Malta Companies and Portugal’s IFICI Regime: A Potentially Tax-Efficient Structure for International Entrepreneurs

For individuals moving to Portugal under the IFICI regime (Tax Incentive for Scientific Research and Innovation), an international company located in Malta may offer an interesting combination of low effective corporate taxation, EU legal certainty and potentially tax-exempt foreign dividends in Portugal.

The structure is not automatically advantageous, and it requires careful planning. However, when the company has genuine substance in Malta and the shareholder qualifies for IFICI in Portugal, the combination can be particularly attractive for international entrepreneurs, consultants and business owners.

What is IFICI in Portugal?

IFICI was introduced under Article 58-A of the Portuguese Tax Benefits Code as the successor, for qualifying activities, to certain benefits previously associated with the Non-Habitual Resident regime.

An eligible individual who becomes Portuguese tax resident may benefit for up to 10 consecutive years.

The principal benefits include:

• a 20% special Portuguese personal income tax rate on qualifying Portuguese-source employment or self-employment income; and
• as a general rule, an exemption from Portuguese IRS on qualifying foreign-source income, except pension income and income arising from jurisdictions included on Portugal’s tax blacklist. Portal das Finanças

This second element is particularly relevant for internationally mobile business owners.

Why can Malta be interesting for an IFICI taxpayer?

Malta is an EU Member State and is not included on Portugal’s current list of jurisdictions with clearly more favourable tax regimes under Portaria n.º 150/2004, as amended. Portal das Finanças

This matters because IFICI generally provides an exemption for qualifying foreign-source income, whereas income from blacklisted jurisdictions may instead be subject to a 35% Portuguese tax rate. Portal das Finanças

Accordingly, a properly structured Maltese company may create the following framework:

Malta company → corporate taxation in Malta → dividend to shareholder resident in Portugal under IFICI → potential Portuguese exemption on the foreign dividend

The precise result depends on the legal classification and source of the income, the shareholder’s IFICI status, and the actual management and substance of the company.

How is a Maltese company taxed?

The standard Maltese corporate income tax rate is 35%.

However, Malta operates a full imputation and shareholder refund system. Following a distribution of taxed profits, shareholders may be entitled to recover part of the corporate tax previously paid by the company. The Malta Tax and Customs Administration confirms that shareholders may receive a refund of part or all of the tax paid at company level, depending on the relevant income. MTCA

For certain ordinary trading profits, the traditional refund mechanism can result in an effective Maltese tax burden substantially below the headline 35% rate.

For example, in the commonly referenced 6/7 refund scenario:

• company profit: €100,000
• Maltese corporate tax at 35%: €35,000
• profit available after corporate tax: €65,000
• potential shareholder refund: €30,000
• net Maltese tax burden: €5,000

This produces an effective Maltese tax rate of approximately 5%, assuming all relevant conditions for the refund are satisfied.

Importantly, the company initially pays the 35% tax. The lower effective rate generally arises only after the shareholder refund process.

Malta also has a 15% final corporate tax option

Malta introduced an optional 15% Final Income Tax Without Imputation regime, available from the 2025 year of assessment.

Eligible companies can elect to pay 15% final tax instead of using the standard 35% imputation/refund mechanism. The election is subject to specific conditions and generally applies for a minimum five-year period. MTCA

This can make Malta attractive not only for businesses seeking the lowest possible effective rate, but also for entrepreneurs who prefer greater simplicity and predictability.

What happens when the Maltese company pays dividends?

This is where the potential interaction with IFICI becomes particularly relevant.

For a Portuguese tax resident who qualifies for IFICI, foreign-source investment income is, as a general rule, exempt from Portuguese IRS, provided the income does not arise from a jurisdiction included on Portugal’s blacklist and the applicable legal requirements are met. Portal das Finanças

Therefore, where:

• the company is genuinely resident and managed in Malta;
• the dividend is properly regarded as foreign-source income;
• Malta remains outside Portugal’s blacklist;
• the shareholder remains eligible for IFICI; and
• no Portuguese anti-abuse or recharacterisation rule applies,

the dividend may potentially be exempt from Portuguese personal income tax under IFICI.

This can create a significant difference compared with the normal Portuguese regime, under which foreign dividends received by an individual are generally exposed to Portuguese taxation.

Example: Malta company owned by an IFICI resident in Portugal

Consider an international consultancy generating:

€500,000 annual taxable profit

Under a qualifying Maltese refund structure, assume for illustration that the final effective Maltese company tax is approximately 5%.

The economic result could be approximately:

• profit before Malta tax: €500,000
• effective Malta tax: €25,000
• economic amount remaining after Malta tax/refund mechanics: €475,000
• dividend received by qualifying IFICI shareholder in Portugal: potentially exempt from Portuguese IRS

This would produce a very different result from operating the same international business directly as a Portuguese individual.

However, this example is illustrative only. The exact treatment depends on the nature of the business, the Maltese refund entitlement, the source of the income and the Portuguese tax analysis.

The key issue: the company must genuinely be in Malta

A Malta incorporation certificate alone is not sufficient.

If the business is incorporated in Malta but all strategic decisions are actually made from Portugal, the Portuguese Tax Authority may examine whether the company is effectively managed from Portugal.

A robust international structure should therefore normally consider:

• directors with genuine decision-making authority in Malta;
• board meetings and corporate decisions documented in Malta;
• local accounting and corporate administration;
• an appropriate registered office and business presence;
• a Maltese bank/payment infrastructure where appropriate;
• contracts and governance consistent with the stated place of management;
• genuine commercial reasons for using Malta.

The objective should be to build a genuine cross-border business structure, rather than a company that exists in Malta only on paper.

What about Portuguese CFC rules?

This is another area that requires careful analysis.

Low foreign corporate taxation can potentially interact with Portuguese controlled foreign company rules, depending on ownership, taxation levels, the nature of the income and the circumstances of the foreign entity.

The fact that Malta is an EU Member State is relevant, but it does not mean that every Maltese structure is automatically outside Portuguese anti-abuse provisions.

For this reason, the structure should be reviewed before incorporation rather than after profits have already accumulated.

Who might consider a Malta–IFICI structure?

This type of structure may merit analysis for:

• international consultants;
• software and technology entrepreneurs;
• founders of international service companies;
• professionals relocating to Portugal;
• business owners with clients predominantly outside Portugal;
• individuals who qualify for IFICI and expect to receive foreign dividends.

It is less likely to be suitable where the entire business is effectively operated personally from Portugal with no genuine commercial presence abroad.

Is Malta a tax haven for Portuguese tax purposes?

No. Malta is an EU Member State and does not currently appear on Portugal’s statutory blacklist of jurisdictions with clearly more favourable tax regimes. Portal das Finanças

That distinction is important for IFICI because foreign-source income from blacklisted jurisdictions is subject to a materially different Portuguese tax treatment.

Frequently Asked Questions

Can IFICI exempt dividends from a Maltese company?

Potentially, yes. Under the current IFICI rules, foreign-source income is generally exempt from Portuguese IRS, subject to exceptions including income connected with blacklisted jurisdictions. The exact source and classification of the dividend must nevertheless be confirmed. Portal das Finanças

What is the corporate tax rate in Malta?

The statutory corporate tax rate is 35%, but Malta’s shareholder refund system can substantially reduce the effective tax burden in qualifying circumstances. MTCA

Can a Maltese company really achieve a 5% effective tax rate?

Certain trading structures using the traditional shareholder refund system can produce an effective rate around 5%. This is not an automatic 5% corporate tax rate: the company first pays 35%, and a shareholder refund may subsequently reduce the economic tax cost.

Does Malta have an alternative to the refund system?

Yes. Malta now offers an optional 15% final corporate tax regime for qualifying entities, subject to the relevant conditions. MTCA

Can I manage the Malta company entirely from Portugal?

That creates material tax risk. If the company’s effective management is in Portugal, the Portuguese authorities may challenge the intended foreign structure. Governance, substance and actual decision-making need to reflect the jurisdiction claimed.

Malta and IFICI: a structure worth analysing, not an automatic solution

The combination of Malta’s corporate tax system and Portugal’s IFICI exemption for qualifying foreign income can create a highly competitive framework for certain international entrepreneurs relocating to Portugal.

The potential advantages include:

• an EU-based corporate structure;
• potentially low effective Maltese corporate taxation;
• efficient dividend distributions;
• possible Portuguese exemption of qualifying foreign dividends under IFICI;
• stronger reputational and banking characteristics than traditional offshore jurisdictions.

However, the structure must be designed around the actual business. IFICI eligibility, foreign-source classification, Maltese substance, effective management and Portuguese anti-abuse rules all need to be considered together.

At GoalSeek, we advise international entrepreneurs and professionals relocating to Portugal on the interaction between IFICI, foreign companies and cross-border income structures.

A Malta structure should therefore be assessed before incorporation and before Portuguese tax residence begins, whenever possible.