There are various reasons why a company or other legal entity would want to change its jurisdiction, including changes in the political, economic and fiscal environment, and recent drives toward transparency and compliance. This means that companies are looking for more “robust” locations such as Malta.
Our core business is corporate structuring. In international corporate structuring, the issue of tax payments is becoming increasingly topical among our clients. Offshoring and tax havens are no longer preferred. This is due to both the stricter tax policies in countries where taxes are applied, and banks that no longer welcome offshoring, and refuse to work with such clients.
Taxes must be paid, the only question is where and how much?
- EFFICIENT CORPORATE TAX RATE – 5%
- DIVIDEND TAX – 0 %
MALTA LIMITED COMPANY
Limited Liability Companies or Malta Limited Companies are the preferred vehicles for operating businesses both in the local and international context.
- Easy and simple to register or start a company
- Low effective tax rate on trading income
- No tax on qualified inbound dividends
- No tax on outbound dividends
- Participation exemption on capital gains
- Member of EU, Schengen and OECD
- Euro is official currency
- Advanced and competitive corporate tax system
- Robust banking system
- Strong and stable political support for the financial services industry
- No transfer pricing and CFC rules
- English is the official language
A Malta Limited Company will allow you to benefit from Malta’s extensive tax treaty network with over 70 countries. The country is also the only EU Member State that adopts the full imputation tax system through which shareholders are entitled to claim refunds on the tax paid by the company. Refunds vary in line with the source from which the dividend is being distributed, thus potentially enabling shareholders to reduce their effective tax rate to 10%, 5% or have such income exempted from tax. There are also tax exemptions or benefits offered to special categories of employees.
“Low taxes, clear accounting requirements, advanced banking, English as the official language, low company maintenance costs and very advantageous geographical position are the factors that attract modern entrepreneurs to Malta.”
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MALTA LIMITED PARTNERSHIP
Malta Limited Partnership or Malta LP is a tax transparent entity that has legal personality – it can enter into contracts in its own name. A Malta LP is an onshore entity registered in Malta.
Partnerships are by nature legally and fiscally more flexible than companies and can give rise to interesting tax planning opportunities. Limited Liability Companies (Malta Ltd. Companies) are the preferred vehicles for operating businesses both in the local and international context. However, partnerships are subject to less regulatory obligations when compared to limited liability companies.
A Malta LP may opt to be treated as a tax transparent vehicle. This is an attractive planning instrument, when the beneficiaries or partners are not residents in Malta. In particular, should the tax authorities in the partners and beneficiaries’ country of residence recognise the Malta LP as the owner of all income attributable to the Malta LP, then the partners or beneficiaries would only be tax liable in their respective countries of residence after a distribution by the Malta LP of partnership earnings or income, capital gains, or property.
“If the Malta LP is tax transparent, there are no tax issues even if the income is remitted in Malta. The income of a tax-transparent Malta LP is always subject to be taxed at the personal level of each partner (not at the LP level).”
KEY FEATURES OF A TAX-TRANSPARENT MALTA LP:
- separate legal entity
- treated as a tax transparent vehicle in Malta
- tax returns accompanied by a simple balance sheet need to be filed annually
- VAT registration is possible in Malta
- subject to less regulatory obligations when compared to Ltd. companies
- fiscal flexibility
- both individuals and legal entities may be partners
- administration and representation of the LP is vested in the LP’s general partners
- registered by delivering a signed deed of partnership to the Registrar of Companies
- partnerships acquire a legal personality separate and distinct from that of their partners
- not necessarily subject to tax, as opposed to Limited Companies
- liability for tax payment on partnership income is shifted to the partners
- tax chargeable according to the applicable personal tax situation and rates that apply to the partners
- by default, tax transparent
- option to be taxed as Ltd. company
- easy and straightforward liquidation procedure
BUT YOU DON’T HAVE TO LIQUIDATE, YOU CAN MOVE YOUR COMPANY TO MALTA
There are two ways to gain access to Maltese tax benefits without liquidating your company
- Setting up your business by registering a Permanent Establishment (PE) for your overseas company in Malta. This is done hassle free, fast and efficient.
- Transferring your official residence from an offshore jurisdiction to Malta. Provided that the overseas country recognizes this concept in its respective law, transferring your official residence would be the other choice to relocate your overseas entity and business to Malta without liquidation.
Corporate migration enables companies to avoid liquidating the existing company and transfer the business portfolio of trading agreements and assets to Malta. By registering your overseas company in Malta or tranferring its official location to Malta, whilst setting up a bank account in the EU, you achieve the goal of tax compliance and efficiency.
“EU member since 2004, Malta is a country with a stable and predictable tax system, which is one of the most important factors for any entrepreneur. For years, Malta has been working on improving its tax policy, reducing bureaucracy, and making its accounting simple and comprehensible. Also, communication with state institutions is simple and predictable.”
HOW TO REGISTER YOUR OVERSEAS COMPANY IN MALTA?
Malta’s company law provides the option for foreign companies to set up branches or permanent establishments in Malta without the need to incorporate a new company, or transfer the official location of established companies, providing additional flexibility in respect to corporate structuring. An overseas company is defined as a “body corporate constituted or incorporated outside Malta”.
MALTA PERMANENT ESTABLISHMENT (PE) OF OVERSEAS COMPANY:
- Does not have separate legal personality from its foreign counterpart
- Is not re-incorporated in Malta. The only criteria for its establishment in Malta is that it has a place of business in Malta, and appoints an authorised local resident in Malta
- The registration fee for setting up a PE depends on the nominal value of the authorised share capital of the overseas company. Registry fees are payable on submission of the required documents to the Registrar of Companies
The registration of a PE is a simple and straightforward process and can be completed within a few days of receipt of all the documents required.
SEE HOW WE CAN HELP YOU CREATE A MALTA PERMANENT ESTABLISHMENT
HOW TO TRANSFER THE OFFICIAL LOCATION OF YOUR COMPANY TO MALTA?
The process of transferring the official location of your overseas company to Malta will involve your entity making a formal application to the Registrar of Companies requesting that the foreign registered company be transferred to Malta. This application must be accompanied by the required documentation. We shall provide you a list of the required documents. Most importantly, you must prove that the law in the original country permits such a transfer, usually in the form of a declaration from the foreign authority in charge of the registration of companies.
Once all the required documentation has been accepted by Malta, the Registrar will issue a provisional registration certificate. Following the strike-off of the entity from the original country, Malta will issue a final registration certificate. In cases where the entity delivers a licenced activity, such as investment services, additional requirements would be applicable.
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