Income derived by a Maltese company from the operation of one or more commercial yachts should ultimately be chargeable to tax in Malta at a combined overall effective Malta tax rate of 5% – by application of Malta’s refundable tax credit system.
In fact, such income would be chargeable to tax in Malta at the rate of 35% at the level of the operating company. However, upon distribution of net dividends by that company in favour of its shareholders, the said shareholders should generally be entitled to a refund of six-sevenths of the Malta tax suffered at the level of the operating company on the profits out of which the dividends were distributed.
Furthermore, foreign income tax which may be due in relation to the yacht’s commercial operations would be converted into credit against the Maltese income tax in a way that the Malta tax rate would be reduced below the 5% rate.
