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.

Advantages

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

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

Restrictions on trading

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.

Powers of company

Malta taxation

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%.