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MaltaMain » Jurisdictions » Malta
The Republic of Malta is an island state in the Mediterranean, which has no rivers, lakes neither springs of fresh water. Despite the small area (316 km2) there are some huge high-tech enterprises in Malta. The beautiful nature attracts thousands of tourists. Moreover, Malta is the world center of English learning (English is a state language).
Malta is a parliamentary republic, a part of the EU.
Prestige and low taxes make Malta very attractive place to business. Malta may be used for registration of international trusts, holding companies and shipping companies.
Company activities in Malta are regulated by Companies Act 1996, Financial services Act, Trade shipping Regulations and Commercial Transportation Law.
Until 2007 it was possible to register International Trading Companies end International Holding Companies which were offshore companies, but now the legislator does not differentiate resident and non-resident companies and proposes tax benefits for all shareholders.
Types of companies
The Malta law provides such corporate forms as partnerships with limited and unlimited liability, public and private companies, but the most preferable is Limited Liability Company (Limited, Ltd).
LIMITED LIABILITY COMPANY:
- The minimum authorized capital – €1164.69, 20% of which must be paid by the moment of incorporation - €240.
- Shares – ordinary, privileged, with or without per value. Bearer shares are not allowed.
- Director – at least 1, individual or legal person, no residency required.
- Members – 2 - 50, individuals or legal persons, no residency required (in some cases it may be 1 member). If there are ore than 50 members, the company must be public.
- Secretary – is required, individual, no residency required (resident is preferable).
- Publicly available information: information about directors, members and secretary. Information about beneficiary owner may be hidden by using nominee service.
- The company is obliged to annually submit up-to-date information about its structure and owners (annual return), maintain and submit an annual financial report, as well as undergo an audit (except for companies that do not exceed the limits of two of the three criteria: balance sheet 46 600 EUR, turnover 93 000 EUR, number of employees for the reporting period - 2).
- Annual meetings of members are required (in any country), the registered office is required.
Corporate tax – 35% but when distributes an income the company receives tax credit in favor of shareholders which is equal to the sum paid by the income tax from which the dividends were distributed.
When distributes dividends, received from sources outside Malta, as well as passive income, received in Malta (this includes foreign income and Maltese taxable income), the shareholders will be able to demand to return 6/7 of the paid tax. Thus, the total effective tax rate will be 5%.
If the business income consists of passive income earned in Malta (this includes foreign and Maltese taxable income), shareholders are entitled to claim 5/7 of the tax paid by the Maltese company on these incomes. This achieves an overall effective tax rate of 10%.
A 2/3 refund of paid tax will be applied if the company has already used the benefits of the double taxation treaty.
Since the refund can only be paid to the account of the shareholder of the operating company, a two-tier structure is often used. The shareholder of the operating Maltese company is the second Maltese company (holding). Thus, funds returned by the state in Malta are subject to 0% taxation. This profit can be reinvested by the shareholder or remain in the account of the holding company in Malta.
In the case of using a two-tier structure, when a second Maltese company (holding) acts as a shareholder of the operating Maltese company, the operating company can pay 5% of the tax immediately, without having to pay 35% and demand a return of 30%.
It is also possible to obtain a certificate of tax residency in Malta.
TAXATION OF MALTESE HOLDING COMPANY
Capital gains – 0%.
The income will be tax free if it has been received from non-resident subsidiary company which:
- is the EU resident;
- pays not less than 15% foreign tax;
- has no more than 50% of passive income and royalty in its whole income;
- pays foreign tax on the rate of 5% and share of equity in subsidiary is not a portfolio investment for the Malta company.
AGREEMENTS ON AVOIDANCE OF DOUBLE TAXATION
Switzerland concluded more than 70 agreements on avoidance of double taxation, including Ukraine.
Malta is a convenient jurisdiction for shipping companies: ships up to 1.000 tons are exempt from income tax; platforms, barges and ships under construction may be registered; no residency required for owner, crew, shareholders and directors; simple registration procedure.
Malta is the only jurisdiction in the EU which gives licenses for on-line casinos. Remote Gaming Regulations provides 4 classes of games that have to be licensed.
Moreover, there are new rules for obtaining residence permit in Malta to attract wealthy people (a person must owns real estate costs from €275 000, live in Malta for not less than 90 days a year – for beneficial owners, annual tax - €15 000, good English or Maltese language skills etc.).
If you wish to register a company in Malta, please contact our lawyers for advice:
+38 (098) 737-88-88
We will help you open an "offshore" company in Malta or in any other jurisdiction of your choice.