WHY MALTA 

Malta’s rise into the ranks of Europe’s leading finance centres has been driven by its reputation for stability, security and an excellent business environment resulting from: •    

  • EU membership since 2004,    
  • offering passporting rights for services and companies;•    
  • Robust yet flexible EU regulatory framework; •    
  • Lowest effective Tax in EU and double taxation agreements with over 70 countries;•    
  • One of the best Credit Rating and the best GDP annual increase in the EU;•    
  • Ideal Location, midway between Europe and North Africa;•
  • Continuously rated as one of the best places to work and live in.​

SETTING UP A COMPANY IN MALTA

The Limited Liability Company is the mostly used type of business structure. The following are the main characteristics:

  • Share capital – €1.2k (20% minimum paid-up);
  • Shareholders – 2 minimum, 50 maximum, but 1 also allowed in single member companies;
  • Director – 1 minimum;
  • Taxation – 35% corporate tax, with refunds at shareholders’ level;
  • Audited accounts - once a year;
  • Set-up – 2 days following completion of due diligence. 

Other possible set-ups include, public companies, partnerships, trusts, foundations; these covering sectors such as manufacturing, financial services, blockchain and gaming.

 

MALTA CORPORATE TAX 

A company incorporated in Malta is considered to be resident and domiciled in Malta and subject to income tax on its worldwide income and on some chargeable capital gains.

The standard rate of tax on income and chargeable gains is 35%. However upon receipt of a dividend from a trading/operating company, shareholders of a Malta company may claim a refund of all or part of the Malta tax paid at the level of the company. There is no withholding tax on outbound dividends.


 

 

 

MALTA TAX REFUND SYSTEM

 

There are a number of fiscal incentives and refund mechanisms used in Malta. The mostly used one is a refund of 6/7 tax to Shareholders from the originally paid 35% Corporate tax.

The following is an illustrative example of the tax refund, in which a Trading Company is set-up in Malta, owned by a Holding Company.

In the above example, the TradeCo will invoice its clients and after the deduction of expenses, pay the remaining as dividend to the HoldCo. Thus, in this case from a taxable profit of EUR 100, the resulting Effective Tax is of 5% and 95% will be available to the Foreign Shareholder.   The Tax Refund is guaranteed by law and payable from the Tax Department to the HoldCo through a tax refund claim.

Malta compared to other EU Countries

The following is a comparative table of the applicable tax on private limited companies or equivalent:

 

Country

Taxation %

Malta Ltd

35 less 30 = 5

Cyprus Ltd

12.5

Netherland BV

20-25

UK Ltd

20-23

Ireland Ltd

12.5

Estonia LLC

20

Gibraltar Ltd

10

Liechtenstein AC

12.5

Luxembourg SARL

21


The set-up and maintenance cost of a corporate structure varies considerably between the countries, with a properly structured one in Maltese costing the average of the above countries. When considering the set-up, annual maintenance and tax expense, Malta will however emerge as the most competitive one, particularly when revenues are above EUR 100,000. This is mainly due to the application of the tax refund system whereby, the more the revenue, the wider will be the advantage of operating from Malta.