It is a strange thing to watch a United States senator stand at a podium and, without meaning to, deliver the finest pitch a small Mediterranean island has heard in years.
Marcus — a software founder in Austin, the kind of man who reads SEC filings the way other people read the sports page — was only half watching. The clip rolled across his feed at midnight. Bernie Sanders, white hair lit like a halo, jabbing the air, thundering about a rigged system that lets America's biggest corporations spirit their profits off to "tax havens" like Malta, Singapore, Switzerland.
Then came the numbers, and Marcus sat up.
Abbott Laboratories, the senator said, booked all its profits through a Malta subsidiary with no employees, and shaved $336 million off its tax bill in a single year. Thermo Fisher: $3.5 billion. S&P Global: $269 million. Yum Brands — the people who make your Taco Bell — $121 million. Even Crocs, the foam-clog company, walked out of Valletta $47 million lighter.
Sanders meant it as an indictment. Marcus heard something else entirely.
Wait. That's legal? Where do I sign?
This is the article I wish Marcus had read that night, before he started drafting org charts on a napkin.
The island everyone loves to scold
Let's begin where the outrage ends, because the outrage skips the most important word: legal.
Malta is not hiding anything. The mechanism that so offends the senator is not a back-room loophole whispered between consultants. It is a published, statutory, decades-old feature of Maltese law called the full imputation system, and it was negotiated openly with the European Commission and blessed in a 2007 agreement that preserved Malta's right to compete.
Here is the whole trick, and it is not really a trick at all. A Maltese company pays corporate tax at a headline rate of 35% — higher, note, than the US federal corporate rate. When that company distributes a dividend, its shareholder can claim back six-sevenths of the tax the company paid on trading profits. Do the arithmetic and the effective rate lands at roughly 5%.
Why does Malta allow this? Because its system refuses to tax the same euro twice. Most countries tax the company's profit, then tax the dividend in the shareholder's hands — two bites of one apple. Malta takes one bite. The refund simply unwinds the corporate-level tax so the shareholder isn't taxed a second time on money the company already paid tax on. Profit is taxed once, cleanly, at the shareholder's true rate. (PwC's Malta tax summary lays out the refund accounts and the participation exemption in detail.)
This is not a scheme that survived in the shadows. It was audited into the daylight. When Malta joined the EU, its tax code was dragged through the Code of Conduct Group and OECD review and came out the other side intact and compliant. The refund is the same for a German shareholder, an American one, or a Maltese pensioner. And in 2025 Malta even added an optional 15% flat regime alongside the classic system — hardly the behaviour of a jurisdiction trying to dodge scrutiny.
So when a senator calls Malta a "tax haven," what he is really objecting to is tax competition itself — the audacity of a 500,000-person island deciding it would rather have a thriving financial-services sector than match the rates of nations a hundred times its size. That is not corruption. That is sovereignty. A small state's right to set its own price for doing business is not a bug in the European project; for places like Malta, it is the only lever they have.
Marcus, watching from Austin, found all of this deeply reasonable. He was right to.
And then he made the mistake almost every American makes next.
The chart that doesn't belong to you
Marcus called his advisor the following morning, already half-built in his head: a Malta holding company, an operating company beneath it, his SaaS revenue routed through the island, that beautiful 5% number glowing on the spreadsheet.
His advisor let him finish. Then asked one question.
"Marcus — when Abbott does this, who owns the Malta company?"
The answer is the entire article. Abbott is a US C-corporation. You are a guy. And in the eyes of the US tax code, those are not two sizes of the same thing. They are two different planets.
Here is the part Sanders never explains, because it would ruin the speech. The Malta refund does not "beat" America's anti-avoidance rules. America's rules — for corporations — were quietly built to let it through.
When a US company owns a foreign subsidiary, that subsidiary is a Controlled Foreign Corporation, and its earnings get pulled back into US tax each year under a regime that in 2026 is called NCTI — Net CFC Tested Income, the rebranded successor to GILTI under the 2025 tax law. The CFC's profit doesn't get to sit on the island untouched. It gets taxed in America whether or not a single dollar comes home.
So why doesn't that destroy the Malta benefit for Abbott? Because a C-corporation gets a toolkit an individual simply does not:
A §250 deduction that drops the effective US rate on that foreign income to about 12.6%.
A §960 deemed-paid foreign tax credit for the tax the Malta company paid — and crucially, the company paid 35%, even though the refund is paid to the shareholder entity above it, not to the company itself. So America sees a high-taxed subsidiary and hands over credits accordingly, while the cash actually borne, after the refund, is 5%. The credit is calculated on tax the group never economically suffered. That mismatch is the engine of the whole structure.
A §245A participation exemption that lets the eventual dividend come home essentially tax-free.
(Cooley's breakdown of the 2025 international changes walks through how these corporate-only levers now fit together.)
Every one of those instruments — the §250 deduction, the deemed-paid credit, the participation exemption — belongs to corporations. Strip them away and run the exact same Malta chart for Marcus the individual, and watch what happens:
His share of the Malta company's income is taxed to him currently, at his full ordinary US rate — up to 37%. He gets no deemed-paid credit for the Malta tax. Worse, the kind of income a paper trading or licensing company throws off is often classic Subpart F income — foreign base company income — which is taxed to him immediately regardless of any of this. The 5% Maltese rate doesn't reduce his American bill by a cent. The same boxes on the same chart produce the opposite result. (Bloomberg Tax's NCTI walkthrough shows just how differently the individual and corporate calculations run.)
There is a partial bridge — a §962 election that lets an individual be taxed as if he were a corporation, unlocking the corporate rate and the credit. But it comes with its own second layer of tax on the way out, and it does not magically gift a solo founder the transfer-pricing machinery, the genuine substance, and the army of lawyers that let a multinational defend the migration of billions in profit to an office with no staff.
So Marcus's napkin sketch wasn't illegal. It was borrowed from a wardrobe cut for someone three hundred times his size.
What Malta actually offers a founder like Marcus
Here is where the senator's framing and the consultant's caution both fall short — because the honest answer isn't "you can't," it's "not like that."
If Marcus genuinely runs his business through a US C-corporation, with real operations and real people on the island, the Malta structure is open to him exactly as it is to Abbott. Legitimately. The door is not locked; it simply has a sign on it reading corporations and substance only.
But for most individual founders, the real prize on the island was never the photocopied org chart. It is Malta itself. Relocating your own tax residency. Restructuring not where your profits appear to be earned, but where you and your company genuinely are. Malta's gift to the individual entrepreneur is a legitimate, low-friction, EU-passported home base — not a paper company that collapses the moment a US examiner asks who actually does the work.
That distinction — between pretending your profits moved and actually moving your life — is the entire difference between a structure that survives an audit and one that becomes the cautionary tale in next year's Senate speech.
The invitation hidden in the indictment
Marcus closed his laptop that morning a little wiser and, oddly, a little more excited. He had gone in chasing a magic trick and come out understanding a system — one that rewards people willing to do the real thing and quietly punishes those hunting a shortcut.
Bernie Sanders stood at his podium believing he was issuing a warning. To a certain kind of person — the kind who builds rather than complains, who reads the filing instead of the outrage — he was issuing an invitation.
The structures are real. The island is legitimate. The mechanics are knowable. The only question Malta ever really asks is the one Marcus's advisor asked first:
Are you willing to do it properly?
For those who are, the door is open. Life is short. One shot. The senator just told you where to look.
This article is general commentary on international tax structuring, not personal tax or legal advice. Cross-border structures involving US persons are unforgiving of guesswork — speak to a qualified adviser before you build anything.