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A Complete Guide to Setting Up a Company in Malta

Are you considering expanding your business’ horizons to the heart of the Mediterranean Sea - Malta? Setting up a company in Malta can be an attractive proposition for entrepreneurs due to its strategic location, robust legal framework, and favourable tax regime. In this guide, we'll walk you through the process of forming a company in Malta, highlighting its benefits, necessary steps, legal requirements, and other essential considerations.

Advantages for Businesses in MaltaWhat are the benefits of registering a company in Malta?

Malta offers a wide range of advantages for businesses seeking to establish a presence in the region. Some of the key benefits include:

  • Strategic Location
    Situated at the crossroads of Europe, Africa, and the Middle East, Malta provides convenient access to diverse markets.
  • Favourable Tax Regime
    Malta boasts a competitive corporate tax rate of 35%, with various incentives and tax credits available for eligible companies. A full imputation system is applicable. Through this system the amount of the tax refund is set at 6/7ths of the tax paid by the company. The effective corporate tax rate being paid will be circa 5%.
  • EU Membership
    As a member of the European Union, companies registered in Malta benefit from access to the EU's single market and regulatory framework, inclusive of funding, grants and subsidies, where eligible.
  • Support for Innovation and Growth
    The Maltese government actively promotes innovation across pivotal sectors such as gaming, fintech, and maritime, providing incentives such as grants and tax credits to foster research and development.
  • Skilled Workforce
    Malta has a well-educated and multilingual workforce, making it an attractive destination for businesses requiring diverse talents.

A step-by-step guide to incorporating a company in Malta

Setting up a company in Malta involves several steps. The below guide will walk you through the whole process step by step.

1.    Choose your Company Name and Type
Choose a unique name for your company and make sure it complies with Malta’s company naming regulations. These regulations fall under the remit of the Malta Business Registry. There are four different types of company to choose from, namely: Limited Liability Company, General Partnership, Single Member Company, and Overseas Company branching out to Malta. 

2.    Establish a Malta Registered Office
You need to have a registered office address in Malta. This will be the official address of your company's official correspondence and documentation.

3.    Appoint Directors and Shareholders
Decide who will be the directors and shareholders of the company. In Malta, a private limited company can be formed with a minimum of one director and one shareholder. The shareholder may either be an individual person or a corporate entity. In the case of public companies, there should be at least two directors and one company secretary.

4.    Sourcing of Employees
After appointing Directors and a Company Secretary, establishing an office and hiring employees in Malta can add significant value to your company and ensure operations are conducted within the country, depending on the company's size and activities.

5.    Draft Memorandum and Articles of Association
Prepare the Memorandum and Articles of Association, which are the legal documents governing the company's activities and internal regulations.

6.    Share Capital
Determine the share capital arrangement of your company. Malta does not impose exchange controls, allowing free movement of capital. Therefore, your company can have both authorised share capital and issued share capital, which can be denominated in any currency. The minimum requirement for authorised share capital of a private company is €1,164.69, whereas for a public company it is €46,587.47.

7.    Register the Company
Submit the necessary documents to the Malta Business Registry (MBR) for company registration. These documents include:
•    Memorandum of Association
•    Articles of Association
•    BO1 Form
•    Documentation verifying paid-up share capital
•    Identification proofs for company individuals and officers 
•    Beneficial Owner Declaration
•    Bank references for non-EEA resident shareholders
•    Payment via cheque for registration fee
•    Any supplementary forms or documents specified by the Registrar’s Office.
All document copies must be authenticated by a notary or legal professional.

8.    Obtain a Tax Identification Number (TIN)
After the company is registered, you need to obtain a Tax Identification Number (TIN) from the Office of the Commissioner for Revenue.

9.    Register for VAT (if applicable)
In general, the registration to a VAT number is done online through the Office of the Commissioner for Revenue website. VAT registration for sole traders in Malta is obligatory for annual turnover exceeding EUR 35,000, with the exception of medical practitioners and certain insurance firms.

10.    Open a Bank Account
Once the company is registered, open a business bank account in Malta. You'll need the company's documents, identification, and proof of address.

11.    Comply with Regulatory Requirements
Ensure compliance with all regulatory requirements, including annual filings, tax returns, and any industry-specific regulations applicable to your business.

12.    Operational Considerations
Set up any necessary operational infrastructure, such as office space, hiring employees, and obtaining licenses if required.

13.    Seek Professional Advice
Throughout the process, it's recommended to consult with legal experts, accountants, or business advisors who are familiar with Maltese corporate law and regulations. DZ Advisory can assist you all through this process, guaranteeing a smooth and successful entry into Malta's vibrant business landscape.

What other information should I be aware of before setting up a company in Malta?

  • Taxation & Double Tax Treaties
    Malta operates a territorial tax system, whereby companies are taxed only on income generated within its borders or income brought into Malta. Additionally, Malta is currently a signatory to nearly 70 Double Tax Treaties, presenting interesting opportunities with the right corporate structure in place. 
    Corporate tax in Malta is fixed at a rate of 35% on gross profits based on the company’s audited financial statements. However, through a tax refund system available to shareholders of Malta-registered companies, the net effective tax rate can be lowered to 0% for holding company structures, and 5% for trading companies. However, specific legal requirements must be met for shareholders to qualify for these tax refunds. 
  • Accounting & Auditing Requirements
    Malta-registered companies are required to keep accurate accounting records and prepare annual financial statements in accordance with International Financial Reporting Standards (IFRS). These financial statements, including the directors’ report, statement of financial position, statement of comprehensive income, notes, and accompanying schedules, must be audited at the end of each financial year as per the Malta Companies Act, 1995, and International Accounting Standards. 
  • Company Re-domiciliation in Malta
    Malta allows for the re-domiciliation of foreign companies to Malta and vice versa, providing flexibility for businesses seeking to relocate or expand their operations. With this option, companies aiming to shift their operations to Malta are not obliged to liquidate their existing setup in their current jurisdiction and start anew in Malta. Instead, they can opt for company re-domiciliation, enabling the transfer of their company domicile to Malta while retaining the legal entity originally established in a foreign jurisdiction. This process entails submitting a request to the Registrar of Companies in the manner prescribed by the company. By relocating their domicile to Malta, companies must adhere to Maltese laws and regulations without needing to establish a new legal entity from scratch.
  • Company Mergers in Malta
    Malta's Companies Act provides a framework for facilitating mergers and acquisitions through various legal mechanisms, including mergers by acquisition and mergers by the formation of a new company. These transactions can come in various forms, ranging from a straightforward share transfer or a subscription to a new share issue, to more complex structures like joint ventures or property transfers.
  • Malta Branch Establishment
    Foreign companies can establish branches in Malta by registering with the Malta Business Registry and appointing a local representative. Although not considered a legal entity, a Maltese branch must still undergo registration with the Malta Registrar of Companies. Establishing a branch is a straightforward and quick process, requiring notification to the Registrar within one month of operations commencing in Malta. Unlike the incorporation of a registered Malta company, there is no minimum share capital prerequisite for establishing a branch. Moreover, a Maltese branch is subject to similar legal provisions and regulations, including the potential eligibility to seek tax refunds for any Maltese tax liabilities. However, it's essential to recognise that a branch does not possess legal entity status. 
  • Registration of a Partnership in Malta
    Partnerships in Malta are regulated by the Maltese Companies Act and can take various forms, including general partnerships and limited partnerships. Each of these partnership types possesses a distinct legal status independent of its partners. Maltese legislation allows partnerships to own property under any legal title and to be subject to legal action.
  • Malta Company vs. Partnership
    In Malta, choosing between a company and a partnership depends on factors such as liability protection, taxation, and management structure. Companies afford limited liability protection, whereas partnerships offer more flexibility in management and taxation. The steps involved in forming a partnership include: drafting a partnership deed and appointing general and limited partners based on the chosen partnership type. Furthermore, it's worth noting that under certain conditions, a Limited Liability Company (LTD) can be converted into a partnership.
  • Shelf Company in Malta
    For entrepreneurs looking to establish a presence in Malta without navigating the entire incorporation process, shelf companies, also known as ready-made companies, may be an attractive solution. These pre-registered entities are readily available for immediate purchase and use, offering a quick and convenient option.

What other information should I be aware of before setting up a company in Malta?

1.    Can foreign nationals own a company in Malta?
Yes, foreign nationals can own and operate companies in Malta, subject to certain restrictions and regulatory requirements.

2.    Are there any residency requirements for directors and shareholders?
Malta does not impose residency requirements for directors or shareholders of companies registered in Malta. However, it is advisable to have at least half of the board composed of local directors, along with a company secretary who is well-versed in Maltese law. This approach aligns with the increasing importance of managing and controlling the company from within Malta for taxation purposes. This recommended setup ensures better compliance with local regulations, smoother operations, and enhanced adherence to tax laws and other legal requirements in Malta.

3.    What are the ongoing compliance requirements for companies in Malta?
Companies in Malta must comply with various ongoing obligations, including filing annual returns, maintaining accounting records, and holding annual general meetings.

4.    What are the fees involved in the incorporation of a company in Malta?
The fees for incorporating a company in Malta depend on various factors, including government filing fees, legal fees, notarial fees, and ongoing compliance costs. However, the below table provides a general idea of the expenses involved.

Aspect Fee/Requirement
Government Registration Fee €245 for authorised share capital of up to €1,500
Minimum Authorised Share Capital allowed €1,164.69
Minimum Annual Government Fee €100 (if the Company’s authorised share capital is less than €1,500)
Corporate Tax 35% with potential refunds applicable to the shareholder/s

5.    How much time is required to set up a company in Malta?
The time it takes to incorporate a company in Malta varies based on factors like the complexity of the company structure, availability of required documents, and registration process efficiency. But as a general guideline, registering your company takes about 9 weeks, while the tax registration process typically takes around 3 weeks.

In a nutshell, forming a company in Malta offers a wealth of opportunities for businesses seeking a stable and business-friendly environment in the heart of the Mediterranean. By understanding the legal requirements, tax implications, and regulatory framework, entrepreneurs can navigate the process with confidence and unlock the full potential of this dynamic jurisdiction. For a brief brainstorming on how to set up a business in Malta read here to understand what it entails before actually setting up the business in Malta.

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