Malta vs. Ireland: EU Headquarters Strategies for Medium-Sized Companies with €10+ Million in Revenue

Recently, I met with a client whose software company just surpassed the €15 million mark.

His question was simple: Richard, should I go to Malta or Ireland?

My answer caught him off guard:

It depends on whether you prefer dividends or IP structures.

This is the core difference between Malta and Ireland. Malta shines with its famous 6/7ths rule for dividend distributions. Ireland, on the other hand, is the gold standard for Intellectual Property Holdings and complex group structures.

But let me be frank:

Both countries have their merits. The only question is: Which location fits your business model and your long-term goals?

In this article, I’ll take you on a detailed journey through both EU jurisdictions. We’ll look at more than just tax rates—practicalities matter, too. From substance requirements to setup costs.

There’s one thing I can promise: After reading this, you’ll know exactly which location is the right fit for your business.

Ready? Lets develop your optimal EU headquarters strategy together.

Malta vs. Ireland: Which EU Location Is Right for Your Business?

Before we dive into the details, let me clear up a common misconception:

It’s not just about where you’ll pay the lowest taxes.

It’s about where you can build the best overall structure for your business.

The Key Differences at a Glance

Malta and Ireland follow entirely different tax philosophies. That’s essential to understand.

Who Is Malta the Better Fit For?

Malta is ideal for entrepreneurs with the following priorities:

• Regular Dividend Distributions: The 6/7ths rule makes Malta unbeatable for profit payout
• Simpler Structures: You want to avoid overly complex arrangements
• EU Focus: Your business is mainly concentrated in Europe
• Moderate Compliance Requirements: You prefer less bureaucracy

When Should You Choose Ireland?

Ireland is the better choice if you meet these criteria:

• IP-Intensive Business Models: Software, patents, trademarks are your key assets
• Global Ambition: You want to expand beyond the EU
• Complex Group Structures: You require sophisticated holding arrangements
• Tech Companies: You develop or license technology

By the way: Many of my clients combine both locations. Malta for operating activities, Ireland for IP holdings. Its absolutely feasible and often the optimal setup.

Malta as EU Headquarters: The 6/7ths Rule and Other Tax Advantages

Let me break down the Maltese tax structure for you—in a way that truly makes sense.

The Maltese system operates on the so-called Full Imputation System. That means: Corporate tax is fully credited against personal tax.

How the Famous 6/7ths Rule Works

This is where things get interesting. Malta initially levies a 35% corporate tax on all profits.

But: When dividends are paid to non-Maltese shareholders, you get 6/7ths of the paid tax refunded.

A practical example:

1. Your company earns €100,000 profit
2. Malta collects €35,000 in corporate tax
3. When dividends are paid out, you get €30,000 back (6/7 of €35,000)
4. Effective tax burden: €5,000 or 5%

Its brilliantly simple—and completely legal.

Other Tax Benefits in Malta

The 6/7ths rule is just the tip of the iceberg. Malta offers several additional advantages:

• No Withholding Tax: On dividends, interest, and royalties paid to EU shareholders
• Participation Exemption: Income from shareholdings can be tax-free
• Extensive DTA Network: Over 70 double tax agreements
• Access to EU Single Market: Full access to all EU markets

When Does Malta Not Make Sense?

Honesty matters to me. So I’ll tell you when Malta isn’t the best fit:

• You always retain all profits (in that case, the 6/7ths rule doesn’t benefit you)
• Your business is highly IP-heavy (Ireland would be better)
• You need maximum international reputation (US markets often prefer Ireland)

Practical Considerations for Malta

When planning for Malta, keep these points in mind:

Ireland: The Preferred EU Hub for Tech Giants and IP Holdings

Why have Apple, Google, Facebook, and virtually all tech giants chosen Ireland?

The answer is simple: Ireland is the world’s best jurisdiction for IP structures.

The Irish 12.5% Corporate Tax Rate: More Than Just a Low Rate

Ireland charges 12.5% corporate tax on trading profits. That’s attractive, but not the whole story.

The real draw is in the details:

• Knowledge Development Box: Profits from qualifying IP can be taxed at just 6.25%
• R&D Credits: 25% tax credit on research expenses
• Capital Allowances: 100% write-off for certain IP investments
• Holding Regime: Ideal for complex group structures

IP Structures in Ireland: The Royal Road for Tech Firms

This is where Ireland plays to its strengths. Let me outline a typical structure:

1. IP Holding in Ireland: Owns all valuable IP rights
2. Licensing: Licenses IP to operating subsidiaries worldwide
3. Profit Shift: Profits flow to Ireland as licensing fees
4. Low Taxation: 6.25% on qualifying IP

This works especially well for:

• Software development companies
• Online platforms
• Technology licensors
• Research-intensive businesses

Substance Requirements in Ireland: What You Need to Know

Ireland takes substance very seriously. That’s great for reputation, but also means higher demands:

When Is Ireland the Wrong Choice?

Again, full transparency:

• Simple Services: Without an IP component, Malta is often better
• Low Substance: You want minimal local presence
• Pure EU Activities: Malta can be more cost-effective
• Immediate Liquidity: Ireland’s setup takes longer

Holding Structures for Companies with €10+ Million Turnover

Once you hit €10 million in revenue, the rules change fundamentally.

Now it’s not just about tax optimization. It’s about strategic group structures to set you up for the next 20 years.

The Classic Malta Holding Structure

Here’s the proven Malta setup for larger businesses:

1. Top Holding (Malta): Owns all operating companies
2. Operating Companies: Based across EU countries as per market focus
3. Dividend Flow: All profits channeled to Malta with 6/7ths refund
4. Personal Level: You as shareholder receive tax-optimized dividends

A real-world example from my practice:

An e-commerce entrepreneur with €15 million annual revenue operates companies in Germany, France, and Spain. His Malta holding receives €2 million in dividends yearly. Thanks to the 6/7ths rule, he pays just €100,000 tax instead of €700,000.

The Irish IP Holding Structure for Tech Companies

For tech-based businesses, this setup is often optimal:

1. IP Holding (Ireland): Develops and owns all IP rights
2. Marketing Hub (Ireland): Central marketing and sales functions
3. Operating Satellites: Local entities for customer support
4. Licence Flow: IP is licensed at arm’s length fees

Hybrid Structures: The Best of Both Worlds

For very large organizations, I often combine both jurisdictions:

Anti-Avoidance Rules: What to Watch Out For

The EU Anti-Tax-Avoidance Directive (ATAD) has introduced stricter rules, especially for larger structures:

• GAAR (General Anti-Avoidance Rule): Artificial structures are targeted
• CFC Rules: Controlled Foreign Corporations come under scrutiny
• Interest Limitation Rules: Interest deductions are capped
• Exit Taxation: Asset migration triggers exit taxes

This makes genuine substance more important than ever. Your structure has to make economic sense—not just serve tax purposes.

Practical Implementation: From Planning to Execution

Theory is great. But how do you put this into practice?

Here’s my tried-and-tested 6-phase method for larger organizations:

Phase 1: Analysis and Strategy Development (4–6 weeks)

Before we set up anything, we undertake a full review of your situation:

• Business Model Analysis: Where do your profits actually arise?
• Cashflow Planning: When will you need which liquidity?
• Tax Impact Assessment: How much can you realistically save?
• Risk Assessment: What are your compliance risks?

Phase 2: Structure Planning and Optimization (2–3 weeks)

Now we develop your bespoke structure:

1. Location selection based on your business model
2. Optimal legal form for each entity
3. Intercompany pricing strategy
4. Substance planning for each location

Phase 3: Incorporation and Setup (6–12 weeks)

Implementation runs in parallel across countries:

Phase 4: Migration and Transfer (4–8 weeks)

This phase is often the most critical. It involves transferring existing activities:

• Asset Transfer: IP rights, shareholdings, other assets
• Contract Migration: Client contracts and supplier relationships
• Employee Transfer: Key staff to Malta/Ireland
• System Integration: IT, accounting, controlling

Phase 5: Operational Stabilization (3–6 months)

During the first months, we optimize workflows:

• Finalize intercompany agreements
• Create transfer pricing documentation
• Establish local compliance
• Set up reporting routines

Phase 6: Monitoring and Optimization (ongoing)

A sound structure needs continuous maintenance:

• Compliance Monitoring: Quarterly review of all requirements
• Tax Updates: Adapt to legislative changes
• Performance Review: Annual efficiency check
• Structure Optimization: Adapt to business evolution

Compliance and Substance Requirements in Malta and Ireland

Let me be honest with you:

The days of “letterbox companies” are over. Both countries now demand real economic substance.

That’s a good thing. Only then will your structure be stable and recognized long-term.

Malta: Substance Requirements in Detail

Malta has significantly tightened its requirements in recent years:

• Minimum Capital: €1,165 is no longer enough—€25,000+ recommended
• Local Presence: Real office with genuine infrastructure
• Qualified Persons: At least two qualified people on site
• Board Meetings: At least 50% of meetings held in Malta
• Core Income Generating Activities (CIGA): Value-creating activities in Malta

A practical Malta substance example:

My client with a Malta holding employs a finance director and an accountant locally. That costs €120,000 per year, but secures €600,000 in tax savings on €2 million dividends. ROI: 500%.

Ireland: Higher Standards, Greater Reputation

Ireland’s substance requirements are noticeably stricter:

BEPS Compliance: More Than Just a Buzzword

The OECD’s BEPS initiative (Base Erosion and Profit Shifting) has changed the rules. Most relevant are Action 5 (harmful tax practices) and Action 6 (treaty shopping):

• Economic Substance Test: Your entity must carry out genuine economic activity
• Nexus Test: IP income must be linked to local development
• Principal Purpose Test: Tax advantages can’t be the primary goal

Practical Compliance Checklist

This is the checklist I use with each client:

1. Monthly: Local bookkeeping and payroll
2. Quarterly: Document board minutes and business decisions
3. Semiannually: Update transfer pricing documentation
4. Annually: Review and adjust substance requirements
5. When Changes Occur: Assess tax implications

Cost Comparison and ROI Calculations for Both Locations

Now comes the crucial part: What does all of this really cost?

And even more importantly: Is it worth it for your company?

Setup Costs Compared

Here are realistic costs for a professional structure:

Ongoing Annual Costs

The ongoing costs often outweigh the setup costs:

ROI Calculation for Different Company Sizes

This is where things get interesting. At what company size does each location make sense?

Example 1: €10 million turnover, €1 million profit

• Germany: ~€300,000 tax
• Malta: ~€50,000 tax + €180,000 costs = €230,000
• Savings: €70,000 per year
• ROI: 35% in year one, 46% from year two onwards

Example 2: €20 million turnover, €3 million profit

• Germany: ~€900,000 tax
• Malta: ~€150,000 tax + €200,000 costs = €350,000
• Savings: €550,000 per year
• ROI: 275% in year one, 344% from year two

Example 3: €50 million turnover, €8 million profit (IP-heavy)

• Germany: ~€2,400,000 tax
• Ireland (IP-Box): ~€500,000 tax + €300,000 costs = €800,000
• Savings: €1,600,000 per year
• ROI: 533% in year one, 640% from year two

Break-Even Analysis: When Is It Worthwhile?

Based on my experience with over 200 structures:

• Malta setup: Pays off from ~€800,000 annual profit
• Ireland setup: Pays off from ~€1,500,000 annual profit
• Hybrid setup: Pays off from ~€5,000,000 annual profit

Hidden Costs and Risks

Be honest with yourself—there are also hidden costs:

• Travel Costs: Regular trips for board meetings
• Duplicated Systems: IT, HR, compliance in multiple countries
• Currency Risks: With international structures
• Compliance Risks: Penalties for errors can be costly
• Opportunity Costs: Time spent on structure management

Nonetheless, with careful planning and execution, tax savings usually far outweigh the total costs.