Setting up your business company in Malta

What Malta can offer you

The Republic of Malta is an archipelago consisting of three inhabited islands Malta, Gozo and Comino. The Maltese islands are situated in the middle of the Mediterranean Sea about 100 km South of Italy.

Across the financial world, Malta has become famous for being incomparably friendly with all foreign investors who choose the country as the home for their capital. Among the reasons for this well-earned reputation is the Non-Dom taxation legislation, one of the most attractive in Europe when it comes to enforceable tax payments.

Since 2019, the Maltese government authorities issued a set of guidelines concerning the remittance basis of taxation. These guidelines are directed specifically at people who are Malta residents but aren’t domiciled in Malta, i.e., ex-pats who live in Malta.

Therefore, as a Maltese resident under the non-dom legislation, a person must only pay taxes on the following:

  • Locally sourced income, meaning income acquired within Malta.
  • Locally sourced capital gains.
  • Foreign source income only to the extent remitted to Malta.

Any gains on the transfer of capital items from external sources aren’t part of the tax legislation even when remitted to Malta. There is also no inheritance or wealth tax enforceable on non-domiciled residents. Further, income remitted to Malta is taxed at a flat 15% rate.


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.

An efficient tax jurisdiction

Malta has an effective and efficient tax jurisdiction, both in respect to corporate taxation as well as other direct and indirect taxation. Malta adopts a system of tax refunds upon the distribution of dividends. The tax refund system significantly lowers the effective tax suffered in Malta and in fact this effective rate is presently the lowest in the EU region. Malta does not levy any withholding tax on payments of dividends, interest and royalties. Distributions to shareholders of a Maltese company by a liquidator in the course of winding up the to the extent to which they represent income derived by the company are deemed to be dividends paid to the shareholders out of the profits derived by the Maltese company. Malta does not have any controlled foreign company legislation as well as no transfer pricing rules. Malta’s Income Tax Act does not contain any thin capitalisation rules. Malta does not levy any exit taxes, wealth taxes or any payroll-based tax or trade tax.

Low set up and operational costs

The costs of setting up and running a company in Malta are reasonable and relatively lower than the same costs in other jurisdictions in Europe. Professional services are normally attained at considerable lower rates than in most of Europe and these entail an overall efficient and lean operating cost structure whilst being compliant in all respects.

Key corporate features

  • Type of Company – Private Limited Liability Company
  • Political Stability – Good
  • Common or Civil Law – Civil (strong Common Law influence)
  • Disclosure of Beneficial Owner – No (optional)
  • Migration of Domicile permitted – Yes
  • Corporate Taxation – Yes but credits / refunds should apply to shareholder(s)
  • Language of Name – Latin Alphabet
Corporate requirements
  • Minimum number of Shareholders – Two / One
  • Minimum number of Directors – One
  • Corporate Directors permitted – Yes
  • Company Secretary required – Yes
  • Usual Authorised Capital (Private Company) – €1,165
Local requirements
  • Registered Office/Agent – Yes
  • Company Secretary – No
  • Local Directors – No
  • Local Meetings – No
  • 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 (min)

Procedure to incorporate

This entails the deposit of the paid-up share capital into a bank account and the filing of the Memorandum and Articles of Association with the Registrar of Companies. Non-EU/ non-EEA resident shareholders are also required to submit a bank reference besides an identification document for the immediate shareholder (e.g. passport copy or certificate of incorporation).

Restrictions on trading

There are no specific restrictions on trading imposed on Maltese Companies. However, it must be noted that companies involved in particular spheres of economic activity may require a license before commencing their activities. Such activities would include investment services, insurance business, other financial services and also gaming activities, to mention a few.

Companies incorporated prior to 31st December 2006 and having the status of an International Trading Company (ITC) are subject to the restriction that no trading activities can be conducted with persons resident in Malta, except as provided by the Income Tax Act.

The Income Tax Act specifically allows the following activities to be undertaken by an ITC:

  • engage in 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 15% of the ordinary share capital of the said International Trading Company;
  • trade with companies registered in Malta under the Malta Financial Services Authority Act 1994;
  • trade with other International Trading Companies;
  • manage Maltese companies whose business is restricted to affiliated insurance (or “captive insurance”) carried on exclusively with non-residents;
  • provide 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;
  • provide 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.

Powers of company

A Maltese company may exercise all those powers outlined in the Memorandum and Articles of Association of the Company.

Malta taxation

When creating a new taxation system, Malta was assisted by a global tax consultant, whose expertise allowed to create an EU-compatible, but yet pro-business environment. The main legislation is 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)

5% effective corporate profit tax, if companies are owned by non-residents or by residents without domicile in Malta. The unique structure complies with “subject to tax” regulations of double tax treaties: companies pay a profit tax of 35% and the recipient of dividends receive 30% or 6/7, if it is a corporation whose beneficial owners are not both resident and domiciled in Malta. In case of royalties and interest rates, there is sometimes a 5/7 refund, so the final tax rate is 10%.

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