Maltese tax law makes a distinction between trading income and income on assets acquired as long-term investment without an intention to trade.
Like when selling bonds or equities, capital gains on the disposal of cryptocurrencies acquired as a long-term investment without the intention to trade are not subject to tax in Malta. On the other-hand, if the person disposing of such cryptocurrencies is doing so as a trading activity, any of such gains will be subject to Malta tax. Mining income done as a trading activity is similarly subject to tax, after the deduction of the related expenses such as equipment depreciation and energy costs.
Malta however offers several fiscal advantages through its well established financial services industry and unique tax regime, particularly applicable to non-resident persons. Apart from setting-off corporate taxable gains against taxable losses and expenses, any remaining balance can benefit of an effective 5% corporate tax rate or even 0% if done through an investment fund. Investors in such structures would need to understand their home countries’ tax position, including the best application of any double taxation agreements with Malta, tax deferral rules, etc.
From a VAT point of view, the payment by cryptocurrencies is exempt from VAT whereas the actual provision of services or supply of goods falls within the parameters of the traditional VAT laws. Transactions to exchange fiat currencies for cryptocurrencies and vice versa are exempt from VAT.
Service Providers' Income Tax
Service providers companies operating in Malta are entitled to avail themselves of Malta’s full imputation tax system and refunds (same procedure applicable to a company, partnership or trust).
On an individual basis, service providers may also avail themselves of the Malta Highly Qualified Persons Rules allowing them a flat tax rate of 15% and tax exemption when income exceeds a threshold amount.