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Maltese company formation

Malta is a Mediterranean island state, member of the European Union and the Eurozone. Being an ex British colony, Malta has adopted the Common Law legal system with features of civil law and applies the International Financial Reporting Standards (IFRS) for the preparation of the financial statements. The population is well educated and multilingual with English being the second language on the island. Malta is well known as a tourist destination, a yachting location as a result of its many natural marinas and a gaming jurisdiction.

It has developed as an international business center in Europe as a result of the above characteristics as well as its strategic location, stable political and economic environment, the excellent business infrastructure and telecommunications and above all its favorable tax regime with the following characteristics:

Tax System

•    Corporate tax rate 35% but with the possibility in the event of non Maltese Shareholders to reduce the effective tax rates as follows:

–          5% for business income through the tax refund system they apply (as 6/7 tax refund is received).

–          At 10% for passive income interest or royalties (as 5/7 tax refund is received).

•    Tax on dividend 0% – participation exemption is granted if 10% is held or minimum shareholding of €1.164.000.

•    Capital gains tax on participation 0% under conditions.

•    Capital gains tax on investments (trading in securities) 35% but effective tax rate 5% due to the tax refund system.

•    Tax on income from royalties, patents in respect of inventions 0%.

•    Tax on income from aviation 0%.

•    Attractive jurisdiction for yacht registration, with excellent yacht registry and VAT solutions available.

•    Licensing for Gaming Company.

•    Extensive network of Double Tax Treaties with over 60 countries including good Double Tax Treaties with China, Russia and Israel.

•    No withholding taxes on outbound dividend, interest or royalties for Malta with some exceptions.

•    Competitive fees for incorporation and administration.

•   Low capital requirements.

•   Absence of CFC legislation, thin capitalization or transfer pricing rules.

•   No wealth or capital taxes.

•   No exit or entry taxes upon a shift of domicile or residence to and from Malta.

•   Access to the European Parent –subsidiary Directives and European interest and royalty Directive (no withholding taxes are due over dividend , interest and royalty payments from companies resident in other European companies to Malta company).


Legal aspects of Maltese companies

The most commonly used type of company in Malta is the limited liability company with the following characteristics:

–          Minimum one director, corporate or physical.

–          Minimum 2 shareholders; as a practice we register one share in our names to meet this requirement, if needed.

–          Obligatory secretary. Physical person licensed in Malta.

–          Registered office in Malta.

–          Memorandum and articles of Association must be signed by the subscribers.

–          Share capital account is opened at a bank for the deposit of the paid up issued share capital.

–          Minimum share capital for private company is €1165 with at least 20% paid in advance.

For more information you can contact us at

Setting up a Maltese company

Setting Up a company

Limited liability company(public or private)

General Partnership

Limited Partnership

Branch of a Foreign Company

Sole Proprietorship



Companies are registered with MFSA (Malta Financial Services Authority)

Minimum shareholders’ 2 but private limited companies may be incorporated as a single member company with physical persons and one main activity

Minimum 1 Director, physical person or legal entity

Secretary  (compulsory) – physical person(licensed agent in Malta)

Registered office in Malta-(compulsory)


Niche Markets, ideal for Maltese companies:





Minimum Capital:

Private companies €1,165 with at least 20% paid i.e. in practice we incorporate companies with capital of €1200 out of which €240 is paid


Requirements to establish a Maltese company:

If the company is not a shelf company then a reserved name must be chosen or alternative you can send  the company name you wish and check the availability in MFSA

Detailed business activities/Objects of the company / Preparation of the Memorandum and  Articles of Association

Certified by a lawyer of passport, utility bill and bank reference letter of the director/shareholder/beneficial owner (if the documents are not in English language then an official translation is required)

Certified by a lawyer of the corporate documents if director/ shareholder will be a corporate entity (if the documents are not in English language then an official translation is required)

Share capital is deposited at the special bank account and certificate is issued confirming payment of capital

Filing at MFSA for the company registration .The period needed to register a company is 24 – 48 hours.

Upon the registration in MFSA we need approximately 3-4 days in order to receive  certificate of incorporation and Memorandum and Articles of Association.

According to business line we will advise if VAT is required


The package of incorporation includes the following:

Fees of Incorporation

Registration Fees

Company Secretary

Registered Office

Certificate of Incorporation

Memorandum and Articles

Tax Registration

Share Capital- Opening start-up capital bank account in Malta ( the share capital paid in the account is additional to the fees for the company formation)


Bank Account:

The Banking regulations of Malta are based on EU rules and the financial services are available in the same terms to Malta owner and Foreign owned companies.

We can assist  you for the opening of a bank account in Malta or elsewhere  in Cyprus or in any of the following banks:


Business Taxation; General Information:

  • Taxable in Malta on worldwide bases irrespective of where its management & control  is situated. Foreign companies which are managed & controlled in Malta (but they are not ordinary resident and domiciled) pay taxes on a source and remittance basis that is on income & chargeable gains arising in Malta and on income arising outside Malta but remitted in Malta; foreign source gains would not be taxable in Malta
  • Companies and individuals are subject to income tax at the flat rate of 35% on net profit derived from trading, premiums, interest, royalties, rent, capital gains. Effective tax rate is reduced substantially either by virtue of refundable tax   credit or by application of the participation exemption
  • Dividend received by a Maltese company or capital gains derived from the disposal of shares is tax exempt in the following circumstances

– If it holds more than 10% of equity or

-if participation is less than 10% but it has minimum equity investment of €1.164.000 for an uninterrupted period of 183 days

-Obligation to distribute dividend and get refund up to 4 years

Additional conditions apply to the above for dividend income to be tax exempt:

  • Maltese resident or EU country  or If not EU then the foreign tax rate to be at least 15%                          or
  • If less than 50% arises from passive income or royalties
  • e.g even if dividend is received from BVI company, participation exemption applies if it is a trading/consultancy company and less than 50% of income arises from passive income.
  • A non resident shareholder can claim a refund of part or all of the tax suffered by the company on said profits

6/7 refund:

  • it’s available on profits; generally trading income which does not constitute “passive interest or royalties” or upon which the company has not claimed double taxation relief
  • After refund effective tax rate is 5% i.e 6/7 of 35% = 30 % refunded
  • 5/7 refund:
  • this refund applies to dividends distributed out of profits which constitute “passive interest or royalties” and on which company has not claimed double taxation relief. Effective tax rate  is 10% i.e. 5/7  of  35% = 25% refunded
  • Effective tax rate =6.25%
  • If no double taxation treaty exists then if a commonwealth country can claim commonwealth relief; otherwise Unilateral relief is available at flat rate foreign tax credit of 25% is available on companies.
  • 2/3 refund  on Maltese tax paid on dividend received on which Maltese companies claim double taxation relief – Rarely used if WHT on dividend is high and cannot claim participation exemption or in case of financing company


Financial statements:

  • Companies are subject to tax on income arising in a calendar year (known as the bases year) in the year following that in which it arises (known as the year of assessment).
  • Companies must make three provisional tax payments due on 30th April,  31st August and 1st December, respectively, during each bases year if their accounting reference date is 31st December
  • A company that carried on 90% or more of its business outside Malta or it is owned by non residents may opt to be exempt from paying provisional tax payments.
  • Every company incorporated in Malta has to submit a set of audited financial statements on a yearly bases to the Maltese Financial Services Authority within nine months from the end of the accounting period. The financial statements must be approved by at least 2 directors.
  • Annual return to MFSA is filled at the anniversary of the company formation
  • A final tax payment is due by the date the tax return is submitted (although six month exemption applies). The tax return is due 9 months from the end of financial year




Malta and Moldova signed the first DTT

On the 10th of April 2014 Malta and Moldova signed the first income tax treaty and an accompanying protocol.

The treaty provides for withholding at source, at the following rates:

– A 5% rate will apply where dividends are paid by a resident of Moldova to a resident of Malta that is the beneficial owner of the dividends. In the case of Malta, no withholding tax effectively will be levied, since any withholding tax on dividends may not exceed the tax chargeable on the distributable profits.

– The rate on interest and royalties generally will be 5%.

However, the term “royalties” does not include payments for the use of, or the right to use, industrial, commercial or scientific equipment (e.g. leasing income).

The source state may tax gains derived by a resident of the other state from the alienation of shares deriving more than 50% of their value, directly or indirectly, from immovable property situated in the source state.

The above DTT is similar to the Cyprus and Moldova, although Cyprus is superior as it is the old OECD model without exchange of information or any capital gains tax in the case of sale of shares of companies with more than 50% of their value in real estate.

Malta’s new Residence Program for non-EU individuals includes Schengen Visa

A new residence scheme has been launched by the Maltese Government, called ‘The Global Residence Scheme’ aimed at attracting non-EU persons to take an EU residence in Malta.

‘The Global Residence Scheme’ offers to a non-EU person and his/ hers dependents a Universal Schengen Visa, which enables the holder to travel across the European Union countries (which form part of the Schengen Area) without the need for a Visa.
Below are some salient points of this scheme:

(a) rental on annual basis a residence in Malta from Euro 8,750 to Euro 9,600 or buy a property ranging from Euro 220,000 to Euro 275,000 depending on the locality;
(b) There is no particular requirement to physically reside in Malta during any time of the year;
(c) The applicant must pay a minimum annual tax of Euro 15,000 covering himself and his/hers dependents, if any.  This Euro 15,000 tax covers up to Euro 100,000 income remitted to Malta.  Any other income remitted to Malta in excess of Euro 100,000 is subject to tax at only 15%.  Obviously, if income is not remitted to Malta, this would not be taxed;
(d) Any capital gains remitted to Malta are not subject to tax at all;
(e) The applicant must have a health insurance to cover him and his dependents for all medical expenses;
(f) The  Government’s application fees vary from Euro 5,500 to Euro 6,000 depending  on the locality of the property rented or acquired;
(g) Under this scheme, an applicant may still work or carry out business activities in Malta;

Ukraine, Malta to sign convention DTA

Ukrainian Finance Minister Yuriy Kolobov is to sign a convention between the governments of Ukraine and Malta on the avoidance of double taxation and the prevention of tax evasion

The decision was approved by The Cabinet of Ministers of Ukraine at a meeting on July 24, the government’s press office reported.

It would appear that the draft convention’s tax rates on dividends, interest and royalties comply with the requirements of the OECD Model Tax Convention on Income and on Capital.

In particular, the general rate on dividends is 15%, and 5% on dividends received by the owner of more than 20% of a company that pays dividends. The general rate on interest and royalties is 10%, according to the statement.