Since joining the EU in 2004, Malta has become a globally recognised financial centre and an increasingly popular jurisdiction for corporate structuring.
It is politically stable, is in a convenient time zone, has a reputable regulator and a competitive, transparent tax regime approved by both the EU and OECD.
Typical uses of Maltese companies
Malta companies can be used for a wide range of business activities as trading and holding companies. They are typically used for property ownership, intellectual property structuring, yacht ownership, aircraft ownership, eCommerce activities, investment and general asset holding.
Being located in the heart of the Mediterranean Sea makes Malta a particularly attractive jurisdiction for yacht owning companies who need to import their yacht into the EU. With careful planning and management it is possible to establish structures which allow for a reduction in VAT and in some cases total recovery of VAT paid on the purchase/importation of the yacht and recovery of VAT on the ongoing expenses.
Double taxation treaties, and tax refunds
Malta has an extensive network of double taxation treaties, with 68 agreements currently in place.
Part of the attraction of Malta is that it has the lowest effective tax rate in the EU. Malta companies are taxed at the advanced corporation tax rate of 35%, however, non resident beneficial owners are eligible for a refund of tax paid on dividends. The tax refunds available are:
• 6/7ths refund – due on profits earned from trading activities resulting in a maximum net leakage of 5%
• 5/8ths refund – due on profits derived from passive interest and royalties, resulting in a maximum net tax leakage of 10%
• 2/3rds refund – available in those instances where a company has claimed double tax relief. The refund depends on the type of double taxation relief availed of and is limited to the tax paid in Malta
• 100% refund – applies where profits are derived from a participating holding
Company Formation in Malta: a quick guide
|Company Law||The Companies Act, 1995 came into force on 1 January 1996. The Companies Act replaced the Commercial Partnerships Ordnance of 1962 which had originally introduced modern company law principles into Maltese Law.|
|Types of Company||The Limited Liability Company, based on the English Company model. The Partnership “en nom collectif” where the partners have unlimited liability for the debts of the partnership. The Partnership “en commandite” where at least one partner has unlimited liability for the debts of the partnership. Commercial partnerships, once constituted, enjoy a distinct legal personality.|
|Taxation rates applied to Companies||Companies are taxed at the Advanced Corporation Tax rate of 35%, however, non resident beneficial owners are eligible for a refund of tax paid on dividends. The tax refunds available are: 6/7ths refund—due on profits earned from trading activities resulting in a maximum net leakage of 5%. 5/7ths refund—due on profits derived from passive interest and royalties, resulting in a maximum net tax leakage of 10%. 2/3rds refund—available in those instances where the company has claimed double tax relief. The refund depends on the type of double taxation relief availed of and is limited to the tax paid in Malta. 100% refund—applies where profits are derived from a participating holding.|
|Double Taxation Treaty||Malta has signed double tax treaty agreements with 68 countries.|
|Capital Requirements||Minimum paid up share capital on incorporation is 20% of the issued share capital. The minimum issued share capital for private companies is €1,165 and for public companies is €46,590|
|Members||The minimum number of shareholders for public companies is two, but a private limited company may be formed as a single-member company.|
|Directors||The minimum required number of directors is one and corporate directors are permitted.|
|Secretary||The requirement for Malta Companies to have a company secretary was introduced with the introduction of the Companies Act 1995. A Malta company cannot be incorporated or operated without a company secretary. The secretary must be a person and not a corporate entity.|
|Annual Meetings||There must be at least one General Meeting each year, in addition to any other company meetings.|
|Accounts||At the end of the financial year, audited financial statements must be approved at the general meeting of the company and then submitted to the Registry of Companies. A company may opt for a financial year end other than 31 December as long as the first period is not less than six months and not more than eighteen months.|
|Method of incorporation and timescale||A company is incorporated by submitting The Memorandum and Articles of Association, the identification documents of the subscribers and proof that the initial share capital has been deposited to the Registry of Companies. Once all the documents have been submitted a company can be incorporated in 24 hours.|
To download this information please click the link for our PDF Maltese Company Factsheet.
If you are interested in establishing a Malta Company, please do not hesitate to contact me firstname.lastname@example.org