Take the stairs to the second floor of an old brewery on the Mediterranean archipelago of Malta and buzz yourself in to a tiny office hidden behind a heavy metal door.
The air smells of hops, but this place isn’t just brewing beer: It’s the headquarters for a convoluted strategy that the world’s biggest corporations use to dodge billions of dollars in U.S. income taxes.
Consider Crocs. One of the world’s most profitable shoemakers sells its signature chunky clogs to 150 million customers across 100 countries annually. Yet, come tax season, the Broomfield, Colo., company has claimed that all its global profits were actually earned in this two-person office.
Welcome to Malta. The tiniest country in the European Union, with roughly the population of Milwaukee, it is home to turquoise water beaches and a raging nightclub scene. It is also the world’s hot new corporate tax haven.
“The faintly preposterous tax schemes of the past,” said Philip Laroma Jezzi, a tax law professor at the University of Florence, “have given way to something far simpler: Malta.”
The accounting firms KPMG, PwC, Deloitte and EY are aggressively marketing the strategies that Crocs and other companies are using to push profits to Maltese units with ghost offices and no employees. A KPMG presentation reviewed by The New York Times laid out a byzantine arrangement for prospective clients to slash their tax bills by arbitraging U.S. and Maltese rules.
“The choreographers are the Big Four,” said Michael Hamersley, a former tax lawyer at KPMG and EY. “They seek out the opportunity to exploit the tax system.”
Crocs, Deloitte and EY didn’t respond to requests for comment. KPMG and PwC didn’t answer questions about their Malta tax businesses.
Accounting firms present the Maltese maneuvers as legal business transactions. But the lack of a business purpose beyond dodging taxes could make them vulnerable to legal challenges by the Internal Revenue Service. The agency is increasingly attacking strategies that it says lack “economic substance.” Companies work hard to manufacture the appearance of a rationale beyond tax avoidance, Mr. Hamersley said.
The ‘single malt’
Thomas Pynchon described Malta in “V.,” his debut novel, as an island that “lies on her back in the sea, sullen.” European tourists mob the streets of Valletta, the capital, where a core of honey-hued, baroque buildings quickly gives way to modern commercial sprawl with little concession to aesthetics.
Malta has refined its appeal as a tax haven over decades. In an interview in his office at the Portomaso Marina, overlooking a harbor filled with yachts, John Dalli, a former finance minister for Malta, recalled hiring KPMG to draft legislation to help the country compete with offshore hubs like Bermuda and Grand Cayman. In the center of Valletta, building after building bears plaques for the law and financial firms that open the nearly endless shell companies claiming the island as their headquarters.
PwC promoted a strategy called a “double Malta” as far back as 2006, promising tax rates in the single digits, compared with typical corporate income tax rates near 30 percent. After Ireland tightened rules on so-called double Irish tax shelters that made it easy to push profits into zero-tax locales, companies like LinkedIn and Abbott Laboratories discovered they could replicate the benefits by shifting part of those structures to Malta. The strategy became known as the single malt.
Malta has an uneasy relationship with the rest of Europe. For years its “golden passport” scheme sold E.U. citizenship for as much as 750,000 euros, about $865,000 at today’s conversion rate, attracting Russian kleptocrats and prompting criminal allegations that the chief of staff to Malta’s prime minister had demanded kickbacks. The European Union sued Malta, and last year the European Court of Justice declared the program unlawful.
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The leak of offshore law firm records known as the Panama Papers linked Maltese politicians to companies enabling tax evasion and money laundering. In 2017, a remote-controlled car bomb killed the investigative journalist Daphne Caruana Galizia in her driveway after she exposed those connections.
After Malta said in 2023 that it would delay joining an international tax crackdown for six years, American companies including Victoria’s Secret, Kraft Heinz and PepsiCo flocked to the island, setting up hundreds of shell companies to exploit its near-zero tax rate. The number of Maltese subsidiaries established by U.S. companies has soared, up nearly 70 percent over the past three years, according to U.S. securities filings and Maltese corporate records.
The Trump administration turbocharged Malta’s tax appeal. On his first day back in office, President Trump withdrew the United States from the international effort to enforce a 15 percent global minimum corporate tax. This past January, the United States completed an agreement with the Organization for Economic Cooperation and Development largely exempting American companies from the pact. With more than 130 countries signed on to enforcing a minimum tax, Malta’s tax laws became particularly attractive.
Lights out
In the scorching summer heat during a recent trip to Malta, a reporter for this article visited a building listed as the headquarters for the Malta units of a slew of U.S. companies. When buzzed inside, he found nothing but empty offices with the lights off. Wall-mounted nameplates announced the presence of dozens of companies claiming the remote building as their Malta headquarters, including Skechers, Microchip Technology and Thermo Fisher.
Officially, Malta levies a 35 percent corporate tax, but firms can drive that rate to nearly zero. Accounting firms supply local tax advisers to serve as board members for the shell companies, while colleagues at the same firms audit the entities’ financial statements.
A presentation titled “Malta: A Legitimate, Tax Competitive E.U. Jurisdiction,” by a Maltese firm called Acumum, detailed criteria for a shell company to pass muster: resident Maltese directors, a head office on the island and a local bank account.
The presentation, which featured a drawing of a sack bound by a golden lock, cautioned: “Note: none of the above factors are conclusive proof.”
KPMG recently wrote a blueprint to bypass the 15 percent global minimum corporate tax: A U.S. parent company establishes a financing entity in Malta, which opens a U.S. branch.
Countries following O.E.C.D. guidelines could impose a “top-up tax” to enforce the global 15 percent minimum, but the KPMG strategy exploits a loophole: It generally allocates the Malta earnings to a U.S. branch, blending them with the higher-taxed profits of the broader U.S. company, effectively hiding the low-taxed Maltese profits.
“Malta’s tax rules are well understood,” a KPMG spokesman said. The interaction between different countries’ rules and the new minimum tax “creates complexity and uncertainty for multinationals, which must navigate an evolving environment.”
Crocs has put more of its tax-strategy eggs into the Maltese basket.
After Crocs in 2022 purchased HeyDude, another shoemaker, it created a new unit in Malta to siphon profit from its newly acquired worldwide trademarks and patents worth more than $3 billion.
Last year, Crocs established a U.S. branch of one of its Malta units. That put Crocs in position to take advantage of the KPMG strategy of hiding low-tax profits.
By charging interest on loans among its own subsidiaries, Crocs shifts profits out of higher-tax countries where it actually sells shoes and into Malta. The arrangement reduced its 2023 tax bill by $218.6 million, Maltese filings show.
Crocs investors are enjoying the upside: Shares in the company, which recently changed its slogan from “come as you are” to “wonderfully unordinary,” have soared nearly 54 percent in 2026, more than quadruple the gain in the broader market.
Other countries may soon copy Malta’s lead.
In May, officials in Switzerland considered delaying a provision of a new corporate tax there. The next month, legislators in Singapore introduced a bill to shield big U.S. companies from aspects of the global minimum tax.
Sabrina Zammit and Julian Bonnici contributed reporting.
The post Crocs Has a Trick for Dodging Taxes: a Tiny Office in Malta appeared first on New York Times.
