- Audit obligation: Yes
- Continent: Europe
- Disclosure of beneficial owners: No
- EU VAT ID available: Yes
- Local manager required: No
- Minimum paid-up capital: EUR 240
- Obligation to submit an annual report: Yes
- Tax system: Preferential tax
One of the drivers of the economy in the ninth smallest country in the world – where there is no advanced industry – is company services. British rule had a strong impact on Maltese company law and, as a result, the most widespread form of company is the Limited (Ltd), which provides limited liability for the owners. Companies are registered electronically and this takes no more than one or two days. Owners must pay up 20% of the equity of the company upon registration, but it is also possible to start a company with only EUR 1,200 in shar capital.
A 35% corporate tax is imposed on the profit of companies, which is the second highest in the European Union. Therefore, Malta is generally not regarded as an offshore jurisdiction by other EU member states; however, thanks to its tax refund procedure, the tax system continues to be attractive. In essence, a profitable company must pay the 35% corporate tax at the end of the financial year, but if at the same time the company pays a dividend to the owners, the tax office will refund 6/7th of the tax to the owners. As a result of this refund, the actual corporate tax rate is only 5%. Holding companies enjoy additional fiscal benefits as certain incomes stemming from investments are total free of tax, such as dividends and the profit made by the sale of a business share. In recent years, a similar regulation has been adopted for patents and trademarks, but it appears that the process is by no means at an end. Malta exempts certain income types from tax not only internally but at international level too and it has made a number of tax treaties which offer additional opportunities in this area.
It appears that Malta has not only joined the EU tax competition but also tries to attract financial businesses to the country. In this respect, the European rules are uniform, but wherever there is a chance to deviate, the local people try to make use of it. An increasingly larger number of experts are engaged in creating investment funds and obtaining EU financial permits.