Company Incorporation Malta

Corporate Income Tax is subject to a flat rate in Malta.

Whether you’re an individual or a company, receivers of dividends paid out of corporate income and subject to tax in Malta, are allowed to claim large tax refunds from the distributing company. The person receiving the dividend, claims against the local Inland Revenue department and recieves the refunded dividend within 14 days.

To avoid double taxation on income, Malta has entered into and ratified 57 treaties with others countries worldwide. If, however, a double tax treaty has not been signed, Maltese law gives alternate relief on foreign income derived from a Maltese resident, whether an individual or company.

This includes Income Tax relief on earnings from outside Malta, which has been taxed overseas. Otherwise, a flat Foreign Tax credit of 25% on the net foreign income is claimed by Maltese companies for income and gains derived from outside the country.

In Malta, investors frequently choose:

• Private Limited Companies
• Public Limited Companies
• Commercial Partnerships

• Confidential ownership of the Private Limited Company is allowed
• Shelf companies are available
• New Private Limited Companies can be established within 24hrs
• The minimum share capital is €1164.69, only 20% of which ( €232.94) should be paid up during incorporation
• Private Limited Companies are taxed at a flat rate of 35% but refunds by Inland Revenue would bring the effective CIT rate (after dividends) down to 10%, 5% or 0%
• One shareholder is sufficient
• Shareholder meetings can be held anywhere
• One director is sufficient
• One company secretary is required
• Corporate directors are allowed
• Accounts must be prepared, filed and audited annually

Both small and large scale companies are attracted to Malta. A Maltese company can trade and provide services, consultancy and mediation, while internationally enjoying a net 5% or lower effective tax rate, after distributing dividends to shareholders and applying refunds.

Maltese companies are not low tax companies. The corporate income tax rate is 35%; the (confidential) refunds are payable to the shareholders.

As a member of the EU, Malta also enjoys a reputable onshore status. This allows investors tax opportunities without any aspersions being made about their credibility as offshore companies.

It is recommended that the local corporate set up includes a Maltese holding company to receive dividends and tax refunds on behalf of the business owners. In this way refunds dont get paid directly to the owners avoiding or deferring personal tax on dividends.

Therefore dividends and refunds on tax paid by the subsidiary operational company accumulates in a tax friendly environment, allowing reinvestment through the corporate structure without exposure for undeclared personal income.

Capital investments, funding income into this holding company, is allowed to come from various sources including shareholders, banks, institutions, funding etc. Equally it can come from profits of its subsidiaries or other assets/investments.

It can be distributed to the subsidiaries by way of loan or capital finance. The holding company also provides asset protection by owning business assets of any form.

Examples include any real estate, fixed assets, investments, securities, bank accounts, intellectual property, etc., as well as personal assets including any luxury items, depending on the shareholders involved.

Maltese holding companies are excellent tax planning tools as they enjoy low effective tax rates on worldwide profits including:

• 0% on dividends received from a participating holding; that is where the parent company holds at least 10% of the equity in the subsidiary, or holds an investment of at least €1.5 million in the subsidiary for more than 183 days
• 0% on capital gains made from the disposal of a participating holding company
• 5% on dividends from non-participating holdings
• 10% on passive income, such as interest, royalties, etc.