Global Minimum Tax from 2025: What Will Change for Malta Structures

Picture this: you’re sitting with your tax advisor in Valletta, feeling great about your clever Malta structure, and suddenly the term minimum tax comes up. Since moving here, I’ve personally witnessed this exact scenario happen to at least ten acquaintances. The international minimum tax from 2025 onwards—officially called the Global Minimum Tax or Pillar Two—is shaking up much of what we thought we knew about Malta’s tax perks.

Don’t panic—but don’t ignore it either. Today, I’ll explain what’s actually changing, which of your Malta structures are affected, and above all, which specific steps you should take now. Because one thing is clear: with the right planning, it’s still possible to legally optimize taxes in 2025 and beyond.

What exactly is the international minimum tax?

The international minimum tax isn’t a Maltese invention—it’s a global initiative driven by the OECD (Organisation for Economic Co-operation and Development). The principle is simple: multinational companies should pay a minimum of 15% tax worldwide—no matter where they park their profits.

The basic rules of the Global Minimum Tax

The system works as a kind of safety net. For example, if your company pays only 5% tax in Malta, the parent companys home country can claim the missing 10% to reach the required 15% minimum. The OECD calls this the Income Inclusion Rule (IIR).

This applies to all multinational groups with a consolidated annual revenue of at least 750 million euros. That sounds like a big-corporate threshold, but surprisingly many mid-sized structures fall under it—especially if you have multiple entities in several countries.

What makes Malta special

For years, Malta benefited from its refund system: foreign shareholders could reclaim 6/7 of the corporate tax paid, reducing effective tax rates to around 5%. These are precisely the structures now targeted by the new rules.

It’s important to understand: The minimum tax isn’t out to destroy Malta’s tax system, but rather to curb aggressive tax planning.

Which Malta structures are affected?

Not every Maltese company is affected automatically. I went through a checklist with my tax advisor—here are the key points:

Structures in the risk zone

• International holdings: Malta-based entities holding shares in companies located in other EU countries
• IP structures: Companies collecting license fees for intellectual property
• Management companies: Malta-based firms providing services to sister companies
• Trading companies: Businesses engaged in trading activities making use of the refund system

Structures outside the focus

• Purely local companies: Malta entities with no international connections
• Companies with real substance: Businesses with genuine operations and staff in Malta
• Smaller groups: Corporate structures below the 750-million-euro threshold

A real-life example from my circle: Marco, an Italian e-commerce entrepreneur, had set up his Malta holding to collect dividends out of Germany and Italy. His structure clearly falls under the new rules as his group’s total revenue exceeds the threshold.

The substance test becomes crucial

From 2025 onward, Malta will introduce stricter substance requirements. In other words: your company will need to prove genuine economic activity on the island. Shell structures will face significant challenges.

Practical impact on your tax planning

Let’s get practical. What does all this mean for you if you operate a Malta structure?

Calculating added tax costs

The math is straightforward. Let’s say your Malta company currently pays an effective 5% tax rate on €100,000 profit—that’s €5,000. From 2025, you’ll need to pay at least 15%, so €15,000. The €10,000 difference can be claimed either by Malta or by the country where your parent company is based.

Malta has already announced that it will introduce a Qualified Domestic Minimum Top-up Tax (QDMTT). This means Malta itself wants to collect that extra €10,000 before any other country does. Smart move—though for you as a taxpayer, the bottom line is the same.

Understand the cashflow impact

The biggest surprise for many: Tax is not just being recalculated retroactively, but has to be paid promptly. Under the refund system, you could have a delay of up to 18 months—those days are over.

A friend of mine, owner of a Malta holding with German subsidiaries, had to completely revise his liquidity planning. Instead of €50,000 a year, he now faces €150,000 in taxes—and without the usual refunds.

Impact on different business models

• Licensing: Especially affected, as there’s often little substance behind large profits.
• Holdings: Dividend flows are treated differently for tax purposes.
• Trading: Trading margins now fully subject to the minimum tax.
• Services: Service providers with genuine substance can still benefit.

Your options starting in 2025

You’re probably asking: What can you actually do? Here are your options, listed by effort and effectiveness:

Option 1: Build real substance in Malta

The obvious path is to relocate genuine business activities to Malta. That means:

1. Hire employees: At least two qualified staff who make real decisions
2. Rent office space: Not just a mailbox, but actual workplaces
3. Move management functions: Key business decisions must be made in Malta
4. Set up IT infrastructure: Servers, systems, and data physically located in Malta

This option works especially well for digital service providers and tech companies. A software developer I know moved his 15-person dev team to Sliema—for him, Malta is still worthwhile even with the minimum tax.

Option 2: Tax optimization within the 15%

Even with the 15% minimum tax, there are still legal ways to optimize. Malta still offers:

• No withholding tax on dividends for EU shareholdings
• Generous depreciation options
• Tax-free capital gains on participations
• Flexible group financing

Option 3: Restructuring or relocation

Sometimes a complete realignment makes more sense. Alternatives to Malta:

What does it mean for different types of entrepreneurs?

Depending on your situation, different strategies come into play. Here’s my assessment for typical Malta users:

For German entrepreneurs

Germany is enforcing the minimum tax rules particularly strictly. If you operate a Malta holding as a German, the German tax office will demand the difference to bring it up to 15%. My advice: expect a heavier tax bill and plan ahead.

Example calculation for a German Malta structure:

• Malta company’s annual profit: €200,000
• Previous tax (5%): €10,000
• New minimum tax (15%): €30,000
• Additional burden: €20,000 per year

For Italian structures

Italy already has a strict CFC regime (Controlled Foreign Company), so many Maltese structures owned by Italians are less affected. You should, however, carefully review the new substance requirements.

For digital nomads and small businesses

Good news: if your group stays below the €750 million threshold, the minimum tax doesn’t apply. For freelancers and small limited companies, nothing changes for now.

For investors and family offices

This gets tricky. Pure holding structures without operating business will find it tough to prove substance. Consider whether relocating to another EU country makes sense, or whether to set up real asset management in Malta.

Practical steps for the transition

Enough theory—here’s your actionable checklist for the coming months:

Do immediately (by end of 2024)

1. Structure analysis: Have a tax advisor check whether your structure is affected
2. Substance check: Document all current activities in Malta
3. Liquidity planning: Calculate the added tax burden for 2025
4. Review contracts: Review all service agreements between related entities

Implement by March 2025

1. New accounting system: Migrate to the new reporting requirements
2. Build substance: Hire qualified employees as needed
3. Office space: Rent actual business premises, if not already done
4. IT systems: Relocate critical systems to Malta

Ongoing adjustments from 2025

• Plan for quarterly tax prepayments
• Update substance documentation continuously
• Monitor new OECD guidelines
• Annual structure review by professionals

Pro tip from experience: Start documenting now. The Maltese tax office will be looking much more closely from 2025 at where business activities really take place.

Outlook and alternatives

What does the future hold for Malta as a tax jurisdiction? Here’s my take after two years on the island:

Malta remains attractive for genuine businesses

Malta has quickly responded to the new rules and adapted its tax system. For companies with real substance, the island remains attractive:

• EU access with no Brexit risks
• English-speaking administration
• Qualified workforce
• Modern financial services
• Stable political conditions

New business models are emerging

The most interesting developments come from companies moving genuine operations to Malta. A friend of mine relocated his crypto trading desk entirely to Valletta—with 12 employees and a full compliance department. For him, Malta pays off, even with a 15% tax rate.

Alternative locations compared

If Malta no longer fits, here are some realistic alternatives:

• Ireland: Similar benefits to Malta, but higher costs
• Netherlands: Excellent for holding structures, but highly complex rules
• Luxembourg: Tried and tested for financial setups, but very high operating costs
• Portugal: NHR program is not yet affected by the minimum tax

Bottom line: Malta isn’t dead, but it’s becoming more selective. If you run real business operations, you can still benefit. Mailbox companies are a thing of the past.

Frequently asked questions about the international minimum tax

When does the minimum tax apply in Malta?

The international minimum tax applies in Malta from January 1, 2025, for fiscal years starting on or after this date. For example, companies with a financial year from April 1 to March 31 will only be affected from April 2025.

Is the €750 million threshold per company or per group?

The threshold applies to the entire corporate group (consolidated). Even if your Malta company only has €1 million in revenue, if it belongs to a larger group, the rules may apply.

Can I keep my existing Malta structure?

Yes, by building substance. If you can prove real business activity, qualified staff, and a genuine business presence in Malta, the structure still works—just with 15% instead of 5% tax.

What happens to my existing tax rulings?

Existing advance tax rulings fundamentally remain valid but must be re-evaluated in light of the new minimum tax rules. In many cases, an amendment or new application will be necessary.

Does the minimum tax also affect private individuals?

No, the minimum tax applies only to corporations within multinational groups. As a private individual with Maltese tax residency, your personal tax situation remains unchanged for now.

How is substance actually measured?

Malta follows the OECD guidelines: at least two qualified full-time employees, real business premises, regular board meetings in Malta, and verifiable management decisions on the ground are the key criteria.

Can I offset losses against the minimum tax?

Yes, losses from other companies within the same group can offset the minimum tax calculation. This makes planning complex and requires careful coordination among all group entities.

How much does restructuring my setup cost?

That depends on the level of substance required. For two employees, office space, and compliance, expect at least €150,000–€200,000 additional annual costs. On the upside: you won’t need to relocate to another country.

Are there transitional arrangements?

Malta allows a transitional period until the end of 2025 to build up substance. However, existing structures must already pay the higher tax from January 2025, even if substance isn’t fully established yet.

Is Malta still worthwhile?

For genuine business activity, definitely yes. Malta still offers EU access, English-speaking administration, a skilled workforce, and a modern infrastructure. At a 15% tax rate, it’s still cheaper than Germany (30%+) or Austria (25%).