As long as there are taxes, there will be tax evasion. Countries that compete for business through favorable tax structures can create friction with neighbors concerned about lost tax revenue. Malta has attracted international companies with a headline corporate tax rate of 35 percent and a tax refund system that can result in a much lower effective rate for qualifying companies.
Located in the Mediterranean, Malta is an ancient archipelago that has drawn scrutiny over financial transparency, corruption, and money laundering. The release of the Panama Papers fueled political unrest in Malta, where investigative journalist Daphne Caruana Galizia reported on corruption and offshore financial dealings. She was assassinated in 2017. Businessman Yorgen Fenech was later charged in connection with her murder. A subsequent acquittal reported by the BBC involved a separate firearms-related case.
Why Malta attracts companies seeking lower tax burdens
A recent article in The New York Times recounts how Malta has become a leading destination for companies seeking to reduce their global tax burden. Like Ireland, Malta has adopted policies that critics argue facilitate tax avoidance through legal tax-planning strategies. For additional background on offshore accounts, tax avoidance, tax evasion, and related reporting requirements, see our guide, Offshore Tax Matters Explained.
Companies including Crocs have used Malta as part of international tax structures designed to reduce their overall tax burden. Malta's corporate tax system has a headline rate of 35 percent, but qualifying shareholders may receive refunds of a portion of the tax paid by the company, significantly reducing the effective tax rate in some circumstances. Critics, including the Tax Justice Network, argue that Malta's system allows multinational companies to shift profits and reduce taxes that might otherwise be paid elsewhere.
Malta's ongoing tax and financial scrutiny in Europe
Malta was removed from the grey list of the Financial Action Task Force (FATF) in 2022, but aspects of its financial and tax policies have continued to draw scrutiny in Europe. Its investor citizenship, or "golden passport," program also faced legal challenges from the European Union (EU). In 2025, the Court of Justice of the European Union ruled that Malta's investor citizenship program violated EU law.
It remains to be seen how Malta's tax policies will evolve amid continued international scrutiny. If you are concerned about offshore tax compliance or considering an offshore tax structure, set up a consultation or call us at 440-250-9709. Our tax group serves clients across the U.S. and internationally from our offices in Cleveland and Chicago.
