Malta Company Formation

Malta is a traditional tax based system with a number of advantages for foreign and non-resident individuals and companies. Malta has four 'non-resident'—a.k.a. offshore company, the most popular the International Business Company (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 reorganize its offshore industry.

Key Takeaways

• Malta's strategic location and favorable business environment make it an appealing destination for company formation.
• Legal and capital requirements must be met during the company registration process, with distinctions between private and public companies.
• Entrepreneurs benefit from Malta's efficient taxation system and financial incentives post-company formation.

In 2004, Malta ceased offering its international offshore companies, though because of its liberal tax laws, it has managed to keep much of its foreign financial business through offering public and private non-resident companies.

 A Malta IBC has a restriction on its:

• Right to transfer shares
• Limits on the number of employees (under 50)
• Right to offer the public any of its debentures or shares

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 10th 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 manage to avoid all corporate taxes.

Malta offers several other offshore company formation products, another being the Malta Limited Liability Company (LLC) which can be used for collective offshore investment schemes, partnerships, or any company structure where limited liability amongst is members is required.

Though the price for a Malta IBC 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 form a company offshore in the European Union.

For information on Malta as an Offshore Financial Center, click here

Advantages of a Malta Company Formation

• 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 agreements

Top Uses

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

Key Corporate Features

*Annual Return Fee
An annual fee ranges between €100 and €1,400 (for companies with authorized capital up to €1,500 and €2,500,00 respectively) with discounts of €15 - €300 for electronic submission.

Incorporation Package Include

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

Types of Maltese Companies

When incorporating a business in Malta, an investor may choose from several company structures, each with specific regulatory and capital requirements.

Private Limited Liability Company

A Private Limited Liability Company in Malta is characterized by its shares not being available to the general public and a restriction on the number of shareholders, which cannot exceed fifty. The minimum authorized capital for such a company is €1,164.69, with at least 20% of the issued share capital being paid up upon signing the Memorandum of Association.

Public Limited Company

Conversely, a Public Limited Company has the ability to offer shares to the public and is required to have a minimum authorized capital of €46,587.47. For this company type, a minimum of 25% of the issued share capital must be paid up at the inception of the company.

General Partnership

A General Partnership in Malta involves partners who are jointly and severally responsible for the obligations of the partnership without any limitation. This entity does not have a stipulated minimum capital requirement and partners are typically individuals or corporate bodies.

The Registration Process

The process of registering a company in Malta involves several key steps that must be adhered to strictly to comply with the regulatory framework. These steps are designed to ensure transparency and establish the legal framework within which the company will operate.

Choosing a Company Name

Before initiating the registration process, one must select a unique company name. The Registry of Companies must approve the chosen name to ensure that it is not identical or deceptively similar to any existing company name. It is recommended to provide a few alternatives to avoid any potential conflicts or delays in the process.

Memorandum and Articles of Association

A critical step in the registration process is the preparation of the Memorandum of Association and Articles of Association. These documents formalize the company's structure, purpose, and the regulations governing its operations. Key information within the Memorandum includes:

• Company Name
• Registered Office in Malta
• Objects of the company
• Details of shareholders
• Amount of share capital

The Articles of Association detail the rules for the internal management of the company.

Registrar of Companies Submission

Submission to the Registrar of Companies is the final phase. The registration documents, including the Memorandum and Articles of Association, are filed with the appropriate fee. Depending on the capital, the fee ranges from €245 to €1,750. Upon successful submission and approval, the company is issued a Certificate of Registration, which is conclusive evidence of the company's existence. Electronic filing may offer reduced fees and expedited processing.

Opening a Corporate Bank Account

When a company is incorporated in Malta, opening a corporate bank account is not mandatory, but it is highly recommended to facilitate business transactions. To open a bank account, the directors must provide due diligence documentation, including:

• A completed application form
• Proof of identity for all directors and shareholders
• Evidence of the company’s registration
• The Memorandum and Articles of Association

Once an account is opened, companies benefit from the robust banking infrastructure in Malta. Entities may hold assets in these accounts both domestically and internationally, underscoring Malta’s capability to cater to global business needs.

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 IBCs 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 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 IBC.

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 IBC. 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 modelled off of the UK.

Shareholders / Members

It is required that a Malta IBC 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

Registered Office required

Yes, a registered local office is required for all Malta IBCs

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 IBCs is required to prepare a financial audit of accounts.

Annual Reporting

An annual return is required to be submitted by all Malta based IBCs 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

Time required to form 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.

Names of Company requiring a special licence or permission

Any IBC 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 IBC. A company that is seeking to own real estate property must be given appropriate authorization.

Permitted suffixes

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

Access to Double Tax Treaties

Malta has signed over 70 Double Tax Treaties

Minimum 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.

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