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Malta
General Information
Malta is situated in the middle of the Mediterranean Sea, south of Italy. The Republic of Malta is a member of the United Nations, the Commonwealth and forms an integral part of Western Europe both politically and culturally. Malta's competitive tax system, extensive network of Double Taxation Agreements, and its English-speaking educated workforce make it an increasingly popular jurisdiction. Whether you are looking for an effective international trading company, a ship-owning company, or investment vehicle, Malta provides several solutions to accommodate your requirements.
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- Incorporation Fees- from £ 3650
- Renewal Fees - from £ 3200
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£ 3,650 |
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Malta is a Civil Law jurisdiction, however, all modern legislation such as company, tax and maritime laws are modelled on the UK legal system. Malta has been establishing itself as a serious and well regulated Financial Centre since 1988 when advanced modern legislation was introduced for the registration of International Holding Companies and the International Trading Company providing the international investor with an alternative location. These two companies are designed to take advantage of the tax treaties signed by Malta, allowing for the relief of tax on cross border transactions.
Type of corporate vehicles available:
The International Trading Company (ITC)
The International Trading Company (ITC) regime was introduced in 1994 through the enactment of new provisions in the Income Tax Act and Income Tax Management Act. The regime allowed certain Maltese companies, subject to various conditions, to obtain the status of an ITC. Maltese companies which obtained an ITC status were only allowed to carry on trading activities with persons outside Malta. Activities which were permitted to be carried out by an ITC included the following:
Purchases for export of goods manufactured, assembled or processed in Malta provided that such purchases are not made from a person who owns directly or indirectly more than fifteen per cent of the ordinary share capital of the said international trading company.
- Trading with companies registered in Malta under the Malta Financial Services Authority Act 1994
- Trading with other ITCs
- The provision of management, administration or other services to collective investment schemes resident in Malta where such schemes are marketed exclusively outside Malta and are licensed or exempt from licensing under the Investment Services Act, 1994
- The provision of ship management services provided that objects are limited to activities relating to the management of ships which are not less than one thousand tons and which are engaged in the carriage of goods or passengers.
Benefits of an International Trading Company
Malta's full imputation system of taxation and the refund of tax provisions contained in the legislation make the ITC a very tax efficient vehicle for non- resident shareholders. An ITC is taxed at the normal company rate of tax, which is currently 35%. However upon receipt of a dividend from an ITC, non-resident shareholders are entitled to:
- Refund under the Imputation system
Taxed at a flat rate of 27.5% on the gross amount of the dividend and are credited with the amount of tax paid by the company on the profits out of which the dividend was paid. By application of Malta's full tax imputation system and the fact that the ITC would have suffered income tax at 35%, then the non-resident shareholder would effectively be entitled to a refund of 7.5%, which is claimed in the shareholder's income tax return submitted to the Maltese Inland Revenue Department.
- Refunds of Corporation Tax
Shareholders are further entitled to a refund under the provisions of the Income Tax Management Act of two thirds of the Malta tax paid by the company on the same profits. This refund is payable by the Inland Revenue Department not later than the fourteenth day following the end of the month in which the refund becomes due.
International Trading Companies may request an advance ruling on their tax status. Such a ruling guarantees the tax position of the company for a minimum period of five years and may be renewed for a further period of five years. Any changes in the tax legislation during these periods will not become operative before the lapse of two years from the coming into force of the new law. As a result of the favourable tax treatment afforded to non-resident shareholders, and the element of discrimination that this brings about in the context of EU law, the International Trading Company will be phased out by the end of 2006 and replaced with a similar vehicle that is expected to remove the existing discrimination by making the tax refunds available to both resident and non-resident shareholders alike. In the meantime, all advance revenue rulings issued by the Inland Revenue Department will continue to be honoured for the duration of their two-year validity.
International Holding Companies (IHC)The activities of an international holding company (IHC) would typically be that of holding of shares, interest bearing securities, property or royalty rights outside Malta. The tax that will be suffered in Malta on income derived from such investments can be substantially reduced. Like all other Maltese companies, an IHC is liable to a flat-rate corporate tax of 35% on profits. Through a series of tax credits, this tax liability is reduced to 18.75%, which must be paid to the Revenue within 18 months from the end of the accounting year in which it arises. This tax liability can be further reduced if the company has tax-deductible expenses. Normally, reasonable administrative expenses are allowed as deductibles. In the case of dividends received by a shareholder and arising from a "participating holding" the full amount of Maltese tax paid would be refunded, resulting in an effective tax rate of nil. To qualify as a participating holding, the shareholding of the Maltese company in the foreign company must satisfy at least one of the following conditions:
- The holding is 10% or more of the equity of the foreign company;
- The holding is of at least Lm500,000 or its equivalent in foreign currency;
- The holding confers a level of control (director on the board) or rights related to the acquisition of the balance of equity shares in the foreign company; or
- The shares in the foreign company are held for the furtherance of the Maltese company's business.
The Malta tax that will be suffered on any other foreign investment income (that is, dividends, interest, royalties) will range between 0% to a maximum of 6.25% depending on the amount of foreign taxes paid on that income and on the amount of tax deductible expenses.
The tax due by an IHC, on its foreign sourced profits, is to be paid 18 months after the end of the relevant accounting period, or on the date of distribution of such profits, whichever is the earlier. Refunds of tax to the shareholders are payable by the tax authorities within 14 days following the end of the month in which an application for the refund by the shareholders is made
The registration of a Maltese company
A certain procedure is followed for the registration of the company. The first step in the process is the choice of the name of the company.
Name of the company : Anything identical or similar to the name of a company already incorporated or reserved; anything that in the opinion of the Registrar of Companies is offensive. All companies name will end with Limited or LTD or Public Limited liability or PLC.
Memorandum and Articles of Association : Once approval for the company name is obtained, the memorandum and articles of association of the company are prepared and submitted for registration to the Registrar of Companies. The Memorandum should state the name of the company; the name, address and official identification of the officers and shareholders; whether the company is a private company or a public company; the registered office of the company in Malta the objects of the company; details regarding the authorised, issued and paid-up share capital; the number of directors and the particulars of the first directors and secretary.
Shareholders : A private company must have, at least, 2 shareholders who may be individuals or corporate. In order to satisfy this requirement, the practice is for a third party to hold a single share with all the other shares being held by the intended beneficiary. However a "single member company" may also be registered, subject to the satisfaction of certain formalities.
Directors : The minimum number of directors is one, who need not be a Maltese resident. Corporate directors are also allowed. Secretary: The secretary is to be an individual and may be a non-resident of Malta. The Company Secretary of a Malta company is responsible for the Company Register, to keep all minutes of meetings of the Company's members and directors, and to file all documentation with the Registry of Companies as required by law.
The minimum share capital : The authorised and issued share capital of a private company shall be of a minimum of Lm500 (approximately 1250 Euros) of which at least 20% is to be paid-up. Companies may have their share capital denominated in any major foreign currency.
Registered office : Every company is required have a registered office situated in Malta. Global Business Incorp Limited provides registered office facilities in Malta.
Basic Tax Principles : The company rate of tax is a flat-rate of 35% on the chargeable profits based on the audited accounts of the company. However, a system of tax refunds granted to shareholders provides significant fiscal benefits, reducing Malta tax in the hands of shareholders to 0% in the case of holding companies, and 5% in the case of trading companies.
VAT : Maltese companies may need to be registered for VAT purposes. The Maltese VAT prefix is 'MT'
Double Taxation Agreement : Malta's wide network of double tax agreements as well as other methods for relieving double tax on cross border transactions provide an excellent base for establishing tax efficient structures including international trading and holding company activities.
Audit and financial returns : Maltese companies are required to keep financial records and submit audited annual accounts for the company with the Registry of Companies at the end of each financial year. Financial statements comprise of the directors' report, the auditors' report, balance sheet, profit and loss account, notes to the financial statements, together with schedules to the profit and loss account. Accounting records are required to be kept for a period of 10 years. If the books are kept at any place outside Malta the company is required to keep sufficient records in Malta to disclose the financial position of the company to its officers. Failure to maintain accounts or make them available for inspection by the officers of the company at the company's registered office is an offense punishable by a fine.
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- Incorporation Fees-£ 3650
- Renewal Fees - £ 3200
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|
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£ 3,650 |
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Malta is a Civil Law jurisdiction, however, all modern legislation such as company, tax and maritime laws are modelled on the UK legal system. Malta has been establishing itself as a serious and well regulated Financial Centre since 1988 when advanced modern legislation was introduced for the registration of International Holding Companies and the International Trading Company providing the international investor with an alternative location. These two companies are designed to take advantage of the tax treaties signed by Malta, allowing for the relief of tax on cross border transactions.
Type of corporate vehicles available:
The International Trading Company (ITC)
The International Trading Company (ITC) regime was introduced in 1994 through the enactment of new provisions in the Income Tax Act and Income Tax Management Act. The regime allowed certain Maltese companies, subject to various conditions, to obtain the status of an ITC. Maltese companies which obtained an ITC status were only allowed to carry on trading activities with persons outside Malta. Activities which were permitted to be carried out by an ITC included the following:
Purchases for export of goods manufactured, assembled or processed in Malta provided that such purchases are not made from a person who owns directly or indirectly more than fifteen per cent of the ordinary share capital of the said international trading company.
- Trading with companies registered in Malta under the Malta Financial Services Authority Act 1994
- Trading with other ITCs
- The provision of management, administration or other services to collective investment schemes resident in Malta where such schemes are marketed exclusively outside Malta and are licensed or exempt from licensing under the Investment Services Act, 1994
- The provision of ship management services provided that objects are limited to activities relating to the management of ships which are not less than one thousand tons and which are engaged in the carriage of goods or passengers.
Benefits of an International Trading Company
Malta's full imputation system of taxation and the refund of tax provisions contained in the legislation make the ITC a very tax efficient vehicle for non- resident shareholders. An ITC is taxed at the normal company rate of tax, which is currently 35%. However upon receipt of a dividend from an ITC, non-resident shareholders are entitled to:
- Refund under the Imputation system
Taxed at a flat rate of 27.5% on the gross amount of the dividend and are credited with the amount of tax paid by the company on the profits out of which the dividend was paid. By application of Malta's full tax imputation system and the fact that the ITC would have suffered income tax at 35%, then the non-resident shareholder would effectively be entitled to a refund of 7.5%, which is claimed in the shareholder's income tax return submitted to the Maltese Inland Revenue Department.
- Refunds of Corporation Tax
Shareholders are further entitled to a refund under the provisions of the Income Tax Management Act of two thirds of the Malta tax paid by the company on the same profits. This refund is payable by the Inland Revenue Department not later than the fourteenth day following the end of the month in which the refund becomes due.
International Trading Companies may request an advance ruling on their tax status. Such a ruling guarantees the tax position of the company for a minimum period of five years and may be renewed for a further period of five years. Any changes in the tax legislation during these periods will not become operative before the lapse of two years from the coming into force of the new law. As a result of the favourable tax treatment afforded to non-resident shareholders, and the element of discrimination that this brings about in the context of EU law, the International Trading Company will be phased out by the end of 2006 and replaced with a similar vehicle that is expected to remove the existing discrimination by making the tax refunds available to both resident and non-resident shareholders alike. In the meantime, all advance revenue rulings issued by the Inland Revenue Department will continue to be honoured for the duration of their two-year validity.
International Holding Companies (IHC)The activities of an international holding company (IHC) would typically be that of holding of shares, interest bearing securities, property or royalty rights outside Malta. The tax that will be suffered in Malta on income derived from such investments can be substantially reduced. Like all other Maltese companies, an IHC is liable to a flat-rate corporate tax of 35% on profits. Through a series of tax credits, this tax liability is reduced to 18.75%, which must be paid to the Revenue within 18 months from the end of the accounting year in which it arises. This tax liability can be further reduced if the company has tax-deductible expenses. Normally, reasonable administrative expenses are allowed as deductibles. In the case of dividends received by a shareholder and arising from a "participating holding" the full amount of Maltese tax paid would be refunded, resulting in an effective tax rate of nil. To qualify as a participating holding, the shareholding of the Maltese company in the foreign company must satisfy at least one of the following conditions:
- The holding is 10% or more of the equity of the foreign company;
- The holding is of at least Lm500,000 or its equivalent in foreign currency;
- The holding confers a level of control (director on the board) or rights related to the acquisition of the balance of equity shares in the foreign company; or
- The shares in the foreign company are held for the furtherance of the Maltese company's business.
The Malta tax that will be suffered on any other foreign investment income (that is, dividends, interest, royalties) will range between 0% to a maximum of 6.25% depending on the amount of foreign taxes paid on that income and on the amount of tax deductible expenses.
The tax due by an IHC, on its foreign sourced profits, is to be paid 18 months after the end of the relevant accounting period, or on the date of distribution of such profits, whichever is the earlier. Refunds of tax to the shareholders are payable by the tax authorities within 14 days following the end of the month in which an application for the refund by the shareholders is made
The registration of a Maltese company
A certain procedure is followed for the registration of the company. The first step in the process is the choice of the name of the company.
Name of the company : Anything identical or similar to the name of a company already incorporated or reserved; anything that in the opinion of the Registrar of Companies is offensive. All companies name will end with Limited or LTD or Public Limited liability or PLC.
Memorandum and Articles of Association : Once approval for the company name is obtained, the memorandum and articles of association of the company are prepared and submitted for registration to the Registrar of Companies. The Memorandum should state the name of the company; the name, address and official identification of the officers and shareholders; whether the company is a private company or a public company; the registered office of the company in Malta the objects of the company; details regarding the authorised, issued and paid-up share capital; the number of directors and the particulars of the first directors and secretary.
Shareholders : A private company must have, at least, 2 shareholders who may be individuals or corporate. In order to satisfy this requirement, the practice is for a third party to hold a single share with all the other shares being held by the intended beneficiary. However a "single member company" may also be registered, subject to the satisfaction of certain formalities.
Directors : The minimum number of directors is one, who need not be a Maltese resident. Corporate directors are also allowed. Secretary: The secretary is to be an individual and may be a non-resident of Malta. The Company Secretary of a Malta company is responsible for the Company Register, to keep all minutes of meetings of the Company's members and directors, and to file all documentation with the Registry of Companies as required by law.
The minimum share capital : The authorised and issued share capital of a private company shall be of a minimum of Lm500 (approximately 1250 Euros) of which at least 20% is to be paid-up. Companies may have their share capital denominated in any major foreign currency.
Registered office : Every company is required have a registered office situated in Malta. Global Business Incorp Limited provides registered office facilities in Malta.
Basic Tax Principles : The company rate of tax is a flat-rate of 35% on the chargeable profits based on the audited accounts of the company. However, a system of tax refunds granted to shareholders provides significant fiscal benefits, reducing Malta tax in the hands of shareholders to 0% in the case of holding companies, and 5% in the case of trading companies.
VAT : Maltese companies may need to be registered for VAT purposes. The Maltese VAT prefix is 'MT'
Double Taxation Agreement : Malta's wide network of double tax agreements as well as other methods for relieving double tax on cross border transactions provide an excellent base for establishing tax efficient structures including international trading and holding company activities.
Audit and financial returns : Maltese companies are required to keep financial records and submit audited annual accounts for the company with the Registry of Companies at the end of each financial year. Financial statements comprise of the directors' report, the auditors' report, balance sheet, profit and loss account, notes to the financial statements, together with schedules to the profit and loss account. Accounting records are required to be kept for a period of 10 years. If the books are kept at any place outside Malta the company is required to keep sufficient records in Malta to disclose the financial position of the company to its officers. Failure to maintain accounts or make them available for inspection by the officers of the company at the company's registered office is an offense punishable by a fine.
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