Tax planning strategy for consultant

Status
Not open for further replies.
The Malta company first pays the full 35% corporate tax in Malta. Once that's⁤ done, the parent company applies for a tax rebate of up to 6/7 (six sevenths).⁣ 35*(6/7)=30. As long as the shareholder lives up to the requirement of being non-resident and⁢ non-domiciled, the request is approved.

If you are a foreigner living in Malta, you only︀ fulfill one of those two criteria: you are non-domiciled, but you are resident. So residents︁ set up companies which qualify as tax resident through incorporation (such as UK), or simply︂ rely lack of enforcement from IRD and use non-resident companies (such as BVI).

So if︃ the Malta company paid 70,000 EUR in corporate tax against 200,000 EUR profits, the parent︄ company would get 60,000 EUR back. This makes your net tax rate 5%.

In many,︅ but not all, cases the tax rebate is not in scope for corporate income tax︆ for the holding company. I'm not familiar enough with Mexico to comment on that specifically.︇

To use the money for yourself, people (expats in Malta) often pay themselves a tiny︈ salary of around 9,000 EUR from the Malta company which is not subject to tax.︉ The rest of the money, they take out from the parent company one way or︊ another. There are different, creative ways to do that as a non-domiciled resident.

Technically, if︋ you are a non-resident of Malta, you don't even need a holding company since you,︌ as a natural person, satisfy the criteria. But then you have a local tax burden︍ to worry about. The structure works best if you are resident in Malta, or can︎ pay yourself money from the holding company in a tax efficient way.
 
Mexico is not good enforcing this, but i do need to prove i paid︊ taxes in malta so they don't challenge the validity of my invoices, so my customers︋ can report the expense as tax deductible. For this to be posible i would have︌ to declare a dividend in favor of the sharehoder (holding company or individual), which can︍ be capitalized or paid?
 
You would have to check with a⁣ Mexican tax adviser/lawyer to be sure. I suppose you could show the Mexican authorities that⁢ you have paid 35% corporate tax in Malta, and then not tell them about the︀ 6/7 rebate you get. Might not be legal, though.

Whether the tax rebate counts as︁ an incoming dividend or something else is something to determined in the holding company's jurisdiction.︂ As I mentioned, in many but not all jurisdiction, it's exempt from tax. Read the︃ MT-MX DTT and discuss it with a local lawyer.
 
I know about my PM but don’t know how to activate it.‍ Don’t want to share my email address here
 
I just came across this thread and have a︀ similar question but perhaps not exactly the same situation. I am soon to be a︁ resident of Mexico and have an online business selling digital services to customers outside of︂ Mexico. The idea of a Maltese operating company with a foreign parent outside of Malta︃ (and outside of Mexico) seems like it could be a good structure. The Maltese operating︄ company would be a deemed tax resident of Mexico but would already have paid 35%︅ tax, so nothing due in Mexico...in theory. I am reading the MT-MX DTT but wonder︆ if you have any other insights to share.
 
Status
Not open for further replies.

JohnnyDoe.is is an uncensored discussion forum
focused on free speech,
independent thinking, and controversial ideas.
Everyone is responsible for their own words.

Quick Navigation

User Menu