Opening a Company in Malta

What you need to know to do business on our beautiful island

The Maltese Islands enjoy the reputation of being an excellent hub for international business, investment and financial services.   As a full EU member state since May 2004, with a highly-skilled and educated workforce, solid regulatory framework, and one of the most advantageous tax regimes for European onshore business and investments, Malta-registered companies are ideal vehicles for business owners and shareholders.

Tax Planning Opportunities for Maltese Companies

The new company taxation system rolled out from 2007 onwards allows onshore companies registered in Malta to pay tax on earnings generated anywhere around the world at the normal corporate tax rate of 35%.   Additionally, there are significant tax opportunities for shareholders to obtain statutory tax refunds, which are legally guaranteed and paid by the Inland Revenue Department within two weeks from lodging a refund request. When used correctly, these tax refunds drastically reduce the effective corporate tax rate in Malta to only 5%.   Tax benefits available for shareholders of onshore companies registered in Malta include:

Imputation System

The full imputation system used in Malta allows the tax paid by companies registered locally to be available as credit to shareholders. This credit is made available to shareholders when they receive dividends from the company.

Refunds for Active Income

Shareholders of a dividend-paying trading company registered in Malta are entitled to claim a refund of six-sevenths of the tax paid by the company.

Refunds for Passive Interest and Royalties

When dividends are paid out of the profits made from passive interest and royalties, the shareholders of a Malta-registered company can claim a refund of five-sevenths of the tax paid by the company.

Refunds for Participating Holdings

Income and capital gains made by companies registered in Malta that hold at least 10% ‘participating holding’ in equity shares of companies incorporated abroad are qualified for a full refund of the tax paid when dividends are distributed to their shareholders.   If the participating holding also qualifies as being ‘participation exempt’ by virtue of having certain anti-abuse provisions implemented, then a Malta-registered company can opt not to declare its income when filing tax returns as no taxes are being paid.

More Tax Benefits

Malta has no withholding taxes on dividend payment, interests and royalties paid to non-residents, no stamp duties, and no capital duties or wealth taxes.   The island also boasts an extensive double taxation treaty network with over 65 countries around the world, which is expect to continue growing in the future.

Living in Malta

A new residence programme for foreigners (non-EU) was launched on 1st June, 2013 and is to be introduced by legal notice by the end of the month. This programme replaces the original foreign residents’ scheme, the High Net Worth Individuals Scheme, which was suspended in 2011.   The Global Residence Programme will allow people who buy high-value property and pay taxes in Malta to benefit from a residence permit. Under the programme, the value of immovable property bought in Malta by foreigners has to be at least €275,000. However, when the property is in the south of Malta or in Gozo, the minimum value can be €220,000.   The threshold of rented property has been lowered to €9,600 in Malta and €8,750 in Gozo or the South of Malta. The Program removed the provision when third country nationals needed to place a 500,000 bond with the government and an additional €150,000 per dependant.   The minimum tax to be paid in advance has been reduced from €25,000 plus €5,000 per dependant per year to a minimum of €15,000 on income derived in Malta, with further income charged at 15%.   Foreign residents and their dependants have to be covered by their own health insurance policy. They will not be entitled to free health services by the state.