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German State Receives 'MaltaLeaks' Data

by Ulrika Lomas,, Brussels

12 May 2017

The German state of North Rhine-Westphalia (NRW) has obtained information, which it claims shows how thousands of owners of companies registered in Malta are avoiding German taxes "in a big way."

The state's Finance Department announced on May 10 that it had acquired a flash drive from an anonymous source containing information on 60,000 to 70,000 Maltese companies. It said the structures are linked to individuals living "in almost all countries of the world."

After an initial evaluation of the data, the Department believes that around 1,600 to 1,700 of these companies are connected to taxpayers in Germany.

According to NRW Finance Minister Norbert Walter-Borjans, the information shows that corporations and individuals are using corporate structures registered in Malta "to bypass tax in Germany in a big way."

"Often, these offshore companies are set up to transfer profits or assets abroad.. and to hide them in inactive mailbox companies," Walter-Borjans said. "Time and again, the investigators also come across company models that were created with the purpose of bypassing corporate taxes in Germany."

While Malta's headline rate of corporate tax, at 35 percent, is higher than Germany's, foreign investors in Malta can claim a number of tax benefits when locating a holding company there by utilizing the country's large network of double tax avoidance treaties, and its participation exemption and tax imputation regimes.

Under Malta's tax imputation system, when dividends are paid by trading companies to the shareholders, these shareholders are entitled to claim refunds of 6/7ths of the Malta tax paid by the company, resulting in an effective Maltese tax rate of five percent.

According to the NRW Finance Department, tax investigators in the city of Wuppertal will now "systematically evaluate" the data contained in the "Malta list."

Walter-Borjans said that, since 2010, information obtained in electronic format from whistleblowers has resulted in the collection of EUR2.4bn (USD2.6bn) in unpaid taxes in NRW, and EUR7bn for Germany as a whole.

TAGS: individuals | Finance | tax | holding company | Malta | tax avoidance | corporation tax | offshore | Germany | dividends | Tax | Tax Evasion

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