Malta Limited vs. UK Limited: Pros and Cons

Before I joined the team at Dr. Werner & Partners, I worked as a consultant in London. Back then, I was also advising people who wanted to set up a company. However, my advice at the time wasn't focused on the Malta Limited like it is today, but rather on the UK Limited. So, what are the actual differences?

The UK Limited

The UK Limited is essentially the British counterpart to the Malta Limited. Since you practically don't need any share capital to get started, the UK Limited is particularly popular with first-time entrepreneurs.

The Malta Limited

A Malta Limited also comes with limited liability – meaning you generally don't risk your personal assets. This structure has gained significant popularity in recent years. This is simply because the Maltese government has created strong incentives for entrepreneurs to set up shop here. Generally speaking, Malta offers the highest potential for savings for both employees and business owners, which is most evident in the Malta Limited structure (with its 5% effective tax rate).

Differences Between a Malta Limited and a UK Limited

In terms of corporate structure, the two forms are very similar. This is largely because Malta's corporate law is historically based on the British system. However, if you look closer, the differences become clear:

• Currency: Malta uses the Euro, while the UK uses the Pound. Trading in the same currency as your main market makes life easier and prevents exchange rate losses.
• Use of a Corporate Director: With a Malta Limited, a corporate entity can easily act as a director. In the UK, this is restricted; you generally need at least one natural person named. Using a corporate director can have advantages when structuring how funds are managed within a group.
• Taxation: If a Malta Limited has foreign shareholders, the effective tax rate drops from 35% to just 5%. Compared to the UK, where corporation tax is significantly higher (currently up to 25%), this is arguably the most critical difference.

Is the UK Limited Out and the Malta Limited In?

The UK Limited isn't necessarily a bad choice. In fact, for simple business setups, a company in England can be the better alternative. And I have to be honest here: setting up and running a Malta Limited involves significantly more effort and higher costs.

It's certainly not the cheapest option regarding formation fees. However, the requirement for share capital signals seriousness to partners and banks. Furthermore, the initial costs are usually recouped quickly through the significant tax savings.

My conclusion is this: If you are looking to build a serious, professionally managed company, you are very well served with a Malta Limited in the long run.

If you have questions about the differences between a Malta Limited and a UK Limited, or about tax optimization in Malta generally, feel free to reach out to us at Dr. Werner & Partners. We'll help you find the best option for your specific situation.