Malta

Overview

Although the smallest member of the European Union (EU), Malta is a leading European financial center and is one of the most cost-effective onshore jurisdictions in Europe to form a company. Malta is fully OECD and FATF compliant has a robust regulatory and legal system and boasts one of the lowest effective corporate tax rates in Europe. In Malta, business entities are typically structured either by forming a limited liability company or as a partnership.

 

Malta Tax Advantage Overview

Having amended its tax legislation in anticipation of EU Accession, Malta has enhanced its tax system that is ideally suited both to inbound and outbound EU investors.  Notable amendments were the introduction of a Participating Holding and a Participating Exemption regime.

Sunset provisions were also introduced, whereby companies incorporated on or prior to 1st January 2007 as International Trading Companies, had to adhere to a new income tax regime, negotiated and approved by the EU Commission in anticipation of EU membership, by 1 January 2011.

The credit imputation system was retained, however, the statutory impediment placed on International Trading Companies from trading domestically, thereby artificially segregating the EU common market, was removed.  The new tax climate offers to the investors the following Malta tax advantages:

  • Low taxation (effective rate 5%);

  • Onshore, EU– status;

  • Possibilities for tax planning in order to lower taxes even further (in some cases to 0%);

  • Extensive double tax treaty network;

  • Exemption from tax on dividends received;

  • Exemption from tax of profit generated from transactions in securities;

  • Exemption from withholding tax on the repatriation of income either of dividends, interest, and royalties;

  • Access to EU directives

 

Company Requirements

A private limited company must:

  • Have the name of the company ending with ’limited’ or abbreviated to ‘ltd.’

  • Have an Authorized Share Capital of at least €1,200 of which at least 20% must be paid up;

  • Only one director is necessary; and

  • Only one shareholder is necessary (not more than 50).