Sometimes our business clients seek to relocate their existing company or opening a branch in Malta. In that case, the first question that is presented is how one goes about opening a branch or a subsidiary in Malta.
The first thing to note is that there are differences between Maltese branches and subsidiaries. We can give you proper guidance as to whether a branch or subsidiary is the best option for you in establishing a presence in Malta. The major difference between these two types of companies is that the subsidiary is an independent entity and the branch office is an extension of the parent company. From a financial point of view, Maltese subsidiaries are required to register for taxation and for VAT and keep their own financial records, while branch offices need only obtain a VAT number. The parent company of a branch office is required to submit annual audited accounting records with the Malta Registrar of Companies.
Opening a branch in Malta - We can assist you with every aspect of opening a branch in Malta. Establishment of a branch in Malta is administered by the Maltese Companies Act which states the requirements for branch registration.
What are the formalities regarding Malta branches?
- A copy of the Certificate of Good Standing of the parent company
- A copy of the Certificate of Incorporation of the parent company
- A copy of the parent company’s Memorandum & Articles of Association
- A secretary to the branch – required to be an individual and not a corporate body
- A Malta branch representative – personal bank reference letters, professional references and a certified true passport copy for the branch representative are required
The requirements shown above are needed for branch registration with the Registrar of Companies within a month of the branch being set up. All required documentation must be apostilled and translated into English by an official translator.
What are the accounting requirements for a Maltese Branch?
A Malta branch is required to register for VAT with the Maltese VAT department and file returns quarterly. Annually audited tax accounts should be filed with the Inland Revenue. The parent company is required to file annual audited financial accounts to the Registrar of Companies. It should be noted that minimal capital is required at registration. Branches established in Malta usually pay the same income tax as the local companies (35%), but in most cases, tax facilities are granted.
The advantages of owning a branch in Malta are numerous:
Financial (for example, no withholding taxes on dividends, interests and royalties and exemption from income payment, if the foreign company's country has signed double tax treaties with Malta which allows for this), no registration costs, minimal share capital request, and the possibility of a refund of taxes. Many actions of the branch must receive the consent of the parent company before being applied, so a higher level of control is possible. It is normal for a branch to perform the same functions as the parent.
Steps to Incorporate a subsidiary in Malta In order to incorporate a subsidiary, the investor must uphold the provisions of the Maltese Companies Act. Both types of limited liability companies are based on a Memorandum of Association that includes the most important information about the newly founded company:
- Activities performed by the company
- Details regarding the shareholders
- Details regarding the company directors and secretary
- Information regarding the amount of capital
- Name and registered office’s address
- Name and details of the company’s legal representative
- Number of shares distributed to each shareholder and their rights
- Period of availability (if any)
- Type of company
The Memorandum of Association along with the decision of opening the subsidiary in Malta must be delivered to the Registrar of Companies which will issue a certificate of registration and a registration number. The name desired must be checked online and if it’s available, it must be reserved. A bank account must be opened and the capital must be deposited there. The final step that must be taken before starting the commercial activities of the Maltese subsidiary is to register for social security and insurance for the company’s employees. Subsidiaries in Malta must observe the same principles for annual accounting and audit as any other company incorporated in the country. A balance sheet, profits and loss account, a director’s report and an auditor’s report must reflect the true financial situation of the company.
Get in touch with our team if you’re planning on relocating to Malta and our consultant will guide you accordingly.