Malta Self-Sufficient Residency + Estonian OÜ

[hasby2023]

Hi all,

I'm planning to move to Malta under the Self-Sufficient Residency scheme, and I'm evaluating a lean international structure for my online B2C business (mainly selling to Italian final clients).

To keep initial setup and maintenance costs low, I'm considering starting with a simple Estonian OÃœ, where I'd be the sole shareholder and director. The idea is to begin with this setup and transition to a more complex trading + holding structure (Estonia + Cyprus or similar) later on, once the company starts generating enough profit to justify the added costs ”” with the long-term goal of reducing corporate tax down to 5%.

In the meantime, I have some key doubts about how to extract profits in the most tax-efficient way:​

1. Is it better to pay myself a salary/management fees or to wait and take dividends from the OÜ?
2. Are management fees or salaries subject to withholding tax, social security or income tax in Estonia (where I am not resident) or in Malta (where I am a self-sufficient resident)?
3. Are dividends paid to me as a Maltese tax resident subject to withholding tax in Estonia, assuming I don't remit the funds to Malta?
4. From Malta's side, would either salary or dividends be taxed if the money is not remitted to Malta under the remittance basis?
5. Is there any CFC risk in Malta considering I'd be the tax resident owner of a foreign (Estonian) company?

If anyone has experience with a similar Malta + Estonia setup, I'd greatly appreciate your insights. Open to any suggestions on how to improve the structure further as well.

Thanks in advance!
Hasby

 

[Martin Everson]

hasby2023 said:
Is it better to pay myself a salary/management fees or to wait and take dividends from the OÜ?
Click to expand...

Yes

hasby2023 said:
Are management fees or salaries subject to withholding tax, social security or income tax in Estonia (where I am not resident) or in Malta (where I am a self-sufficient resident)?
Click to expand...

No

hasby2023 said:
Are dividends paid to me as a Maltese tax resident subject to withholding tax in Estonia, assuming I don't remit the funds to Malta?
Click to expand...

You pay corporate tax on the distributed profits (dividends) to Estonia.

hasby2023 said:
From Malta's side, would either salary or dividends be taxed if the money is not remitted to Malta under the remittance basis?
Click to expand...

No

hasby2023 said:
Is there any CFC risk in Malta considering I'd be the tax resident owner of a foreign (Estonian) company?
Click to expand...

CFC only over 750k euro in accounting profits. That's Malta CFC threshold last time I checked.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[hasby2023]

Thanks for the answer! So in definitive, I have to take management fees, right?

 

[Martin Everson]

hasby2023 said:
Thanks for the answer! So in definitive, I have to take management fees, right?
Click to expand...

Yes management salary/Employee Salary. Your not taxed on this if not remitted.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[JimBeam]

People with Self-Sufficient Residency permit pay only the tax on the amounts they remit to Malta?

Is there any minimum per year (read somewhere that there is ~ EUR 5k/year)?

 

[W Fish]

Martin Everson said:
Yes management salary/Employee Salary. Your not taxed on this if not remitted.
Click to expand...

How is "remitted" defined here?
If I pay with a debit/credit card issued by a non Maltese bank in a grocery store in Malta, is this remitted?
Or if I or the OP buys a house / car for the same original Estonian company, money coming from a non Maltese, possibly Estonian bank?

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[aragon]

hasby2023 said:
From Malta's side, would either salary or dividends be taxed if the money is not remitted to Malta under the remittance basis?
Click to expand...

Only if you earn over €35k in a year. Your tax liability is then €5k regardless of how much over €35k your foreign income was.

W Fish said:
How is "remitted" defined here?
If I pay with a debit/credit card issued by a non Maltese bank in a grocery store in Malta, is this remitted?
Click to expand...

Yes, that is a remittance to Malta.

W Fish said:
Or if I or the OP buys a house / car for the same original Estonian company, money coming from a non Maltese, possibly Estonian bank?
Click to expand...

Who is buying the house/car? The OP or the Estonian company? Two different entities. One is tax resident in Malta where the remittance rule would apply, while the other is presumably not so the remittance rule wouldn't apply.

 

[W Fish]

aragon said:
Only if you earn over €35k in a year. Your tax liability is then €5k regardless of how much over €35k your foreign income was.



Yes, that is a remittance to Malta.


Who is buying the house/car? The OP or the Estonian company? Two different entities. One is tax resident in Malta where the remittance rule would apply, while the other is presumably not so the remittance rule wouldn't apply.
Click to expand...

Thank you!
I was having in mind the Estonian company (belonging to and being managed by the OP), sorry for not being clear enough.
This seems too easy...

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[hasby2023]

It is actually too good to be true, especially if you consider that Malta is a 30€ Ryanair flight away from that Tax Nightmare called Italy

 

[Don]

hasby2023 said:
Hi all,

I'm planning to move to Malta under the Self-Sufficient Residency scheme, and I'm evaluating a lean international structure for my online B2C business (mainly selling to Italian final clients).

To keep initial setup and maintenance costs low, I'm considering starting with a simple Estonian OÃœ, where I'd be the sole shareholder and director. The idea is to begin with this setup and transition to a more complex trading + holding structure (Estonia + Cyprus or similar) later on, once the company starts generating enough profit to justify the added costs ”” with the long-term goal of reducing corporate tax down to 5%.

In the meantime, I have some key doubts about how to extract profits in the most tax-efficient way:​

1. Is it better to pay myself a salary/management fees or to wait and take dividends from the OÜ?
2. Are management fees or salaries subject to withholding tax, social security or income tax in Estonia (where I am not resident) or in Malta (where I am a self-sufficient resident)?
3. Are dividends paid to me as a Maltese tax resident subject to withholding tax in Estonia, assuming I don't remit the funds to Malta?
4. From Malta's side, would either salary or dividends be taxed if the money is not remitted to Malta under the remittance basis?
5. Is there any CFC risk in Malta considering I'd be the tax resident owner of a foreign (Estonian) company?

If anyone has experience with a similar Malta + Estonia setup, I'd greatly appreciate your insights. Open to any suggestions on how to improve the structure further as well.

Thanks in advance!
Hasby
Click to expand...

Estonian company director fees are subject to income tax in Estonia, regardless of whether the director is a resident or not.
With regular salaries, you might be able to get away without taxation in Estonia.
You can create a structure where you pay effective 5% tax in Malta, and this can be repatriated to Estonia and shareholders tax free.

 

[hasby2023]

Thanks, but what do you mean by regular salaries?

 

[rss]

hasby2023 said:
I'm planning to move to Malta under the Self-Sufficient Residency scheme
Click to expand...

Not sure if you started the process already but you should do it ASAP, it takes a few months in total to get your maltese id, you are running out of time for the current fiscal year.

 

[Don]

hasby2023 said:
Thanks, but what do you mean by regular salaries?
Click to expand...

Salary from employment, not a director/board member fee.

 

[Martin Everson]

W Fish said:
How is "remitted" defined here?
If I pay with a debit/credit card issued by a non Maltese bank in a grocery store in Malta, is this remitted?
Or if I or the OP buys a house / car for the same original Estonian company, money coming from a non Maltese, possibly Estonian bank?
Click to expand...

Read the guide below and save yourself time and effort.

https://cfr.gov.mt/en/inlandrevenue... for Individuals under the Income Tax Act.pdf

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[hasby2023]

I was wondering, could an Estonian OU be considered a Maltese company if its POEM is located in Malta? Or, given that the CFC rules wouldn't apply in this case (accounting profit <750k), does this mean there are no potential issues or complications with this setup?

 

[UndividedNomad]

Okay with this setup you have CFC covered, but there would still be the permanent establishment risk there no? then taxation as Maltese resident company no?

 

[Don]

hasby2023 said:
I was wondering, could an Estonian OU be considered a Maltese company if its POEM is located in Malta? Or, given that the CFC rules wouldn't apply in this case (accounting profit <750k), does this mean there are no potential issues or complications with this setup?
Click to expand...

You should generally outsource management of the holding to avoid issues like the income to be treated Maltese source and subject to 35% CIT

 

[hasby2023]

UndividedNomad said:
Okay with this setup you have CFC covered, but there would still be the permanent establishment risk there no? then taxation as Maltese resident company no?
Click to expand...

Yes exactly what i was thinking. But maybe the audits are not very likely to happen in Malta (?) or simply there are some strategies like signing important agreements etc only in Estonia

 

[brianK]

aragon said:
Only if you earn over €35k in a year. Your tax liability is then €5k regardless of how much over €35k your foreign income was.
Click to expand...

how does the tax works in Malta how much in percentage you have to pay if you relocate to Malta and open a Ltd where you take out 150K euro out a year ?

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[10101]

Nobody mentioning that he's fully taxable if he works from Malta? Non dom tax is for passive foreign income e.g. rent income, long term capital gains or royalties or a job physically done in another country