The Republic of Malta
A Unique Investment Destination

Establishing Your Business Entity in Malta

Exploring Malta’s Business Advantages

The Republic of Malta is an archipelago comprising three inhabited islands: Malta, Gozo, and Comino. These picturesque islands are strategically located in the heart of the Mediterranean Sea, approximately 100 kilometers to the south of Italy.

Malta has earned a distinctive reputation in the global financial realm for its unwavering commitment to foreign investors. The cornerstone of this reputation lies in its Non-Dom taxation legislation, which is heralded as one of the most enticing in Europe in terms of practical tax obligations.

In 2019, the Maltese government introduced a comprehensive set of guidelines pertaining to the remittance basis of taxation. These guidelines primarily target individuals who are residents of Malta but do not have domicile in Malta, which often includes expatriates residing in Malta.

Consequently, under the non-dom legislation in Malta, a resident is only obligated to pay taxes on the following:

• Income sourced within Malta.
• Locally generated capital gains.
• Foreign source income, only to the extent it is remitted to Malta.

Notably, any gains derived from the transfer of capital assets from foreign sources are exempt from taxation, even when remitted to Malta. Furthermore, there are no inheritance or wealth taxes applicable to non-domiciled residents. Income remitted to Malta is subject to a flat 15% tax rate.

Advantages to Set up your Business Company in Malta

Well-regulated yet flexible regulatory jurisdiction

Malta is renowned for being a well-regulated jurisdiction, with specific legislation covering a host of different forms of entities (e.g. foundations, trusts, protected cell companies, single member companies etc.) as well as for specific business activities, such as gaming, maritime, financial services, intellectual property and so forth.

Efficient Tax Regime

Malta boasts an efficient tax system, both in corporate taxation and other forms of direct and indirect taxation. The tax refund system, particularly upon dividend distribution, significantly reduces the effective tax burden in Malta, making it one of the most competitive rates in the EU. Notably, Malta does not levy withholding taxes on dividends, interest, or royalties. It also does not have controlled foreign company legislation or transfer pricing rules. Furthermore, thin capitalization rules, exit taxes, wealth taxes, payroll-based taxes, and trade taxes are not part of Malta’s fiscal landscape.

Cost-Effective Setup and Operations

Setting up and operating a company in Malta is cost-effective, with lower expenses compared to many other European jurisdictions. Professional services in Malta are generally more affordable, contributing to an efficient and streamlined operational cost structure that aligns with regulatory compliance.

Key Corporate Features

Local Requirements

• Registered Office/Agent: Required
• Company Secretary: Not required
• Local Directors: Not required
• Local Meetings: Not required
• Register of Directors: Yes
• Register of Shareholders: Yes

Annual Requirements

• Annual Return: Yes
• Submit Accounts: Yes (Audited)

Recurring Government Costs

• Minimum Annual Tax/License Fee: N/A
• Annual Return Filing Fee: €100 (minimum)

Procedure to Incorporate

Incorporation entails depositing the paid-up share capital into a bank account and filing the Memorandum and Articles of Association with the Registrar of Companies. Non-EU/non-EEA resident shareholders must also provide a bank reference and identification documentation for the immediate shareholder.

Trading Restrictions

Maltese companies generally do not face specific trading restrictions. However, certain business activities may necessitate licenses before commencement. These activities include investment services, insurance, financial services, gaming, and more.

Companies established prior to December 31, 2006, under the status of an International Trading Company (ITC), are subject to specific restrictions. These companies are prohibited from engaging in trading activities with residents in Malta unless exceptions are provided under the Income Tax Act. The Income Tax Act allows for specific activities, such as trading with companies registered in Malta under the Malta Financial Services Authority Act 1994 or managing Maltese companies focused on affiliated insurance conducted exclusively with non-residents, among others.

Powers of the Company

A Maltese company can exercise all powers defined in its Memorandum and Articles of Association.

Malta Taxation

Malta’s taxation system was established with the guidance of a global tax consultant, resulting in an EU-compliant yet pro-business environment. Key legislation includes the Maltese Income Tax Act (Chapter 123 Laws of Malta), the Income Tax Management Act (Chapter 372), and the Value Added Tax Act (Chapter 406).

Malta offers an effective corporate profit tax of 5% for companies owned by non-residents or residents without domicile in Malta. This unique structure aligns with “subject to tax” provisions of double tax treaties, where companies pay a 35% profit tax, and dividends recipients receive 30% or 6/7 if it’s a corporation with non-resident and non-domiciled beneficial owners. For royalties and interest rates, a 5/7 refund often applies, resulting in a final tax rate of 10%.