The “double Maltese” is a complex tax technique used by some multinational companies to reduce their tax bill. It is similar to the “double Dutch sandwich” but with Malta instead of the Netherlands.
Dual Maltese involves the use of two intermediary Maltese companies to transfer funds from one subsidiary located in one country to another subsidiary located in another country. This technique reduces the taxes paid on the profits made by these subsidiaries, as Maltese tax laws provide tax benefits such as tax credits for dividends and tax deductions for interest.
The first “Maltese” consists of a foreign subsidiary which makes payments to a Maltese intermediary company, which then transfers these payments to another foreign subsidiary. The second “Maltese” is formed by the second foreign subsidiary, which is owned by a second Maltese intermediary company, which in turn transfers the payments to a third foreign subsidiary.
Using this technique, multinational corporations can transfer funds from one country to another without paying as much tax on the profits made by their subsidiaries, as these payments are deducted from the taxable profits in the different countries.
However, it is important to note that the use of this technique is increasingly controversial and criticized by governments and international organizations, who consider that it can be considered an abusive tax practice and harmful to tax fairness. International and national tax rules are changing to limit the use of these techniques.