Two systems, two philosophies
Cyprus taxes once. A limited company pays 15 % corporate tax from tax year 2026, and with that the company’s tax is settled.
Malta taxes twice and then gives back. A Maltese company pays 35 %. If it distributes, the registered shareholder can reclaim a fraction of the tax paid: 6/7 on trading income, which leaves an effective 5 %.
That construction is the core of every comparison. It explains how Malta advertises 5 % while holding one of the highest headline corporate rates in Europe.
What 100,000 EUR of profit costs in each country
| Item | Cyprus, non-dom | Cyprus, domiciled | Malta, trading profit |
|---|---|---|---|
| Profit | 100,000 EUR | 100,000 EUR | 100,000 EUR |
| Corporate tax | 15,000 EUR | 15,000 EUR | 35,000 EUR |
| Distribution | 85,000 EUR | 85,000 EUR | 65,000 EUR |
| Defence contribution on dividends | 0 EUR | 4,250 EUR | not applicable |
| GESY on the dividend | 2,252 EUR | 2,252 EUR | not applicable |
| Refund to the shareholder | not applicable | not applicable | + 30,000 EUR |
| Reaching the shareholder | 82,748 EUR | 78,498 EUR | 95,000 EUR |
| Total burden | 17.25 % | 21.50 % | 5.00 % |
The figures are not dressed up, and they fall in Malta’s favour: roughly 12,250 EUR per 100,000 EUR of profit against a Cypriot non-dom.
Three things belong with them that the table does not show.
First, timing. The 35,000 EUR is due at once. The refund arrives only after a distribution and a claim, and the claim must be filed within six months of the end of the calendar year in which the tax became chargeable. The statutory payment deadline runs from completed processing, not from the claim. Until then the business is missing a third of its profit as working capital.
Second, structure. The refund goes to the registered shareholder. If that is an individual, it lands in private hands. To keep it inside the business, a second company has to sit above the first, which means two sets of books, two sets of accounts and two filing cycles.
Third, the distribution itself. No distribution, no refund. Anyone retaining profits in the company pays 35 % in Malta and 15 % in Cyprus.
The Maltese 15 %, which is not a shortcut
Since 2 September 2025 Malta has had the Final Income Tax Without Imputation Regulations, Legal Notice 188 of 2025. Under them a company may elect to pay a flat 15 % on its chargeable income.
That sounds like the Cypriot rate but works differently:
- The election binds the company for at least five consecutive years.
- The tax is final. There is no credit and no refund at shareholder level.
- It may not be lower than the effective tax that the ordinary system would have produced, refunds included.
So the election is not a way to pay 15 % instead of 5 %. It is a simplification for cases where the refund route would not reach 5 % anyway.
Residence: the 60 days are the real difference
This is where the two countries separate more sharply than on rates.
Cyprus makes a person resident on more than 183 days in the tax year. Alongside that stands the 60-day rule: at least 60 days in Cyprus, a business, employment or office in a person resident in Cyprus, a permanent home in Cyprus owned or rented, and as an entry condition no stay of more than 183 days in any single other state. The statutory wording is set out in the guide to Cyprus tax residency.
Malta makes a person resident on more than 183 days. Alongside that stands ordinary residence, which does not turn on days but on the facts: a permanent home, family, the centre of economic interests. It cuts both ways and can produce residence without 183 days.
Malta has no short-stay rule of the Cypriot kind. For anyone unwilling to actually move, Cyprus offers a route and Malta does not.
Non-dom: Malta without a limit, Cyprus with one
Both countries separate residence from domicile, and both tax non-doms more lightly. The mechanics differ.
Cyprus exempts non-doms from the special defence contribution on dividends and interest. What remains is GESY at 2.65 %, charged on the first 180,000 EUR of annual income, so at most 4,770 EUR. The status ends after 17 of 20 years. The detail is in the guide to non-dom status in Cyprus.
Malta taxes non-doms on the remittance basis: Maltese income at progressive rates up to 35 %, foreign income only to the extent it is remitted to Malta, foreign capital gains not even when remitted. There is no time limit, because Maltese law has no deemed-domicile rule. In exchange a minimum tax of 5,000 EUR a year applies once foreign income reaches 35,000 EUR and is not fully remitted.
For someone with substantial foreign income meant to stay abroad, the Maltese system is the stronger one. For someone whose income comes from their own company in the country of residence, the remittance rule has nothing to work on.
What running the business costs
| Item | Cyprus | Malta |
|---|---|---|
| Minimum share capital | none | 1,165 EUR, 20 % paid up |
| Official formation fee | from 175 EUR | from 100 EUR filed electronically |
| VAT standard rate | 19 % | 18 % |
| VAT registration threshold | 15,600 EUR | 35,000 EUR |
| Employer contributions | 15.4 %, three of them to 68,904 EUR | 10 %, at most 55.93 EUR a week |
| Genuine exemption from audit | none, only a review below 300,000 EUR | yes, on two of three thresholds (turnover 93,000 EUR) |
On staff the gap is wide at every level: 10 % against 15.4 %. In Cyprus a salary of 60,000 EUR costs the employer roughly 9,240 EUR on top; in Malta around 2,908 EUR, because the Maltese contribution stops rising above an annual salary of about 29,100 EUR. What makes up the Cypriot figure is set out in the guide to Cyprus payroll and contributions.
On formation Cyprus is ahead: no minimum capital, and no stamp duty either since 1 January 2026. What the state actually charges is listed in the guide to company formation in Cyprus.
Price level: the comparison that is usually told wrong
Eurostat publishes a price level for every country, with the EU at 100. For 2024:
| Item | Cyprus | Malta |
|---|---|---|
| Actual individual consumption | 95.1 | 93.1 |
| Food and non-alcoholic beverages | 104.7 | 112.2 |
| Housing, water, energy | 92.1 | 80.1 |
| Electricity, gas, other fuels | 108.3 | 60.1 |
| Transport | 87.7 | 82.6 |
| Restaurants and hotels | 89.0 | 88.7 |
Overall Malta is slightly cheaper, noticeably more expensive at the supermarket, and not comparable on electricity. The Cypriot figures in detail are in the guide to the cost of living in Cyprus.
What argues for Malta
- The effective rate. 5 % on trading income is lower than 15 %, and that is not a matter of interpretation.
- Non-dom without a limit. No expiry after 17 years, no extension against payment.
- Employer contributions with a hard cap. Around 2,908 EUR a year instead of 15.4 % up to the ceiling.
- A higher VAT threshold and a standard rate of 18 rather than 19 %.
- A lower price level overall, energy above all.
- A genuine audit exemption. Cyprus has none: there, every company must be audited or at least reviewed.
What argues for Cyprus
- The 60-day rule. The only one of the two routes to residence that does not require spending the year there.
- One step instead of three. 15 % once, with no forced distribution, no claim and no wait for a refund.
- No second company. The Cypriot arithmetic works with a single limited company.
- No minimum capital, and no stamp duty since 2026.
- Full liquidity. A third of the profit is never sitting with the tax office waiting on a claim.
What we could not confirm
- How long a Maltese refund actually takes. The statutory deadline attaches to completed processing, not to the claim. Advisers quote anything from a few weeks to several months and contradict each other; we found no official processing statistics.
- Whether the Maltese 183-day threshold is in the statute. It is quoted everywhere, yet PwC states expressly that there are few specific rules on residence and domicile. We report both and neither as statutory wording.
- The exact reach of the Cypriot contribution ceiling. Our payroll guide names three of the five employer contributions as stopping at the insurable earnings ceiling and the cohesion fund as uncapped; how GESY with its own 180,000 EUR ceiling fits in was not settled for this comparison. The worked example therefore stays below 68,904 EUR.
- Tax in the country being left. Both calculations cover the country of residence alone. Whatever falls due on leaving a previous country of residence appears in neither system.
How the decision is actually made
On the table, Malta wins. On the question most people actually have, not necessarily, because that question is rarely “where is the rate lowest” but:
- How many days a year do I want to be there? Below 183 days, only Cyprus has a route.
- Do I need the profit in the company or in my own hands? Malta’s 5 % presupposes the distribution.
- How much administration will I carry? One limited company against two companies and a refund procedure.
Anyone answering all three in Malta’s favour should go to Malta. For most of the owner-managed companies we see, at least one answer comes out differently.
Who works this out for your case
This decision rests on three legal systems at once: the Cypriot, the Maltese and that of your current country of residence. Tell us in five questions what your case looks like and you get an answer rather than a table: Cyprus setup from one place.
Once the decision falls to Cyprus, the next steps are the overview of taxes in Cyprus and the tax reform in force since 1 January 2026.