Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: February 7, 2014
The Firm
201-896-4100 info@sh-law.comClearly, the U.S. market is attractive in its own right which accounts for its take-it or leave-it attitude toward taxation incentives. Other jurisdictions, however, are not as fortunate and must develop attractive systems to encourage investment and the growth of its financial sector.
Smaller countries look to the financial sector as a means of increasing their GDP and raising the standard of living. One example is Malta, situated inside the European Union (“EU”) and well-positioned to host holding companies, patent boxes and international finance subsidiaries. Malta has sixty-one (61) income tax treaties and is a member of the EU and may avail itself of the parent-subsidiary directive which permits dividends to pass free of tax in certain cases.
Malta’s Participation Exemption has an anti-abuse test and three safe harbors. One is a foreign company is incorporated or resident in the EU. A second is if less than 50% of its income is from passive sources. Third, the foreign income is subject to tax at 15% rate or more. This test can be easily satisfied with proper planning.
Malta uses a management and control test so foreign entities as well as local companies may become resident. Malta has an imputation system of taxation which allows shareholders to claim tax credits and refunds for tax paid by the company with only 5% leakage. Passive income suffers leakage of about 10%, however, a 25% foreign tax credit and a 2/3 refund brings the rate to 6.25%. A Maltese company may pay to a foreign individual or corporation without further withholding. This is a stark contrast to the US and FACTA.
Malta is a civil law jurisdiction but has enacted trust legislation to go with its statute on foundations. Trust income is subject to tax at 35%; however, the beneficiary may be able to claim a refund. Trust income arising outside of Malta and non-resident beneficiaries permits the income to escape Maltese tax provided there is no local trustee.
Many jurisdictions, including Malta, have special programs to attract high net worth individuals, register yachts and lease aircraft.
Maltese foundations have a unique feature called segregated cells, with each cell being taxed independently. A foundation may also elect to be taxed as a trust. Foundations are treated as corporations for tax purposes.
Protected cell companies are creatures of Maltese law which permits the segregation of assets and liabilities in each cell. It offers a way of converting the character of income or delaying distributions up the chain. You may gain capital appreciation inside the wrapper of the cell.
If a company wants to leave Malta, there are no exit taxes. Consider Section 7874 on U.S. corporate inversions and one realizes Malta is different. There are no controlled foreign corporation (CFC) rules in contrast to Subpart f.
There are many jurisdictions seeking to accommodate business investment and the finance sector. One can find suitable base for most any project given the options available.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]
Author: Dan Brecher
The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]
Author: Brian D. Spector
The bankruptcy legal landscape presents both challenges and opportunities for businesses navigating financial distress. Understanding current bankruptcy trends can help businesses make more informed and strategic decisions. Corporate Bankruptcy Filings Trending Upwards Bankruptcy filings continued to trend upwards in 2024. According to statistics released by the Administrative Office of the U.S. Courts, personal and business […]
Author: Brian D. Spector
In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]
Author: Kenneth C. Oh
On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]
Author: Matthew F. Mimnaugh
If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]
Author: Jesse M. Dimitro
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!