Malta Company Formation

March 07 21:00 2022 by The Editor Print This Article


Tax Benefits of Company Formation in Malta

Subject to the below, the Maltese corporate tax rate of 35% is applicable to all Malta companies on their worldwide income.  Malta Holding Companies enjoy full participation exemption benefits meaning that dividends from subsidiaries of a Malta HoldCo are not taxable on distribution to a Malta holding company.  Shareholders of actively trading Maltese companies are entitled to a refund of 30 out of 35% paid by the company. Overall, this reduces the effective tax leakage to 5%.  The entitlement to tax refunds is also available to any corporate shareholder of a Maltese company.  Royalties also benefit from this effective tax rate and are potentially if they satisfy the rules for IP holding companies owning copyrights, trademarks and patents in Malta.  Non-Malta registered companies resident in Malta by virtue of the board of directors being present in Malta and tech company's registration in Malta as an Oversea Company, are taxable on a remittance basis meaning that passive income 

Initial Share Capital for Malta Company Formation

The minimum share capital of a private company is €1,165, and  €46,588 for public companies.  Of these amounts, at least 20% must be paid up for private companies and 25% for public companies.  The funds must be remitted to a special company in formation account held by your company formation agent, clearly referencing the the name of the company in formation.  This is key to enabling your formation agent to confirm to theMalta Registry of Companies that the initial share capital of the company has been contributed by the promotors of the company.  The share capital of a Maltese company may be denominated in any currency as long as it is equivalent to the minimum prescribed amount.

Malta Company Officers, Shareholders

The company's directors may be of any nationality and corporate directors are allowed to hold office as directors. A company generally needs at least one director and a company secretary.  Corporate secretaries are not allowed. To defend the company's tax residence in Malta and for the purposes of double tax treaty application, it is recommended for some or all of the company's officers to resident in Malta.

Shares can be held by a licensed fiduciary or trustee so that the identity of the beneficial owners is not publicly available at the Registry of Companies.

Malta Company Formation Agents

Most professionals offer Malta Company Formation in Malta, ranging from small legal and accounting practitioners to larger law firms and Big 4 accounting firms.  Malta's company formation costs are very competitive by European standards, however, do not expect fees to compare with offshore jurisdictions that are low on compliance and are not comparable in reputability and good standing. So if a company offers to set you up for Euro345, you can expect additional costs to follow and the practice of misleading clients with 'transparent' pricing is strongly frowned upon by the local community.   Company formation in Malta need not be an expensive exercise. Firms offering a truly one-stop-shop approach providing Malta company formation, company administration, accounting, domiciliation together under the supervision of both lawyers and tax advisors, are able to provide the security of 360 degree know-how at economies of scale that only a true integrated company formation service can deliver.  "one-stop-shop" and "multi-disciplinary" are terms that are loosely used and do not necessarily translate as expected.  Service is generally impeccable and respnosive but do your homework and choose your provider well. For a list of recommended company formation agents, scroll to the bottom of this article.

Minimum capital€1,250Corporate DirectorsYes
Minimum paid up capital€ 250Nationality of DirectorsAny
Currency of CapitalAnyFiduciary ShareholdersYes
EU VAT RegistrationYesShelf Companies availableYes
Refunds within14 daysTime to Register12-24 hours

Language of Maltese Company Documents

Maltese and English are both official languages in Malta. Official documentation and government correspondence, including company registration related documents are drafted in original in English.  Italian is widely spoken and French, German, Spanish are  secondary languages.  English is the language of instruction at the University of Malta and in private schools and educational institutions.

Malta Company Formation Jurisdiction Overview

Malta has pursued its financial centre strategy with a view to establishing itself as a hub for reputable, compliant, transparent and onshore financial centre for company formation in Malta.  Malta put its offshore past back in 1994 when it revoked all offshore laws and embarked on the path to EU membership, fully transposing the EU acquis communautaire into Maltese law in advance of its obligations, including European Company Law directives. Today, Malta is on the forefront of OECD and FATF compliance and is fully white-listed.  Malta is widely regarded as a reputable jurisdiction for company formation of Malta holding companies as well as limited liability companies for domestic and international business activity and investment.

Malta's International Rankings

Malta ranked 47th overall in the Global Competitiveness Report 2012-13 issued conducted by the World Economic Forum, ranking 13th in relation to the Soundness of its Banks, 16th in the Strength of Auditing & Reporting Standards, 15th in Financial Market Development, 12th in the Regulation of its Securities Exchange and 21st in Technological Readiness.  Malta was ranked 2nd European Destination for Fund Managers by the International Fund Investment Magazine and Top 5 Financial Centres to grow in importance by the City of London Financial Services Index.  Malta ranked 7th in Europe's Happy Planet Index 2007 and scored 100% in Quality of Life League by International Living, scoring 100% for Safety & Freedom.  Malta was ranked 12th in the Press Freedom Index by Freedom without Borders.

Origins of Maltese Company Law

Malta's Income Tax Act of 1948 was enacted during British colonial rule and survives today with key characteristics such as Malta's imputation system as well as Malta's source and remittance basis of taxation.  Malta's Companies Act also finds its origins in Malta's colonial heritage and has evolved from the Companies Act shared with the rest of the Commonwealth, of which Malta remains a member, into a modern, EU based set of company legislation facilitating the formation of companies in Malta.  The legislative effort behind Malta's Trust & Trustees Act drew on the collective experience of trust lawyers' and trust and estate practitioners in Malta who have long used Jersey trust law as their preferred proper law of Maltese offshore trusts (under the old Offshore Trusts Act).

European Directives effecting Malta Companies

Malta is a full member of the European Union since 2004 and joined the Euro Currency area in 2008.  Registering a company in Malta opens up Malta companies to full access to EU Funding opportunities available to all companies registered in the European Union.  Maltese companies also enjoy the effects of European tax directives, including the Parent-Subsidiary Directive, the EU Mergers Directive and the EU Interest & Royalties Directive.

The Island of Malta: in Good Company

Malta is in good company at the crossroads of Europe, North Africa and the  Middle East. Malta's mixed cultural history starts with the Phoenicians and then the Arabs, the Romans, the Portuguese and the Spanish.  The  Knights of St John left a lasting mark on the Maltese architectural and artistic landscape, followed by the French and the English until 1964 when Malta gained its independence.  Malta's strongest influences are British and Italian but you will find a number of linguistic, cultural and culinary influences other than these.

Recommended Malta Company Formation Agents

Maltese company formation firms that are established on the market and integrate all services revolving around a new company formation are: 

Company Formation MaltaMalta International Trading CompaniesMalta Holding CompaniesShipping CompaniesMalta TrustsVirtual Office ServicesDouble Tax Treaty NetworkDouble Taxation ReliefMalta Taxation System