Are you a crypto investor and a tax resident in Malta? Or maybe you are a crypto investor looking for the right country to cash out your investments tax free? In any case, you want to know about Malta crypto tax to understand the opportunities and pitfalls.
Key Takeaways of Taxes in Malta for Crypto
- Taxation of cryptos differ for individuals and companies
- Capital gains realized by private individuals are tax free
- In case of active trading, mining or staking progressive taxes can apply
- For companies all the income is taxable as part of the company’s profits
- Malta introduced various acts in order to support and regulate the crypto space
Does Malta Tax Crypto?
The Malta cypto tax differs for private individuals and companies.
So we’ll make a distinction between whether you invest in cryptocurrencies as a private individual on the one hand or through a Maltese company on the other hand.
Furthermore, we’ll also have a quick look at VAT.
Malta’s Crypto Taxation for Individuals
The tax treatment of cryptocurrencies in Malta varies based on the nature of the transaction.
Malta doesn’t impose any capital gains tax on profits made on the sale of your cryptocurrency investments.
I speak about investments because this is the case when you invest in cryptos for the long run. In other words, when you have a buy-and-hold strategy.
This is important because if you actively trade in cryptocurrencies, the Maltese tax authorities could see this as a professional or business activity.
That means that your income from trading will be subject to the progressive tax rates. These rates start at 15% for income over €9.000 and goes up to 35% for €60.000 and above.
In this scenario, you’ll also have to pay social contributions based on your income. These come on top of the income taxes.
The same applies in case you are active in mining cryptocurrencies or do staking.
Corporate Taxes on Cryptos
The Malta crypto tax situation is different for companies.
The principle is that all profits made by a Maltese company, from cryptos or other activities, are subject to tax.
This means that gains from holding, actively trading or any other activities like mining are all subject to the standard tax rate of 35%. So, there is no separate Malta crypto tax rate for companies.
This rate seems high but luckily you can get a tax refund of most of these taxes once you payout the profit as a dividend.
If you want to learn more about this, I suggest to have a look at my article about tax residency in Malta.
Malta Crypto Tax: VAT
Another point we need to discuss is VAT or value added tax. This tax applies when you do a transaction whereby goods or services are sold.
However, transactions of cryptocurrencies as such are not subject to VAT. Nevertheless, if you use cryptocurrencies to pay for goods or services this does not mean that the transaction will be free of VAT.
Therefore, you need to distinguish between transactions of cryptos itself on the one hand and using cryptos to pay for purchases on the other hand.
The Maltese Legal Framework Around Crypto
Malta intends to be on the forefront of the development of blockchain and cryptocurrencies. The country implemented various laws in this respect.
There are three pieces of legislation you need to know of which regulate everything that has to do with cryptocurrencies and blockchain technology in general.
- Virtual Financial Assets Act (VFAA): the VFAA is the cornerstone for everything that has to do with cryptocurrencies in Malta. The regulation intends to protect investors, ensure market integrity and tries to provide regulatory clarity by establishing a separate framework for everything that has to to with virtual financial assets compared to more traditional investments.
- Malta Digital Innovation Authority Act (MDIA): Via this act the Malta Digital Innovation Authority was established. The MDIA wants to promote innovative technologies while at the same time also regulating them to ensure consumer protection and market integrity. The MDIA also works closely together with other authorities regarding anti-money laundering (AML) and countering the financing of terrorists (CFT).
- Innovative Technology Arrangements and Services Act (ITAS): the ITAS manages the regulatory framework for innovations using distributed ledger technology (DLT). As such, companies in this space can get certified for meeting certain standards regarding security, reliability and functionality.
Let Me Create the Best Tax Strategy for Your Situation
Looking to cash in your crypto investments? Or do you just need assistance with an overall tax setup that matches your lifestyle?
In that case you can reach out! Just like over 200 other nomads who I assisted in drastically reducing their taxes.
