Company formation in Malta

Malta – Highly Beneficial Tax Jurisdiction

The Formation of a company in Malta is swift and extremely tax beneficial. All companies registered in Malta shall automatically be deemed to be tax resident in Malta. Malta Companies are taxed at 35% but on the distribution of a final dividend, shareholders are allowed an advantageous tax credit, with the default tax credit being of 6/7ths of the 35%, leaving a tax leakage of just 5%. If the Malta Company has suffered tax outside Malta, then this foreign tax may also be taken into consideration for tax relief, to further lessen the tax leakage. It is possible for the ultimate tax leakage of a Malta company to be nil (an extremely beneficial position for a fully-regulated, onshore, EU Member State).

A practical illustration of the aforesaid is set forth below:

Maltese Company No Foreign Tax With Foreign Tax
Net Foreign Income 10000 10000
Grossing up with Foreign Tax 0 525
Chargeable Income 10000 10525
Tax at 35% 3500 3685
Credit- Double Tax Relief 0 525
Malta Tax Payable
(tax at 35% less tax credit)		 3500 3160
Shareholder of Maltese Company
Refund on distribution
(6/7 of Malta Tax Payable)		 3000 3160*
Effective Tax Paid in Malta 500 0
Effective Tax leakage in Malta on Net Income 5% 0%

*3160(6/7ths of 3685)

Formation Procedure

The procedure for registering a Malta Company may be completed in approximately two (2) working days, if the following steps are complied with:

Company Name

The Promoters of the Company should choose two (2) or three (3) company names, in order of preference. A company search may be done electronically or manually and is normally completed in a few hours. When the name has been accepted, the promoters of the company must submit the following documents:-

Documents

  • Memorandum and Articles of Association;
  • Know-your-client documents for shareholders and directors of Company;
  • Evidence of payment of share capital;
  • Cheque covering registration fees and publication costs

Memorandum and Articles of Association

The Memorandum must state, among other things, the following:

  • Status of the company whether it is a public company or a private company,
  • The name, residence and identity of the shareholders;
  • The Company Name;
  • The registered office in Malta;
  • The objects of the company;
  • The authorised share capital;
  • The issued share capital;
  • The number of directors, the name, residence and identity of the first directors, and where any of the directors are a body corporate, the name and registered office of the body corporate;
  • The name, residence and identity of the first company secretary;
  • The period, if any, fixed for the duration of the company.
  • The Articles of Association

    • The Articles of Association govern the company’s internal procedures and functions and regulate the rights of its members among themselves.

    Know-your-client documents for shareholders and directors of Company

    The Maltese registrar of companies must ascertain the veracity of the details of the shareholders and directors and shall require identification e.g. passport copies, identity cards or similar documents for all shareholders and directors.

    Where the shareholders and the directors are corporate entities, a copy of the constitutive documents, certificate of incorporation, extract from registry of companies, certificate of good standing or similar document shall suffice.

    Evidence of payment of share capital;

    The minimum issued share capital of a private limited liability company is of just EUR 1165, or equivalent in any other currency,  of which at least 20% has to be fully paid up.

    The Maltese Registrar of Companies shall request evidence of such payment, normally a bank slip or bank letter (the bank may be local or foreign). Alternatively, a declaration by a practitioner (lawyer or accountant) attesting to the remittance of such share capital shall suffice.

    Payment of Registration Fees

    The registration fees payable to the Maltese registrar of companies vary depending on the authorised share capital of the company, and start at just EUR 245. In addition to this, one should add the publication costs for the publishing of the Memorandum and Articles of Association. The cost is calculated on a per page basis, and depending on how voluminous the Memorandum and Articles of Association, shall normally cost around EUR 6 to EUR 15 per copy.

  • Registration Process

    • After the aforesaid documents have been submitted to the Registrar of Companies, the Registrar of Companies shall, after verifying compliance with the Maltese Companies Act and any applicable legislation, issue a certificate of incorporation as evidence of the incorporation of the Malta Company.

  • Company Uses

    • Maltese Law allows for many practical uses for a Malta Company, including but not limited to the following:

    • Holding Companies – holding of all types of assets (tangibles and intangibles);
    • Gaming Companies – Malta has over 380 licensed igaming companies;
    • Shipping Companies – Shipping Companies have a special corporate tax regime – 0% corporate tax;
    • Investment Services – Fund Managers, Fund Administrators, Forex;
    • Financial Services – UCITS and Professional Investor Funds;
    • Business of Insurance – including Captive Insurance.

    Kindly note that special share capital requirements may apply with regard to licensed activities.

    Advantages

    As stated, a Malta Company is a very tax efficient vehicle with an ultimate tax leakage of just 5% or less. Furthermore, a Malta Company has access to Malta’s extensive network of double tax treaties which includes over 50 jurisdictions. Other advantages include the following:-

    • Possibility to re-domicile / continue a Company, in and from Malta;
    • Onshore, reputable jurisdiction yet investor-friendly, low-tax jurisdiction without stigma of offshore, tax haven;
    • EU Member state with access to EU Directives;
    • In the case of licensable activities, such as investment and financial services, Malta licensed companies may passport their services into other Member States;
    • Share Capital may be denominated in any desirable currency;
    • Accessible and friendly regulator;
    • Low running costs for the Malta Company;
    • Transfer of shares in a Malta Company is normally tax exempt for non-residents, as long as the Malta Company owns no immovable property in Malta (not restriction to ownership of immovable property outside Malta);
    • No transfer pricing rules;
    • No thin capitalisation rules;
    • Generous income tax deductions and exemptions;
    • Trading Losses may be carried forward indefinitely;
    • No withholding taxes to shareholders upon remittance of dividends;
    • Friendly and investor-friendly tax authorities with possibility of binding advance revenue rulings;
    • Easy VAT registration of trading companies and low VAT Rate;
    • Access to tax incentives and tax rebates for small businesses as well as business investing in plant and machinery in Malta.

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