Malta vs. Ireland: EU headquarters strategies for medium-sized companies with revenues over 10 million

Recently, I sat down with a client whose software company had just crossed the 15-million-euro mark.

His question was simple: “Richard, should I choose Malta or Ireland?”

My answer surprised him:

“It depends on whether you love dividends or prefer IP structures.”

This is, in fact, the core difference between Malta and Ireland. Malta shines with its famous 6/7ths rule on dividend distributions. Ireland, on the other hand, is the gold standard for intellectual property holdings and complex group structures.

But let me be honest with you:

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 locations. We’ll look not just at tax rates, but also at practical aspects—from substance requirements to setup costs.

Because I can promise you one thing: After reading this article, you’ll know exactly which location is right for your business.

Ready? Then let’s develop your optimal EU headquarters strategy—together.

Malta vs. Ireland: Which EU Location Suits Your Company?

Before we get into the details, I want to dispel a common myth:

It’s not about where you pay the lowest tax.

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

The Fundamental Differences at a Glance

Malta and Ireland follow completely different tax philosophies. This is crucial to understand.

Who is Malta the Better Location For?

Malta is ideal for entrepreneurs with the following priorities:

• Regular dividend distributions: The 6/7ths rule makes Malta unbeatable for profit payouts
• Simple structures: You don’t want overly complicated constructs
• EU focus: Your business is mainly Europe-centered
• Moderate compliance requirements: You prefer less bureaucracy

When Should You Choose Ireland?

Ireland is the better choice if you meet these criteria:

• IP-heavy business models: Software, patents, trademarks are your core assets
• Global ambitions: You want to expand outside the EU
• Complex group structures: You need sophisticated holding arrangements
• Tech companies: You develop or license technology

By the way: Many of my clients combine both locations. Malta for operational activities, Ireland for IP holdings. This is absolutely doable and often the optimal solution.

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

Let me explain Malta’s tax structure—in a way that’s truly clear.

The Maltese system operates under the so-called “Full Imputation System.” In other words: corporate tax paid is fully credited to the personal tax liability.

How the Famous 6/7ths Rule Works

This is where it gets interesting. Malta first levies 35% corporate tax on all profits.

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

A practical example:

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

It’s brilliantly simple—and 100% legal.

Other Tax Advantages in Malta

The 6/7ths rule is just the tip of the iceberg. Malta also offers these benefits:

• No withholding tax: On dividends, interest and royalties to EU shareholders
• Participation exemption: Profits from shareholdings are tax-exempt
• Extensive DTA network: Over 70 double taxation treaties
• EU single market access: Full access to all EU markets

When Does Malta Make No Sense?

I value honesty. So I’ll say when Malta is not optimal:

• You always retain all profits (then the 6/7ths rule doesn’t help)
• Your business is very IP-heavy (Ireland is better here)
• 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 every tech giant chosen Ireland?

The answer is simple: Ireland is the world’s best location 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 spectacular on its own.

The real interest lies in the details:

• Knowledge Development Box: Profits from qualified 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 Gold Standard for Tech Companies

This is where Ireland shows its true strength. Let me explain a typical structure:

1. IP holding in Ireland: Owns all valuable IP rights
2. Licensing: Licenses IP to operating companies worldwide
3. Profit shift: Profits flow to Ireland as license fees
4. Low taxation: 6.25% on qualified IP

This is particularly effective for:

• Software development companies
• Online platforms
• Technology licensors
• Research-driven companies

Substance Requirements in Ireland: What You Must Know

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

When is Ireland the Wrong Choice?

Here too, I’m honest with you:

• Simple services: Without an IP component, Malta is often better
• Low substance: You want minimal local presence
• Purely EU activities: Malta may be more cost-effective
• Immediate liquidity: Ireland’s setup takes longer

Holding Structures for Companies with 10+ Million Euro Turnover

Once you surpass 10 million euro in turnover, the rules change fundamentally.

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

The Classic Malta Holding Structure

Here is the proven Malta structure for larger companies:

1. Top holding (Malta): Holds all operating companies
2. Operating companies: In various EU countries depending on market
3. Dividend flow: All profits flow to Malta, with 6/7ths tax refund
4. Personal level: You as shareholder receive tax-optimized dividends

A real-life example from my practice:

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

The Irish IP Holding Structure for Tech Companies

For tech-driven companies, this structure is often optimal:

1. IP holding (Ireland): Develops and holds all IP rights
2. Marketing hub (Ireland): Central marketing and sales functions
3. Operating satellites: Local entities for customer care
4. License flow: IP is licensed at arm’s length fees

Hybrid Structures: The Best of Both Worlds

For very large companies, I often combine both locations:

Anti-Avoidance Rules: What To Watch Out For

With the EU Anti-Tax Avoidance Directive (ATAD), new rules are in force—especially for larger structures:

• GAAR (General Anti-Avoidance Rule): Artificial structures are targeted
• CFC rules: Controlled foreign corporations are scrutinized
• Interest limitation rules: Deductibility of interest is restricted
• Exit taxation: Emigration triggers exit tax

That’s why real substance is more crucial than ever. Your structure must make genuine business sense, not just tax sense.

Practical Implementation: From Planning to Execution

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

Here is my proven 6-phase method for larger companies:

Phase 1: Analysis & Strategy Design (4-6 Weeks)

Before we set up anything, we thoroughly analyse your situation:

• Business model analysis: Where are your actual profits generated?
• Cashflow planning: When do you need which liquidity?
• Tax impact analysis: How much can you really save?
• Risk assessment: What compliance risks exist?

Phase 2: Structure Planning & Optimization (2-3 Weeks)

Now, we develop your tailored structure:

1. Location selection based on your business model
2. Legal entity optimization for each entity
3. Intercompany pricing strategy
4. Substance planning at each location

Phase 3: Formation & Setup (6-12 Weeks)

The practical execution runs in parallel across several countries:

Phase 4: Migration & Transfer (4-8 Weeks)

This is often the most critical part. Here we transfer existing activities:

• Asset transfer: IP rights, shareholdings, other assets
• Contract migration: Customer and supplier contracts
• Employee transfer: Key personnel to Malta/Ireland
• System integration: IT, accounting, controlling

Phase 5: Operational Stabilization (3-6 Months)

In the first months we optimize processes:

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

Phase 6: Monitoring & Optimization (Ongoing)

A good structure needs continuous care:

• Compliance monitoring: Quarterly checks of all requirements
• Tax updates: Adjust for legal changes
• Performance review: Annual efficiency assessment
• Structure optimization: Adapt as business evolves

Compliance and Substance Requirements in Malta and Ireland

Let me be honest with you:

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

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

Malta: Substance Requirements in Detail

Malta has considerably tightened its requirements in recent years:

• Minimum capital: €1,165 is no longer enough—€25,000+ is recommended
• Local presence: Actual office with own infrastructure
• Qualified persons: At least 2 qualified people on site
• Board meetings: At least 50% of meetings in Malta
• Core Income Generating Activities (CIGA): Value-added activities in Malta

A practical example for Malta substance:

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

Ireland: Higher Standards, Better Reputation

Ireland’s substance requirements are much tougher:

BEPS-Compliance: More Than Just a Buzzword

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

• Economic substance test: Your company must have genuine activity
• Nexus test: IP income must be tied to local development
• Principal purpose test: Tax advantages cannot be the main objective

Practical Compliance Checklist

This is the checklist I use with every client:

1. Monthly: Local accounting and payroll
2. Quarterly: Document board minutes and decisions
3. Every six months: Update transfer pricing documentation
4. Annually: Review and adjust substance requirements
5. On changes: Assess tax implications

Cost Comparison and ROI Calculation for Both Locations

Now we get to the most important part: What does all this really cost?

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

Setup Costs Compared

Here are realistic figures for a professional structure:

Annual Ongoing Costs

Ongoing costs are often more significant than the setup:

ROI Calculation for Different Company Sizes

This is where it gets exciting. At what size does each location pay off?

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 first year, 46% from year two

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 first year, 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 first year, 640% from year two

Break-Even Analysis: When Does It Make Sense?

Based on my experience with over 200 structures:

• Malta structure: Worth it from ~€800,000 annual profit
• Ireland structure: Worth it from ~€1,500,000 annual profit
• Hybrid structure: Worth it from ~€5,000,000 annual profit

Hidden Costs and Risks

Be honest: There are hidden costs too:

• Travel expenses: Regular trips for board meetings
• Duplicated systems: IT, HR, compliance in several countries
• Currency risks: For international structures
• Compliance risks: Fines from mistakes can be expensive
• Opportunity costs: Time for structure management

Still: With proper planning and execution, tax savings usually far exceed all the associated costs.