be obtained that the company is actively trading and therefore the participation exemption may still apply.

Holdings not qualifying as participating holdings

If the holding of shares does not qualify as a participating holding, then the gains and dividends are taxed in Malta at the rate of 35%. However, upon the distribution of these profits and gains to the shareholders, the latter may claim a tax refund of the tax paid by the company on the profits so distributed. The tax refund can amount up to six-sevenths (6/7) of the tax credit.

Alternatively one may claim flat rate foreign tax relief whereby the effect is that the initial rate of tax is reduced from 35% to 18.75%. A tax refund may also be claimed but this will amount to 2/3rd of the Malta tax credit. Non-dom companies. Companies incorporated and managed and controlled in Malta are in terms of our tax legislation both domiciled and resident in Malta. They are taxed on their world-wide income and capital gains, subject to certain exemptions. In addition when such companies have foreign branches, branch profits are subject to Malta tax with relief for foreign taxes. Foreign companies (companies incorporated outside Malta) are generally taxable in the jurisdiction in which they have been incorporated. However, their tax residence may be moved to Malta by transferring the effective management and control of their business to Malta. In such cases, though the companies become resident in Malta for tax purposes, they are still foreign companies and in accordance with the provisions of our tax legislation, they are not domiciled in Malta.

The following tax principles apply to companies resident but not domiciled in Malta:

• Income and gains arising in Malta are taxed in full in Malta (tax refund provisions also apply when profits are distributed by way of dividend);

• Income arising outside Malta is taxed in Malta but only to the extent that such income is remitted to Malta;

• Gains arising outside Malta are not taxed in Malta even if such gains are remitted to Malta.

Global Resident Scheme (such scheme also integrates the e-Residence Maltese card, the Maltese ID Card and Visa)

The Global Residence scheme is applicable to non-EU, non-EEA and no Swiss nationals only. Hence this scheme will enable non-EU, non-EEA and no Swiss nationals to obtain a Maltese eresidence card together with Visa. Taxation under the Global resident scheme:

• Flat rate of 15% on income remitted to Malta

• Flat rate of 35% on income arising in Malta

The minimum tax shall be €15,000 and shall include all dependents (the definition of dependent is widened, also including dependent brothers and sisters and direct relatives in an ascending line. Employees are also provided for, i.e. carers/butlers and other persons that may have been in the employ of the applicant for the preceding two years.

Conditions to be satisfied:

• Applicant must either acquire or rent a property in Malta or Gozo

• Property Purchase requirements : Purchase price of property in Malta €275,000 Purchase price of property in Gozo and the South €220,000

• Rent : Annual minimum rental of property in Malta €9,600 Annual minimum rental of property in Gozo and the South €8,750

• Applicant and dependents are to be covered by an all-risks medical insurance in Malta.

• The renewal of the Uniform Residence Permit shall only be given on condition that the applicant and dependents not only satisfied the minimum conditions for the past year but shall also satisfy the conditions for the forthcoming period for which the Uniform Residence Permit is given. This includes the payment of the minimum tax.

• The immovable property on which the applicant has declared as his residence in Malta cannot be used by any other person other than dependents or those in his employ. The applicant may not rent out the property that he is declaring to be his residence in the application for whatever period and in whichever location.

• The applicant may not be resident for more than 183 days in any other single jurisdiction.

• Application fee is €4,000 at application stage. From the date that the person actually takes up residence in Malta, a further amount of €2,000 shall be payable. Persons who take up residence in Gozo or in the South of Malta can benefit from a reduction of €500 from the atter €2,000.

Contact Details:
CCPS Malta
Albea house
Testaferrata Street
Msida
MSD 1401
E-mail: info@ccpsmalta.com
Tel: +356 27642887
Skype: clive.ccpsmalta
Website : www.ccpsmalta.com