Malta has developed into a reputable financial services centre offering an attractive and competitive environment for international business and investment. A beneficial tax regime supported by an agreement reached with the European Union continues to enhance Malta’s position as an attractive jurisdiction to those investors who want to use Malta as a base for their international activities. Companies, registered or resident in Malta enjoy a range of benefits which include comparatively low running costs, a skilled multi-lingual workforce as well as an extensive treaty network coupled with various other forms of tax incentives.
Malta Company Formation & Incorporation
The process of company incorporation in Malta is relatively simple and straightforward. In fact, it usually takes between one and two working days from receipt of all required due diligence documentation, information and funds to register a Malta company. Modelled on its counterpart in the UK, the Companies Act also regulates the management and administration of Malta registered and/or resident companies.
Requirements & Restrictions of company formation and incorporation in Malta
Malta company law does not impose any restrictions on the nationality and residence of the shareholders, directors or officers of a Maltese company. Furthermore, provided the business operation in question is legitimate, there are no restrictions on the types of activities that a company in Malta can carry out following its successful registration and incorporation. However, the activities of certain Malta companies may be regulated by local authorities such as the Malta Financial Services Authority (MFSA) or the Malta Gaming Authority (MGA).
Prior to submission of the incorporation documents to the Maltese Registry of Companies, the share capital (minimum being €1165) must be paid upon subscription, and deposited in a bank account under the name of the Malta company.
A Malta company is required to have at least one director (two in the case of a public company), who may also act as the company secretary in certain cases. It is possible for a body corporate to act as the director of a Malta business, although the role of company secretary must be filled by an individual. Maltese law does not restrict a shareholder of a Malta company from also being its director.
Maltese law generally requires that a company has at least two shareholders. It is however possible to register a Maltese company with only one shareholder provided the company fulfils certain conditions. Shareholders in Maltese businesses can be either individuals or corporate bodies, whether such are Maltese or not. Furthermore, it is possible for the shares in a Malta company to be held by an authorised fiduciary, thereby keeping the identity of the beneficial owners fully confidential. A Maltese company is also required to hold a members’ Annual General Meeting (AGM) at least once every year.
Annual Return and Audit
A registered Malta company is required by law to submit an annual return to the Registrar of Companies, and to have its annual financial statements audited.
Re-domiciliation (Continuance) of Companies to Malta
Maltese company law provides for the re-domiciliation of foreign companies to Malta and vice-versa. Companies which are re-domiciled to Malta are registered in Malta as Malta companies without the need to be dissolved and wound up in the jurisdiction where they were originally registered.
Continuation will not create a new legal entity but the company shall re-domicile to Malta with all its assets, rights, liabilities and obligations intact.
Upon re-domiciliation being finalised the company becomes domiciled and resident in Malta in terms of the Income Tax Act. No tax or other levy is charged upon continuation of the company to Malta.
Malta also offers a very attractive tax system that can be highly beneficial to companies registered or resident here.
Under Malta’s tax system a company is considered resident in Malta if it is incorporated in Malta or, in the case of a foreign body of persons, if its control and management are exercised in Malta. Tax is charged at a standard rate of 35% on the chargeable income of the company. However, in view of Malta’s full imputation system of taxation, any income tax paid by the company is credited in full to the shareholder upon a distribution of dividends, so as to avoid the double taxation of corporate profits and entitles shareholders for a refund of any tax paid by the company which is in excess of the shareholders’ income tax liability. Therefore, on receipt of dividends the shareholders are not subject to any tax on such dividend.
Furthermore, the fact that Malta has entered into treaties for the avoidance of double taxation with close to 70 countries (most of which are largely based on the OECD Model Convention), grants relief from double taxation using the credit method, does not withhold any tax on the distribution of interest and royalties to non-resident beneficial owners of such income or on the distribution of dividends irrespective of the residence and nationality of the shareholders, and does not have any CFC legislation, Thin Capitalisation Rules and Transfer Pricing legislation, makes it one of the most attractive jurisdictions to consider when deciding where to set up one’s
Repatriation of Profits and Refunds
Given that in several jurisdictions the nature of the tax refund may give rise to classification problems particularly as to whether the tax refund should be considered as a dividend, income or otherwise, such problem may be remedied via the interposition of a second Maltese (holding) company. Such company would generally hold shares in the Maltese operating/trading company so that dividends distributed by the latter company and refunds received from the Commissioner of Inland Revenue would be received by the holding company as profits. In turn such profits can either be distributed in the form of dividends to the shareholders or reinvested in the operating company. As a result of the imputation system, the tax suffered by the Maltese subsidiary (operating/trading company) will be credited against the tax due by the holding company on the dividends received, resulting in no further tax liability for the holding company. Additionally, no withholding taxes are imposed on distributions of outbound dividends.
Other Benefits of the Maltese Tax System
- No exit or entry taxes upon a shift of domicile or residence to or from Malta;
- No wealth or capital taxes;
- Advance revenue rulings can be obtained on international tax issues;
- Capital gains on transfers of shares in Maltese companies by non-residents are generally exempt;
- Duty is imposed on share transfers but exemptions exist for companies which have more than 90% of their business interests outside Malta;
- Access to the EU Parent-Subsidiary Directive and EU Interest and Royalty Directive.
How we can we help you
Our team is able to handle all the requirements of companies under our administration, depending on the level of service requested by each client. We are the chosen service providers in Malta for many international clients from a wide range of industries.
Providing a comprehensive array of professional services, including tax planning and compliance, assistance with setting up corporate structures and/or businesses in Malta, accounting and book-keeping, payroll, and administration support we ensure that our clients comply with all legal and regulatory requirements imposed on Maltese companies. Furthermore, through our law firm we are also able to assist corporate clients with all their legal requirements, be they of a contractual nature, arbitration or litigation, whereas through our licensed fiduciary services company we are able to provide clients which fiduciary services as required.
Other services include:
- • Management reporting
- • Debt collection
- • Back office operations
- • Assistance with opening of bank accounts
- • Drawing up of business plans
- • Liquidations
- • VAT compliance and reporting
- • Procurement of audit services