Cyprus vs. Malta: The Ultimate Comparison (Tax, Non dom & More)

Hey everybody, it's Ricardo Gorski, the founder of Taxone, where we help individuals and businesses pay as little tax as legally possible. And in this video, I want to talk about Malta versus Cyprus, two low tax jurisdictions that are very popular. And the interesting part is that I've been living in Cyprus for six years now. And recently I actually visited Malta. So I can give you a very good overview about the lifestyle, business aspects, taxes, of course, and everything else that is associated with that. And regarding this comparison, I created this beautiful chart right here. And we will start right away with the lifestyle comparison. And the first thing that I realized when I was in Malta is that Malta is much, much smaller than Cyprus. In fact, it is 30 times smaller. And that leads to the fact that Malta feels more like a big city instead of the whole country like Cyprus, for example, because you can go anywhere and you can reach everything within 10, 15 minutes of driving. And that also leads to the fact that Malta can be quite busy. When you look at those three pictures, all of them were taken by me during my Malta trip, you see that the beaches are very busy with a lot of people. The nightlife is definitely alive. And even pool parties like in Café Del Mar, where I was meeting someone, the pool is definitely busy. Those are pictures that you don't really see when you're in Cyprus. Wherever you go, unless you go to Ayannappa during high season, you always have some space at the beach and it's not as crowded as here. So that leads to the fact that Cyprus is, as I said, 30 times bigger, but also we have much more greenery. We have the Akamas National Park, we have the Trados Mountains, we have Mount Olympus and a lot of free space, a lot of land, a lot of agriculture, which you don't really see in Malta just because every plot in Malta has a property on it or a hotel or maybe even a factory, maybe a company, commercial place. So everything is definitely very, very dense in Malta, but in Cyprus, you feel much more free. You have to visit both countries to know exactly what I mean. And when you visit Cyprus and Malta, you will realize that both countries are bilingual. Meaning, if you speak English, it's pretty easy for you to get stuff done, to talk to most people. Yes, Malta has their own native language and also Cyprus speaks Greek. So Cyprus is more Greek, but Cyprus used to be a British colony. So there are still a lot of people that speak English from those times, the older people and the younger generation learns English in the school. Same goes for Malta. In general, I would say that both countries have a pretty similar climate. It is rather hot Mediterranean. But when I was in Malta, it felt a little bit more fresh. So whereas here in Cyprus, it can be very dry when there is not a lot of wind. In Malta, there was quite some breeze coming from the sea that was very refreshing. When it comes to living costs, I would say both are about the same. And for that, we have this chart right here from livingcost.org. And as we see pretty much everything is about the same cost of living for one person is one year is cheaper in Cyprus. But this is something that you don't really see over a longer period of time. So both countries cost about the same to live in, even though some things like groceries and coffee was much cheaper in Malta. Then the last point regarding lifestyle is the geolocation and the connecting flights. I found out that both countries have a very good location. Malta is closer to central Europe and Cyprus is closer to the Middle East. So if you were to travel to the UAE, for example, on a regular basis, it's more convenient to fly from Cyprus. And if you were to visit Europe or the UK on a regular basis, then it's a little bit more convenient from Malta. But both islands are about a two-hour flight from each other. So even that is not a big deal. We are not flying to the other end of the world. And that for the short part about the lifestyle, if you want to know more about the Cyprus lifestyle, I recommend you my private channel, RicoGo. I upload videos like that, which are a little bit more relaxed, like behind the scenes, the raw reality of living in Cyprus outside of my office. And I recently uploaded this video. Cyprus is not what you think here is proof where I go over a lot of different lifestyle aspects. It's definitely worth to watch the video if you have some time. And now we are coming to the interesting part for the tax one channel. And that is business. Cyprus and Malta are two islands with low taxes. In fact, they are ranked top 10 worldwide in the most popular corporate jurisdictions and even number one and two in you. As we can see here in this article by Nomad Capitalist, the best jurisdictions for company cooperation in Europe are Malta and Cyprus, even though it is ranked as six and seven. This is the worldwide article. So it is like one and two in the EU. That's what the author of this article meant. Also, I would say that incorporating a company in Cyprus, especially but also Malta is rather easy. The same applies to the accounting, especially if we compare it to a German GMBH, for example, which I used to run a few years ago. Then even though these two jurisdictions have very low taxes and also a rather bad reputation, especially in the past, for example, where wealthy Russian speaking individuals were transferring a lot of money to Cyprus, then also the banking crisis and or the citizenship by investment program scandal. I would say that nowadays the reputation of Cyprus and Malta is very much improved because we are compliant with the OECD's global minimum tax, which you can see here that is coming from the US. And they are focusing on the corporate tax rates and they want to implement a global minimum corporate tax rate of 15%. And I will talk more about that in a minute. But let's continue with the fact that both islands don't really have many industries, which is the reason in the first place why these countries offer these tax benefits, because they want to attract wealth individuals, because what else do they have? They have tourism, of course, they have the shipping industry, and they have the services industry, which is attached to the tax benefits and some regulatory licenses, et cetera, et cetera, wherein Malta, for example, is the eye gaming industry, very present or gambling it is at the end of the day. And in Cyprus, it is Forex, even though it's not very far away from eye gaming, but also real estate construction. We have energy reserves here because we are in the Middle East. We have oil reserves and also agriculture is quite common here in Cyprus. We are even exporting wine, which is very, very interesting. And both countries used to have CBI, which is the citizenship by investment. So both countries up until recently were selling passports, which were attached to an investment into properties in each country, but both countries pretty much abandoned their CBI program because of pressure from the EU. Cyprus stopped in 2019. Malta stopped recently in 2025, where they don't offer the two million by investment citizenship anymore. But now it is a new program, which I will discuss in a minute as well. And also both countries still until today have the non-dom regime. Very interesting, but different for each jurisdiction. I'm going to explain it in very detail. And also, as said, both have low corporate tax. And now we are going to focus on the taxes. And for that, we will start with the non-dom programs for natural persons like you and me, as Ricardo Gorski and yourself. And then after that, we are going into the corporate scene and discuss corporate tax and everything else that is associated with it. Let's start with Malta. So Malta offers a 183 days tax residency rule where you have to spend officially six months in the country. However, there is also the possibility to gain legal tax residency in Malta when you can prove sufficient economic substance and when you can prove that Malta is your primary residency, your center of life. So to say with a permanent home there, whether you buy it or rent it and other requirements. But let's talk about the tax benefits. Once you are a non-domiciled resident in Malta, then you will be only taxed on your remitted income, meaning as a natural person, you would be technically tax free. But there is a tax free allowance, which is about 35,000 euros. And after that, personal income tax applies. And for non-U nationals under a special residency program, there is a fixed tax of 15% flat. And if you ask yourself now, okay, what applies to me, it is depending on your passport, whether you have a European passport or a non-European passport, the residency type that you are using and the income type you are receiving. So what is the result of being a non-dom in Malta? It means that you can live tax free in Malta if you keep assets offshore. So if you do not remit your income in Malta, in practical terms, that means if you have an offshore bank account somewhere in another country that is not Malta, and you will not transfer that money to Malta, then you do not pay taxes on that assets or that income that you will keep offshore. But here comes the tricky part, where the line between abroad and remitting means everything. Super simple example, let's say you use a Revolute or WISE, the NEO bank, and you have your money on there. In theory, you do not have to pay taxes in Malta if you keep that money in Revolute or WISE. But if you use the credit card from Revolute or WISE in Malta by paying for your groceries, your rent, or any other expense, then you are remitting in that very moment when you swipe the credit card. And then either a personal income tax, which can go up to 35%, would apply or the 15% flood tax, depending on your residency that you are using in Malta. And now it's getting interesting because on top of that, there is also an annual minimum tax that is 5000 euros for the normal non-dom in Malta and 15,000 euros for non-UN nationals under the GRP or any other special residency program. And what that means is if you remit more than 35,000 euros in Malta, which is the tax-free threshold, then you have to pay 5000 euros, even if it is just 35,000 euros in one euro. You do not pay personal income tax or 15% on that one euro. No, you have to pay 5000 euros immediately. But the weird thing is if you do not remit 35,000 in Malta, but let's say 34,999 euros, then you do not even have to pay the annual minimum tax. But if you are being honest, 35,000 might not be enough, especially if we consider that these numbers are for households, not for individual persons. Anyway, that about the Malta non-dom, let's continue with the Cyprus non-dom, which I am actually using since six years now. And the Cyprus non-dom is interesting. It works a little bit different. So we have the international standard 183 days tax residency. But also what Cyprus offers is the 60 days rule tax residency, meaning with five requirements that you need to fulfill simultaneously, you can become a Cyprus tax resident by just staying two months per tax calendar year in the country. In the remaining time, you can spend elsewhere in the world, but you need to keep in mind to not spend more than six months in any other jurisdiction, because then logically you become a tax resident of that country. And then you will need to look into the double tax treaty. A little side note, if you're coming from a country with strict tax authorities like Germany, Scandinavian countries, the UK, then you might even trigger tax residency with less than six months. So definitely make sure to speak to your advisor in your home country, what you need to do in order to completely cut ties with that country and just fully relocate to a new country if that is what you're looking for. Because we are now talking about relocation, and we are discussing offshore setups in a minute. So tax benefit of the Cyprus non-dom is that you're exempt from the SDC, which is the special defense contribution, which basically means in simple words, there is no tax on dividends, there is no tax on interest income, and there is no tax on international rental income. The result is 0% dividend tax, and that lasts for 17 years from the time you become a non-dom. The only thing that applies is a 2.65% NHS contribution, which is the National Health Service, or also called Yesi, basically the health insurance in Cyprus on your first 180,000 euros in dividend income. And that is kept at 180K, which is equivalent to 4.770 euros. So just below 5000 euros, no matter how much more in dividend you receive, even if it is 1 million, 10 million, the maximum you will pay is 5000 euros, which will be relevant later on when we look at an example. The costs for becoming a non-dom is less than 1000 euros for the certificate, and there is no annual minimum tax that you will pay, depending on your dividend income, you just pay the NHS contribution, and that's it. So that about the non-dom programs, but in order to take advantage of the non-dom programs, you first have to become a resident of that country. And for that, what is relevant is the immigration, the residency, and potentially the citizenship if you're interested in that, and that is different to the tax residency. When you come to Cyprus with your German passport, let's say you are first just a visitor and you can legally stay up to three or four months and you cannot work here in Cyprus and then fulfill the requirements for the tax residency, just then you are a legal tax resident. So there is some paperwork associated with becoming a tax resident in either jurisdiction. And here it is super simple for EU nationals, so individuals that have a EU passport or individuals in the European economic area. And when you apply for the PR in Cyprus as a European person, then you will receive the yellow slip, super simple costs a few hundred euros, and that's it. You just have to go to the immigration office and you will receive the yellow slip at the very same day. And Malta has the equivalent e-residency card, which is also very cheap and easy to apply for as a European national. For non-European nationals with non-European passports, Cyprus offers a PR by investment. And there are many different routes. It can be. And the most popular route is to invest into a new building in Cyprus, which is worth at least 300,000 euros. So you have to buy it from a developer. It is a so-called off-plan property, which we advise on with offplan.one, which is the partner company of tax.one. So if you're interested in that, just go to offplan.one and we are happy to assist you. And Malta offers the GRP, which is the global residency program and also other special schemes. It is a very individual here. So I definitely recommend you to book an individual consultation call if you're interested in getting the right residency for you, because as we saw, it is affecting how you are taxed. Other than that, both countries still offer a citizenship program, but it is a new program or programs better said, because nowadays you cannot get a citizenship by a pure investment anymore. It is tied to naturalization, which takes a few years of staying in the country, or Malta offers citizenship by Merit, which still hasn't fully launched yet. But once it is the case, we are also updating you here on this channel. So definitely make sure to subscribe and Cyprus has a very interesting fast track program for highly skilled professionals where you can get the Cyprus passport in just three years compared to seven years if you go through the normal naturalization route. But the requirements are that you either need to incorporate a company of foreign interest, register it with the business facilitation unit, or if you don't have your own business, then you need to be employed in a Cyprus company and receive a minimum salary of 2,500 euros. The same applies if you incorporate your own company and also some other requirements apply like you need to learn a little bit of Greek and you need to work in specific industries and sectors and have a degree. But again, it's getting too individual here. Let's continue with the next point. And that is the corporate taxation. And here we will definitely start with Cyprus, just because Malta needs a little bit more time. So Cyprus is super simple. Currently, the corporate tax sits at 12.5%. On all your profits in a Cyprus limited company, but in 2026, we will have a tax reform where the corporate tax will be raised to 15%. Why? Because of the global minimum corporate tax and Cyprus doesn't want to be gray listed or blacklisted. So we just apply with international standards and Cyprus won't have any reputational or practical problems. But what's very, very interesting is the IP box regime for certain businesses, for businesses with intellectual property, mainly softwares, but also other businesses can apply here and individual tax ruling is definitely necessary because we are using notional deduction in order to use qualifying income and qualified expenses in order to then find out the effective corporate tax because the IP box regime doesn't guarantee 2.5%, but something in between 2.5% and 12.5% or 15% depending on those formulas that are being used for finding out the effective corporate tax. But again, it's just for certain businesses, most businesses, like consulting, services and all that just pay the regular official corporate tax and that's it. The only thing here that's obviously possible is to reduce profits because corporate tax is applied on the profits with business expenses, travel expenses, softwares and equipment expenses. So iPad, MacBook, phone, everything can be written off, can be used as a business expense, reduce the profits and effectively makes you pay less in taxes. So if you found this complicated already, hold your horses because now we are talking about Malta and Malta has a headline corporate tax, an official corporate tax of 35%. That is paid upfront by every single Maltese company. But then depending on your income type, the commissioner for revenue, the Maltese tax authorities is refunding the taxes that you already paid from the 35%. And here we have an article by KPMG where the tax refund system is explained and there are these tax refunds that exist. We have the sixth seventh tax refund. We have the fifth seventh tax refund, the two thirds tax refund and the full tax refund. Here we see that the most common tax refund is the sixth seventh, which means basically sixth seventh of the 35% are being refunded for normal trading income, selling products, consulting and services, businesses of that sort. I will not go over the other tax refunds because they are a little bit less common and you can find them online. So we will continue with normal trading income, consulting services, marketing, whatever, and the effective trading income tax here is about 5%. So from the initial 35% that we paid upfront in corporate tax, we are getting back 30%. But but but these refunds can only be claimed by either holding companies or non-dom residents, basically just upon dividend distribution. So if the profits stay in the Maltese company and there has not been a dividend distribution of some sort, then you will not get a refund and the 35 corporate tax is what you will pay in Malta. But that leads to the fact that you are forced to pay out dividends, which a lot of businesses don't want because it is unpractical. You want to keep the money in the business, reinvest it, use it for other investments, marketing expenses, stuff and whatever there is. And you are right because of that fact, holding structures are very common with Maltese setups because a holding can also receive dividends. And then from that holding, you can basically shift the profits into other trading companies, and you are still eligible for the refund. This does come with the disadvantage that you need two companies in order to take advantage of that refund system in Malta. If you do not want to receive the dividends personally, and that can get quite expensive, I will talk about the costs in a minute. First, I want to mention that you need to keep in mind that if you're using offshore holding companies, for example, you definitely want to make sure to not violate management and control, as well as controlled foreign companies, because depending on where you are a tax resident as a natural person, if you're running an offshore holding somewhere in a jurisdiction that you've never visited, this will not look good, especially not in a manual investigation by the tax authorities. So now it is time for the corporate costs. How much does it cost to take advantage of a company in Cyprus and a company in Malta? In Cyprus, the incorporation is as cheap as 1500 euros for a company formation. Accounting costs about 2000 euros annually. Obviously, it depends on the volume and the transactions that you have in that company. If you're running an e-commerce store with thousands of transactions every year, then the accounting is obviously more expensive than for companies where there is just one invoice per year, because they have one client or one partner company, something like that. The same applies to auditing, but on average, accounting costs about 2k and auditing about 1200 euros in Cyprus. Malta, as you already see, much more expensive. A company incorporation can cost 10,000 euros easily. Accounting 3000 euros easily. The same for auditing and also keep in mind the non-dom fee. If you're emitting more than 35,000 euros in Malta as a non-dom, then you're either paying 5000 or 15,000 euros as the annual minimum tax. But wait, this right here is just for one company. So if you're taking advantage of the holding structure explained earlier, then these costs are almost doubled. Obviously, you will get a discount if you're working with the same lawyer on debt, but it can get quite expensive in Malta. The rule of thumb here is that this Malta setup only makes sense if you make at least quarter of a million, 250,000 euros in profits, everything lower than that. The maintenance and setup costs will just eat you alive. And then a Cyprus setup is much more affordable. And this is also what I loved when I came to Cyprus. Six years ago, I was just a little kid with a dream and a business idea. And I had so little fixed costs and so little bureaucracy, which has allowed me to focus on my business without worrying about paperwork, costs, accounting, auditing and all of that. And we don't have to talk about Germany at all. So all of that now leads to an example to put things into perspective. Let's say an entrepreneur is relocating to Cyprus and he makes one million in profit. From that one million in profit that lays now in the business bank account of the Cyprus limited company, he is paying with the new corporate tax from next year, 150,000 euros in corporate tax. After the corporate tax obligation, we have 850,000 euros left and we are paying us everything as a dividend because we want to have a payday. And then because we are receiving 850K in dividends, which is more than the cap of 180K, the maximum we will pay in NHS contribution is 4770 euros, as explained earlier, which is the 2.65% on the 180K cap. And that leads us to a net income from the business generating the money into our own Revolute Private Bank account, whatever we are using. It is 845K and 230 euros, which is quite good if you ask me because in Germany, I would have to give up almost half of my money. And if you are coming from a high tax country, which I assume you are, then I'm telling you, you will feel very good no matter where you relocate to. So now we are looking at Malta as an example, one million in profit in the Maltese trading company. Then we have 350,000 euros in corporate tax that we need to pay upfront regardless, which actually leads to the fact that this has some cash flow and liquidity issues. But let's just say we transfer this to the tax authorities in Malta. And then there is 650K left, which we also distribute everything as a dividend. And just then upon dividend distribution, we are receiving a tax credit. And we will receive a 300,000 euros refund, which is the 6/7 tax refund. And that leads to 950K euros in net income after everything as a non-domiciled individual. But again, this then means that this money is now a private bank account, not in a holding or in another corporate jurisdiction. And then we have the issue again of, okay, what do we do with the money? Now if it's my private money, if I want to invest it and pay for business expenses, paying as a natural person wouldn't be the cleanest solution from an accounting point of view. But there are answers and solutions for everything that again, we are happy to discuss an individual consultation call. This is a very, very generic basic overview of comparing these two countries. And what I find interesting and what I asked myself in the beginning is that, okay, but if I receive the dividends from my Maltese company as a Maltese non-dom, do I not have to pay personal income tax on debt because I'm technically remitting it and it's more than 35,000 euros? And the answer is no, if you're a Maltese non-domiciled tax resident, then the so-called full imputation system applies, which makes sure that you're not being double taxed because it is already taxed in the company with 35%. You're just receiving the refund and everything is taxed. So that leads to the fact that let's say you do not receive any other foreign income, which would be taxed with income tax, your total tax rate is 5% in Malta. And with that being said, let's come to the conclusion. Both countries are similar islands. I definitely recommend you to visit both countries so that you get an idea of the different lifestyle in those countries. It is also something that you need to consider relocating to new countries, not just where is the lowest tax, because then you can also move to Panama BVI or any other third world country, but you obviously don't want to do that. You want to somehow stay close to your home country, still being able to use public infrastructure and not being afraid to go on the streets. That is why you're probably looking into this video, which are two very developed countries, Malta and Cyprus. As I said, total tax rate depends on various different variables, like income types, amounts, your residency status, et cetera. But in general terms, you can say that Cyprus is currently at 15% with the current 12.5% corporate tax. And in the future, it will be 17% total tax. Why? Because it will be 15% corporate tax plus 2.65%. Yes, the contribution, if it stays the same, it looks like it will stay the same. Yes, technically, it is a little bit more than 17%, but compared to what you paid home, it's peanuts. That's what I always think. I'm actually fine with paying taxes here in Cyprus. If the taxes are being used for the right things, if I see that the country's infrastructure is being developed and we are not sponsoring foreign affairs or irregular migrants coming to the country and just receive free social help while the pension funds are empty. Anyway, sorry about that. I get very emotional about those topics because my family is still in Germany. I'm trying my best to get them here to Cyprus as well. Now back to the topic, Malta's total tax is 5% based on the example that we looked at. But again, keep in mind a lot of individual variables. Then if we just discuss a few more things like banking, for example, Malta's reputation for banking is not the best just as Cyprus is, but the reputation of Cyprus banking has been approved by a lot because the 2013 banking crisis was a late consequence from the global financial crisis. Cyprus central banks invested into Greek bonds because it is like the big brother of Cyprus and those bonds lost value almost overnight. And because of that Cyprus faced issues where they had to get a bail in by the EU and mainly Germany forced the Cyprus banks to impose a so-called haircut where deposits in Cyprus with over 100,000 euros were split in half. And this mainly affected the earlier discussed Russian money here in Cyprus, which you can claim was the initial goal by Germany. But no one knows really the truth. The main point I'm trying to make here is that it was not a volunteer decision by the Cyprus government or the Cyprus banks to cut deposits in half. It was literally a forced decision, so to say with bad luck that Greece and Cyprus were affected by the global financial crisis a little bit later so that it looks like an isolated event which a lot of people don't understand. But as you see, it's getting quite complex. This is a topic for a separate video, which I will definitely make in the future. So make sure to subscribe if you're interested in that or in other topics, everything regarding Cyprus. My question when looking at Cyprus and Malta is how is this sustainability? Because we looked at the minimum tax legislation and we see that the US and the EU and the UK want to implement a global minimum corporate tax. And when they look at Malta and they see this headline official corporate tax of 35%, but behind the scenes there is this refund system. I'm not sure how long this will be sustainable and when Malta will be pressured to change this system. I actually talked about exactly that in 2022, I think. And I also said back then that I don't really think this system is sustainable, but until today nothing really changed. The only set part would be if you set up this holding structure, you pay 25,000 euros in overall costs and all that, and then suddenly legislations change and you cannot exploit this loophole anymore. That would be rather set, but there will be definitely solutions by the Maltese government then as well. And then obviously the potential of both countries. I see a lot of potential in the Cyprus jurisdiction because of the geolocation because of real estate in Malta. I think like it has already been on most people's radars. When I talk to individuals all over the world, many people know Malta already, but Cyprus is like this up and coming country. Limassol is like the new Dubai and Paphos attracts so many foreign investors. Again, definitely another topic which I will discuss. That's about it comparing Malta with Cyprus. I'm sure you found something interesting if you're interested in either Cyprus or Malta. Definitely make sure to visit tax.one and we are happy to discuss everything in an individual consultation call. And if you subscribe to the channel, I will see you in the next video.