Malta Corporate Services
A Maltese company is an ideal vehicle for establishing a business within the EU. Malta is regarded as a jurisdiction of choice due to its highly competitive tax system, participation exemption and tax refund, along with over 70 double tax agreements. Sovereign’s team based in Malta can establish both holding companies and trading companies.
Malta offers a highly efficient fiscal regime that avoids double taxation on taxed company profits distributed as dividends. Malta companies are taxed at a rate of 35%. However, a full imputation system applies to the taxation of dividends, whereby the tax paid by the company is imputed as a credit to the shareholder receiving the dividend. This means that profits taxed at a corporate level are not subject to further tax in the shareholder’s hands, and, depending upon the rate of tax applicable to the recipient of dividends, may trigger entitlement to a tax refund in the hands of the recipient.
As a result, shareholders of a Maltese company should, upon a distribution of profits, be entitled to claim a tax refund of 6/7ths of the relevant tax paid in respect of trading income and 5/7ths of the relevant tax paid in the case of passive interest and royalties. The refund is reduced to 2/3rds where the distributing company claims double taxation relief. Income and gains from a participating holding (where a company holds directly at least 10% of the equity shares of a non-resident company, or meets certain other criteria) are exempt from tax.
Alternatively, instead of claiming this exemption, a company can choose to pay tax at the normal tax rate and then receive a full refund of the tax paid upon a distribution of dividends.
Double taxation treaties
Malta grants relief from double taxation under the credit method on source-by-source and country-by-country bases. The Maltese tax regime governing double taxation relief includes not only treaty relief but also unilateral relief, and thereby ensures that income arising from overseas is not subject to double taxation, even if there is no double taxation agreement in existence.
In terms of domestic legislation, no withholding taxes are imposed on dividends, interest and royalties paid to non-residents, subject to certain conditions. In addition, no Maltese tax is imposed on gains realised from transfers of corporate securities by non-residents, provided that the sole or main assets of the company whose securities are being transferred do not consist of Maltese immovable property.
Choosing the right business set up
Limited Liability Company (LLC)
The Limited Liability Company (LLC) is the most common form of business entity on Malta. A company may have the status of a public or a private company. The memorandum and articles of a private company must:
- Restrict the right to transfer its shares;
- Limit the number of members to 50;
- Prohibit any invitation to the public to subscribe for any shares or debentures of the company.
Malta trading companies are onshore business companies that are registered under the Maltese Companies Act, which are taxable on a worldwide basis at the normal corporate tax rate of 35%. Shareholders are entitled to a 6/7ths refund, reducing their effective tax rate to around 5% at shareholder level. Malta’s corporate tax rate is chargeable on
Malta Holding Company
Malta holding companies can be set up in order to hold shares and securities and business assets in any form – real estate, fixed assets, aircraft, investments, bank accounts and intellectual property – as well as personal assets such as yachts, residential property and works of art.
Business support services
Sovereign provides ready-made or customised incorporation of all types of Malta companies. Once incorporated, we provide a domiciliary service, which includes the provision of company secretarial, registered office and nominee shareholder services. Full management services from our own licensed corporate directors are available and highly advisable in most cases. Re-mailing services are also available for all companies established by Sovereign. In addition to providing incorporation, domiciliary and management (directorship) services, a range of ancillary services is available on request, which includes but is not limited to:
- Accounts and audit services – the filing of annual audited accounts is a requirement for all companies established in Malta. Accounts can be prepared for a competitive fee and we have arrangements in place with a number of auditors;
- Payroll services for companies with Malta-based employees;
- Provision of dedicated telephone lines;
- Office and personnel assistance;
- Designated staff members (temporary or permanent availability);
- Assistance with office relocation;
- Introduction to real estate agents, government agencies and other third parties;
- Redomiciliation of foreign companies to Malta.