The Malta Company

A Malta company is a company registered in Malta. 

Malta Holding Companies

A company that intends to operate as a holding company is a company that satisfies certain criteria with respect to its equity stocks. There are no express limitations on the objects, however, to comply with the legal requirements for tax refunds, such a company may effectively limit its scope to the ownership, management and administration of equity holdings in other companies.

These companies are ideal for the management of equity investments of any kind including investment portfolios. A special tax regime exists with respect to ‘participating holdings’ held by a Maltese company in an overseas company.

Qualifying Participation

• a holding of >10% of the equity shares of a company not resident in Malta.

If the shareholding percentage is <10%, its shareholding still qualifies as a participating holding, provided that:

• the Maltese corporate shareholder is entitled (at its option) to purchase or has the right of refusal on a disposal of the balance of the equity shares of the overseas company;
• the Maltese corporate shareholder is entitled to either sit on the Board or appoint a person to sit on the Board;
• the company invests a minimum of one million, one hundred and sixty four thousand six hundred and eighty six Euro and seventy cents €1,164,686.70 or the equivalent sum in a foreign currency;
• the shares are held in the overseas company for the furtherance of its own business.   

An equity holding is a holding of the nominal share capital in a company where the shareholding entitles the shareholder to a right to votes, to profits available for distribution to shareholders and to assets available for distribution on a winding up of that company. A holding of shares held as trading stock for the purpose of a trade does not constitute a participating holding.

The Malta Company

The formalities for dealing with company formation must be handled by a licensed nominee company. Approval is obtained by presenting a formal application to the effect that the company is fully owned by non-resident shareholders and that its objects comply with certain requisites. One copy of the Memorandum is presented to the Malta Financial Services Authority together with the bank deposit slip showing that the paid up share capital of the company has been deposited at the bank, for registration.

The fees payable upon registration by a company to the Registrar are based on the authorised share capital. These vary from a minimum of €349.41 (for companies of up to €4,658.75) to €1,747.03 (for companies having an authorised share capital exceeding €1,153,039.83). Should a company subsequent to registration increase the authorised share capital, it must pay the difference in registration fees.

Malta Holding Companies

The formalities for dealing with company formation must be handled by a licensed nominee company. Approval is obtained by presenting a formal application to the effect that the company is fully owned by non-resident shareholders and that its objects comply with certain requisites. One copy of the Memorandum is presented to the Malta Financial Services Authority together with the bank deposit slip showing that the paid up share capital of the company has been deposited at the bank, for registration.

The fees payable upon registration by a company to the Registrar are based on the authorised share capital. These vary from a minimum of €349.41 (for companies having an authorised share capital of up to €4,658.75) to €1,747.03 (for companies having an authorised share capital exceeding €1,153,039.83). Should a company subsequent to registration increase the authorised share capital, it must pay the difference in registration fees.

The Malta Company

Company name

Three names in order of preference are to be given so that the licensed nominee applies to the Malta Financial Services Authority for approval. This is normally obtained within twenty-four hours.

Principal activities - Objects clause

The company’s main business activity is to be obtained so as to insert same in the objects clause of the Memorandum of the company.

Share capital

The minimum issued share capital of an ITC is the same as that of an onshore company - €1,164.69 expressed in any convertible foreign currency - with a minimum of 20% paid up on incorporation. There is no requirement to convert same to local currency. This is to be deposited in a local bank in a ‘company in formation’ account.

Shareholding

The minimum number of shareholders is normally two, however a single member company may also be registered. A licensed nominee company can act as the registered shareholder(s) so that the identity of the beneficial owner(s) is not disclosed.

Registered Office

Every company registered in Malta must have a registered office in Malta. This is normally at the office of a firm of accountants, lawyers or consultants.

Directors and Secretary

All companies must have at least one director and a secretary. The Board of Directors can be composed of both foreigners or a licensed nominee company. The secretary must be an individual (a director can be a company), but no specific qualification other than general competence is required.

Letters of Reference / Declarations

The licensed nominee is required by law to obtain the following references in respect of each non-resident shareholder and for each director:
 

• at least one status report from a bank or similar financial institution;
• non-resident shareholders must disclose the name and address of their bankers from whom direct confirmation upon their business reputation and status can be obtained by the Central Bank of Malta or by the licensed nominee;
• photocopy of the passport ;
• a short curriculum vitae;
• declaration from all applicants that they have never been:
• convicted of an offence (other than a traffic offence),
• adjudged bankrupt,
• a director, manager or shareholder of a business entity which was subject of an investigation by a governmental, professional or other regulatory body, or which was adjudged bankrupt, compulsorily wound up or has made any compromise with its creditors. 

Applicants must also declare their interest as shareholders or directors in other companies registered in Malta, both onshore and offshore.

Malta Holding Companies

Company name

Three names in order of preference are to be given so that the licensed nominee applies to the Malta Financial Services Authority for approval. This is normally obtained within twenty-four hours.

Principal activities - Objects clause

The company’s main business activity is to be obtained so as to insert same in the objects clause of the Memorandum of the company.

Share capital

The minimum issued share capital is of €1,164.69 expressed in any convertible foreign currency - with a minimum of 20% paid up on incorporation.. This is to be deposited in a local bank in a ‘company in formation’ account.

Shareholding

The minimum number of shareholders is normally two, however a single member company may also be registered. A licensed nominee company can act as the registered shareholder(s) so that the identity of the beneficial owner(s) is not disclosed.

Registered Office

Every company registered in Malta must have a registered office in Malta. This is normally at the office of a firm of accountants, lawyers or consultants.

Directors and Secretary

All companies must have at least one director and a secretary. The Board of Directors can be composed of both foreigners or a licensed nominee company. The secretary must be an individual (a director can be a company), but no specific qualification other than general competence is required.

Letters of Reference / Declarations

The licensed nominee is required by law to obtain the following references in respect of each non-resident shareholder and for each director:
 

• at least one status report from a bank or similar financial institution;
• non-resident shareholders must disclose the name and address of their bankers from whom direct confirmation upon their business reputation and status can be obtained by the Central Bank of Malta or by the licensed nominee;
• photocopy of the passport ;
• a short curriculum vitae;
• declaration from all applicants that they have never been:
• convicted of an offence (other than a traffic offence),
• adjudged bankrupt,
• a director, manager or shareholder of a business entity which was subject of an investigation by a governmental, professional or other regulatory body, or which was adjudged bankrupt, compulsorily wound up or has made any compromise with its creditors. 

Applicants must also declare their interest as shareholders or directors in other companies registered in Malta, both onshore and offshore.

Meetings

Every company must hold a general meeting every year. This is in addition to any other meetings held in that year.

Annual Return

An annual return is to be filed annually by all companies. This is sent to the Registrar of Companies accompanied by a payment depending on the authorised share capital. Fees vary from €163.06 to a maximum of €978.34.

The Malta Company

Company Taxation

Taxation of company

A company must draw up its financial statements in accordance with the provisions of the Companies Act, 1995. Proper books of account have to be maintained; these must give a true and fair view of the state of the Company’s affairs and have to be audited by a Certified Public Accountant and Auditor. The company’s tax charge (which is at 35%) is based upon these accounts.

Taxation of Share Holder in Receipt of a Dividend

Malta’s full imputation system of taxation and the refund of tax provisions contained in the legislation make the ITC a very tax efficient vehicle for non-resident shareholders. Hence, non-resident shareholders are taxed at a flat rate of 35% on the gross amount of all dividends received from the company. However, they can claim a 6/7 refund against their tax liability for the following:
 

• the full Malta Tax at source retained by the company on the distribution of dividends;  

This tax refund is :

• itself not taxable;
• payable by the Inland Revenue not later than the fourteenth day following the end of the month in which the refund becomes due. This refund is paid in the same currency in which the relevant profits were charged to tax. 

Advance Revenue Ruling

One may request an advance ruling on their taxable status. Such a ruling guarantees the tax position of the company for a minimum five year period. Any changes in the tax legislation during this five year period will not become operative before the lapse of two years from the coming into force of the new law. These may be renewed for a further period of five years.

Tax treaties

A Malta Company may take full advantage of the double tax treaties to which Malta is a party and relief from double taxation is available where foreign income is taxed in Malta but has suffered tax in the foreign state.

Presently, Malta has signed twenty-eight tax treaties which include eleven with E.U. member states. Seventeen other treaties are awaiting ratification.

Confidentiality

The transactions and activities of the Malta Company are of a confidential nature and shall be so treated for all purposes, and shall continue to be so treated even after the company has been struck off the register. 

Withholding Tax

Dividends

On paying out dividends, the company withholds tax. This amount is equivalent to the company corporation tax and is fully imputed to the recipient. No further payment is hence due to the Inland Revenue Department.

Interest

There is no withholding tax on interest paid to any person who is a non-resident so long as this does not arise from a permanent establishment in Malta owned by that non-resident.

Royalties

There is no withholding tax on royalties paid to any person who is a non-resident so long as this does not arise from a permanent establishment in Malta owned by that non-resident.

Relief from Death and Donation Duty

There is no Death and Donation Duty on inheritance of shares of Malta Companies as long as these are held by non-residents.

Work Permits

Foreigners (both directors and expatriate staff) are eligible to obtain work permits to live in Malta together with their families.

As regards National Insurance contributions, companies may opt not to pay in respect of foreign employees if they already contribute to a similar national scheme in their mother country.

Foreign employees working for a Maltese company and paid through Malta are taxed at Nil rates for the duration that they are outside Malta so long as these funds are not remitted to Malta. However, salaries received in Malta for the time that they are in Malta are taxed at normal rates.

Malta Holding Companies

Tax of Company

The income received by the Maltese company from its qualifying participation is taxed at the rate of 35% just like all other companies.

Taxation of Shareholder in Receipt of a Dividend

The shareholders of that Maltese company enjoy preferential tax treatment in that when such profits from the qualifying participation are subsequently distributed to a non-resident shareholder, there will be a FULL REPAYMENT of the Malta tax suffered on the income.