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How to proceed for Company Incorporation in Malta?

Narendra Kumar

| Updated: Oct 03, 2018 | Category: Company Registration, Global Registration

Company Incorporation in Malta

Malta is a member of the European Union and is considered as an attractive jurisdiction for company incorporation in malta. The Maltese tax system is designed in a way to promote the international investment and to support the financial services in Malta, and comparatively the tax rate of Malta is low for nonresident taxpayers. In Malta, an international holding Company (IHC) is a company which is intended to hold overseas investments and distributes the income to nonresidents making it an offshore attraction. The Registry of Companies of Malta is a part of Malta Financial Services Authority. The Registry of Companies deals in company incorporation and all commercial partnerships including companies are registered irrespective of what type of activity they carry out. The Registry of Companies is considered to be a public registry wherein all the registered information and data is available to the public. It is ranked among the most prosperous countries in the European Union and also classified as an advanced economy by the International Monetary Fund and also the World Bank.

What are the Market Opportunities in Malta?

Malta has gained more popularity amongst the foreign investors. Malta has undergone significant changes in terms of competitiveness. The strength of the Malta Economy is through its strategic location, taxation system, and multilingual workforce, tourism, IT industry which attracts numerous businessmen interested in offshore investment. Malta has strong economic ties with the other European Union countries. The government has designed different types of programs and schemes which provide incentives and tax deductions for foreign entrepreneurs from various industries.

What is the Type of Companies can be Incorporated in Malta?

The major types of companies available for registration in Malta are:

Private Limited Liability:

These types of Companies are the most employed type of business vehicle in Malta. According to the Maltese Companies Act, a private limited company is the one which has a minimum share capital of 1165 Euros. However, the share capital need not exceed the minimum requirements at least 20% of the amount needs to be deposited. Also, there is a requirement of a minimum of two shareholders, one director, one company secretary, and a registered office. The directors of the Maltese Company can either be residents or nonresidents of Malta.

Limited Liability Companies:

These are the one which is registered as public companies. These have to have at least two shareholders who are required to subscribe a minimum share capital of approximately 46600 Euro of which at least 25% must be upon the incorporation of the company. If compared to a private company, a public company must possess at least two directors and they can trade its shares on the Maltese stock exchange.

Sole Proprietorship:

Foreign companies can also set up the branch offices in Malta while for individuals who are looking for a simpler way of doing business in the country can opt for sole proprietorship option.

What is the Incorporation Process?

Usually, the incorporation process takes around 24-48 hours from receipt of the documents and satisfaction requirements established y Maltese Law.

A company can be set up by drafting and registration of its memorandum of Association. All the shareholders need to subscribe and obtain the certificate of registration in this respect. The following details should be included in the Memorandum of Association:

  • Company name
  • Address of the subscribers
  • Nature of company (private/public)
  • The Registered office of the company (needs to be situated in Malta)
  • Details relating to authorized and paid up share capital
  • No of Proposed Directors and Company Secretary

What are the Documents Required for Company Incorporation in Malta?

The Registry of Companies forms part of the Malta Financial Services Authority. The responsibilities of the Registry of Companies are in the Malta Companies Act, 1995. the basic document required for incorporation is a Company Search Report. The report includes details of the Company, along with the confirmation of its existence and also lists out the Company Information. Thus, a Maltese Company Report contains which needs to be submitted to the Registry of Companies in the form of Memorandum of Association and Articles of Association are:

  • Company Name
  • Registration Number
  • Type of Company
  • Registered Office
  • City/Locality of the Company
  • Company Share Capital
  • Number of Authorised Shares
  • Share Type
  • Number of shares issued
  • A nominal value of shares
  • Director Details (Full name, ID Number, Full Address and nationality)
  • Shareholders Details (Full name, ID Number, Full Address and nationality)
  • Legal Representatives Details (Full name, ID Number, Full Address and nationality)
  • Judicial Representatives Details (Full name, ID Number, Full Address and nationality)
  • Company Secretary Details (Full name, ID Number, Full Address and nationality)

What are the Provisions Regarding taxation Aspect in Malta?

In Malta, the most popular and tax-efficient legal set up is a Private Limited Company. A limited liability company can be set up in such a manner that the optimum tax efficiency is achieved. Malta is considered to be a tax-efficient jurisdiction for the holding companies as well as trading companies. In furtherance to this, the trading companies in Malta can enjoy effective tax rates of 5%. Also, it is worthwhile to mention that holding companies can achieve tax neutrality.

Malta is currently a signatory to almost 70 % of the double taxation treaties and there are some interesting opportunities that exist when putting into place the appropriate corporate structure. Corporate tax is calculated in Malta at a flat rate of 35% on the gross profits which are based on the audited financial statements of the Company. The tax refund system is also applicable to the shareholders of Maltese Registered Company. In either case, there are specific legal requirements that must be satisfied in order for the benefit of the shareholders.

What are the advantages of Incorporating a Company in Malta?

Malta provides various benefits to investors who are interested in conducting business. These benefits are:

  • The holding company of Malta, can at certain specifications obtain the tax exemption.
  • The investors can achieve an effective tax rate on trading profits of 5%.
  • There exists no withholding tax, stamp duties or other restrictions on the distribution of the profits from a Maltese Company to the nonresident shareholders.
  • Malta is a European Union Country enjoys all the benefits and protections of it. Thus, even if the Malta Company carries on the business or ownership overseas, it shall still be considered a Maltese Company.
  • Maltese companies can hold funds in the banks located outside Malta.

Conclusion

Setting up a business in Malta is an effective option since it has the backing of being in the European Union. Malta serves a competitive tax system and an extensive network of Double taxation agreements. Malta has an English speaking educated workforce which makes it an increasingly popular business vehicle for the companies from all over the world to register a company in Malta. Malta has several types of companies such as Malta Holding Company (used as a part of an effective asset-based holding structure), a Trading Company, Ship Owing Company, Investment vehicle or a captive insurance company. This helps the investors to do the diversity of business in Malta. Malta also provides several solutions to accommodate the requirements of the investors willing to trade overseas.

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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