DIVIDEND TAX in EUROPE
and the smart corporate tax system in Malta with
Look at OECD data to go deeper on the issue
|Source: OECD, “Tax Policy Reforms 2019,” Sept. 5, 2019, https://www.oecd.org/tax/tax-policy-reforms-26173433.htm; OECD.Stat, “Table II.4. Overall statutory tax rates on dividend income,” 2019, https://stats.oecd.org/index.aspx?DataSetCode=TABLE_II4.|
|Country||2017 Tax Rates||2018 Tax Rates||2019 Tax Rates|
|France||44.0 percent||34.0 percent||34.0 percent|
|Iceland||20.0 percent||22.0 percent||22.0 percent|
|Latvia||10.0 percent||0.0 percent||0.0 percent|
|Norway||29.8 percent||30.6 percent||31.7 percent|
Some countries, MALTA is one of the most interesting, have integrated their taxation of corporate and dividend income to eliminate double taxation. In most countries, though, dividend taxes add another layer of taxation on corporate income.
Imagine a business earning a profit of $100. This profit is subject to a corporate income tax of 22.5 percent (the average of the European countries covered), resulting in corporate income taxes of $22.50 and after-tax profits of $77.50. The business decides to distribute these after-tax profits as dividends to its shareholders. These shareholders then need to pay an average of 23.5 percent in dividend taxes, a tax bill of $18.21. The total tax bill on a $100 profit then amounts to $40.71, which is an integrated tax rate of 40.71 percent. As this example shows, when analyzing corporate income taxation, it is important to look at dividend taxes in the context of other layers of taxation.
CORPORATE TAX SYSTEM in MALTA, Europe
CORPORATE TAX SYSTEM MALTA,
Europe and global bad practices and regulation incentivizing CORPORATE DEBT instead of EQUITY, MALTA has instead a fair NID policy
Thin-Cap Rules in Europe
High-tax countries create an incentive for companies to finance investments with debt because interest payments are tax-deductible, which is usually not the case for equity costs.
CORPORATE, BOARD, TAX, LEGAL, BUSINESS ADVISORY: PURSUING SUBSTANCE
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