Malta has become one of the most renowned countries amongst investors and entrepreneurs, mostly because of the attractive tax system and the ease of acquiring a license. The fact that Malta is a European country which has a mixed the legal system whereby most of its company law is based on EU and common the law is another bonus, with BREXIT that is planned for the first quarter of 2019, as it would offer those British companies another alternative which has a familiar structure enabling a smoother shift.
To register a company, one needs a Memorandum of Association and Articles of Association which is signed by all the shareholders. These two documents contain all the information about the company so that it acquires its own separate legal personality. The Memorandum of Association includes the name, the type of company whether it’s a limited liability company or a public company, the object of the company and details about the management structured, amongst others. Whilst the Articles of Association include the internal regulations of the company’s affairs and the conduct of its business.
Finally, one would also need the Registry of Beneficial Owners which is a declaration confirming the identity of the natural ultimate beneficial owners. All these documents have to be submitted to the Registrar of Companies to have complete registration.
For the registration to be accepted there must be the initial share capital, whereby the minimum for private limited companies is set at €1165 of which at least 20% is paid up. Whilst with regards to public limited companies the minimum is €45,578.47 of which 25% needs to be paid up. In order for this to be accepted one needs proof, in fact, one would show that the initial share capital is deposited in a bank account opened in the company’s name. In addition, there is also the registration fee that needs to be paid and this is calculated on the authorized capital of the company.
Malta’s tax system is distinguished from most European countries as it has a very competitive corporate tax rate which stands at 35% of chargeable income for every company. In addition, our system also caters for refunds on various grounds whereby we have;
– Imputation System which is used by shareholders. This arises in cases where the profits of the company are distributed amongst shareholders and they pay tax in Malta on dividend at a rate which is lower than the company rate of tax, therefore excess imputation tax credits are refundable.
– 100% refunds – This is used when one has the income or profits derived from an investment which is considered to be a Participating Holding or falls within the parameters or satisfies the anti-abuse provisions.
– Double Taxation Relief – Shareholders can claim up to to a 2/3 refund of the tax paid in Malta in respect of any foreign income received by a Maltese company.
– 6/7th refund – In cases where shareholders are paid of dividends from any other income, they become entitled to claim a refund of tax paid by the company. Thus, shareholders will benefit from a rate of tax of 5%.
– 5/7ths refund – When the income received is passive interest or royalties; or in cases of income arising from a participating holding which does not fall within the safe harbors or satisfy the anti-abuse provisions.
This shall not be construed to be as advice but shall merely serve as a brief description of the process needed to set up a company. If you would like to discuss this further please do not hesitate to contact us on [email protected]