The Republic of Malta is a promising jurisdiction that is notable for its legal ways to optimize taxation. Moreover, the Maltese Islands are located on trade routes between Europe, Africa, and Asia.
Many entrepreneurs are thinking about starting a business abroad and choosing a tax jurisdiction for a future company. Malta’s tax system assumes low tax rates. The conditions for entrepreneurship in the country are one of the most favorable in the European Union, there are many benefits. Let’s talk about the benefits of Malta as a place to live and do business.
To reside in Malta and conduct business, you must obtain a residence permit or citizenship of the country. The Maltese Citizenship Law provides an opportunity to obtain citizenship for special merit in the field of direct investment for 14 months. To do this, you need to invest in the country’s economy from 690,000 € and pass a strict due diligence check.
In total a little more than 400 thousand people live in Malta, and 1.2 million tourists visit the country a year. Tourism provides 35% of the country’s GDP, and most of the real estate here is apartments that are rented. Tourist service is a whole industry, where almost any well-organized business is considered profitable.
Among the industries that are developed in Malta are electronics and programming. Well-known world companies, such as ST Electronics, Playmobil, Trelleborg, TRC Media Group, invest in high technologies.
Until 1964, Malta was part of the British Empire but is still considered one of the world’s centers for the study of the English language. Specialists with international diplomas work here, and private schools bring high incomes.
Agriculture on the islands is poorly developed due to a lack of land. Mainly potatoes are grown for sale here. The processing of seafood remains a fairly profitable business. The country is also known for its pharmaceuticals.
It is profitable for investors to invest in a Maltese business for various reasons:
• A stable economy of Malta with minimal losses is going through crises. For example, in 2020, despite the dire economic impact of the pandemic, rating agencies assigned Malta A or A + ratings.
• International Business Center. Representative offices of well-known corporations and large companies operate in Malta.
• Hard currency zone and reliable banks. Since 2008, the country has been part of the Eurozone.
• Personal safety. Malta is recognized as one of the safest countries in the European Union in terms of crime.
• Government support for business. Programs are working here, the purpose of which is to help in the development of entrepreneurship.
• Favorable taxation. If you become a resident of Malta, you will receive many tax benefits.
• Second citizenship. Malta grants vetted investors Citizenship for Excellence in Private Equity.
A second passport can be obtained within a year and a half.
On the face of it, the Maltese 35% income tax does not attract investors. At the same time, this rate is valid only if the company does business in Malta and its income grows by more than 10% per year. If the Maltese company is used as part of an international structure that accumulates profits from other countries, then the lion’s share of the tax is refunded. The state keeps only 5% for itself, which looks attractive for any international company. Part of the tax is refunded during the distribution of dividends. In this case, income is taxed at an effective rate of 10%. If an international company pays dividends to the owners of the Maltese company, then such payment will not be subject to any tax in Malta. A company can become a Maltese tax resident by registering in Malta or by opening its head office here.
There are three forms of companies in the country:
• Private limited company: shares are allocated to the entire capital of the business, which are owned by all members of the company;
• Partnership with unlimited liability: all partners are equally responsible for debts and obligations;
• Partnership with limited liability: along with general partners, there are partners whose liability is limited to their share in the capital of the enterprise.
To open a business in Malta, it is necessary to register the articles of association with the Malta Financial Authority and pay the registration fee. The registration fee for setting up a company is calculated on a progressive scale depending on the declared share capital. With the minimum capital, it is 7.5% of its amount. And with the maximum capital is less than 1%. After that, a registration certificate is issued.
To receive financial assistance from the Government of Malta, it is necessary to register the company with the Department of Social Security. A limited liability company can have a minimum share capital of 1250 €. Of this amount, you pay 20% when you apply for registration and put it in the bank on a deposit on behalf of the company. The director can be a legal entity, and the secretary must necessarily be an individual. There are no restrictions on citizenship.
By law, a company must have at least two shareholders – both individuals and legal entities. To receive tax deductions, a shareholder must not be a resident of Malta. A trustee may act as a holder of shares. It usually takes 1 – 2 weeks to register a company. By this time, the company must have a registered office in Malta.