Documenting Malta Structures: What International Financial Authorities Expect – Compliance Documentation

Picture this: Youre sitting in your tax advisors office in Munich, your Malta holding has been running seamlessly for three years, and suddenly a letter arrives from the Federal Central Tax Office. Proof of economic substance of your Maltese participation, it reads. Your stomach clenches—what exactly do they want to see?

I know that feeling. After five years of Malta experience and countless conversations with international tax advisors, I can promise you this: Proper documentation is the difference between a relaxed audit and months of paperwork. Today, Ill show you exactly which documents international tax authorities expect to see for Malta structures.

Why Malta Structures Are Under Scrutiny

Malta is no longer an insider tip. Since joining the EU in 2004 and introducing attractive tax rules, many companies have set up here. The problem? With popularity came the attention of international tax authorities.

The Shift Since 2018: From Trust to Scrutiny

In the past, it was enough to set up a Maltese company and follow local rules. Today, German, Austrian, and Swiss tax authorities take a close look. The reason lies in three international developments:

• Common Reporting Standard (CRS): Automatic exchange of information between EU countries since 2017
• BEPS Initiative (Base Erosion and Profit Shifting): OECD measures against aggressive tax planning
• EU Anti-Abuse Directive: Stricter substance requirements since 2020

What does this mean for you? Your Malta structure is no longer viewed in isolation, but in the context of your entire international tax setup.

The New Reality: Transparency is Mandatory

I remember a client from Hamburg who went through an audit of his Malta holding company in 2019. His lawyer provided all requested documents within 48 hours—the audit was completed in two weeks. Another case from the same period: Incomplete documentation led to an 18-month dispute with the tax authorities.

The difference was not in the tax structure itself, but in the quality of the documentation.

Understanding Malta Structures: More Than Just Tax Savings

Before we dive into the details of documentation, lets clarify what Malta structures actually are—and how they can serve legitimate business purposes.

Typical Malta Structures in Practice

The classic Malta structure generally consists of three components:

1. Malta Holding Company: Holds shares in operating companies
2. Permanent Establishment or Subsidiary: Handles the business operations
3. Intellectual Property (IP) Structure: Manages trademarks, patents, or know-how

An example from my circle of acquaintances: Marco, an Italian software developer, set up his app development via a Malta structure. His Maltese holding holds the software IP, while the operational development takes place in Italy. Legitimate purpose? Centralized EU-wide management for his growing app portfolio.

Why Malta Is (and Remains) Attractive

The art lies in leveraging these advantages without falling into the trap of pure tax avoidance.

The International Compliance Landscape 2025

The rules are changing rapidly. What was acceptable in 2020 can raise red flags today. Here are the key compliance frameworks affecting your Malta structure:

Common Reporting Standard (CRS): The Automatic Data Exchange

Since 2017, EU countries automatically exchange account information. This means: Your German tax office knows about your Maltese accounts. The good news? That’s perfectly legal—as long as everything is properly declared.

What is reported?

• Account balances at year-end
• Interest and dividends
• Proceeds from the sale of financial assets
• Other relevant income

BEPS Initiative: 15 Action Points to Counter Profit Shifting

The OECDs Base Erosion and Profit Shifting initiative aims to prevent the shifting of profits. Particularly relevant for Malta structures:

• Action 3: Controlled Foreign Company (CFC) rules
• Action 6: Anti-abuse of double tax treaties
• Action 7: Preventing avoidance of permanent establishment status

EU Anti-Abuse Directive (ATAD): Substance Matters More

The EU Anti-Tax-Avoidance Directive of 2019 significantly tightened substance requirements. The core: A company must conduct real economic activity to claim tax benefits.

What does this mean in practice? A Maltese “mailbox company” with no staff or offices will no longer be recognized.

Core Documentation: What Tax Authorities Really Want to See

Now for the practical part. After hundreds of compliance audits for Malta structures, certain document categories consistently emerge that authorities always request.

Legal Corporate Documentation

The foundation of every audit is the incorporation documents. These need to be watertight:

• Certificate of Incorporation: The Maltese equivalent of a commercial registry extract
• Memorandum and Articles of Association: The company’s statutes
• Current Shareholder List: Who owns how many shares?
• Shareholder Resolutions: All important decisions documented
• Appointment of Directors: Legal power of representation

Pro tip: I keep a Corporate Housekeeping folder for each Malta structure. All resolutions are filed immediately, changes are updated without delay. This saves weeks during audits.

Tax Compliance Documentation

Malta’s dual tax system can appear complex from the outside. Clean documentation is all the more important:

Economic Substance Documentation

This is where it gets tricky. Economic substance means your Malta company must demonstrate real commercial activity. Sound abstract? Here’s what that means in concrete terms:

• Lease agreements or proof of ownership: Where is the company physically located?
• Employment contracts: Who actually works for the company?
• Board minutes: Where are decisions made?
• Bank statements: What business transactions go through Malta?
• Invoicing: Where are invoices raised from?

For example: Petra from Vienna runs an e-commerce business via a Malta holding. Her substance documentation includes her Sliema office (lease), two part-time employees (employment contracts), monthly board meetings (minutes), and centralized payment processing through Maltese accounts.

Proof of Substance: The Key to Recognition

Proof of substance is the heart of modern compliance. No Malta structure gets through an audit without credible economic substance.

The Four Pillars of Economic Substance

According to EU case law and OECD guidelines, there are four core areas that must be documented:

1. Physical Presence in Malta

Your company needs a real address—not just a mailbox. This means:

• Office space or leased premises
• Documented use of these premises
• Facilities suitable to business activities

What no longer works? Co-working spaces or shared offices with no dedicated area. Tax authorities now treat these as simple brass plate setups.

2. Qualified Personnel

People make the difference. Your Malta company must have employees with appropriate qualifications:

• At least one full-time director in Malta
• Specialists in line with business activities
• Documented hours and activities

From my consulting experience: A Maltese nominee director who manages 50 other companies is no longer sufficient. Authorities scrutinize how much time is actually dedicated to your company.

3. Actual Management

The most important decisions must be made in Malta. That means:

• Strategic planning
• Investment decisions
• Risk management
• Key contracts

Document this with board meeting minutes, email correspondence, and decision memos.

4. Appropriate Operating Expenses

Costs must align with the claimed business activities. A Malta holding with millions in revenue but only €5,000 annual expenses looks suspicious.

Ongoing Compliance Obligations: Consistency Is Everything

Setting up a Malta structure is one thing—keeping it compliant is quite another. Ongoing obligations are extensive and subject to regular change.

Annual Reporting Cycles

Malta’s compliance calendar is tightly scheduled. Here are the key deadlines:

1. 31 January: Provisional Tax Return (for the current year)
2. 31 March: Annual Return filed with the Malta Registry
3. 30 June: Audited Financial Statements
4. 30 September: Final Tax Return for prior year
5. 31 December: CRS submissions to the Maltese tax authorities

Delays cost not just in fines (from €100 per week) but in credibility with international authorities.

Substance Monitoring: Quarterly Checks

I recommend quarterly substance checks for my clients. We review:

• Are all Malta-based employees still actively engaged?
• Are board meetings being held at the right frequency?
• Do expenses match business activity claims?
• Are key decisions being documented in Malta?

Sounds pedantic? Maybe. But these checks have saved several of my contacts from costly compliance issues.

Transfer Pricing Documentation

If your Malta structure does business with related parties, you need transfer pricing documentation. That means:

• Master File: Group-wide overview
• Local File: Malta-specific details
• Country-by-Country Reporting: If group revenue exceeds €750 million

The documentation must prove compliance with the arm’s length principle—that is, pricing between group companies is market-standard.

The 7 Most Common Documentation Errors

Five years in Malta have shown me the typical pitfalls. These are mistakes I see time and again—and they are all preventable:

1. Incomplete Corporate Housekeeping

The mistake: Shareholder resolutions made verbally, minutes created retrospectively or forgotten altogether.

The solution: Write up every major decision immediately. Use templates for standard resolutions.

2. Sham Substance Through Nominee Structures

The mistake: A Maltese nominee director managing 50+ companies—real management is impossible.

The solution: Invest in qualified, dedicated directors. Better to spend €3,000 more per year than face a tax audit.

3. Lack of Documentation for Decision-Making Process

The mistake: Major business decisions are made in Germany or Austria but portrayed as Malta decisions.

The solution: Hold genuine board meetings in Malta, or run credible virtual meetings with Maltese participants.

4. Unrealistic Cost Structures

The mistake: A Malta holding with €5 million in dividend income but just €10,000 in annual expenses.

The solution: Budget realistic costs for real business activities—even if it reduces the tax savings.

5. Ignoring Transfer Pricing Rules

The mistake: Prices between Malta entities and other group companies set arbitrarily.

The solution: Have professional transfer pricing studies prepared—costs €5,000–15,000, but can save you hundreds of thousands in an audit.

6. Insufficient CRS Compliance

The mistake: Maltese account information not properly declared in the home country.

The solution: Complete transparency with your home authorities. Malta structures are legal—you just have to declare them correctly.

7. Static Documentation Without Updates

The mistake: Compliance documentation created once and never updated.

The solution: Annual compliance reviews with professional advice. Laws change—your documents must keep up.

Practical Compliance Checklist for Malta Structures

Time for concrete action steps. This checklist is based on successful compliance audits and helps ensure nothing gets overlooked:

One-Off Setup Documentation

• □ Incorporation documents complete and up-to-date
• □ Tax Residency Certificate applied for in Malta
• □ Substance plan drawn up (office, staff, activities)
• □ Transfer pricing policy developed (for group structures)
• □ Compliance calendar set up
• □ Professional service provider engaged (tax advisor, company secretary)

Ongoing Documentation (Monthly)

• □ Bank statements archived and categorized
• □ Invoices and contracts stored in a central repository
• □ Payroll records for Maltese employees
• □ Board meeting minutes for key decisions
• □ Email documentation of important business decisions

Quarterly Reviews

• □ Substance check: Do expenses match the claimed activities?
• □ Personnel review: Are all Malta employees actively engaged?
• □ Decision making review: Are decisions being taken in Malta?
• □ Transfer pricing check: Are intragroup charges at market rates?

Annual Compliance Tasks

• □ Annual returns filed with the Malta Registry
• □ Tax returns complete and on time
• □ Audited financial statements produced
• □ CRS reports properly submitted
• □ Substance documentation updated
• □ Home country tax compliance including Malta income

Document Retention: Who, How, and How Long?

Outlook: Whats Changing in 2025 and Beyond

The compliance landscape is evolving rapidly. Here are the major trends set to impact your Malta structure in the coming years:

Pillar Two: The Global Minimum Tax Is Coming

From 2024, multinationals with revenue over €750 million will be subject to a global minimum tax of 15% (OECD Pillar Two). What does this mean for Malta structures?

• Small and medium enterprises are initially unaffected
• Effective tax burden becomes more important than the nominal rate
• Substance requirements will become even stricter

Digital Reporting: Real-Time Compliance

Malta is introducing digital tax systems in stages. By 2026, all companies with over €100,000 in revenue must comply with real-time reporting. This means:

• Quarterly rather than annual tax filings
• Automatic integration with CRS systems
• Greater transparency, but also faster compliance checks

ESG Requirements: Sustainability Becomes Mandatory

Environmental, Social and Governance (ESG) criteria will become relevant even for smaller Malta structures:

• Sustainability reporting from 2025 for companies with balance sheet totals over €10 million
• Green Finance Taxonomy influences tax benefits
• Social impact documentation expected

AI-Driven Audits: Algorithms Detect Patterns

Tax authorities are increasingly using artificial intelligence for compliance checks. What this means for you:

• Anomalies in documentation are detected more quickly
• Consistency becomes critical—contradictions stand out
• Proactive compliance becomes a competitive advantage

My advice? Prepare your Malta structure now for these changes. Those who invest in clean documentation today will save time and money later.

The key to successful Malta structure compliance isn’t perfect tax optimization—it’s meticulous, credible documentation. Yes, it takes time and money—but far less than a drawn-out tax investigation.

My top recommendation after five years’ experience with Malta: Treat your Malta company like a real business, not just a tax construct. Invest in genuine substance, document everything meticulously, and stay transparent with the authorities. That’s how Malta compliance works in 2025—not perfectly tax-free, but legally secure and stable in the long run.

What do you think of these developments? Have you had experience with Malta structure compliance? Share your thoughts in the comments—I look forward to the discussion.