Strong economic progress
Since gaining independence in 1964, Malta has been transformed in the subsequent decades. It has an open market economy, and upon joining the EU in 2004 took the next steps towards securing the economic future of the country. Malta’s strong economic position ensured the adoption of the Euro in 2008 allowed the nation to be more competitive and to provide a safeguard against currency fluctuations.
Even the economic crisis did not impact Malta so much as many countries and Malta was one of the first to emerge from recession. Malta is pro-business and shows great flexibility in reacting to what is required internationally for the global market.
Malta has a strategic location at the heart of the Mediterranean. It boasts very close links to mainland Europe, North Africa and the Middle East. It is regarded as one of the best choices for investment in high end manufacturing and the IT sectors. It has first-rate port and airport infrastructure to make it a perfect centre for logistics or travel. Plus, of course, EU membership provides superb access to the whole Euro-Mediterranean region and beyond.
Malta boasts a highly educated workforce, very hardworking and dedicated. All levels of workers are to be found, from management, technical, the professions having a top rate staff so much easier. A utilitarian link between industry and education ensures that it is straightforward to hire the right staff and is one of the factors that makes Malta so competitive.
English is one of the two official languages in Malta, the other being Maltese. It makes Malta easy to negotiate for businesspeople without having to have interpreters at all times and possible confusion or poor communication. In practical terms, the closeness of Italy means most also speak Italian. Coupled with a sprinkling of other European languages this means that Malta is perfect for business and investment.
Low taxes on corporations
While the full rate for corporate taxation in Malta is 35%, various refunds bring this down to an average of 5%.
Malta as an International Financial Centre
During the international economic crisis Malta emerged relatively unscathed because it took a common sense and conservative approach to doing business. This ensured that Malta’s financial reputation remained strong and the sector developed its standing internationally and is expected to continue its progression in the coming years.
First-rate ICT Set-up
Malta has become a world leader in this sector with fast fibre optic broadband available everywhere and an environment that encourages such businesses. This has contributed to the growth of financial services and information communication technology (ICT) and many companies now embrace Malta as the go-to place for excellence in this area.
Lower costs for wages and rents
Rents and wages remain highly competitive with most of the established EU companies and enable significant savings to be made. With lower costs than most jurisdictions, operations can be made extremely efficient when coupled with the hardworking and highly educated workforce.
Quality of life
Of course, even business is not all about money and here is where Malta scores heavily. You can combine an attractive lifestyle with knowing your business in is the best place. Malta has top class hospitals, schools, and universities combined with a sunny environment all year round. There are ample bars and restaurants and going out is enjoyable as the crime rate is very low. Beautiful fishing villages abound and you are never far from relaxing on the beach. Historical and cultural attractions are everywhere and that feeling of being in the Mediterranean yet also some where unique is truly only possible in Malta.
The Maltese authorities put great effort into attracting foreign investment and have enacted various legislation to ensure that it continues to be a high priority for companies to establish here.
The Business Promotion Act of 2001 was designed specifically to encourage companies in the areas of manufacture, repairs and maintenance that have great development and employment prospects.
Regarding taxation, the BPA offers reduced tax rates of 5% in the first seven years, 10% for the following six years and 15% for another five years and tax credits that range between 50% and 65% provided the conditions of the Act are fulfilled.
There are other benefits for investors in Malta
Malta has many incentives for outside investors and among those are:
- Indefinite work licenses for shareholders owning more than 40% in a company
- Loans for businesses in the industrial area
- Malta Freeport which is a customs-free zone that offers companies reduced tax rates and investment credits,
- The Individual Investor Program and the Global Residence Program designed for non-EU citizens
- Malta Enterprise is one of the best agencies in the country at helping investors in choosing the right type of company and the correct steps to take.
Also, the government offers a very welcoming environment by permitting equal treatment to both foreign and Maltese companies. Another crucial feature for drawing foreign investment in Malta is the taxation system that provides generous exemptions, low tax rates and double taxation treaties with many countries.
Business legislation has also enabled special regimes for banks, investment services companies, offshore companies, and shipping companies. The Maltese government has also enabled legislation that allows for the creation of trusts.
The Company Act in Malta
For historical reasons this is based on the Company Law of the United Kingdom. and mostly concerns civil matters rather than common law. It was initially called the Commercial Partnerships Ordinance and it was to be replaced in 1995 with the new legislation the Company Act in Malta. Companies had to restructure according to this and register with the Registry of Companies in Malta. Naturally, some regulations in the Company Act in Malta also follow the principles of the EU directives, as Malta is a member of the European Union, as for all member states. These rules can be found in the transcript of the Company Act 1995 in Malta. We can help all foreign investors who wish to come here to set up a company. We can go through the requirements of each type of structure and after that they can decide and select the type of business that fits best their needs. Limited companies are the most often choice. However there exists also public companies where shareholders are more than 50. This is mostly used for large companies.
Requirements for foreign investors
We can also offer advice on the laws regarding work. Employment Law is related to the Companies Act in Malta. Many texts are concerned with the rules of the Labour Law. Some examples are: legislation regarding employment can be found in the Industrial Relations Act, the Conditions of Employment Act, the Social Security Act, and the Employment and Training Services Act. Relationships between employer and employee are all covered in the main acts concerning Labour Law. Whether it is the written or oral contract of employment and all duties and obligations of the employer and the employee in a Maltese company are stipulated in the Act. Everything must be according to the company act in Malta and we can advise you precisely in these areas.
Please contact our specialists in company formation should you need to find out more about the Company Act in Malta.
We can advise on all aspects of VAT to ensure that you are fully compliant and utilising your VAT rates to your best advantage. The following is how it works here.
Value added tax (VAT) was established in Malta in 1995, and has undergone many changes since then. And when Malta became an EU member In 2004, the EU’s Council Directive harmonized value added tax. Value added tax is applied to any economic activity which its effective management and control is held in Malta. hence all forms of transactions are subject to value added tax.
Value Added Tax Rates in Malta
The standard rate of VAT in Malta is 18%. But there is also a reduced VAT rate of 7% that applies to tourism accommodation. However, only hotels or resorts authorized by the Malta Tourism Authority (MTA) can benefit from the reduced rate. Another reduced rate of 5% applies to electricity, medical services and equipment, printed materials, certain foods, works of art, cultural events and the mending of clothes, shoes and leather items.
Malta has a zero tax rate for credited supplies that include:
- export of goods outside the European Community,
- brokerage services,
- the processing of goods re-exported outside the Community,
- international transport of passengers,
- certain foods except catered ones,
- pharmaceutical products,
- school transports,
- transports for employees,
- gold supplied by the Central Bank,
- intra-community supplies.
Supplies exempt from VAT without credit are:
- immovable properties,
- insurance services,
- financial services,
- cultural and religious services,
- postal services,
- healthcare services,
- water provided by a public authority.
Any company supplying goods or services in Malta or any country in the European Union is subject to VAT if its annual turnover exceeds 12,000 euros. If its transactions are below this threshold, the company must register for VAT, however it has the possibility to drop out of the Maltese VAT system, in which case the company will not invoice VAT, but it cannot claim any VAT refunds either. Non-Maltese companies delivering goods and supplies in Malta must also register for VAT, but the registration threshold applies differently to foreign companies and so they must name a VAT representative to maintain a relationship with the tax authorities.
VAT rates in Malta are:
- 18% on the taxable value of every taxable supply of goods, services or importation.
- 7% on accommodation supplies in premises licensed under the H.C.E.B. Act.
- 5% on various printed matter.
- 5% on the supply of electricity
- 5% on various confectionery items.
- 5% on various medical accessories.
- 5 % on various items for the exclusive use of the disabled.
- 5% on works of arts, collectors’ items and antiques.
- 5 % on minor repairing of bicycles, shoes and leather goods, clothing and household linen (including mending and alteration)
- 5% on domestic care services such as home help and care for the young, elderly, sick or disabled.
There are also certain products which are exempt and on which no VAT is charged.
Registering for VAT
An application form can be obtained from the VAT department. The application must be filled and submitted to the department together with a copy of a legal identification document i.e. an identity card or passport. In case of a limited liability company a Memorandum and Articles of Association will also be required together with a copy of identification document of the director who signs the application. We can advise you on registering for VAT to make sure it is as straightforward as possible and to provide you with the best possible strategy for your business.
In order to overcome the problems of double taxation on income and provide low withholding taxes on dividends, incomes and royalties for the companies for foreign investors who do not have a residency in Malta, but whose business is located here and producing profits, Malta has signed double tax treaties with 67 countries and jurisdictions. Incomes can either be exempt from Maltese taxation or can be taxed here and receive a refund in the country of residence (to the limit of the sum that would have been taxed locally), according to the tax treaty signed. There are lower taxes for a treaty country than for a non-treaty one and while withholding tax on dividends, interests and royalties depends on many factors, however we can advise each client on his particular situation.
How it works
Here are how it applies in various cases of the regulations of the double tax treaties.
With a minimum of 25% of a Maltese company’s capital for a non-resident entity with the residing country Albania, China, Finland, Germany, Hungary, Korea, Kuwait, Latvia, Luxembourg or the Netherlands, the withholding tax on dividends is 5%, and for the rest of the circumstances it is 15%. a Denmark resident with a company which has at least 25% of the capital held won’t pay any withholding tax on dividends and 15% in the rest of the cases. A resident of France, Poland, Sweden or Switzerland owning a Maltese Company with at least 10% of the capital will have an exemption on the dividends’ tax. Withholding taxes on interests and royalties will not exceed 15% and in many cases are not charged at all. Besides these provisions, the double tax treaties signed with Malta specifies what the conditions are for making an exchange of taxpayers’ lists.
The countries and jurisdictions which have signed double tax treaties with Malta are the following: Albania, Australia, Austria, Bahrain, Barbados, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Jordan, Korea, Kuwait, Latvia, Lebanon, Libya, Lithuania, Luxembourg, Malaysia, Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Qatar, Romania, San Marino, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Thailand, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States of America.
Since joining the EU, Malta has made strong efforts to ensure a steady flow of foreign investment. It enjoys an 'A' investment grade rating by Standard's and Poor's and "A3" by Moody's. There are various mechanisms available to enhance your company’s competitiveness. The following are the main points. The Business Promotion Act offers incentives for businesses that work in the areas of manufacturing and processes. The Companies Act of 1995 is the primary source of law regarding the incorporation of limited liability companies in Malta. The Companies Act enables regulations for limited liability companies with variable share capital and companies with share capital in foreign currencies. The Income Tax Act of 1948 and its amendments that set a unique taxation rate of 35% for Maltese limited liability companies. For some companies that export goods or services, a reduced rate of 5% applies. The Malta Enterprise Act was enacted in 2003 and provides rules and regulations for granting incentives to help the Malta Enterprise Corporation set guidelines for industrial incentives by considering the factors a company will be formed upon. The Malta Financial Services Authority Act of 1989 is in charge of the regulations regarding financial services in Malta, such as banking and investment services. The Investment Services Act of 1994 contains a set of rules regarding investment services and insurance.
The main elements of the Malta Enterprise are:
- 65% investment allowance for plant and machinery and 20% for industrial buildings
- investment tax credits for companies in economic activities such as pharmaceutics, electronic and electrical
- loan guarantees and loan interest subsidies
- incentives for job creation
- Malta has completed double tax treaties with over 60 countries and companies have the option of operating with the Malta Freeport and the custom-free zone.
- Tailor-made incentives can be further discussed with Malta Enterprise.
Our experts can go into greater detail upon contact and ensure that you avail of the best possible conditions for your company.
Malta’s republican constitution of 1974 is the basis of working rights in Malta. It upholds the basic doctrines of workers’ rights, including inter alia the maximum number of daily working hours, a weekly rest day, holidays without pay, the establishment of a minimum working age, gender equality, professional and vocational training for workers, contributory social insurance and the provision of the means of subsistence for those unable to work.
The other main areas of note are the Employment and Industrial Relations Act (EIRA), the Employment Commission Act, the Employment and Training Services Act and EU Regulations and Directives which apply in virtue of the principle of direct effect. Then there is secondary legislation which includes Wage Regulation Orders which regulate certain conditions of employment for specific sectors. At present, there are 31 different WROs in force. The conditions specified in these Orders include, among other things, maximum hours of work, minimum wages, overtime rates, sick leave and special leave. There is also the Public Service Management Code which is designed for members of the civil service. They have their conditions of employment controlled by way of the Public Service Management Code or “PSMC” which was introduced in 2002. The PSMC brings together all the standing regulations, circulars, policies on HR Management, in the fields of Employee Relations and Resourcing in the Public Service. This code falls within the jurisdiction of the Management and Personnel Office (the former Establishments Division) within the Office of the Prime Minister.
The next important area are collective agreements which account for around a third of those employed in the private sector. These are specific agreements which regulate conditions of employment. Then there would be the other relevant areas of Judicial decisions, arbitration awards and custom and practice which works when the situation is not covered by law. Employment contracts are a vital part of the Maltese system and as long as these don’t contravene the basics set down by law, all other areas can be subject to specific contracts. If the time of employment is in excess of one month and the employee’s working hours are more than eight hours per week, the employer is bound to give the worker, within 8 working days from the commencement of hire, either (i) a written contract of employment, or (ii) a written statement of minimum conditions, which must be furnished to the employee.
Such information is expected to include such rudimentary things as the standard rates of pay, overtime rates, hours of work, place of work and leave entitlement. Wages should be paid at regular intervals not exceeding 4 weeks in arrears. Of course, different periods of pay can be agreed in a collective agreement. It should be noted that once a probation period has finished, normally six months but can be less by agreement, Maltese law is quite strict on dismissal and employers have to follow correct procedure in order to dismiss any staff member.
Registering a company in Malta
There are many advantages to forming a company here which is a straightforward procedure which can be finalised in as little as 48 hours. For taxation purposes, you can get a refund of up to 6/7 for foreign shareholders, there are full tax exemption for holding companies and no withholding taxes or stamp duties in the case of profit repatriation. Our experts are available to guide you through the process but we outline the basic steps below.
Types of companies
- private limited liability companies
- public limited liability companies
- general partnerships
- limited partnerships
And of course, foreign companies can open up subsidiaries or branch offices in Malta.
How do I register a company in Malta?
First there is a minimum share capital to be deposited in the case of a public or private company. For a public company this is 46,600 euros, 25% of which must be deposited before registration and for a private company it is 1,165 euros. Both types of company must have a minimum of two shareholders, even if the Company Act also allows a single shareholder to establish a company in Malta. The company has to have a registered office in Malta.
The main steps to setting up a company are:
You must reserve a company name with the Maltese Commercial Register, this must not cause confusion with another company, be offensive or already taken. You must draft the company’s memorandum and articles of association which our experts can assist you with. You must deposit the minimum share capital, and then file the application with the Trade Register.
What documents are required to register a company in Malta?
The memorandum and articles of association, a confirmation of the company name reservation, the bank receipt confirming the share capital deposit, passport copies of the shareholders, directors and company secretary. Whatever your requirement is, we can organise the process for you and ensure that it is as effortless as possible.
Taxation in Malta
Malta has a straightforward tax regime with many of the popular taxes in other countries do not apply to Malta, there are no withholding taxes on dividends, interest and royalties, there is no trade, exit, or wealth tax, and even for capital gains tax, any chargeable gains are added to the other income of the company and charged to tax at the normal corporate rate of tax.
Consequently, other than VAT on goods and services which we cover in our section on value added tax, the two main forms of taxation are income tax and company tax which we cover in our relevant sections.
This makes Malta a highly desirable place to do business and our experts can advise you for every step of the way to ensure you are fully compliant and your tax liabilities are efficiently minimised.
The corporate tax rate is 35%. The taxable income for companies which are both resident and domiciled in Malta includes worldwide income and certain capital gains. Companies which are either not resident in Malta or not domiciled here are subject to tax on any income and certain capital gains arising in Malta and on income arising outside Malta which is received in a Maltese bank account. Such companies are not subject to tax on any capital gains arising outside Malta. Taxable profits of each year are the profits reported in the company’s audited financial statements adjusted by adding non-deductible expenses and by deducting exempt income.
Corporate income tax is levied on the following entities:
- partnership with silent partners, the capital of which is divided into shares,
- a limited liability company, or any company constituted as such under any law in force in Malta,
- any body of persons constituted, incorporated or registered outside Malta and of a nature similar to the aforementioned partnerships and companies,
- any cooperative society duly registered as such in Malta, and
- any fellowship, society or other association of persons, whether incorporated or unincorporated, and whether vested with legal personality or not. For partnerships not mentioned in (1), the tax is levied on the partners of the partnership and not on the partnership itself.
Malta has favourable tax planning opportunities for:
- dividends received from a participating holding
- capital gains made from the disposal of a participating holding
- dividends from non-participating holdings
- trading income
- passive income (interest, royalties etc)
The full imputation system of taxation is operated here which means the tax paid by the company is available as a credit to the shareholders when any distributions are made to them. Company tax of 35% is available as a credit to the shareholders upon receiving dividends from the company. 6/7ths refunds for active income.
When dividends are paid by trading companies to the shareholders, these shareholders become entitled to claim refunds of 6/7ths of the Malta tax paid by the company. Taking into account such refunds, this results in an effective tax rate of 5%.
Shareholding may be held by individuals or through a Maltese parent. The definition of a company has been widened to include an oversea branch set up in Malta, companies which although not resident in Malta carry out activities in Malta and also companies which are neither incorporated nor resident in Malta provided that such companies are registered with the local tax authorities.
There is no levy of withholding tax on dividends paid to shareholders, which is a very attractive for international businesspeople. Royalties are not subject to such tax either. Pursuant to the “investment income provisions”, certain investment income such as interest paid by Maltese-licensed banks and other public entities may be subject to a withholding tax of 15%. Investment income payable to a collective investment scheme (CIS) investing at least 85% of its total investments in Malta-based securities is taxed with such a tax at the rate of 10% with regard to corporate or government bonds and 15% with regard to bank interest.
Tax refunds to non-residents
There are tax refunds on distributed profits which have been taxed in Malta (with the exception of profits derived from real estate or profits subject to a final withholding tax). In order to qualify for a refund, the profits must be distributed either to non-resident shareholders or to a Maltese holding company wholly owned by non-residents. The rates of the tax refund are: 6/7 of the Maltese tax paid on the distributed profits (total corporate tax burden is equal to only 5% in this case); 5/7 of the tax paid when the dividend is distributed from passive interest or royalties; 2/3 of the tax paid when the dividend distributed is derived from foreign sourced income that was relieved from double taxation. This tax refund system is favourable in Europe and is particularly beneficial for international business people who want to minimise their corporate tax liabilities in a central location close to Europe, Africa and the Middle East.
There is a full imputation system available for tax relief of which we outline the main points below. We are at your disposal to explain more in depth this favourable tax regimes with you at any time and ensure that you achieve the maximum relief possible. We can go through possible scenarios based on your projected income and give you exact figures based on those projections.
There are various refunds permitted in our system.
- 6/7ths of the Malta tax
- 5/7ths of the Malta tax
- 2/3rds of the tax payable in Malta
Full refund of the tax payable in Malta
This is based on the principle that 35% tax has been paid on profits so dividends are not subject to further tax. Relief can be claimed on the following basis. If it is dividends then the relief is 6/7ths. If it is passive interest and royalties then it is 5/7ths. If it is passive income subject to a double tax relief mechanism then it is 2/3rds. If it is dividends from participating holdings then it is 100%. Points to note are that in the case of passive interest and royalties are part of the overall structure of the company then they are also subject to 6/7ths relief. In the case of participating holdings this relief is rarely used as you have the possibility to exclude it from taxation by applying the participation exemption.
Companies which empower their shareholder to claim a tax refund are no longer constrained to carry out trading activities only with persons outside Malta.
Since January 2007 an amendment to the system has opened up the doors for Maltese companies to have multiple holding and trading activities, both in Malta and abroad, without influencing the possibility of claiming for a reimbursement. These amendments have kept the full imputation system for profits distributed from a Maltese Taxed Account and a Foreign Income Account.
The legislative changes have also introduced new types of refunds and abolished the need to have a special status in order to validate a claim for refund. The new system entitles both resident and non-resident shareholders of companies registered in Malta on or after 1st January 2007 to claim the above refunds. It should be noted that these refunds are guaranteed by Law and are paid promptly by the Tax Authority within 14 days from the date on which the refund is requested.
Types of companies in Malta
There are several types of company available in Malta and we can guide you through the process of setting up each one without problems. In order they are:
Public limited company
A public limited company is listed on the stock exchange and have a minimum share capital of 46,600 euros of which 25% must be paid upon incorporation.
Private limited company
A private limited company in Malta has the following features:
- there must be a registered office in Malta
- only one director is necessary, and must be a natural person, but can be of any nationality and resident anywhere
- only one member is necessary
- shares can be registered but not bearer; preference or redeemable shares are permitted; and shares do not have to carry voting rights
- there must be a company secretary
The minimum authorised and paid-up capital is EUR1,165, where the capital is does not exceed the minimum, it must be fully subscribed in the memorandum. Where it exceeds the minimum, at least 20% of the nominal value of each share must be paid up.
International Holding Company
An International Holding Company (IHC) holds participation(s) in foreign companies and it has an effective tax rate is 11.67% or less; if dividends emanate from a 'participating holding', i.e. one of more than 10% in the paying company, then the effective rate of tax is nil.
The IHC can make use of Malta's Double Taxation Treaties.
General Partnerships are created under the Companies Act of 1995 as a partnership which has a partnership name. There is a Deed of Partnership giving the address of the registered office, the names of the partners, its duration, the objects of the partnership, and the amount of capital contributed by each partner. The Deed is registered by the Registrar of Companies.
The partners are liable severally and jointly for the full debts of the partnership.
Limited partnerships in Malta have general partners, who are responsible for management, and have unlimited liability, and limited partners, who are liable only to the extent of their capital investments to the partnership. A limited partnership is formed under the Companies Act of 1995 and is subject to the same rules as a general partnership. The SICAV (Societed'Investissement a Capital Variable) is also formed under the Act, but as a partnership limited by shares and is used by mutual funds.
Branches of foreign companies are permitted but are taxed at the same rate of tax as domestic companies. No additional taxes are withheld on profits transferred back to head office.
The Trusts and Trustees Act 2004, which came into effect in January 2005, and allows local residents and firms to use local trusts, while also furthering Malta's international obligations on transparency,non-discrimination, and the prevention of money laundering.
The Recognition of Trusts Act 1994 brought into effect the Hague Convention, and resulted in a division of trusts into:
- Foreign trusts, governed by whatever law the settlor has nominated.
- Maltese trusts, where the proper law of the trust is Maltese, and the governing legislation is The Trusts and Trustees Act 2004.
Setting up different types of companies in Malta
Malta is considered Europe’s egaming capital because it is one of the best places to open an online betting enterprise such as an online casino. And because it has signed many trade agreements and treaties giving access to Asian and African markets. We can help you to set up your online casino with the minimum of fuss. You must register with the Lotteries and Gaming Authority Malta and follow the regulations of the Gaming Act Regulations of the 7th of August 1998. A license is necessary in order to open an online casino in Malta and it will be granted only to companies registered here. Certain conditions have to be met before applying for licenses for eBetting: any person who controls a major amount of voting capital and the director of the company must be people of integrity and the representative must demonstrate the expertise to operate a casino.
An annual fee must be paid for the license. It is available for a period of 5 years and it is then renewable for another five years after this period.
The online gaming license must state:
- its name
- the address and the address where the specific documents must be issued
- the maximum number of tables and machines that can be operated under the license
- the minimum opening hours
- the date of issuing
- the date of expiration
Four classes of license
The first class of licence for eBetting is granted for lotteries, slots, and online casino style games.
The second class is offered for betting operators.
The third class must be requested by advertising and promotion companies that operate from Malta, such as game portals, poker networks and betting exchanges.
The forth class of license must be requested by companies that are not operators of remote gaming operations, but host this type of business (companies that offers management and space on their platforms).
The Lotteries and Gaming Authority is the main entity which provides licenses for opening online casinos, if all the documents are properly submitted no later than 18 months from the initial submission.
Applicants must provide the following documents:
- a three year business plan
- copies of trademarks if available
- last year’s audited statements (if applicable)
- personal declaration form and a standard application (available on the LGA website)
- power of attorney granted to the representative
- registration certificate of the company
Also the LGA may request other documents such as a proof of residence of the beneficial owner, (utility bill) passport of the beneficial owners, a bank reference letter regarding the beneficial owners etc.
For any change in the status of the online casino the LGA must be informed by no later than 14 days from opened in Malta.
Our experts are on hand to assist you with every aspect of opening online casinos from:
- arranging public notary procedures
- drafting the memorandum and articles of association
- drafting all other documents required for the incorporation of the company
- setting up a bank account for your Maltese company
The Remote Gaming Regulations Law was enacted in 2004, and its link with the dispositions of the Income Tax Act for foreign companies made Malta one of the most attractive countries in Europe for internet sports betting, gambling, and casino games.
There are four different licenses for online gaming:
According to the Maltese Lotteries and Gaming Authority (LGA), there are four classes of licenses available to operators running remote gaming businesses:
- Class 1 licenses are for those who are in charge of their own risk of repetitive games, such as casinos and online lotteries. This type of operator is allowed to obtain a “class 1 on 4” license that enables them to manage games with software according to class 4 licenses.
- Class 2 licenses are for operators who administrate online gaming operations on outcomes based on matchbooks. Class 2 licenses are used in fixed odds betting.
- Class 3 licenses are for enterprises operating on commission from encouraging gambling games. These licenses are usually employed in peer-to-peer gaming, online poker, betting and lotteries. These operators are also allowed to obtain “class 3 on 4” licenses for running gaming software on their machines.
- Class 4 licenses are for gaming software retailers that want to offer maintenance and hosting services on their platforms. Online gaming licenses are established for a five-year period and you are required to have their headquarters in Malta.
Taxation of online gaming
The tax rate for chargeable income is 35% and, according to the taxation system, there is also a corporate tax applied to Maltese companies and to foreign companies that conduct business operations. Because, however, of the full imputation system, shareholders who receive dividend payments can ask for refunds that can be up to 6/7 of the taxes paid to the authorities. For interests and royalties, this can be up to 5/7 of the tax.
Online gaming benefits from special taxation that depends on the license class. Taxes apply in the following stages:
- for class 1 licenses, the tax is set at approximately 5,000 EUR for the first 6 months and then 7,000 EUR per month
- for class 2 licenses, the tax is 0.5% on the gross sum of bets
- for class 3 licenses, the tax is set at 5% on their income
- for class 4 licenses, there is no tax for the first 6 months; for the following 6 months, the license holders must pay approximately 2,400 EUR per month and approximately 4,500 EUR after
The maximum amount for payable income stops at 466,000 EUR per year for any type license.
Relocating your company or opening a branch 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.
Investing in Malta
We can assist in every stage of buying a property in Malta or Gozo. From putting you in touch with reliable real estate agents, through organising notaries and ensuring that all legal aspects are correct. There are many types of properties in Malta and Gozo, including houses and villas, townhouses, apartments, penthouses, maisonettes, farmhouses, etc.
For EU nationals, buying a Maltese property is straightforward and without many restrictions although initially they can only buy one property. This property must be used only as a residence for the owner or for his immediate family, though guests may be accommodated in the property when the owner or a member of his family is in residence. The property may not be rented out, except for villas with a swimming pool, which might be possible to have for renting, through proper permits. A second property may only be purchased after residing in the country for a minimum continuous period of five years.
Foreign nationals, who are not citizens of the EU, are required to obtain an Acquisition of Immovable Property (AIP) Permit from the Ministry of Finance – for which processing typically takes three months. To be granted such a permit, the purchase price of your prospective property, is currently at least €107,670 for an apartment or €179,400 for other types of property.
The prospective buyer must also be able to prove that the funds to be used have been remitted from abroad (i.e. bank receipt). An AIP permit only allows you to buy and own one residential property for you and your family’s personal use.
Steps to buying a property
First you need to investigate the property market and decide on budget, location and type of property. Once you’ve decided on a property and your offer has been accepted, you must sign a Preliminary Agreement with the buyer. This agreement is usually referred to as the ‘Convenium’ or promise of sale agreement and binds both parties to the transaction based on a set of mutually agreed terms and conditions.
This Agreement is usually valid for three months. After the signing of the Agreement (but before entering into a final deed of sale), a Notary would be engaged by the buyer to carry out the necessary searches into the property to confirm everything is in order before proceeding. Upon signing this agreement that 1% of the 5% total stamp duty fee is payable to the Inland Revenue and a 10% deposit is paid by the buyer. The remaining 4% of the stamp duty will be paid with the signing of the final deeds.
Please note that this 1% of stamp duty will be refunded if the final deeds do not go through and that the deposit agreed on during the signing of the Preliminary Agreement will be handed over to the seller if the buyer does not sign the final deed without a valid reason in law.
The following terms must be agreed before the Preliminary Agreement is signed:
- Ground Rent
- Features included in the price
- Payment terms
- Terms of promise of sale agreement
- Works to be undertaken by the owner
- Please note: The contracts and agreements are always written in English.
Final Contract of Sale
If all conditions of the preliminary sale agreement are complete and all duties fulfilled, all parties meet with a public notary to sign the final deed. It is the responsibility of this official to draft this final document and prepare it for signatures.
The normal procedure is as follows:
The final deed is signed at the bank if a mortgage is required by the buyer. The final contract is read out and if both parties agree to the terms and conditions the contract will be signed. Time to pay the balance (the purchase price less any deposits paid on account) to the seller. Both parties must now confirm that they have settled all expenses in relation to the purchase and property conditions.
The keys of the property are then exchanged. The contract is then registered at the Public Registry by the Notary.
Setting up a trust or foundation in Malta
Setting up a trust in Malta is straightforward and we can help with all aspects, from drawing up the trust, working out customized solutions to your needs and making sure that you and your beneficiaries have peace of mind. Malta has had in place the Trust and Trustees Act since 2004 but trusts have been operational since 1984. They are considered a useful extra in the way of financial options. A trust is an obligation that connects one or more persons, known as trustees, to manage a property they control. This is called a trust property and it is held for the benefit of third parties, called beneficiaries, or for benevolent purposes and are agreed in the terms and conditions of the trust.
Why use Malta as a location for settling your assets under a Trust?
Malta is a member of the EU and is an established and reliable country with a top location in the heart of the Mediterranean. It has an open law system and highly advanced legislation. Private international law and the Hague Convention is recognised in the applicable law. Combined with a highly regulated financial services system overseen by the Malta Financial Services Authority, they are an attractive option for non-residents from a tax perspective. The set-up and cost of running a trust in Malta is significantly lower than most other foreign jurisdictions.
Different types of trust in Malta
The three main elements are a settlor, a trustee and a beneficiary.
- A settlor makes the trust and offers the property
- A trustee controls the property
- A beneficiary is the person who gains from it or who benefits from any distribution of the property.
The three types of trust
The three types are constructive, express and implied. The constructive derives from the operation of the law and is not conditioned by the settlor. The express is claimed openly by the settlor and the implied stems from the undeclared but supposed intention of the settlor.
How to set up a trust in Malta
You must set up a trust deed that specifies who the trustee is, who the beneficiary is and the trust fund or settlement which represents the property held by the trustee. It must also mention all persons affected by the trust. The main difference between a Maltese company and a trust is that the trust makes a legal distinction between the beneficial and the legal owner of the property.
What are the main benefits of setting up a Trust?
There are various good reasons to set up a trust and we will list the following as among the most important. First it is confidential and is not required to be registered with a public authority. Second is asset protection. Your assets settled in trust do not form part of your estate but you can still enjoy the benefits of them. Also they are protected against any future creditors or lawsuit liabilities. Third, family members are protected as the trust can be used to hold property for those too young or otherwise incapable of managing it themselves. A trust can provide an impartial administration of your estate if you opt for an outside agency to be the trustee. Fourth, estate planning, you can decide how and when family members inherit your assets and thus you avoid any costly complications arising from death. Fifth, succession tax planning: any permanent property which is settled in trust, does not form part of your Estate any longer and will therefore not be subject to any succession tax upon your death. The property may be held in Trust primarily for yourself (the Settlor) throughout your lifetime and thereafter for your children and grandchildren. Also, on the death of your children, no succession tax is charged when the same property passes on to their heirs – that is, in effect, your grandchildren. A Trust in Malta has great flexibility. It may last for a maximum of one hundred years, as such it is highly versatile and can be organized to meet your specific needs.
Can I move a trust from my home country?
Redomiciliation is possible for trusts and foreign trustees can migrate to Malta from an approved jurisdiction and it is not necessary to liquidate the trust in the country it was made. Trusts are subject to a corporate tax rate of 35% but double tax treaties can influence the tax rates depending on the country involved.
We are available to advise on a range of services regarding trusts and upon contact can set up and administer a trust to your complete satisfaction.
Irrespective of whether a person is a foreigner or Maltese national, they have the right to establish a Maltese foundation. They must comply with the approved regulations in order to do so. Our dedicated team of specialists can guide you through the process to make it as straightforward as possible but the following are the main points you need to bear in mind.
Range of operations
Foundations may embark on any legal enterprise which is not profit-making in nature. They can however, have commercial property such as shares, intellectual property, real estate or vessels as long as they take no active role in their process. Active trading is not permitted and if that is the case then a private limited company is likely to be the best option.
Different types of foundations
1. Private or purpose
Foundations can be either private or purpose. Private foundations are set up for the advantage of a beneficiary or a group of beneficiaries and do not need to be benevolent in nature. There are a number of tax benefits to having a private foundation and as such, they are the most attractive option. Purpose foundations are usually philanthropic and can subsequently be registered as charities and receive tax exempt status provided this is agreed by the local tax authorities. We can advise you in greater detail of the various tax benefits but also see our section on taxation of a foundation.
2. Public deed or will
A foundation can be set up via a public deed or a last will which must be published in Malta. This is similar to the articles of association and memorandum of understanding of setting up a private company. It must have a name in conformity with the law and pay in a minimum initial capital or asset of one hundred and sixty-four euro and sixty-nine cents (EUR 1,164.69). It also must have an address in Malta where communications can be received and where information can be requested about its activities. If the administrators are outside Malta then a local administrator must be appointed. If the means to establish a foundation is a public deed then it would have to be published by a public notary and then registered in the Public Registry.
In order to set up the foundation, the founders must make the above mentioned endowment unless it is for a social purpose or as a non-profit making entity in which case the amount is a minimum of two hundred and thirty-two euro and ninety-four cents (EUR 232.94). If the property is not cash or any other quantifiable assets then the founders have to make a statement that the property is indeed of such value as required by law. These assets may be then used by the foundation or in fact they do not need to be maintained by the foundation as a minimum asset. We have a section on setting up trusts in Malta which you can access here. (insert link) It also explains the difference between trusts and foundations. Our dedicated specialists are on hand to guide you through the process of setting up a foundation whichever option you choose.
Registration in Malta
Our professional team of experts can provide assistance with a number of services in connection with the aviation industry including the incorporation of the appropriate corporate structures, registration of aircraft and aircraft mortgages, co-ordination of aircraft financing transactions, tax structuring and administration and acting as the resident agent in Malta on behalf of aircraft owners and operators.
The chief attractions of Malta's regulatory and legal regime relating to aircraft are as follows:
- Applicability of the Cape Town Convention provides financiers with a higher degree of protection and more effective enforcement remedies whilst allowing lower borrowing costs
- Availability of a wide range of airline services (airplane and engine maintenance, repair and overhaul, aircraft management, aircraft maintenance training and other ancillary support services)
- Broad registration possibilities for all airplanes, whether used for private or commercial air transport
- Competitive minimum depreciation periods for aircraft
- Extensive network of double taxation treaties; and no taxable fringe benefits arising from the private use of the aircraft by non-resident individuals who are shareholders, employees or officers of companies involved in the international transport of goods or passengers
- Facilitation of enforcement of mortgages and other security interests
- No withholding tax on lease payments where the lessor is not a tax resident of Malta
- Tax refunds to shareholders on distribution of profits
- Transparency of all rights and interests in aircraft
Malta Aircraft Registration Eligibility Rules
An aircraft may be registered in Malta by any of the following persons:
- an owner who also operates the said aircraft;
- an owner of an aircraft under construction or temporarily not being operated or managed;
- an operator of an aircraft under a temporary title; or
- a buyer of an aircraft under a conditional sale or title reservation agreement or similar agreement, and who is thereby authorised to operate the vessel.
The Aircraft Registration Act
The Aircraft Registration Act of 2010 came into power on 1st October 2010 and its main goal is to regulate the registration of aircraft, the registration and enforcement of aircraft mortgages and the implementation of the Cape Town Convention and the Aircraft Protocol and its interface with Maltese law.
The Act introduced new concepts such as the recognition of fractional ownership of aircraft in the sense that aircraft shares and interests may be identified on registration and verified in the National Aircraft Register accordingly.
Registration can take place either by the owner itself or by the operator of the aircraft such as the lessee or by a buyer under a title reservation agreement authorised to operate the aircraft or a conditional sale, or by a trustee for the benefit of beneficiaries.
Also unlike many other jurisdictions, it is now possible to register aircraft under construction as soon as the aircraft is "uniquely identifiable" and the requirements relating airworthiness surveys are suspended until the finishing point of the airplane.
Malta is one of the most popular EU countries for yacht registration due to important factors such as low company formation costs, low registration and annual fees, no restrictions on the nationality of the owner, no age limit for the registration of a yacht, reduced VAT rates depending on the size and type of the yacht and everything is controlled by EU norms, laws and regulations. Coupled with lifestyle factors such as the low crime rate, it is the best country in Europe to register your yacht. There are many yachting groups, boating suppliers and tradesmen on hand to ensure it is the best place to moor your vessel. There are also harbours all over the islands so there are always places to go. Our experts are on hand to handle everything for you and ensure your yacht is correctly registered and you have peace of mind.
Registration under the Malta flag takes place in two stages. The first step is provisional registration, whereby a provisional certificate of registration which is valid for six months (extendable for a further period or periods not exceeding in aggregate six months) is issued by the Registrar of Ships. For such provisional registration, certain documents must be filed with the Merchant Shipping Directorate within Transport Malta (TM).These documents include:
- i. A Power of Attorney to register the vessel as a pleasure yacht under the Malta Flag;
- ii. The Application for Registry, duly completed;
- iii. A copy of the International Tonnage Certificate (applicable if over 24m in length);
- iv. A declaration of ownership made before the Registrar by the owner or authorised representative upon delivery of the yacht to the new owner.
Upon provisional registration, registration fees and the first year's annual tonnage tax must be settled with TM.
During the period of provisional registration, the owner needs to have the yacht surveyed for the issuance of the certificate of survey. Such survey is undertaken by a Maltese Government-appointed surveyor or alternatively by one of the recognised classification societies. In order for the permanent registration of the yacht under the Malta flag to be completed, the following documentation would need to be filed with the Merchant Shipping Directorate:
- i. Builder's certificate (if it is new or has never been registered anywhere previously);
- ii. A bill of sale (if applicable), evidencing the ownership;
- iii. Cancellation certificate from the previous flag (if applicable);
- iv. Carving and Marking Note duly completed;
- v. An International Tonnage Certificate (ITC 1969) and a Certificate of Survey if the yacht is over 24m in load line length in terms of Art. 2(8) of the Load Line Convention. If it is less than 24m in load line length, a certificate of survey (tonnage measurement) is required;
- vi. Return of the original provisional certificate.
When all of the above is submitted and proof of ownership is established, a Certificate of Registry is issued by the Registrar of Ships valid up till the first anniversary year of the yacht. A Certificate of Registry is subject to renewal on the anniversary of the registration of the vessel.
Work permits and visas
Work permits and visas
Employment licenses (formerly known as work permits) are issued by the Directorate of Citizenship and Expatriates Affairs (DCEA). These are required in order to work in Malta legally and must be applied for by the job-seeker, not the employer. Employment licenses are necessary for any non-EU foreigner who wants to work in Malta. Those found working without a license face heavy fines if they are employers and deportation if they are employees.
Does an EU citizen need a work permit in Malta?
All EU citizens except for Croatia or member states of the European Economic Area (EEA) plus citizens of Switzerland do not require employment licenses to work in Malta, but they are recommended to contact the EURES advisors through their portal in order to see what requirements they must meet before entering the country to work. EU nationals and nationals of countries including Croatia, Switzerland, Norway and the US, do not require a visa for any stay of up to three months in Malta.
Non EU citizen
Non EU citizens must fulfil certain criteria before they can work in Malta. Malta offers the Single-Work Permit for third country nationals to reside and take up employment. This permit, which can be requested when the applicant is still abroad or upon arrival in Malta, continues to apply only while the applicant remains in employemnt here. The application for this permit has to be accompanied by a number of supporting documents which the applicant must provide for their application to be accepted by Jobsplus. This process may pose difficulties since it also requires proof of job candidate searches by the prospective employer. Regulations stipulate that this should includ the placement of two adverts designed to attract Maltese/EEA/Swiss candidates to fill this post before an application by a non-EU worker can be considered. Individuals originating from other countries that require a visa prior to travelling to Malta may need to add up to 15 days to the waiting time for documents to be issued. Additionally, citizens fo countries not forming part of the Schengen would require a Schengen visa to enter one of the countries within the area. We can advise on all aspects of working here and advise you on a solution that suits your needs.
There are three types of permits in Malta, ordinary, permanent and temporary residence.
Ordinary residence in Malta necessitates individuals to physically live on the island for a period of six months or more. EU/EEA/Swiss citizens can apply as being economically self-sufficient by proving that they are financially stable or on the basis of employment if an individual works in Malta as an employee or is self-employed. EU/EEA/Swiss nationals and Non-EU nationals may accompany the main applicant provided that they prove that they are financially dependent on the latter. A student may also apply on the basis of education if they are studying in Malta. If the student is under-age, his/her legal guardian can apply for a residence permit to accompany him/her upon confirming that he/she has stable and regular income.
EU/EEA/Swiss nationals and their family members may apply for permanent residence after completing a continuous five-year period of legally living in Malta. Applicants must not have absented themselves from Malta for more than six months a year. Non-EU nationals may apply for a residence permit if they are going to be working in Malta or upon opening a business in Malta once certain criteria are satisfied. We can advise you on all aspects of this.
Non-EU nationals may apply for long-term residence if they have been legally living in Malta for five unbroken years. Applicants must not have absented themselves from Malta for more than six consecutive months in any given year of this five-year period and further must not have been away for more than a total of ten months throughout this five-year period.
Non-EU nationals may apply for a residence permit if they are going to be studying in Malta. If the student is underage, his/her legal guardian can apply for the permission to accompany him/her upon confirming that he/she has stable and regular income. Foreign partners of EU nationals may apply for residence in Malta provided that they confirm that they have a regular and stable income and that the relationship has existed for at least two years. Non-EU nationals who reside legally in Malta may apply for the reunification of their family members, namely the spouse being 21 years of age or over and minor unmarried children under the age of 18.
A temporary residence permit may be granted to Non-EU citizens to reside in Malta for more than three months on a case by case basis. For more detailed information on work permits and visas, kindly contact our specialist advisers.