Are you planning to establish a company in Malta? In my comprehensive guide, you will learn:
- about the advantages of esablishing a company in Malta;
- what the Maltese Tax Refund System is;
- what non dom status is and when it applies;
- the different types of companies you can choose from in Malta;
- the requirements for the establishment of a company in Malta;
- how to register a company in Malta, step-by-step, and what documents you need;
- what you need to run a foreign company in Malta.
I hope you enjoy reading this blog! As always, if any questions come up while reading, feel free to write to me – my team and I will address your concerns as quickly as possible.
How to register a company in Malta – 8 steps
Let’s start with the most important aspects: 8 steps to follow.
Avoiding mistakes when establishing a Malta Limited company.
Advantages of Malta
In this chapter, you can learn about the advantages and the basic tax regulations in Malta.
Malta is a preferred location for entrepreneurs and multinational companies looking to relocate their business interests or seeking an ideal market within the EU.
Tax Advantages
Malta is renowned for its low taxes. Actually, the tax rate in Malta is 35%, which at first glance gives the appearance that it is not a favorable location for companies. The bottom-line tax burden is only lower, thanks to the reimbursement of shareholders. This is known as the “Malta Taxation Refund System”.
The Malta Taxation Refund System
Generally, a company in Malta pays 35% tax on trade profits. If the entrepreneur falls under non dom status, he can benefit from the so-called 6/7 rule.
Important: Not everyone automatically falls within this rule – for example, the amount of the tax refund depends on both the type of income of the underlying profits and the application of double taxation relief.
The 6/7 Rule in Malta
In Malta, the most common tax refund is 6/7, resulting in an effective net tax burden of 5%. This applies if the profits made are of a commercial nature. If the profits generated are of a passive nature, as is the case with dividends, interest or royalties, then entrepreneurs receive a tax refund of 5/7 – resulting in an effective tax rate of 10%.
However, this system only applies if you fall into the “non dom” category, or if you have the Resident without Domicile status.
But what does this so-called “non-dom status” actually mean?
Foreigners who move their centre of life, together with their business, to Malta, are also referred to as “non domiciled”, in short non doms or non dom.
However, this status can only be acquired if the entrepreneur’s parents were not born in the same country – this is also the reason why the birth certificate or identity card is required when establishing a limited company.
In short, non dom status (non-domiciled) is a tax status created for foreigners, that comes with certain (tax) benefits.
The non dom status is so popular because it offers tax advantages to entrepreneurs: for example, persons living in Malta pay 0% capital tax.
In order to achieve non dom status, the company must be deregistered in Germany and the centre of life must be moved to Malta, and finally, a Limited Company must be established.
Participating Holding Company
There is also the possibility of full exemption from taxes. One example of this is when a company that receives dividends from an investment is considered a participation.
The official language in Malta is English
From my experience, the language barrier can make emigration much more difficult. So it’s great that English is the official language in Malta. All the Maltese speak English fluently – and all official documents can be obtained and filled out in English too. This has a considerable advantage compared to Portugal, for example, where you will always have to rely on translators if you don’t speak Portuguese.
Proximity to Europe
Malta is located in Europe; therefore it’s not far from Germany. Thanks to the good connections, you can quickly reach your home country by air within a few hours. Malta is also a member state of the Schengen area, so you are not subject to any travel restrictions between Malta and oher countries within this zone.
Mediterranean Lifestyle
The country of Malta not only attracts many tourists, with its more than 300 days of sunshine per year. Entrepreneurs also appreciate the relaxed, free lifestyle in Malta and they often move their business meetings to a small coffee shop right by the sea. If you want to read more about the beauty of Malta, I recommend this article.
Other Advantages
In addition to the 6/7 rule already mentioned, there are umpteen other tax benefits that can come into play, depending on the structure of the company. I would be happy to evaluate them with you and my team on a case-by-case basis.
There is also the possibility of establishing a tax entity in Malta, whereby the Maltese group of companies can be consolidated. In this case, the effective net tax rate of 5% can be paid immediately, in contrast to the refund system mentioned above, provided that certain conditions are met.
Important Note
I’m sure you’ll refer to some other sources on the internet, where you will read about the so-called “low start-up costs” again and again. Please don’t let this tempt you. Yes, you are right. The establishment as such is cheaper than it is in Germany, for example. Nevertheless, there is much more to the establishment of a Limited company than just the actual costs of establishment. At DW&P – Dr. Werner & Partner, where I am CEO, the actual costs are incurred in providing tax-related legal advice for your company. Not every company is the same, so my team and I will seek the best possible solutions to create a good setting for you in Malta. But bear in mind that incorrectly structured settings can become expensive somewhere along the line. When setting up a company in Malta, there are other points to consider, such as opening a business bank account. The requirements of the banks are relatively high, due to the anti-money laundering guidelines.
The Basics of Establishing a Company in Malta
In this chapter, you will learn who can establish a company, how long it takes, what requirements have to be fulfilled for the esablishment of a company and what company forms exist in Malta.
Who can establish a company in Malta?
In principle, a limited liability company can be registered by the shareholders or their authorised representatives. As a rule, a local firm of lawyers, accountants or consultants is called in to take care of all the necessary formalities. The signatories may be natural persons or legal entities. A trustee, duly authorised under Maltese law, may also hold shares in a company.
How long does it take to establish a company in Malta?
The time required to establish a company depends on the type of company to be established and the comprehensiveness and accuracy of the information and documents. However, I can say this much: once the registrar has all the information, the process takes no more than 24 hours.
Registered Head Office in Malta
Logically, a company in Malta must also have a registered office there. According to the MFSA (Malta Financial Services Authority), this can be an office in a law firm or an accounting firm, or any other premises. The registrar must be notified of any change of the registered office.
Prerequisites
Not all companies are equally well-suited to be Malta Limited companies – certain criteria must be met. For example, the company must be owned by partners from abroad or a holding company. Likewise, no letterbox company will do! The applicable laws of Malta should be respected. Furthermore, you should address issues such as value creation and substance. For example, if you want to pay your taxes in Malta and work from Germany, it will not work out in 99.99% of cases, because the value creation takes place in Germany and therefore Germany is entitled to the taxes. In any case, you should seek advice on pitfalls when establishing the company, and also during the ongoing business activities.
You are welcome to make use of our offer of a free initial consultation for this purpose. Just select a date, and my team and I will get back to you as soon as possible.
The Different Types of Companies in Malta
Before you establish a company, you should decide on one of the four different forms of companies.
Malta Limited Company
A Malta Limited company is a limited liability company, and the most common company form in Malta. This form of a company is legally valid under the Companies Act if a Memorandum of Association has been entered into and signed by at least two persons, and if a certificate of registration has been issued by the Registrar of Companies.
The limited company can have the status of a public or private company:
- Private Company:
- A private company is a company that
- limits the number of members to fifty;
- must restrict the right to transfer shares and
- prohibits any invitation to the public to subscribe to company shares or bonds;
- that has a minimum share capital of EUR 1,164.69, of which the authorised share capital must be subscribed by at least two persons (if the authorised share capital equals the legal minimum amount, the amount must be subscribed in the memorandum of association; if it exceeds the amount, at least the minimum amount must be subscribed in the memorandum of association); at least 20% of the nominal value must be paid in when signing the memorandum of association
- Public Company:
- A public company is a company that does not qualify as a private company. It may offer shares or bonds to the public, but it may not issue the shares or bonds in any form. Exception: if the company is registered and the issue is accompanied by a prospectus.
- A private company is a company that
General Partnerships
General partnerships are best suited to small to medium-sized enterprises and they can be
- a partnership between two or more partners, one of whom must be either a natural person or a legal entity – this is referred to as a société en nom collectif (SNC)
- when members of the partnership have limited liability for the business, it is a limited partnership, which is also referred to as a partnership en commandite
Sole Proprietorship
A sole proprietorship or single member company, is a company owned by a single person. This can either be done at the time of establishment or by the acquisition of all the shares by a single person.
An overseas company describes a legal entity that is established or registered outside Malta.
Avoiding mistakes when establishing a Malta Limited company.
Establishing a Company in Malta – A Step-by-step Guide
In this chapter, you will learn how to establish a company in Malta, step by step. The required documents are listed here.
Step 1: Choose your company form
First of all, you have to decide on one of the above-mentioned corporate forms.Step 2: Choose your company name
The next step is to choose a name for your company. When choosing a name, care should be taken to ensure that the name is not the same as that of an existing company, and that it does not contain words that are considered offensive. Furthermore, the company name may not mislead the customers, and in some cases you have to prove that you are allowed to use certain words, e.g. insurance, bank, blockchain. By the way, it is recommended that you protect the registered name.Step 3: Prepare documentation for the commercial register
Once you have selected a form of business, you should prepare the documents required for the Commercial Register.-
Certificate of Incorporation
- whether the company is a public limited company or a company under private law;
- the name and residence of each signatory of the articles of association;
- the company name;
- the registered office of the company in Malta;
- the object of the company;
- the amount of the share capital with which the company is to be registered (also referred to as authorised capital), the division of the capital into shares of a fixed amount, the number of shares subscribed by each signatory and the amount paid up on each share, and, if the share capital is divided into different classes of shares, the rights attached to the shares of each class;
- the number of directors, the name and domicile of the chief director (if one of the directors is a legal entity, the name and registered office or principal place of business of the legal entity;
- the manner in which the representation of the company is to be exercised and the name of the main person or persons entrusted with such representation
- the name and domicile of the chief secretary or secretaries of the company;
- if applicable, the period of existence determined for the company;
- in respect of each shareholder, director and company secretary, the number of an official identification document.
- the total amount or an estimate of all expenses to be paid by the company or incurred by reason of the establishment of the company, until authorisation is granted for business to commence;
- all costs for the transactions that led to or will lead to the granting of the license;
- a description of any special advantages conferred on the company before the date of authorisation to commence business, in respect of those who participated in the establishment of the company or in the transactions leading to the granting of the authorisation.
- The minimum share capital is EUR 46,587.47 (at least 25% of the nominal value of each subscribed share must be paid in when signing the partnership agreement)
2. Articles of Association
The articles of association may be attached to the memorandum of association. The articles of association is a document that sets out the internal regulations of the company. If the articles of association are not registered, it is assumed that the model articles of association, which can be found in the first schedule to the Companies Act, have been adopted. The certificate of incorporation and the articles of association, if any, must be submitted to the Registrar of Corporations. The latter, having ascertained that all legal requirements have been met, will process the registration. A company comes into existence on the date of registration. If you are registering a new company, and one of the shareholders is a legal entity, an additional document, referred to as Form BO1, must also be attached. This contains information on the identity of the beneficial owners of the company.Step 4: Proof of paid-in share capital
The memorandum of association and the articles of association must be forwarded to the Registrar of Companies for registration. All relevant documentation must be attached,e.g.: certified copies of identity documents, references and statements from trustees. Proof of the paid-in share capital in the form of a bank deposit receipt. After registration, you will receive a certificate of registration from the registrar, which will show that the company has been officially registered.Step 5: Registration
The fees payable to the Registrar of Companies for registering a company are calculated according to the authorised share capital of your company, as shown in the table below. Registration can be either on paper or electronic, and the fees vary accordingly: By the way: if you increase your authorised share capital later, you will be charged for the difference in the registration fees.Step 6: Certificate of registration
After you have submitted all the documents and have been approved by the Registrar of Companies, you will receive a Certificate of Registration, which proves that your company has been established. From the moment you receive the certificate, you can begin conducting business.Step 7: Registering for VAT in Malta
After you receive your registration certificate, you need to register your company for VAT payments. In Malta, the value added tax is 18%. To register for VAT, you need the following documents:- The application form submitted through a registered attorney, along with a letter of approval;
- The identity document of the attorney or the legal representative of the company.
- Self-registration as the legal director of a company via eID;
- Self-registration using a valid ID card (if available) and document numbers.
Step 8: Annual Commitments
Every company established in Malta is required to prepare an annual report in the prescribed form on the anniversary of its registration. The report must be filed with the Registrar of Companies within 42 days after the date on which the financial statements are prepared. Depending on the authorized capital, a payment of between EUR 100 and 1,400 must be submitted with the tax return. In addition, you must submit a copy of the financial statements, which must be accompanied by a copy of the auditor’s assessment and the management report. In Malta, auditing is mandatory. The annual financial statements must be submitted within 10 months of the end of the financial year, with a 42-day period of grace. Depending on the size of the company, the form of the financial statements to be submitted varies. The annual report should include the following information:- The name of the company
- Registered address
- The share capital and details thereof, such as the percentage paid up
- Details of all shareholders, directors, secretaries and corporate bodies
- A fee is payable to the Maltese Companies Registry for the filing of the annual report, which depends on the amount of the share capital of the company
Changes wihin your company
The registrar must be notified of any changes within the company (new managing director, new address) without delay.- Increase of share capital – Form H
- Changes in terms of directors, secretaries or representation of the company – Form K
- Change of the registered office of a company – Form Q
- Transfer or passing on of shares – Form T
- And establishment of any other
companies in Malta for overseas companies
Within one month of the establishment of a branch or a place of business in Malta, the company is required to submit the following documents to the registrar:- a certified copy of the foreign company’s certificate of incorporation, articles of association or memorandum of association, or another document that establishes or stipulates the foreign company’s articles of association (and, where applicable, a translation into one of those languages, the accuracy of which is certified in the prescribed manner);
- a list of directors and, if applicable, the company secretary or persons entrusted with the administration of the foreign company, or a list of persons familiar with the representation of the foreign company.
- in the case of a natural person, their name, habitual residential address, nationality and profession;
- in the case of a legal entity, its registered or corporate name and the registered office or head office;
- a declaration containing the following information
- the name under which the branch or place of business carries out its activities
- the address of the branch or place of business established by the foreign company in Malta (if there is more than one branch, the address of the principal branch or place of business must be provided)
- the activities to be carried on by the branch or place of business established in Malta
- the names and addresses of one or more persons residing in Malta, who are authorised to represent the foreign company in the activities of the Malta branch, in Malta
- the scope of the person’s authority, including whether that person is authorised to act alone or jointly with others
- unless disclosed by the certificate of incorporation or the articles of association, a statement including
- the information on the legal form of the foreign company and
- the identity of the register in which the foreign company is registered and
- the number under which it is registered
Continued existence of a foreign company in Malta
Besides setting up a new company, you can, of course, also continue to run a foreign company in Malta, or continue to run a company that was established in Malta. I will go into more detail on the first option in the next section. A company that was established and registered abroad, which is similar in nature to a company under Maltese law, may be registered with the registrar of companies for continuation in Malta, provided that the laws of the foreign country so permit, and the company is entitled to do so. The following documents are required for this purpose:- the resolution or equivalent document from your foreign company, authorising its registeration for continuation of the company in Malta and, where applicable, a certified translation into English;
- a copy of the amended certificate of incorporation of the foreign company;
- a certificate of good standing for the foreign company, issued by the competent foreign authority;
- a declaration, signed by at least two directors of the foreign company, confirming the following:
- the name of the foreign company and the name under which it is to be continued;
- the legal system under which it was established;
- the date of establishment;
- the decision to register the foreign company as a going concern in Malta;
- formal notification from the foreign company that it intends to continue its operations in Malta, and proof that no proceedings have been brought against the foreign company for violation of the laws of the country;
- a statement signed by at least two directors of the company confirming the solvency of the foreign company;
- a list of the directors of the foreign company and, if applicable, the company secretary or persons entrusted with the administration or representation of the foreign company;
- any other proof or information that the registrar may require;
Avoiding mistakes when establishing a Malta Limited company.
Establishing a Company in Malta
As you can see, establishing a company in Malta involves many documents and decisions – it is best to contact a team of experts to assist you with your project.
As you can see, the establishment of a company in Malta must be accompanied by a bunch of documents. My team and I are very familiar with the required documents and we can assist you in obtaining and submitting them. We’d be happy to advise you on the tax consequences of moving to Malta. We’ll also gladly answer your location questions, such as market access, available skilled personnel, subsidies etc.
We can also put you in touch with real estate agents who can help you find suitable properties. We will support you all the way, from dealing with the authorities, filing all the documents for the establishment of the company and opening your bank accounts, and we can also provide tax and administrative support and advice. We can also help you with the tax-efficient structuring or restructuring of assets through foreign companies, holding companies and trusts.
