Malta Crypto Tax Guide 2024
Author: Roxy, Co-founder & CEO at Finloo
Content
- What is a digital payment token in Malta?
- What are the tax incentives provided by the government this year for Web3 Businesses and Individuals?
- What are the crypto tax rates in Malta?
- How is crypto taxed in Malta?
- When is the deadline for crypto taxes in Malta?
- Should Web3 Businesses register for GST in Malta?
- How about withholding tax and stamp duty?
What is a digital payment token in Malta?
A digital payment token in Malta is a form of digital financial asset that is not represented by a traditional currency and is accepted as a medium of exchange. It can be used for various activities, such as buying goods and services, and can be traded on various platforms.
In Malta, digital payment tokens are generally referred to as virtual financial assets (VFAs) under the Virtual Financial Assets Act (VFA Act). These tokens are recognized within the regulatory framework established by the Malta Financial Services Authority (MFSA). The classification and regulation of these tokens are aimed at ensuring consumer protection and the integrity of the financial system.
What are the tax incentives provided by the government this year for Web3 Businesses and Individuals?
Malta offers several tax incentives for Web3 businesses and individuals, including:
- Investment Deductions: Tax credits and deductions for investments in qualifying industries such as information technology and biotechnology.
- Startup Incentives: Reduced corporate tax rates and additional deductions for eligible expenditures for startups.
- Intellectual Property (IP) Regime: Favorable tax treatment for income derived from qualifying IP rights, such as patents and copyrights.
- Participation Exemption: Companies can receive dividends and capital gains from qualifying shareholdings tax-free.
- Double Taxation Treaties: Relief mechanisms to avoid double taxation on income earned abroad for tax residents of Malta.
For example, the benefit may be applied as follows: the standard corporate income tax rate is 35%, but with appropriate structuring, this can be reduced to between 0-5%. Additionally, part-time crypto miners benefit from a flat 10% tax rate on the first €10,000 of income.
What are the crypto tax rates in Malta?
In Malta, crypto tax rates depend on the type of transaction the type of income. Some transactions, such as buying crypto with fiat, holding crypto, and transferring crypto between wallets, are tax-free. Capital gains from the sale of cryptocurrencies are typically not subject to capital gains tax also. However, income derived from activities such as:
- selling crypto,
- mining,
- staking,
- yield farming,
- receiving crypto through airdrops,
- forks,
- ICOs is subject to income tax.
The specific income tax rates can vary based on individual or business status and the nature of the income.
In Malta, trading profits from cryptocurrency activities are subject to income tax, which ranges from 15% to 35% depending on the individual’s tax residency status. However, long-term investors holding crypto assets for extended periods are exempt from capital gains tax. For corporate entities, the standard corporate income tax rate is 35%.
How is crypto taxed in Malta?
Crypto is taxed in Malta based on income generated from crypto trades and income-bearing crypto transactions. The taxation of cryptocurrencies is categorized as follows:
Income Tax: Gains from crypto trades and income from mining, staking, yield farming, and ICOs are taxed as income.
VAT: Certain ICOs and transactions may be subject to VAT.
Capital Gains Tax: Generally not applicable to cryptocurrencies unless they are classified as capital assets.
Tax-Free Transactions: Buying crypto with fiat, holding crypto, and transferring crypto between wallets are tax-free.
Mining activities are taxed at a progressive rate, with a special flat rate of 10% for part-time miners on the first €10,000 of income. Payments for goods and services in cryptocurrencies are taxable, and such transactions are VAT-exempt in the EU
When is the deadline for crypto taxes in Malta?
The specific deadline for crypto taxes in Malta aligns with general tax deadlines, which usually fall on April 30th for individuals and June 30th for companies. It’s important for taxpayers to stay updated with any changes or extensions announced by the Maltese tax authorities
Taxpayers can submit their returns online via the Malta government’s tax portal using their e-ID account.
Should Web3 Businesses register for GST in Malta?
Web3 businesses in Malta do not need to register for GST, as cryptocurrency transactions are exempt from VAT in the European Union. This exemption applies to payments made for goods and services using cryptocurrencies.
Web3 businesses involved in taxable activities such as providing services or selling goods may need to register for VAT in Malta. This includes businesses conducting ICOs or selling NFTs that qualify as taxable services.
- How about withholding tax and stamp duty?
Malta does not impose withholding tax on dividends paid to non-residents, nor does it levy stamp duty on the transfer of crypto assets. This favorable tax treatment makes Malta an attractive destination for crypto businesses and investors. However, traditional stamp duty rules may apply to transactions involving transfer of ownership of certain assets. It`s depend from specific circumstances and nature of the transaction.
The tax treatment of crypto assets in Estonia continues to evolve as the market matures, reach out to Finloo at [email protected] to find out more!
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Check out the full Global Crypto Tax Report 2024