Malta Company Formation
They say that Malta is an island that conquers at first sight! Besides the fact that the summer in Malta lasts longer than the usual three months, Malta is one of the best options for doing business – registering a company.
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Benefits of setting up a company in Malta
Opening a company in Malta has a number of different advantages for setting up a company. Among the key advantages of setting up a company in Malta are the following:
English-speaking business environment
English is widely used in business. This means that investors can easily develop a business outside of Malta;
Strategic location
Malta is located in the heart of the Mediterranean: between Europe, North Africa and the Middle East. This perk makes Malta an ideal hub for a company to plan trade, engage in international trade and expand its business.
Membership in the EU
Malta, as a member of the European Union, can take advantage of the EU single market: the free movement of goods and services, as well as the attraction of labour within the EU.
Visa-free zone
In addition to being a member of the EU, Malta is also part of the Schengen area. This means that there are no travel restrictions between Malta and other Schengen countries.
Skilled workforce
In Malta, you can get a good education, which will allow you to enter good universities in the future and get a decent education. Specialists with European education are in demand not only within but also outside the European Union.
Favourable tax treatment
When registering a company, the favourable tax treatment is probably the most important thing. In turn, the tax system of Malta is designed in such a way as to be attractive to businesses. Malta’s tax regime includes a competitive corporate tax rate, a comprehensive system of imputation and an extensive network of double tax treaties (70 Double Taxation Avoidance Agreements). All of the above “pluses” of Maltese taxation allow you to effectively plan taxation and potentially reduce the overall tax burden on the company’s activities.
The stability and reliability of the political and economic systems of the country
Malta has a stable political and economic environment. This factor gives investors, and future partners a sense of security for the development of future business. The reputation of a company registered in Malta has the highest degree of trust.
Investment incentives for business development
The Government of Malta offers various incentives and grants to attract foreign investment.
Access to financial services
The financial services sector is fairly well-developed in Malta. This allows us to provide highly qualified banking and investment services for businesses.
Reliable legal framework (including the protection of intellectual property)
The legal system of Malta, although it has a number of its own features, is adapted to the legal framework and EU directives, as well as international standards. Understanding the legal framework within which company formation in Malta will operate provides a clear and predictable business environment. In turn, Malta also has a regulatory framework in which special emphasis is placed on the protection of intellectual property. This includes: registering trademarks, copyrights and patents, and protecting the innovations and creative work of enterprises.
Ease of setting up a company
The process of registering a company in Malta is relatively simple. There is clarity in understanding the registration procedures in a short time. The absence of bureaucracy has a positive effect on the business environment.
As can be seen from the above advantages, Malta is a suitable country to set up a company. But in order to choose the legal form, taking into account the peculiarities of each business, it is important to consult professionals when registering a company.
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Types of companies that can be registered in Malta
Depending on the choice of company activity, in order to organise your business, you can choose different types of companies that can be registered in Malta. The most popular forms of companies that are opened in Malta include the following:
1. Private Limited Company (LLC)
The most common type of company in Malta. The minimum number of company members is two persons. The maximum number of participants in such a company is limited to 50. Also, statutory documents should contain restrictions concerning the transfer of shares and prohibit any invitation of such shares to the public. Registration of this type of company in Malta requires the formation of authorised capital in the amount of EUR 1,200, 20% of which should be payable at the moment of registration. This considered entity should have one director minimum. Firms that operate in the form of an LLC may carry out any activity recognized as a legal one by international law.
2. Public Limited Company (Plc.)
Similar to an LLC, but it has its own characteristics. The legislation of Malta provides for requirements for the size of the minimum authorised capital. Today, the minimum statutory capital of EUR 47,000 is required and it has to be entirely deposited at the time of registration (it is important to carefully study the law before filing the registration application – the size of minimum statutory capital can change). Each public LLC must have at least 25% paid-in share capital. At the time of company registration, at least 2 directors must be appointed. At the same time, the maximum number of shareholders in public LLCs is not limited. A public company may offer shares or debentures to the public. It is important to note that a public LLC cannot bid in any form for its shares or debentures unless the company is registered and the issue is not accompanied by a prospectus.
3. Sole Proprietor
A business owned and operated by one person. At the same time, an individual has unlimited personal liability for the debts of the business (like in other countries).
4. General partnership:
An association of two or more persons conducting a joint business with a common profit (it can be local and also a foreign person). At the same time, personal liability is unlimited.
5. Limited partnership
A partnership that needs to have at least 2 partners; at least one of them shall be a general partner with unlimited liability. If there is more than one general partner, they have joint and several liabilities. Limited partnerships also need at least 1 limited partner who agrees to contribute a certain amount of capital to the partnership.
6. Branch
A branch of a foreign company that is established in Malta for the purpose of doing business in that country.
7. Representation
A type of company that is limited to representing the interests of its parent company, not engaging in commercial activities.
Requirements for company formation in Malta
If you have a plan to register a company in Malta, you must meet a number of requirements that will help you seamlessly establish your business, namely:
Determine the type of activity
First of all, it is important to understand what type of activity you plan to engage in. You must determine for yourself the purpose of registering a company in Malta.
Check and reserve a name Maltese company
Select, check and reserve a name for a future Maltese company. This name should be unique and match your future business ideas. In addition, it is important that at the time of your choice of name, a company with a similar name does not exist. It is important to make sure that the name you choose fully complies with Malta’s naming conventions.
Identify and appoint company managers
Decide on the directors, secretaries, and shareholders (beneficial owners) of a company registered in Malta. You will need at least one director. It should be emphasised that at least one director must be a resident of the European Economic Area (EEA). In turn, The number of shareholders in a Maltese company differs depending on the type of company. Appoint a company secretary, who must be an individual. The company secretary may not be the sole director unless the company is constituted as a private exempt company.
Choose an office for Malta company formations
Your future firm must have a registered office in Malta. This address will be used for official document flow in the future.
Authorised capital according to requirements
Decide on the size of the authorised capital depending on the selected type of legal entity (for example, for a Private company the minimum share capital is €1,165, of which at least 20% has to be paid up for a Public company: the minimum share capital — €44,588, of which at least 25% has to be paid up).
Founding documents
Draw up a Memorandum and Articles of Association of the future Maltese company.
Taxation and financial reports
Prior to company incorporation in Malta, it is necessary to familiarise yourself with the requirements of the Maltese tax system. Since Malta has a favourable tax regime for certain types of companies, this will allow you not to spend significant amounts on taxes in the early stages of the company’s existence, but to invest in business development. It is important to note for yourself that you will have to prepare and submit annual financial reports to regulatory authorities.
Annual general meeting
While you have not yet registered a company, it is important to remember the need for an annual general meeting to present financial statements and discuss current issues of the company.
VAT registration
Please note that if a company’s turnover exceeds a certain threshold, it may be necessary to register for value added tax (VAT).
Hired employees
If a company plans to employ employees, it must comply with the employment and welfare provisions of such employees.
Licenses and permits
Depending on the nature of the activity, before the moment Malta company is set up, you should familiarize yourself with the legal requirements for licensed activities. If your future business requires this permit to legally carry out activities, it is necessary to determine what documents/information will need to be collected in order to obtain a license.
It is important to note that the above requirements are basic for company registration in Malta. When opening a business in Malta, it is important to consider both the type of legal entity and the corporate structure and type of activity. In order for the incorporation of a company in Malta to be successful, FINTECH HARBOR CONSULTING recommends contacting specialists.
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Documents required for company registration in Malta
To register a company in Malta, the following is required:
Documentation:
- Memorandum and Articles of Association. The most important document that essentially describes the goals of the company and contains information about the address of the company, directors, founders, the amount of the authorized capital, and more;
- Identity documents: valid passports and proof of address for all directors and shareholders of the future Maltese company.
The information required for the Malta company set up includes:
- The address of the registered office, which will be indicated as official;
- Information about the authorized capital. Based on the type of legal entity you have chosen, the size of the authorized capital, the currency in which it will be issued, and the number of shares will be determined;
- Information about shareholders and directors. This should include information about directors, shareholders with their personal data, which is mainly contained in the passport (identity document);
- Selecting a company name: Before proceeding with the registration process, you must reserve a company name.
- Appointment of company secretary: Details of the appointed company secretary. This person must be a resident of Malta.
- Declaration of conformity. This declaration must be signed by the founders of the company. It states that the company complies with all legal requirements.
- Bank reference letter: Some banks may require this letter to open a corporate bank account.
Before registering companies, carefully study the legislation, or ask specialists who know all the intricacies of Malta company formation to help you with business registration.
Services offered by our company
FINTECH HARBOR CONSULTING employs a number of specialists who have experience in registering companies in various jurisdictions. If you apply to FINTECH HARBOR CONSULTING for the help of Malta company formation, we will first of all carefully consider all your wishes for the future business. Next, we will study all the documents. And as a result, we will offer you the best option based on your business ideas. In addition to the fact that we are ready to accompany the registration of a company, we are ready to help you with its further legal support. First of all, we will help you choose a bank or payment system based on the clients you want to work with, as well as your plans for the development of the company. Secondly, we are ready to prepare draft contracts, additional agreements to such contracts, and provide you with advice and legal opinion on issues related to the company’s activities. FINTECH HARBOR CONSULTING is not just a group of specialist lawyers. We are lawyers who are always ready to hear the client and his wishes, and not just “sell” their services!
Procedure of company incorporation in Malta
The procedure for registering a company in Malta is as follows.
1. Selecting the type of company
Select the type of company you want to register.
2. Company Name Selection
Check if the desired company name is available and complies with the naming rules set by the Malta Business Registry (MBR).
3. Memorandum and Articles of Association
Prepare a Memorandum and Articles of Association which will set out the company’s objectives, share capital, internal regulations, and the rules governing the operation of your future business.
4. Appoint directors and corporate secretary, and select shareholders
Based on the type of legal entity that you have chosen for Malta company formation, select the required number of directors/founders, as well as a corporate secretary. Maintain a statutory register of shareholders, directors and company secretary at the registered office.
5. Share capital
Decide on the structure of the authorised capital. Remember that the minimum share capital may depend on what type of company you choose.
6. Registered office
You must provide a registered office address in Malta. This address will be the official address for legal correspondence with partners, representatives of authorities.
7. Company Registration
Submit the required documents to the Malta Business Registry. Such a list should include Memorandum and Articles of Association, confirmation of the reservation of the company name, information about directors and shareholders, as well as confirmation of payment of the authorised capital.
8. Tax Registration and VAT
Register for tax purposes with the Inland Revenue Department of Malta. As a result of registration, you will receive a taxpayer identification number (TIN). And based on how much profit a company registered in Malta will bring to you, you may need to register as a VAT payer. Be aware of the threshold values for the firm’s turnover.
9. Social Security and Employment Registration
If you plan to hire employees, complete all required registrations within the law.
10. Licenses and Permits
Depending on the nature of your business, make sure you have the necessary permits for your company.
The above instructions are just a brief step-by-step description of your steps to register a company. Remember that each case is individual and when registering a company, you should always take into account the latest legal requirements. And also the fact that Malta company formation will be carried out faster if you turn to specialists.
Taxes in Malta
Understanding the tax system of any country in which you have registered your business is essential to be able to calculate the cost of taxes alone. If we talk about the tax system in Malta, it should be said that in this country there are a number of taxes, similar to those in other countries. Therefore, before register a company in Malta, carefully read such taxes as:
- Personal income tax. Malta uses a progressive tax system for individuals. The tax rates for resident individuals are as follows:
- up to 9,100 euros: 0%
- from EUR 9,101 to EUR 14,500: 15%
- from EUR 14,501 to EUR 19,500: 25%
- from €19,501 to €60,000: 25%
- over 60,000 euros: 35%
Non-resident individuals pay a flat tax rate of 15% on income earned in Malta. However, certain categories of non-resident individuals may be eligible for tax rebates or exemptions.
- Corporate tax. Under the Income Tax Act, Maltese companies are subject to corporation tax on their worldwide income. Foreign companies that do business in Malta will be subject to corporation tax solely on local income. The taxable income of corporations in Malta includes in particular: business activities, dividends, interests, royalties, and incomes made from real estate rental or selling other sources of income. The standard corporate tax rate in Malta is 35%. Companies registered in Malta may be eligible for a 6/7 corporate tax refund. The refund is as follows: if the company pays a corporate tax of 35%, then the shareholders can claim 6/7 of the tax. All of the above actions result in an effective tax rate of 5%. Although, there are exceptions to this rule too. Maltese holding companies can receive a full corporate tax refund under the participation exemption, provided that such legal entities benefit from participation in a company registered outside of Malta. It should be emphasized that Maltese holding companies may also choose to pay corporation tax on certain income. In turn, shareholders after the distribution of dividends may demand a refund of this tax. Please note that when paying corporation tax in Malta, firms must allocate their profits to one of the following accounts:
- Maltese tax bill,
- foreign income account,
- tax-free account,
- final tax accounting, accounting for real estate.
- Taxation of royalties. If a Maltese company derives royalty income from qualified intellectual property rights, then any income arising from those rights is exempt from corporation tax. It is worth noting that the exemption also applies to qualifying patents wherever they are registered, even if they are developed and registered and held outside Malta.
- Value Added Tax (VAT). Malta applies VAT to most goods and services. The standard VAT rate is 18%. But there are a number of certain goods and services that are subject to reduced rates of 7%, 5% and even 0%.
- Capital Gains Tax. Taxed in Malta at progressive income tax rates. However, there are some exceptions for certain types of capital gains (for example, profit from the sale of the main residence).
- Property Tax: Malta levies a property tax known as the ‘Transfer Tax’ or ‘Stamp Duty’ on the transfer of immovable property.
- Social Security Contributions. Both employees and employers are required to pay contributions to social security schemes in Malta. Thus, the employee’s contribution to social security is about 10% of his gross salary, and the employer’s contribution is about 10.3% of the employee’s gross salary.
- “IP-Box” regime. Mankind does not stand still and tries in every possible way to develop new preferential regimes or use existing instruments for such benefits. So, one of the latest trends that is used in tax optimization is the “Intellectual Property Box” or “IP-Box”. The essence of this regime is both to reduce the effective interest rate on income from the use of intellectual property and to release part of income from taxation.IP Box mode appeared in Malta only in August 2019. And accordingly applies to income received from 2019 and later. The effective rate under IP-Box in Malta is zero percent.
- Taxation of royalties. If a Maltese company derives royalty income from qualified intellectual property rights, then any income arising from those rights is exempt from corporation tax. It is worth noting that the exemption also applies to qualifying patents wherever they are registered, even if they are developed and registered and held outside Malta. Royalties earned in Malta by residents of Malta are generally subject to standard progressive personal income tax rates (between 0% and 35%). The tax rate applied will be affected by the total amount of income received. In turn, royalties received in Malta by non-residents may be subject to withholding tax. The standard withholding tax rate on royalties paid to non-residents is 10%. However, this rate can also be reduced (or even eliminated if Malta has a double tax treaty with the recipient’s country of residence).
- Dividends. If dividends are received by a Maltese company, then as a general rule, dividends are considered part of the taxable income of such a legal entity. However, dividends received from a “participating holding company” may be exempt from Maltese corporate income tax under the participation exemption provisions of the Income Tax Act. This legal condition is another big “bonus” part of the attractiveness of Malta’s tax system when considering the country of company registration.
- Other taxes. The list of taxes and duties in Malta is not exhaustive and may vary depending on the law.
- Also, don’t forget about double tax treaties. This is a great legal opportunity for companies to avoid paying for the same product twice.
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FAQ
How much does it cost to open a company in Malta?
The cost of Malta company formation depends on several factors (for example, the type of company, the size of the authorized capital, additional licenses or the involvement of Malta company formation agents). Thus, the cost of registering a company in Malta roughly includes the following costs:
- Registration fees: The basic cost of registering a company in the Maltese Business Register (MBR) is from 245 to 1750 euros, depending on the type of company structure you choose.
- Notarial and legal services. It is possible that you will have to use the services of a notary and/or a lawyer to prepare and notarize the necessary documents. The cost of services of such specialists is from 200 to 500 euros.
- Share capital. The minimum authorised capital depends on the type of company. You need to focus on amounts from 1,165 euros, depending on the type of company.
- Corporate Services: If you choose to work with an intermediary to handle the registration process, expect additional fees. The cost of the services of such specialists ranges from hundreds to several thousand euros.
- Annual fees: company registration in Malta is not only the cost of registration itself. It is also an annual maintenance fee to keep the company active and compliant.
- Additional licences and permissions. Depending on the nature of your business, you may need additional licences and permits. Their cost must be specified based on the type of activity that is subject to licensing.
The above figures are approximate. Actual costs may change over time: the cost of services, and legal requirements change. There is no doubt that company registration in Malta requires financial investments. And therefore, even before the start of the requirement, carefully study the legislation to avoid unnecessary expenses.
Can a non resident set up a company in Malta?
Yes, of course. A non-resident can perform Malta company registration. Malta is extremely positive about attracting foreign investment to the country.
How to register a Ltd company in Malta?
A Limited Liability Company (Ltd) in Malta is the most popular type of legal entity. When you set up a company in Malta in the type of Ltd, you must perform a number of actions, namely:
- choose a unique company name;
- prepare the Memorandum and Articles of Association (M&AA);
- choose a registered office and a resident agent: the company must have a registered office in Malta for official correspondence. In addition, a resident agent must be appointed to represent the company locally;
- Determine the size of the authorized capital for Malta company formation;
- appoint a director and secretary of the company;
- to register a company by submitting all necessary documents to the Register of Enterprises of Malta for company registration;
- register with the tax authorities and register VAT (if necessary). After registering a company, you must register for tax purposes with the tax authorities in Malta;
- open a bank account;
- register employment with the tax and social security authorities of all employees who will be involved in your business;
It is extremely important to comply with all legal requirements and rules in the registration process in a timely and correct manner. Company registration in Malta in the form of an LLC will be carried out quickly and in accordance with the law if you involve specialists as legal advisers on the issue of Malta company incorporation.
What is the minimum capital for a company in Malta?
The minimum share capital requirements for a company registered in Malta depend on the type of legal entity selected. Thus, the minimum authorised capital of Ltd. in Malta is 1165 euros. At the same time, at least 20% of the nominal value of each share must be paid during registration. In turn, in a Plc., the minimum share capital is 46,588.70 euros. At the same time, at least 25% of the nominal value of each share must be paid during registration. In any case, it is important to carefully study the legislation at the time of the Malta company formation. The requirements for the size of the authorised capital may change. And it is very important to consider this moment.
How long does it take to set up a company in Malta?
The time required to establish a company in Malta depends on the type of company being registered, the completeness of the application and the workload of the relevant registration authorities. In general, Malta company formation takes no more than 10 working days.
Can I open a bank account in Malta for my company?
Yes, of course. A non-resident can open a bank account in Malta for their company. However, specific requirements and procedures for opening a bank account should be taken into account. So, some banks may require you to make a minimum deposit or go through a lengthy verification procedure. The process of opening an account in general depends on the bank itself and the type of company you have registered in Malta.
Are there any specific industry regulations or licenses required for certain business activities in Malta?
Yes, specific industry regulations and licenses are required for certain activities in Malta. Licensing and regulatory requirements vary depending on the nature of the business and industry, as follows:
- Online gaming, casino and sports betting companies must obtain licenses from the Malta Gaming Authority (MGA) in order to operate legally;
- financial services firms such as banking, insurance, investment services and electronic money institutions are regulated by the Malta Financial Services Authority (MFSA);
- A business that is related to telecommunications services requires a license from the Malta Communications Authority (MCA);
- Businesses operating in the aviation sector may require licenses from the Civil Aviation Authority;
These are just a few examples of industries where a license as a document for the legal implementation of activities is essential. Therefore, before starting the Malta company formation, carefully read the latest legal requirements.
What areas can I open a small business in Malta?
Malta offers a diverse and dynamic business environment for small businesses in a variety of sectors. The choice of industry will depend primarily on your interests, experience and, most importantly, on the market demand for goods and services that you plan to sell/provide. These types of services include hospitality and tourism, language schools, child and elderly care, IT and technology services, as well as online commerce. In any case, carefully study the requirements before starting a business.
Is Malta offshore?
There is no single answer to this question. The reason is that Malta is often considered to be an efficient tax jurisdiction. Sometimes you can find such names as Malta – “jurisdiction with low taxation” or Malta is “tax haven”. In any case, Malta cannot be classified as a “classic offshore”.
What are the restrictions on the company name?
In Malta, there are certain restrictions regarding the future name of a business. Here are some of the key restrictions on company names in Malta:
- Similar Names: The name you choose for your company must not be identical or too similar to the name of an existing company in Malta. The name must be unique and associated with consumers in the future only with your company;
- Forbidden words: Certain words or phrases are considered confidential. In order to use them, you need to obtain a separate permit. For example, we are talking about terms that are related to banking or insurance business, pharmaceuticals;
- offensive names. it is forbidden to use in the name of companies offensive, obscene words or words that promote illegal activities;
- Misleading Names: the name you choose for your future business should not be misleading. Also, it should not imply business activities that the company does not engage in;
- Royal Family or Government Name: if you wish to use the name of the British Royal Family or any other name, you must obtain prior approval.
Before registering a company name, it is recommended to search for the name in the Malta Business Registry. This will allow you to check its availability and make sure that the proposed name complies with all the rules. In turn, the name reservation process allows you to confirm the availability of the name before proceeding with the company registration.
Which authority registers companies in Malta?
The body responsible for registering companies and supervising corporate affairs in Malta is the Malta Business Register (MBR).
What VAT rate applies in Malta?
The standard Value added tax (VAT) rate in Malta is 18%. This is the rate that applies to most goods and services in the country.
However, there are also reduced VAT rates that apply to certain goods and services. Reduced Rates:
- reduced rate (7%), for example, accommodation in hotels, guest houses and self-service establishments, medical equipment, books and newspapers;
- an extra reduced rate (5%), applied to a limited number of essential goods, such as some medical equipment for the disabled and some types of books, including school textbooks;
- zero rate (0%), for example, the export of goods outside the European Union, certain transactions within the EU, as well as certain food and beverages.
It is important to emphasize that VAT rates and rules may change due to updates to the tax system or changes in government policy. Before Malta company formation, you should familiarize yourself with the legal requirements and taxation of Malta.
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