Over the last few months, Malta has worked hard to cement its position as the global hub for DLT, cryptocurrency and related industries. After recently bringing in three new Acts that will provide much needed regulatory certainty within the industry, Malta is currently the most crypto-friendly EU jurisdiction. But when it comes to setting up a cryptocurrency or blockchain business, tax considerations are often at the forefront of entrepreneurs minds. So how do various EU jurisdictions stack up against each other?
Malta’s tax regime has been approved by both the European Commission and the OECD and any company that is incorporated in the country is subject to a flat tax rate of 35%. There are however a number of exemptions and refunds available that can effectively reduce the amount of tax paid to as little as 0%. When a company pays the 35% rate, the shareholders are entitled to a refund of part or all of the tax they pay on the dividends that they receive.
Whilst not technically EU, Switzerland is still in the EAA and has long been a reputable jurisdiction when it comes to business. When it comes to corporate taxation, Swiss companies are liable to pay income tax on any profits generated within the country; at the federal level this is 8.5% but this can be reduced to 7.83% as it is deductible for tax purposes. Tax is also payable at a local level, meaning that a business incorporated in Switzerland can pay between 11.5% and 24.2% tax.
A British Overseas Territory, Gibraltar has a flat rate of taxation of just 10% on any income that is derived in or from the jurisdiction. The problem with setting up a business in Gibraltar at the moment is that no one is sure what will happen when the UK leave the European Union. This hangs a cloud of uncertainty over business that jurisdictions operating there, particularly if they have business interests in the European Union.
Corporate entities that are incorporated in Lithuania are subject to an income tax rate of just 15%. Some businesses are able to apply for a reduced rate depending on the size of their business, for example, if they have less than 10 employees or a turnover of less than EUR 300,000.
The above is not to be construed as legal advice. If you need any advice you should contact your advisers accordingly.