The Maltese islands lie at the heart of the Mediterranean Sea and have long been a perfect setting for a mixture of people from all backgrounds to unite in a multicultural setting.

Since 2004, Malta has been a full member of the European Union and successfully adopted the Euro in 2008, increasing the country’s attractiveness for trade because of the common currency and monetary policies. Malta has also been a member of the Schengen Area since 2007.

Malta is a bilingual country and both Maltese and English are recognised by the Constitution as official languages. Most Maltese also have a good command of Italian, while French and German are widely spoken. Business correspondence is in English, which makes Malta an attractive place to work and conduct business given that English is recognised worldwide as one of the main languages of business.

Doing Business in Malta

Over the years, Malta has experienced significant economic diversification. The local economy has simultaneously managed to renovate its traditional sectors such as manufacturing and tourism as well as develop new economic sectors such as pharmaceuticals, aviation, yacht registration and leasing, information and communication technologies, financial services, remote gambling, and digital gaming. The country’s economy is one of the best performers in the EU, especially since Malta maintained growth during the financial crisis.

For a small island with a very open economy like Malta this is of crucial importance. Malta’s economic diversification as well as a conservative banking system has enabled the Maltese economy to withstand the economic turmoil encountered during the last couple of years.

Malta’s development and reputation as the jurisdiction of choice has steadily increased over the years, and has been greatly aided by the efforts of the local authorities and their willingness to support each sector of the economy. The Malta authorities strive to adopt a prudent but flexible approach, providing a solid regulatory framework whilst encouraging progress and innovation.

The fact that Malta’s laws are in line with the relevant EU directives means businesses established in Malta are extremely well placed to operate within Europe. This, together with Malta’s low effective tax rates available to business operating from its shores, provides an extremely attractive environment for conducting business.

Malta can also boast of the 70 double taxation agreements it currently has in force, ensuring that the fear of being taxed unreasonably is eliminated for most international businesses and their owners.

Maltese Companies

A Maltese company can trade internationally throughout Europe (having a Maltese/EU VAT registration) as well as outside the EU. All companies resident in Malta are subject to corporate tax at a flat rate of 35%. A non-domiciled non-resident shareholder is however entitled to a 6/7ths refund of the tax paid by the company. The effective corporate tax rate being paid will therefore fall to circa 5%.

A Maltese holding company can provide many advantages, both as a stand alone company or as part of a lager structure. The holding company would allow for asset protection for business assets of any form but also personal assets including any luxury items, depending on the shareholders involved.

Maltese holding companies enjoy low effective tax rates on world-wide profits including:

  • 0% on dividends received from a participating holding, through the participation holding exemption regulations, that is:
    • where it holds at least 10% of the equity in a subsidiary; or
    • where it holds an investment in a subsidiary of at least € 1.5 million and holds that investment for more than 183 days)
  • 0% on capital gains on the disposal of a participating holding
  • 5% on dividends from non-participating holdings
  • 10% on passive income (interest, royalties etc.)

Working in Malta

One of Malta’s prime natural resources is its people. Malta maintains a relatively low unemployment rate when compared to other EU countries, and this is mainly due to the significant growth in the economy driving demand for labour.

The Maltese Government has always acknowledged the need to facilitate the attraction of highly qualified human resources to Malta, especially in sectors where local talent is limited. Highly skilled personnel are looked upon as a resource that will also aid in the development of local talent. To facilitate the attraction of highly skilled workers a specific personal tax incentive was developed, whereby an Individual’s income from a qualifying contract of employment with a company recognised by the Malta Financial Services Authority, is subject to tax at a flat rate of 15% provided that the income amounts to at least €75,000.

Malta’s low income tax, competitive compensation packages, flexible and collaborative work environment, English-speaking community and warm climate, attracts a considerable number of foreign workers, especially in the online gaming, financial, IT, and tourism sectors.

Living standards in Malta are good and compare well with those of continental Europe, while annual living costs are substantially lower than most of the developed European Countries. Indices for Malta are exceptionally high in terms of the environment, freedom, health, safety, and climate. The island’s infrastructure also supports an extensive range of social, community, and sporting actives including: diving, snorkelling, kayaking, swimming, beach volleyball, basketball, tennis, football, boating and many more.

Living and working in Malta is a unique experience. No other Island can offer as much diversity as Malta can. The islands’ small size and limitless options means that in Malta it is possible to have it all – a good standard of living and an even better work and social life balance.

Sound tempting?

If you are interested in using Malta as a base to set up a European business, please do get in touch with me to see whether it’s right for you. If you are considering moving to the islands in order to do business, you may also be interested in the Malta Individual Investor Programme, which gives high net worth individuals and their families the opportunity to gain Maltese – and therefore EU – citizenship. You can download our complete guide to this programme here.

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