Malta Limited Liability Company (LLC)

When considering business structures in Malta, the Limited Liability Company (LLC) stands out as the most popular choice for entrepreneurs and investors. This corporate vehicle provides members with limited liability protection while offering flexibility for both local and international business operations. A Malta LLC can be established as either a private or public limited liability company, with both formats governed by the Malta Companies Act.

Malta's strategic location in the Mediterranean and its membership in the European Union make it an attractive jurisdiction for company formation. The Malta Business Registry oversees the registration and compliance of LLCs, ensuring they meet regulatory standards while benefiting from the country's favorable business environment. Companies operating through this structure can engage in international trade and hold investments while maintaining the protection of limited personal liability.

What is a Malta Limited Liability Company?

Malta is a traditional tax based system with a number of advantageous for foreign and non-resident individuals and companies. Malta has four “non-resident” or offshore companies, the most popular being its Private Limited Liability Company (LLC) and the Malta IBC formed under the Companies Act in 1995.

Though the offshore sector has been around for a number of years, Malta has had to change its use of the word “offshore”, commonly associated with the international finance industry; and since becoming a member of the European Union, the country has had to dismantle its offshore industry.  In 2004 Malta ceased offering its international offshore companies; However because of its liberal tax laws it has managed to keep much of its foreign financial business through offering a restructured public and private non-resident companies.

There are a number of difference between a private and a public liability company in:  its restriction on its right to transfer shares, its limits on the number of employees (under 50), and its restriction of its right to offer the public any of its debentures or shares. Malta also offers clients the availability of being a private exempt LLC allowing for single member ownership of a company.

Malta is a highly reputable jurisdiction with a low corporate tax system that attracts many for its modern infrastructure, EU conforming legislation and superb banking system, ranked 10^th for bank soundness by the World Economic Forum. Because of the many rebates and credits given through their tax imputation system, many companies are able to effectively mange to avoid all corporate taxes.

Though the price for a Malta LLC is more than other jurisdictions, the superb location together with its reputation and tax advantages makes Malta a superb choice for those clients and companies wishing to incorporate in the European Union.

For more information on the Advantages of Malta as an Offshore Financial Center, click here.

Types of Business Structures in Malta

Malta offers several business structures for entrepreneurs and investors looking to establish operations on the island. Each structure has distinct characteristics regarding liability, tax treatment, and regulatory requirements.

Private Limited Liability Company

The private limited liability company (Ltd) is the most common business entity in Malta. These companies must have at least one shareholder and one director, with a minimum share capital of €1,200, of which at least 20% must be paid upon incorporation.

Private limited companies in Malta restrict the transfer of shares and limit the number of shareholders to a maximum of 50. They cannot offer shares to the public and must include "Limited" or "Ltd" in their name.

These entities provide limited liability protection to shareholders, meaning their personal assets are protected from company debts. Private limited companies must submit annual returns and financial statements to the Malta Business Registry.

For tax efficiency, Malta's imputation system allows shareholders to claim refunds on tax paid by the company, making this structure attractive for international business operations.

Public Limited Company

Public limited companies (PLC) in Malta are designed for larger businesses that wish to raise capital from the public. They must have a minimum share capital of €46,588, with at least 25% paid upon incorporation.

Unlike private companies, PLCs can offer shares to the public and list on stock exchanges. They must have at least two shareholders and directors, and include "Public Limited Company" or "PLC" in their name.

PLCs face stricter regulatory requirements, including more detailed financial reporting and corporate governance standards. They must publish a prospectus when offering shares to the public.

These companies are suitable for businesses seeking substantial investment capital or planning an eventual public listing. Public limited companies in Malta enjoy the same tax benefits as private limited companies under Malta's tax imputation system.

General Partnership

General partnerships in Malta (Partnership En Nom Collectif) involve two or more partners conducting business under a common name. All partners have unlimited liability for partnership obligations, meaning personal assets can be used to satisfy business debts.

These partnerships do not have a separate legal personality from their partners but must still register with the Malta Business Registry. Formation requires a partnership deed outlining contribution amounts, profit-sharing arrangements, and management responsibilities.

General partnerships are taxed on a flow-through basis, with profits attributed directly to partners who pay tax at their individual rates. This structure offers simplicity and flexibility in management but lacks liability protection.

These partnerships are typically suitable for professional services firms like law practices or accounting firms where personal involvement and trust between partners are essential.

Limited Partnership

Limited partnerships in Malta (Partnership En Commandite) combine elements of partnerships and companies. They consist of at least one general partner with unlimited liability and one or more limited partners whose liability is restricted to their capital contribution.

The general partner manages the business, while limited partners typically serve as investors without active management roles. These partnerships must register with the Malta Business Registry and specify each partner's status in the partnership deed.

Limited partnerships can be structured with variable capital and may even have their capital divided into shares. This flexibility makes them suitable for investment funds and venture capital arrangements.

Taxation follows the flow-through principle, with profits attributed to partners based on their share. This structure balances liability protection for investors with operational control for managing partners.

Sole Proprietorship

Sole proprietorships represent the simplest business structure in Malta. A single individual owns and operates the business, with no legal distinction between the owner and the business entity.

While easy to establish with minimal paperwork, sole proprietors bear unlimited personal liability for all business debts and obligations. Registration requirements depend on the business activity, with certain trades requiring specific licenses.

Income from sole proprietorships is taxed at the owner's personal income tax rate. This structure offers complete control and flexibility but lacks continuity beyond the owner's involvement.

Sole proprietorships work well for small-scale operations, freelancers, and professionals starting businesses with limited capital requirements. They can later convert to more formal structures as the business grows.

Commercial Partnerships

Commercial partnerships in Malta encompass various partnership forms recognized under Maltese law. These include the previously mentioned general and limited partnerships, along with other specialized arrangements.

All commercial partnerships must register with the Malta Business Registry and submit a partnership deed detailing the terms of cooperation. They may operate under a partnership name and establish a registered office in Malta.

Specialized forms include partnerships limited by shares, where the capital is divided into shares, combining features of limited partnerships and companies. These structures offer flexibility in capital arrangement and management.

Commercial partnerships benefit from Malta's extensive double tax treaty network when engaged in international operations. Each type provides different advantages regarding liability, taxation, and governance depending on business needs.

Legal Framework for Malta LLCs

Malta's limited liability companies operate within a comprehensive legal framework that provides clear guidelines for formation, governance, and operation. The framework is built on the foundation of UK company law but has evolved to meet Malta's specific needs and EU requirements.

Maltese Companies Act

The Malta Companies Act of 1995 serves as the primary legislation governing limited liability companies in Malta. This law, based on UK Company Law, provides the regulatory framework for the formation, administration, and dissolution of companies. The Act defines two main types of limited liability companies: private and public companies.

Private companies restrict the transfer of shares and limit the number of members to fifty. Public companies can offer shares to the general public and have no maximum member limit.

The Act also outlines corporate governance requirements, including director duties, shareholder rights, and financial reporting obligations. Companies must maintain proper accounting records and file annual returns with the Malta Business Registry.

Recent amendments to the Act have strengthened compliance requirements to align with EU directives on corporate governance, transparency, and anti-money laundering measures.

Memorandum of Association

The Memorandum of Association is a foundational document for Malta LLCs that must be submitted during company formation. This document outlines the company's external relationships and contains several essential elements:

• Company name (which must end with "Limited" or "Ltd")
• Registered office address in Malta
• Company objectives and business activities
• Details of authorized share capital and shareholding structure
• Shareholder information including names, addresses, and identification
• Names and details of the first directors

The Memorandum must be signed by all founding members or their representatives. At least 20% of the authorized share capital must be paid up upon formation, with a minimum requirement of €1,164.69 for private companies.

Any subsequent changes to the Memorandum require a special resolution by shareholders and must be filed with the Malta Business Registry within 14 days of approval.

Articles of Association

The Articles of Association form the internal constitution of a Malta LLC, setting out the rules for company operations and management. While not mandatory to draft custom Articles (as default Articles can apply), most companies opt for customized Articles to suit their specific needs.

The Articles typically cover:

• Procedures for issuing and transferring shares
• Shareholders' rights and obligations
• Procedures for conducting board and shareholder meetings
• Voting mechanisms and quorum requirements
• Appointment and removal of directors
• Dividend distribution policies
• Conflict resolution procedures

For private companies, the Articles often include restrictions on share transfers to maintain closed ownership. The document must comply with the Companies Act provisions and cannot contradict the Memorandum of Association.

Changes to the Articles require a special resolution passed by 75% majority of voting shareholders and must be filed with the Registry.

Company Secretary

Every Malta LLC must appoint a Company Secretary responsible for ensuring the company's compliance with legal obligations. The Secretary must be a natural person (not a corporate entity) and must possess the necessary knowledge and experience to fulfill the role.

Key responsibilities include:

• Maintaining statutory registers and company records
• Ensuring timely filing of statutory returns
• Organizing board and shareholder meetings
• Taking and preserving minutes of meetings
• Ensuring compliance with the Companies Act
• Acting as a communication channel between the company and regulatory authorities

For private companies, a director may also serve as the Company Secretary unless the company has a sole director. Public companies have stricter requirements regarding the Secretary's qualifications and experience.

The appointment of a Company Secretary must be formally recorded in the company's registers and notified to the Malta Business Registry.

Registered Office

Maltese law requires every LLC to maintain a registered office in Malta at all times. This physical address serves as the official point of contact for legal notices, correspondence, and regulatory communications.

The registered office must be a real physical location in Malta, not merely a P.O. box. Companies must display their name at this location and keep certain statutory documents available for inspection, including:

• Register of members and debenture holders
• Register of directors and secretaries
• Minutes of general meetings
• Copies of annual financial statements
• The Memorandum and Articles of Association

Any change in the registered office location must be formally approved by the directors and notified to the Malta Business Registry within 14 days. The registered office address is publicly available information that appears on the company's public records.

Many companies use their corporate service provider's address as their registered office, which can include mail forwarding and document management services.

Advantages of Setting Up an LLC in Malta

Malta offers numerous benefits for entrepreneurs considering company formation in this Mediterranean island nation. The country provides one of the lowest effective corporate tax rates in the European Union, making it financially attractive for business owners.

Malta's strategic location serves as a gateway between Europe, North Africa, and the Middle East, offering valuable access to multiple markets. Additionally, the well-developed financial services sector provides robust support for new businesses.

Entity formation services in Malta are streamlined and efficient, with professional assistance readily available for Malta company registration processes. The government maintains business-friendly policies that attract foreign investors.

A key advantage of Malta company formation is the limited liability protection, which shields personal assets from business liabilities. This protection remains one of the primary reasons entrepreneurs choose the LLC structure.

The country imposes no wealth, capital, or inheritance taxes. Furthermore, there are no withholding taxes on distributed dividends, interests, or royalties, creating an advantageous environment for profit distribution.

Malta offers reasonable share capital requirements compared to other European jurisdictions. This lower barrier to entry makes it accessible for small and medium enterprises looking to establish their presence in Europe.

The skilled workforce in Malta is predominantly English-speaking, eliminating language barriers for international business operations. Combined with a relatively lower minimum wage, companies can maintain competitive operational costs.

• Reputable jurisdiction
• Benefits of being apart of EU
• Proximity to European ports and trading centres
• Single member ownership is available
• Re-domiciliation allowances
• Corporate Tax benefits
• Nominee service availability
• English speaking country
• Any name may be used in the Latin alphabet
• Administrative flexibility
• Asset security
• Modern legislation
• Not a typically associated offshore jurisdiction
• Non resident companies have much of the same benefits as resident companies
• Malta is a signatory to over 70 Double Tax Treaties agreement

Top Uses

• Own a maritime vessel
• Holding Company
• International trading platform
• E-Commerce
• Online Gaming
• Holding of Intellectual Property Rights

Key Corporate Features

Requirements for Registration

In order to form a Malta IBC, it is required that the following documents are submitted to the Companies Register:

• Memorandum and Articles of Association
• A confirmation of the minimum share capital
• Confirmation of acceptance of proposed company name
• Details, address, passport and bank reference of each shareholder and director
• Required Fees

Corporate Taxation

Malta has a “full-imputation” tax system where corporate profits are taxed at the standard 35% corporate tax rate; however, when dividends are distributed to individuals out of taxed profits, it carries an imputation credit on the tax that has already been paid by the company; and after refund to shareholders, the tax burden decreases to 5%, or 0% in certain circumstances. This inherently eliminates the double taxation that occurs.

Under Malta’s tax law, all income coming from a company that qualifies as a “participatory holding” company also qualifies for a full refund of the taxes paid by the company, when distributions are paid back to the company’s shareholders. Furthermore, provided certain conditions are satisfied, income can be exempted from being taxed, based on the “participation exemption” clause.

There is a Value Added Tax rate of 18% applicable to those companies that are trading within the EU.Maltese based LLCs also enjoy many other tax benefits including:

• No inheritance tax
• No wealth tax
• No annual property tax
• No tax on interest
• No tax on dividends
• No tax on royalties or licence fees
• No withholding on dividends

Corporate Details

Anonymity Confidentiality and Disclosure

Details of a LLC and its shareholders, directors, beneficial owner and financial accounts are submitted to the Register and are on public record. However, details of the beneficial owner may remain confidential, if a trustee company is used. Nominee services are also readily available to ensure privacy and confidentiality.

Company Shares

Ordinary shares, registered shares, preferences shares and redeemable shares are permissible for a Maltese LLC.

Required Capital

The minimum capital is €250, with the usual authorized at €1,165. Neither the capital nor any shares can be registered on the public stock market and must be kept within the company.

Directors

A minimum of one (1) Director is required to form a Malta Private Limited Liability Company. A Director may be from any nationality, a resident of any country and may be an individual or a body corporate.

Company Secretary

A company secretary is required and must be an individual; in certain cases, it can be the Director.

Company Meetings

Meetings may take place anywhere in the world and are not required.

Principal Corporate Legislation

The Companies Act (1995) is based on Common Law and the UK Company Law principles, but is also aligned with the broader EU financial directive. The 1995 legislation replaced the Commercial Partnerships Ordinance, to fit more in line with EU regulations upon entering the European Union. Other financial legislation include:

• Trusts and Trustees Act 1988
• Malta Financial Services Authority Act, 1994
• Investment Services Act 1994
• Banking Act 1994
• Financial Institutions Act 1994
• Financial Markets Act 2002
• Business Promotion Act 1988

Type of Law

Civil Law with strong Common Law influences in company, tax and maritime laws modeled off of the UK.

Shareholders & Members

It is required that a Malta LLC has at least two (2) members who may be an individual or corporate body and may be a resident and nationality of any country. A single-shareholder company is allowed though its director may be a corporate body.

Exchange Controls

Since 2004, Malta has no exchange controls.

Powers of the Company

A Malta LLC may exercise the powers outlined in the Company’s Memorandum and Articles of Association.

Language of Legislation and Documents

English

Registered Office Required

Yes, a registered local office is required for all Malta LLCs.

Local Presence

Yes, a local registered office is required where a register of the shareholders and directors is kept.

Financial Statements Required

Financial statements and accounting must be prepared according to the International Financial Reporting Standards, and can be kept in any office around the world and may be held in any currency.

Audit Requirements

A Malta LLC is required to prepare a financial audit of accounts.

Annual Reporting

An annual return is required to be submitted by all Malta based LLCs every year. The format of the accounts to be submitted depends on the size of the company.

Small companies – submit abridged balance sheets and profit and loss accounts. If a company meets at least two of the following three:

• Balance sheet is less than €2,562,311
• Turnover less than €5,124,622
• Employees are less than 50

Private companies – also submit abridged balance sheets and profit & loss accounts. If a company meets at least two of the following three:

• Balance sheet total less than €46,587
• Turnover less than €93,175
• Employees less than two

Shelf Companies Available

A shelf company is not available for a Malta LLC.

Time Required to Form and Offshore Company

1-2 days is required to process all of the necessary documents.

Name Restrictions

A name may not be used that is seen to be undesirable or offensive to the Register, or any name that is similar or already in use.

Language of Name

The name of a company may be in any language that uses the Latin alphabet.

Permitted Liability Suffixes

The name of the company must end in either “Limited” of “Ltd”.

Names of Company Requiring Special Licence

Any LLC involved in, but not limited to investment services, insurance, assurance, banking and other financial services must seek permission and may have to obtain a special licence.

Trading Restrictions

There are no restrictions on trading for a Malta LLC. A company that is seeking to own real estate property must be given appropriate authorization.

Access to Double Taxation Treaties

Malta has signed over 70 Double Tax Treaties.

Annual Government Tax

Minimum registration fee is €245. The registration fee ranges between €245 and €2,250, depending upon the authorized share capital. If the share capital does not exceed €1,500 then the fee is €245.

Frequently Asked Questions

How can one set up a limited liability company in Malta?

Setting up a limited liability company in Malta typically takes between 2-3 days once all required documentation is submitted. The process begins with company name reservation through the Malta Business Registry.

A minimum share capital of €1,165 is required for private companies, while public companies need approximately €46,600. At least 20% of this capital must be paid upon incorporation.

The incorporation requires submission of the Memorandum and Articles of Association, proof of capital deposit, and identification documents of all shareholders and directors.

What are the tax implications for a limited liability company in Malta?

Malta operates on a full imputation tax system with a standard corporate tax rate of 35%. However, upon dividend distribution, shareholders may qualify for refunds that effectively reduce the rate to between 5-7%.

The country maintains double taxation treaties with over 70 countries, providing significant advantages for international operations.

Companies must submit annual tax returns and may benefit from various incentives for specific industries including maritime, aviation, and intellectual property.

What are the requirements for foreigners to establish a limited liability company in Malta?

Foreign individuals or entities face no restrictions on establishing a limited liability company in Malta. Non-residents enjoy the same rights as residents in company formation.

At least one director is required, and there is no nationality requirement for directors or shareholders. However, all must provide proper identification and undergo due diligence checks.

A local registered office address in Malta is mandatory, and many foreigners opt to appoint a local company secretary familiar with Maltese corporate requirements.

What are the annual filing obligations for a limited liability company in Malta?

Companies must file annual returns with the Malta Business Registry, typically due on the anniversary of incorporation. This includes updated information about shareholders, directors, and share capital.

Annual financial statements prepared according to International Financial Reporting Standards must be submitted within 10 months after the financial year-end.

Companies are also required to maintain and update a register of beneficial owners and submit any changes to the Registry within 14 days of occurrence.

How does company law in Malta define a public limited company versus a private limited company?

A private limited company in Malta restricts the transfer of shares, limits the number of shareholders to 50, and prohibits public subscription of shares or debentures.

Public limited companies can offer shares to the public, have no maximum shareholder limit, and must include "p.l.c." or "public limited company" in their name.

The regulatory oversight for public companies is more stringent, with additional disclosure requirements and higher minimum capital thresholds of approximately €46,600.

What benefits could a business gain by incorporating as a limited liability company in Malta?

Malta's EU membership provides companies access to the European single market while maintaining a competitive tax structure that attracts international business.

The robust legal framework based on both British and continental legal systems offers strong protection for business operations and intellectual property.

Malta's strategic location in the Mediterranean creates a natural bridge between European and North African markets, complemented by an educated, English-speaking workforce.

Malta LLC Company Formation with Offshore Protection

Registration Includes:

1. Government Registration Fee (First year)
2. Registered Office Address (First year)
3. Registered Agent Services (First year)
4. Company Secretarial Maintenance
5. Certificate of Organisation
6. Articles of Organisation
7. Minutes of First Organisers Meeting
8. Ownership Certificates
9. Register of Members
10. FREE Phone and/or email consultations

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