Registration of a Limited Liability Company (LLC) in Malta
Fast and Easy – 3 Steps without Travelling:
(Please note: Zugimpex does not provide services to US citizens and to US residents.)
- Send us an agreement for company formation services with the following key information, and in addition, our manager will meet or phone you to ensure correct and complete information that is needed to prepare the documents.
To open a Limited company in Malta, these are mainly the Articles of Association which regulates the internal management of a company and, the Memorandum of Association with the key information about the company:
- Company name
- Object (= activities)
- Leased office space or registered address
- If the Limited Liability Company is a Private LLC or a Private Exempt LLC (no body corporate as director, less than 50 shareholders)
- Director and Company Secretary (both can be non-EU citizens; the director can be a corporate body; Company Secretary must be an individual, at Private Exempt LLC companies the Director and Company Secretary according to art. 211 of the Companies Act (Chapter 386 Laws of Malta)
- Shareholder – the location of the holding that you probably need for the refund in case of profits will depend on the residence of the shareholders
- Share capital (standard: 240 € paid in, which is around 20% of 1164.69 € minimum authorized share capital),
- Meet us in person or by Skype for compliance; fill in the mandatory customer due diligence papers; make a transfer for share capital, public fees and our costs.
- Sign the papers that we prepare and email to you for company formation (memorandum and articles of association, forms for the Malta Business Registry – MBR) and send them back to our office. Incorporation at the Registry of Companies (ROC) at the Malta Business Registry (MBR) will usually happen within 2 working days.
Company formation of a new company or takeover of a company is offered only together with other services (accounting, payroll administration, office services etc.,some of which performed by related enterprises because of licenses) because this way we know the activities of our clients. After the company is registered, it receives an income tax number from IRD (Inland Revenue Department, also in charge of the corporate tax) and the ongoing administration can start: setup of accounting procedures, application for a VAT certificate (that allows to act in line with the EU VAT directive), and start of the procedure to open a bank account.
The tasks of a Company Secretary are mainly administrative formalities, e.g., organization of meetings of the companies, filing of returns, and submitting documents to the Registrar of Companies at the Malta Business Registry.
However, Maltese law puts extensive compliance requirements on companies that offer or organize directors services or secretary services, which are in fact nominee directors or nominee corporate secretary functions.We do not recommend and therefore do not provide such services, and if these tasks are done by the real director, the company saves costs and bureaucracy. As a service provider, we inform in time about deadlines and prepare the documentation, so the company can meet its obligations, its statutory, and its compliance requirements.
For daily business, real employees avoid delays caused by nominee directors who are often not available and afraid of their liability. Besides, it is possible to use a foreign legal entity as managing director of a company in Malta.
The same principle applies for the structure: instead of fiduciaries as shareholders, a structure with a holding company outside Malta is in most cases the better solution.
If we also assist the company to apply for a bank account (safe and secure financial institutions in Malta and or outside Malta), please be aware that banks do their own due diligence, so we have little influence on their decision. However, we can help clients in most cases.
Company in Malta: – Tax Benefits:
- 5% corporate tax (after refund) – Malta – companies have the lowest tax in the EU.
- Tax advantages for residents without domicile.
- EU compatible tax laws, friendly administration.Malta makes a difference between residence and ordinary residence. A residence is constituted by habitual and continuous presence; a person does not need to be 183 days per year in Malta to be resident for tax purposes. However, the person must consider the definition of residence in art 4 of double taxation agreements as well as the question of which agreement is applicable.
- According to Maltese Law, the residence for legal persons is the place of management and control. However, it is not sufficient to be able to exercise management and control, relevant decisions should actually be taken there. Therefore, the airplanes are full of businessmen who are happy to fly for a business trip to Malta to meet regularly there for important decisions.
- There are reasonable conditions for a Maltese company to receive a VAT number which is an important consideration for companies that are trading within the European Union.
- Find comprehensive information here: Malta Taxation and International Tax Planning and Substance.
Legal and other Benefits of a Company in Malta:
Sunny climate, good flight connections, an island with tourism and much entertainment.
Well educated multilingual workforce, diversified economy with strong ICT and finance sectors. EU with freedom of movement, Schengen, Euro, and English as an official language.
Directors of corporations can have their residence outside of Malta, however, if directors or shareholders are not citizens of the EU, EEA or Switzerland, the commercial register (MBR) asks for additional due diligence documents (e.g. a professional reference of a lawyer or auditor, a bank reference, a copy of an identity document and an utility bill as a proof of residence).
In Malta, second jobs are possible, they are free from social charges, there is a special tax rate, and the total amount of working hours is limited only for each employment, not in total. Consequently, it is cheaper for clients to employ proper persons part-time, they provide a real substance that can be built up over time.
Nominee directors and fiduciaries carry a huge legal risk, combined with a corresponding administrative and financial burden, and Zugimpex does not offer these services. Background: after Malta was criticized by international bodies concerning the enforcement of its Anti Money Laundering legislation, the government introduced amendments to the Company Service Providers Act and subsidiary legislation in 2020. Since then, The Malta Financial Services Authority MFSA regulates company service providers, including law firms and audit companies. The legislation requires not only special licenses for fiduciary relationships and nominee directors but also defines extraordinary procedures. Therefore nominees often act rather like a semi- governmental person, while real employees are loyal mainly to the employer.
Licenses in Malta often are valid for the entire EU; but in Malta, costs for obtaining and administrating the authorization are much lower. Whether online gaming, shipping, airline, or investment funds, Malta offers the passport to the EU/EEA market at reasonable costs. For IPOs, a combination with the first listing in Malta and a second listing on a larger EU stock exchange might be much cheaper than a single listing on the larger exchange.
- There is a special DLT (digital ledger technology) regulation for ICOs, blockchain, and cryptocurrencies, based on Maltese legislation (Malta Digital Innovation Authority Bill, Innovative Technology Arrangements and Services Bill, and Virtual Financial Asset Bill). While the legislation looks attractive, the relevant authority is extremely reluctant to issue licenses. Since the regulations were introduced, many companies applied, but only very few licenses were granted. The management of Zugimpex, therefore, recommends clients to wait until licenses are issued regularly, before moving such activities to Malta.
It is not required for a Maltese company to have a bank account in Malta, as banks are very restrictive and accounts in other countries are permitted. However, in the meantime there are several licensed Electronic Money Institutions and Payment Providers in Malta and in the EU, and with our support, clients usually can open several accounts within a short time. Check our guidelines on how to deal with banks and you will have more success in opening a bank account.
Find comprehensive information about possible Company Structures.
Public Limited Company (P.L.C.) in Malta:
This legal form is mainly used for investment companies, the requirements are at least two directors and a secretary, the minimum capital is 46600 Euro, of which 25% (11650 Euro) must be paid in.
Malta focuses on transparency, so the shareholders of a P.L.C. are published as “involved parties” on the website of the Malta Business Registry if the company is not listed on a stock exchange.
Most P.L.C. companies are investment vehicles with variable capital (SICAV Société d’ Investissement à Capital Variable). SICAV structures are specially regulated by the Investment Services Act (Chapter 370 Laws of Malta). They can be used as “umbrella companies” with independent sub-funds.
General Partnership (GP) and Limited Partnership (LP):
In Malta, it is a possible to form General Partnership with unlimited joint and several liability of all partners.
In the case of a Limited Partnership (“en commandite”), there are one or more Limited Partners who are just liable for the contribution made to the partnership, in addition to at least one General partner.
Partners can be both individual and legal persons. The use of a (local or foreign) legal person as a General Partner is possible to reduce liability.
For the registration, the following information is required:
- Company name
- Object (= activities)
- Registered address
- Partnership agreement that specifies the General Partner, the Limited Partners and their contribution.
- The defined authorized capital (must be paid in full)
- Application: standard documents to be submitted to the Malta Business Registry (MBR)
A Maltese corporation can change its status to a partnership. A partnership agreement is required stating that the company wants to move from a company to a partnership.
A partnership must submit a financial statement plus tax declaration to the tax office, but the published annual return does not always have to be submitted to the ROC (Registry of Companies).
Malta allows foreign companies to redomicile to and out of Malta using a standardized procedure. If the original company is in a blacklisted jurisdiction, a more complex procedure is required. Before such re-domiciliation, the financial statement in the old jurisdiction can be reworked to ensure a long-lasting (tax) benefit in the new jurisdiction.
The process for the redomiciliation of companies is defined in Malta in the Continuation of Companies Regulations (Legal Notice 344 of 2002 as amended by Legal Notice 352 of 2003 and 181 and 186 of 2006).
However, before such a process can start, the legislation in the outgoing country has to be checked. For example, some EU countries have still not modified their legal system according to the EU Directive 2019/2121 amending Directive 2017/1132 regarding cross-border conversions, mergers and divisions.
A company formed and incorporated or registered under the laws of an approved foreign country (in Malta), which is similar in nature to a company as known under the laws of Malta, may request the Registrar of Companies to be registered as continued in Malta, provided the laws of the foreign country so permit, and provided the company is authorised to do so by its constitutive documents.
Documents which are needed in Malta (eventually certified translation into English):
- Certificate of Incorporation;
- Current version of Memorandum and Articles of Association (M&A).
- Modified Articles of Association that comply with International Business Companies Act 2016 (IBC Act).
- Management resolution to re-domicile;
- Certificate of Good Standing;
- Confirmation by director or another managing body of company that the company is not in the process of winding up, dissolution or strike off; no administrator has been appointed to the company; that the company has no outstanding debts
- Application to the Malta Business Registry
MBR issues a provisional certificate to the company, stating that the company will continue to be registered and is subject to obligations and any legal proceedings in its current jurisdiction.
The company has to provide within 6 month evidence that it has ceased to exist in its former jurisdiction.
Then the MBR issues a final certificate.
In case of a partnership, migration within the EU is rather simple because the partners have the right of free movement and there is no need for liquidation (as it is no corporation).
Cross Border Merger
Cross Border Mergers are regulated in the Directive 2005/56 EU. Mergers can happen for various reasons, and in some cases even to benefit from different legislations regarding insolvency or employee rights.
Foreign Company with Management and Control in Malta
A foreign company can move its management and control to Malta and declare this to the local tax authorities. If the direct shareholders of the company are not residing in Malta, the entity is considered to be „resident without domicile“. In this case passive income arising outside Malta that is not remitted to Malta is not taxable in Malta. This allows using entities that were former offshore and to still benefit from tax advantages.
Branch of a Foreign Company in Malta
A branch of a foreign entity in Malta can be useful, too: Malta has the right to tax the income of the branch, but in some cases, passive income of the Branch arising outside Malta is not taxable in Malta. Branches can be opened and closed easily.
Associations in Malta:
An agreement to associate between at least 3 members is required, which can be done for any lawful purpose. Usually, there is a standard template, which needs to be completed by the name, the address, the objects, and the administrators. If all administrators reside outside Malta, a resident person needs to be appointed as representative.
Registration at the MBR is possible, but not always mandatory. On the website of MBR, the members are not published. Associations are regulated in the Voluntary Organisations Act (Chapter 492 Laws of Malta) which has been amended 2018.
Shipping Companies and Vessels:
Malta is one of the leading maritime hubs in the region with one of the largest international ship registers worldwide. The shipping sector is regulated by specific laws and regulations around the Merchant Shipping Act of 1973 and ancillary regulations as well as STCW 78 Convention (as amended) regarding the manning and certification of seafarers. The regulations apply to yachting, too.
Shipping companies must be incorporated at Malta Business Registry (MBR) under the Merchant Shipping Act and not under the Companies Act, and their objects must be limited to areas in the blue economy.
Ships must be operated through a shipping company. They can be registered in the name of any legal entity or by a natural person who is EU citizen. It is possible to change the name of the ship.
There is no nationality restriction for master, officers and crew. Foreign certificates about training and watch keeping, issued in terms of the STCW 78 Convention, need to be recognized by Maltese authorities. They issue an attestation document and also a Minimum Safe Manning Certificate.
Ships over 10 years have to undergo an inspection by an authorized flag state inpector before or within one month of provisional registration, and ships that are older than 25 years often cannot be registered.
After the provisional registration, all documents have to be finalized within 6 months.
When ships are registered that are still under construction or that are equipped, some requirements are suspended until the construction is completed or until the ship is delivered.
Documents needed for the registration of ships/ vessels:
- Authorization of a representative (if applicable, in case of non-Maltese owners)
- Application for registration
- Company documents or other proof of qualification to own a Maltese ship
- Copy of the International Tonnage Certificate
- Declaration of ownership made in front of the Registrar.
- Evidence of seaworthiness and other certificates
- Declaration of Maritime Labour Compliance (DMLC) – Part 1.
- Payment of initial registration fees and annual tonnage tax.
- Radio Station License application
- Bill of sale or builder’s certificate in the name of the applicant.
- Cancellation of registry certificate issued by the old Administration
- Evidence for SOLAS ships (safety of life at sea, these ships comply to minimum safety standards in the construction, equipment and operation of merchant ships), copy of the last updated Continuous Synopsis Record issued by the Administration where the ship was last documented.
- Certificate of Survey and a copy of the International Tonnage Certificate issued by an approved surveyor of ships.
- Evidence that the vessel has been marked in accordance with law
Where valid appropriate convention certificates are not in place the ship will be issued with a non-operational certificate of registry.
A certificate of Malta registry is subject to renewal on the anniversary of the Maltese registration.
There is also a renewal process with competitive fees, and a process to register and release mortgages.
For yachts that carry up to 12 passengers and are in commercial use, Malta provides a special Commercial Yacht Code setting required standards of safety and pollution prevention.
Bareboat Charter (charter without crew):
Ships registered for bareboat charter have the same rights and obligations as any other ships registered in Malta. Bareboat charter is possible for ships under Maltese or under foreign flag, but the registers for ownership and operations need to be compatible and the ship shall not be registered in another bareboat registry. The ship can be bareboat chartered to a company or person qualified to own a Maltese ship. The Registration can be done for the period of a charter or for up to two years with the option to extend.
Following documents need to be produced:
- Application for registration
- Declaration of bareboat charter
- Charter agreement (if applicable)
- Copy of International Tonnage Certificate
- Transcript or an extract of the underlying registration
- Letter of consent of the underlying registry, owners and mortgagees
- Registration fees
Benefits to register a ship in Malta:
The first benefit is the tonnage tax regime.
- To benefit from it, clients need to register a company that qualifies as a shipping organization (according to the Maltese Merchant Shipping Act) and receives a license from the government. Ashipping organization can own or operate ships that qualify for the tonnage tax regime.
- A ship must also be registered as tonnage tax ship, or it can be declared for tonnage tax even if it is registered in another jurisdiction, if the Maltese tonnage tax is paid. There is no minimum tonnage requirement.
The second benefit is the exemption from income tax
- There is an exemption only if the company is a shipping company with qualifying shipping activities, including ancillary activities according to a list. All income arising in Malta is included in the tonnage tax. This means, also ship management and crew management activities are exempt from income tax.
- However, private yachts and ships used primarily for sport or recreation are formally excluded vessels.
- For shipping companies, there is a simplified tax declaration.
- Shipping companies can also decide to apply for standard taxation, resulting in a 5% effective tax rate.
The third benefit relates to capital gains:
- There is no capital gains tax or stamp duty on the transfer of shares in a shipping organization, also the sale of a tonnage tax ship or of the right to acquire a tonnage tax ship is exempt from tax
The fourth benefit relates to VAT:
- Generally, VAT applies, when a ship (yacht) is used in a permanent manner in the EU, when it is owned by a company or person established within the EU and when it is purchased or imported into the EU
- For a short term yacht charter, the place of supply is where the charter starts. This means, when a ship is chartered for less than 90 days and the charter starts outside the EU, then no VAT has to be paid. At the end, within the 90 days, the ship should be moved out of the EU. For example, ships used in Croatia can start their charter in Montenegro.
- If ships are imported into the EU, a reduced VAT rate can be applied depending on the relationship between the use of the ship inside and outside the EU. To benefit, there must be a leasing agreement between the Maltese company and any foreign or Maltese entity.
- If the yacht is sold at the end of the period, the VAT department issues a “VAT paid” certificate to the yacht.
- For commercial yachts under the Maltese flag, there is a VAT exemption for the purchase of yacht supply, if the place of supply of the vessel is Malta.
- Services around chartering, maintenance, modification of commercial vessels and hiring is exempt from VAT, if the place of supply is Malta. VAT rules state that the place of supply is Malta, if the yacht is in Malta at the beginning of the lease. There are some additional requirements.
The fifth benefit relates to some double tax treaties, if one of them is applicable:
- Profits from operations of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. This also applies to profits from the participation in a pool, a joint business, or an international operating agency.
Ship finance, yacht finance
For ships under Maltese flag, the registration of a mortgage is possible. In Malta, there are several yacht financing institutions. Financing depends on individual circumstances and can be up to 80% of the value. In many cases, it is possible to agree that no early repayment fees are charged.
Intellectual Property Registration: trademarks, patents, design rights:
Trademark registration protects the brand name and gives the trademark owner the exclusive right on the tradename and the logo. Registration in Malta is possible with the Intellectual Property Office (IPO) or at the EU level with European Union Intellectual Property Office (EUIPO) in Alicante in Spain. The European trademark register application is easy and registration is valid for 10 years from the date of registration. Then it shows up at an EU trademark search. Later, renewal is possible. In case of additional registration, the WIPO (World Intellectual Property Organization, cooperation with United Nations) gives guidelines on how to register trademarks in the 97 countries of the Madrid System.
Trademarks are a combination of words and symbols; they can be registered for the EU in one or more of the 45 classes of the International Classification of Goods and Services established by the Nice Agreement (known as the “Nice Classification”). Malta, however, is a single-class jurisdiction.
Designs can be protected for a period of five years by registering a new design right with an individual character. Then they can be licensed. To register, a design shall not be purely functional and must fulfill criteria of morality. Applications have to be filed with the comptroller of the Commerce Department.
It is possible to apply for a Registered Community Design (RCD) at the European Union Intellectual Property Office (EUIPO) or for international protection at the World Intellectual Property Organization (WIPO) office in Geneva.
Copyright protection for software, original literary, scientific, and artistic work lasts until the death of the creator plus 70 years in the EU and plus 50 years outside the EU according to the Berne Convention. Registration of copyrights is not required; it is sufficient to attach the copyright symbol plus the year of creation and the author to the text. Sometimes it is useful to create documents that prove the ownership of copyrights.
Zugimpex: your 1st Choice for Formations, Offering Professional Services, Reasonable Fees, and a Friendly Atmosphere:
- Comprehensive Services for your company in Malta.
- Quick Customer Due Diligence – we expect you have good financial standing, good qualification, and successful experience in your business.
- (Please note – Zugimpex does not provide any services to US citizens or persons residing in the USA. For companies with their registered office or for persons residing in Germany, Italy or France, coordination with a local tax advisor based there is required)
How much is the cost/price for company formation in Malta?
- Minimum capital, and different public and shipping fees: around 450 Euro.
- Lease contract at an external business centre: from 550 Euro per year plus declaration of consent from the landlord (required at the beginning)
- 900 € for company formation and compliance fees with up to 6 hours service.
- (please note that you probably need a holding outside Malta, too).
How much are the ongoing costs for a company in Malta?
- Lease contract at an external business centre: from 550 Euro per year.
- Annual costs depend on the activities: calculate costs starting from 2000 € per year for basic service, bookkeeping, VAT declaration, financial statement, and preparation of tax declaration. Please note that bookkeeping does not need a lot of time, the largest amount of time is spent sorting documents, matching payments, and contacting customers about missing documentation or unclear information (e.g., when there are payments without an invoice).
- Mandatory annual audit costs from an external auditor including special declarations to the tax office: in most cases between 1000 € and 2500 € per company depending on the activities.
After the political changes at the end of 2019, the new Maltese government tried to preserve the good reputation of the country and managed to get Malta out of the FATF grey list within record time. However, they introduced an enormous level of compliance administration. Since then, companies and service providers have to report to several government units that are not coordinated and all of them carry out inspections.
A good example is the Malta Business Registry (MBR). They are entitled to register companies, but also to publish the Annual Accounts and to run the Beneficial Ownership Register. However, the MBR also carries out hundreds of inspections, where they ask to provide within a week a lot of documents that had not been required at the formation stage.
As a licensed service provider, we recommend to all clients to study the list and to have all these required documents prepared from the very beginning, it is just a few “funny” hours of effort and the ready documentation can be handed over whenever the authority ask for it. As stated above, we always recommend clients not to use director services, nominees, fiduciaries or trusts, therefore many points on the list are not applicable and the few additional papers are easy to create. Here is what the head of the compliance unit of MBR writes in a standard letter:
“…..The inspection is being conducted in accordance with Regulation 12 of the Companies Act (Register of Beneficial Owners) Regulation (herein after referred to as the BO regulations) and is designed to review the extent to which the company is complying with Regulations 5 and 6 of the BO Regulations. In this regard you are being requested to send via email to …… the documentation listed below, to enable us to confirm each layer in the structure of ownership of the company, including the minority shareholders. Kindly note that the applicable documentation needs to be provided for all past and present Beneficial Owners / Senior Managing Officials indicated in the BO Forms submitted from 2018 onwards.
A. Documentation required for the Company:
- Organigram / group structure detailing all layers and beneficial ownership interest
- Entity organizational chart certified as true and correct by a director/s vested with legal responsibility (to be submitted only when SMO/s are reported in the BO forms)
- Brief overview of nature of business entity
- Beneficial Owners Register
- Resolution / Minutes of the Shareholders and Directors meetings
- Any Dividend Warrants
- Details of banking arrangements held by entity including name of bank, facilities held and authorized bank representatives and signatories
- Copy of Passport / ID Card of the Beneficial Owners /Senior Managing Officials
- Details of multiple citizenship that may be held by a BO
- Curriculum Vitae / Resume of Beneficial Owners / Senior Managing Officials
- Declarations by the Beneficial Owners / Senior Managing Officials (if any)
B. Documentation required for each layer in the structure of ownership (including the Company)
- Register of Members
- Share Certificates
- Share Register
- Memorandum & Articles of Association (or equivalent)
- Share transfer agreements (if any)
- Agreements with the beneficial owners / Senior Managing Officials (Service agreement and / or Fiduciary agreement or Trust Deed (in case there is a Trust)
- Fiduciary declarations (in case the sample includes a fiduciary relationship)
- In case of Trusts, any “letter of wishes” which might be in place
- Certificates of incorporation
- Details of any powers of attorney issued
- Details of bearer shares or promise of sale agreements (for shares) in existence
- Where no bearer shares exist, a declaration from the director/s vested with legal responsibility
- Any other document which verifies the links between the indirect companies and the beneficial owners / Senior Managing Officials and for all the shareholders.
Kindly send these documents via email, but not later than (date within a week). In case the requested documents are not received by the MBR officials till the deadline date given, a penalty of 10.000 Euro will be imposed against the company without any further notice. Please do not hesitate to contact …. ”
Please note that although Malta is a small island, it is very regulated: in addition to the mandatory audit there are several reports required by different authorities who also make inspections, therefore the pro rata costs have to be considered:
- Company: Annual Return and report of changes to the Malta Business Registry MBR
- Company: Tax Return to the Commissioner for Revenue CfR
- Service Provider: Annual Business Risk Assessment and a 81 page Risk Evaluation Questionnaire to the Financial Intelligence Analysis Unit FIAU
- Service Provider: annual 20 page Excel sheet with Compliance Report by the Service provider to the Malta Financial Service Authority MFSA
- Auditors also have to submit their own compliance forms and reports to the Accountancy Board
- Use our experience at Zugimpex, our contacts, our know-how in international business, and our services in international tax planning.
- Plan with us the setup of your company, your operations, and the transfer of functions, so your company in Malta and the holding will start and operate successfully.
- Our friendly and competent employees are glad to assist you, and when you visit Malta, you will enjoy every stay.
Interim Dividends and Loans to regulate cash flow:
Sometimes a company has positive cash flows each quarter and parts of the funds are not needed for the ongoing activities. There are legitimate cases where the shareholders want to use the liquidity differently and do not want to wait for the general assembly to receive dividends in the next period. Here are two options: a loan and an interim dividend.
In case of a loan, the company gives a loan to its holding, the holding can give a loan to its shareholders. Later, when the Maltese company declares a dividend and pays the tax, the net dividend is booked to offset the loan to the holding. Then the holding receives the refund, declares a dividend to the final shareholders and offsets it against the loan given already to the final shareholders (if the consolidated group rules are applied and there is consolidated tax return, only 5% tax are paid and there is no refund).
In case of interim dividends, a company can make a resolution in writing, signed by all directors, to pay interim gross dividends. It must be stated that the basis of the management accounts is clear, that the company has made profit so far and that based on contracts or ongoing business activities it is anticipated that the company will make further profits during the remaining period.
After having received the right to get the interim dividend, the holding can decide on and pay an interim dividend to the final shareholders. Please note, this depends on the legal situation in the country of the holding and there may be different requirements.
If a Maltese company wants to form a consolidated group to submit a consolidated tax return, the holding structure must already exist during the fiscal year, however registration of the consolidated group is only possible after the end of the first fiscal year. In a consolidated group, the tax number of the holding is used (a foreign holding must appoint its Maltese subsidiary as its local tax representative and apply in time for a Maltese income tax number).
If Maltese companies want to decide on interim dividends already during the first fiscal year, the consolidated group can technically not be formed, because the tax administration releases the registration forms at the beginning of the following year. Then the subsidiary can pay a net interim dividend of 95% and make a tax payment of 5% to the Commissioner for Revenue with its own tax number. Later, when the consolidated group application is approved, the tax credit will automatically be transferred to the group and can be credited against the amount due when the final tax declaration is done.
Liquidation of Companies:
A Maltese company has ongoing costs and obligations, and if this shall not continue, the company can be sold, transferred or there is a liquidation voluntary basis.This is the company liquidation process:
Starting activities for the liquidation of a limited company:
- General meeting: resolution with liquidation date, liquidator, and appointed audit firm.
- Notice of resolution to the Registrar (Form B (1)).
- Declaration of solvency by the directors (Form B (2)) within one month, including a statement of assets and liabilities,
- Declaration with Form L by the Liquidator.
Liquidation activities within 12 months (or general meeting every 12 months):
- Confirmation of outstanding amounts by Inland Revenue Department, VAT department and MFSA and settlement
- Deregistration with Inland Revenue Department, VAT department and Jobs Plus.
- Audit for the ending period
- Payment of all liabilities
- Collection or sales of receivables
- Closing of bank accounts
- Audit for the period from the date of dissolution up to the date of distribution
- Tax return plus payment, tax office issues a tax clearance
- General meeting: Liquidator presents accounts, audit report and scheme of distribution.
- Notice to the Registrar at the Registry of Companies (MBR-ROC).
- Publication in the Gazette, waiting for objections.
- After 3 months, the registrar strikes the company off the register. Then the company status is “dissolved”
Additional and Interesting Information about Malta:
Malta has EU membership, Euro and English as the second official language. According to the census 2021, 519.562 persons lived in Malta with Valletta as its capital; 115.449 or 22,25% of the inhabitants were foreigners. According to the employment agency Jobsplus, 56% of the foreign workforce were non-EU/EEA citizens. The country has 300 sunny days a year and the sunrise earlier in winter when people go to the office. Most people live on the main island Malta, which is located about 130 km south of Sicily, the 2 other islands are Gozo and Comino. There are excellent flight connections to most European centres with over 30 airlines.
Malta is positioning itself as an onshore location compatible with EU laws, but at the same time it provides an attractive environment to enterprises and individuals: Malta was set by the OECD on the whitelist, has numerous double taxation agreements and is rarely in the field of fire of high tax countries. At the same time, it is possible to get access to attractive EU- subsidies. Authorities in Malta act slowly, sometimes customer-friendly, there are one-stop shops that offer to investors flexible and individual solutions.
A favourable environment attracts investors: stable real estate prices, a reasonable salary level, low taxes, reasonable costs for services and a predictable political environment. Thousands of highly qualified people from the EU and outside of the EU move to Malta because of attractive jobs, nice weather, low taxes, and an entertaining lifestyle. Also, it is possible to earn a lot: working hours are limited for one employment with one employer by EU regulations, but employees can work unlimited time by combining several jobs.
(Updated September 2023)