Incorporating a Private Limited Company in Malta requires €1,200 in Share Capital of which only 20% must be paid up. Incorporation is done with the Malta Financial Service Authority (MFSA) and may take as little as 24 hours as long as all the required documentation is available for review by the MFSA.
Registration and annual MFSA fees depend on the amount of authorised share capital that the company is allowed to issue. Registration fees range from €245 to €2,250, while annual fees payable to the MFSA range from €100 to €1,400, such annual fees are paid yearly with the presentation of the Annual Return which states the share capital, and lists the shareholders, directors and company secretary.
The standard corporate tax rate in is of 35% on the chargeable income for a fiscal year. Whenever shareholders receive dividends from the Malta Company they will be entitled to claim a refund of the Malta tax paid by the company on those profits out of which the distributions have been made.
The most commonly used type of company in Malta is the limited liability company. This type of company may be one of the following:
- 1. Private limited company
- 2. Public limited company
The main distinction between the two is that the public limited company may offer its shares to the public and there is no limitation on the number of members it has. While a private limited company limits its members to 50, and may not carry out any offering of its shares to the general public. There are also certain constraints on the transferring of shares in a private limited company.
A public limited company has its name ending in ‘p.l.c.’, while a private limited company’s name ends in ‘limited’ or its abbreviated version ‘ltd.’.
A p.l.c. must have more than one shareholder, while a private limited company may be incorporated as a single member company with one shareholder.
The minimum share capital for a private company may be of €1,200, of which 20% must be paid up, while the minimum share capital for a public limited company is of €46,587.47 of which 25% must be paid up.
Companies incorporated in Malta must also present annual financial statements to the Malta Financial Services Authority (MFSA). Such statements must be signed by an auditor holding a practicing certificate, who gives an independent opinion on the financial statements being presented. The form of the financial statements depends on the size of the company. Companies which qualify as being small undertakings may present abridged financial statements, whilst all other entities must present a full set. The results included in the financial statements must also be represented in the companies annual tax return which is to be filed with the Inland Revenue Department (IRD) within specific dates.
Beneficial owners who wish to remain anonymous may use the services of individuals or companies who are licensed to act as nominees by the Malta Financial Services Authority (MFSA).
Directors’ duties are to act honestly and in the best interest of the company. Nominee directors will act on instructions provided by the beneficial owners of the company but must adhere and apply the rules of good conduct at all times.
The redomiciliaiton of companies in Malta is governed by the Continuation of Companies Regulations, 2002. These regulations allow companies incorporated in other jurisdictions to continue their operations here in Malta, without the need of having to wind up their operations abroad.
The Regulations are divided into two parts. The first part of the regulations lists the criteria necessary for companies who are incorporated in foreign jurisdictions to redomicile to Malta, while the second part of the regulations lists the criteria that must be adhered to for companies incorporated in Malta to continue their operations in other foreign jurisdictions without the need of having to wind up their operations locally.
Corporation tax in Malta is at a rate of 35% on the company’s profits. Malta is the only EU member state that applies the full imputation system; shareholders of a Malta Company are entitled to claim a refund of the tax paid by the company whenever a dividend is being distributed.
Shareholders who receive dividends from companies incorporated in Malta may claim a number of refunds on the tax payable depending on the nature of the income received by the company. The refunds available are:
- 6/7ths refund on income derived from trading activates (resulting in a net tax leakage of 5%);
- 5/7ths refund on income derived from passive interest or royalties (resulting in a net tax leakage of 10%);
- 2/3rds refund if the company has claimed double tax relief;
- Full refund in the case of profits derived from a participating holding.
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