WHY MALTA?
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Transcript of WHY MALTA?
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
Introduction
Setting up in Malta
Over the years Malta has established itself
and proved to be an ideal, cost and tax
efficient jurisdiction for international
business and investment. Malta is
emerging as one of the fastest growing
financial services centres mainly through
its attractive, flexible and comprehensive
legislative and regulatory framework.
The fiscal incentives created by the
government of Malta have been a major
driver of growth of the Maltese economy.
For one, Malta adopts a system of tax
refunds that significantly lowers the
effective tax suffered in Malta. In fact, the
tax refund system lowers the effective tax
rate to 5% in instances where the
shareholders of a Malta registered
company and not resident on the island.
This is the lowest in the EU region.
Moreover, the cost effectiveness of
running and operating a company from
Malta, the highly skilled English speaking
workforce in Malta and the ideal
geographic location of the island in the
Mediterranean sea coupled with a history
of political stability have all been major
contribution factors to why Malta offers an
excellent option for companies wishing to
operate in the European market. Being a
Member State of the European Union,
Maltese companies are entitled to benefit
from the freedoms established by the
Union with regards to the internal market.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
Company Formation Limited Liability Companies are the most
common vehicles used in Malta for
carrying out trading or holding activities.
Setting up a company in Malta is straight-
forward, efficient and inexpensive.
Considering that the Malta company
register boasts over 40,000 companies
incorporated in Malta and the number is
increasing rapidly each year, it is
advisable that an applicant kicks off the
incorporation process by reserving the
proposed company name.
The Companies Act requires every
company to have two shareholders, to
appoint a director, a local company
secretary, to set-up a local registered
office and to have the share capital
deposited in a local bank account. Upon
submission of the Memorandum and
Articles of Association the company is
ready to be incorporated within a matter of
days.
Registration fees upon incorporation of a
company are dependent on the amount of
authorised share capital. The minimum
charge is €245 on an authorised share
capital of €1,500 increasing up to a
maximum of €2,250.
The annual company registration fee
payable is also dependent on the amount
of authorised share capital.
The minimum fee is €100 increasing up to
a maximum of €1,400.
A company is required to register for
income tax purposes upon registration and
required to submit a tax return every year.
Where the shareholders wish to claim a
refund of tax suffered by the company,
they will be required to register with the
Maltese tax authorities and apply for tax
refunds.
Company Redomiciliation
A body corporate formed and incorporated
or registered under the Laws of an
approved jurisdiction other than Malta
may, provided that certain conditions are
met, request the Registrar of Companies
to be registered as being continued in
Malta. This would allow the body
corporate to continue its operations in
Malta without having to wind up the
Company in its jurisdiction. Similarly, a
company incorporated in Malta may be
continued in a jurisdiction other than Malta
as permitted by the laws of the other
jurisdiction.
MFSA Fees related to the redomiciliation
of a company to Malta are identical to the
fees of incorporation. These fees must be
paid when the request to redomicile is
made to the MFSA.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
TAX
A company incorporated in Malta is
treated as domiciled and resident in Malta
and is subject to tax on its worldwide
income and capital gains. Companies not
incorporated in Malta may still be subject
to tax in Malta for all income arising in
Malta.
Companies in Malta are charged a flat tax
rate of 35%.
Tax Refund System
The tax measures currently in force in
Malta provide excellent opportunities to
those companies set up to carry out
international trading as well as investment
and holding activities. Malta is the only EU
member state that operates the full
imputation system of taxation. Non-
resident shareholders of Maltese
companies are entitled to claim a refund of
the tax paid by the company whenever
distributions are made to them.
The refunds currently available are:
- 6/7ths refund: This is the most
commonly available refund option to
non-resident shareholders and is due
on those profits earned from trading
activities. Taking into account such
refund, the effective rate of tax works
out at 5%.
6/7ths
Refund
Company €
Profit before
tax
100
Tax @ 35% (35)
Profit after
tax 65
Shareholder €
Net
dividends 65
Tax at
source 35
Gross
Dividends 100
6/7ths Refund
(6/7*35) 30
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
- 5/7ths refund: This type of refund is
generally due in respect of income
derived from passive interest and
royalties. The effect rate of tax works
out at 10%.
- 2/3rds refund: Available in those
instances where the company has
claimed double taxation relief. The
refund depends on the type of double
taxation relief availed of and is limited
to the tax paid in Malta.
- 100% refund: Applies when profits
are derived from a participating
holding. A specific mention that the
company is a participating holding
must be made in the Memorandum &
Articles of Association.
Tax refund to the shareholder is payable
by the tax department not later than 14
days from the end of the month in which it
is claimed provided that the relative
conditions are satisfied (particularly the
payment of the dividend and the payment
of the company tax)
Double Tax Relief
The imposition of comparable taxes by
two or more sovereign countries on the
same income of the same taxable person
for the same taxable period creates
juridical double taxation. Such a situation
is undesirable as it discourages
international investment and trade. To
avoid being taxed twice on the same
income, Malta maintains a large list of
double tax treaties with foreign countries.
Currently there are 67 Double Tax
Treaties and the list is expected to grow to
75 in the coming year.
Apart from the double taxation treaty
network, Maltese tax legislation contains
domestic rules aimed at ensuring that
income originating from overseas is not
subject to double taxation even if there is
no double taxation agreement in
existence.
Royalties
Royalties accruing to the owner of a
patent in respect of a grant of a licence for
the use by a third party or affiliated
company of a patented product are
exempt from tax in Malta provided that the
person receiving the royalties derives
them from a qualifying patent approved by
Malta Enterprise.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
VAT
VAT System
Anyone who carries on an economic
activity is obliged to register with the VAT
department, unless he provides an exempt
without credit supply. Such registered
persons collect VAT on behalf of the
Government. As such VAT is suffered by
the ultimate consumer and not the
registered person.
VAT Rates
The standard rate is 18% but a reduced
rate of 5% is charged in respect of certain
supplies including the supply of electricity,
printed material, medical accessories and
the repairs of certain products. There is
also a reduced rate of 7% charged on the
provision of accommodation in licensed
holiday premises.
Exempt Persons
Persons whose annual turnover is less
than the statutory thresholds are entitled
to be registered as an ‘exempt person’. An
exempt person does not charge VAT but
is not to deduct input VAT. Persons whose
turnover does not exceed €35,000 (in the
case of the supply of goods) and €14,000
(in the case of services) may opt to be
registered as an ‘exempt person’.
Other exemptions apply which depend on
the nature of the business. For instance
remote gaming operators and banking
institutions are also exempt from VAT.
Residence in Malta
The benefits of taking up residence in
Malta are clear. The economic outlook, the
climate, beaches and the beneficial tax
rates are a few examples and these
coupled with a reasonable cost of living
expense is proof of why you should
relocate to Malta.
Any person staying in Malta for a period
longer than three months requires an
authorisation from the immigration
authorities. Obtaining ordinary resident
status in Malta requires the applicant to be
in Malta for a period of at least six months.
There is no minimum value property
requirement for non-residents seeking to
obtain ordinary residence in Malta as long
as the applicant comes from an EU/EEA
Member State. For third country nationals,
there is a requirement for the applicant to
meet the criteria set out in the Acquisition
of Immovable Property Act before he
becomes eligible to buy property in Malta.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
The Ordinary Residents Scheme
The Ordinary Residents Scheme is an
incentive offered to overseas residents to
transfer their tax residence to Malta. The
scheme is available to persons who have
adequate financial means, live in suitable
property, and are covered under a health
insurance policy. Ordinary residents may
also take up gainful employment or set up
a business activity. Tax in Malta is
charged on a remittance basis meaning
that an ordinary resident is charged tax on
foreign source income that is brought to
Malta and on local source income. The
maximum standard rate of income tax is of
35% however proposals have been made
to reduce the rate even further.
Long-Term Status
A person who has been resident in Malta
for a continuous period of five years may
acquire long term residence status in
Malta subject to the fulfilment of a number
of conditions.
High earners who wish to relocate to Malta
are encouraged to apply under the High
Net Worth Individuals Scheme and benefit
from a reduced flat rate of income tax of
15%.
High Net Worth Individuals Scheme
This scheme is an incentive to attract
foreign high net worth individuals to
acquire a tax residence status in Malta so
as to benefit from a beneficial tax rate of
15% on funds remitted to Malta.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
Tax Status
Upon successful application, beneficiaries
become subject to Maltese tax on foreign
income remitted to Malta at a flat rate of
15%, with the possibility of double tax
relief. There are also minimum thresholds
of tax that need to be paid in Malta. An
EU/EEA/Swiss national must pay a
minimum annual tax of € 20,000,
increasing by € 2,500 for every dependent
living with the beneficiary. In the case of
non-EU/EEA/Swiss nationals, the
beneficiary must pay a minimum annual
tax of € 25,000, increasing by € 5,000 for
every dependent living with the
beneficiary.
The High Net Worth Individuals rules
stipulate that the application must be
submitted by an authorised mandatory in
Malta on behalf of the applicant.
Highly Qualified Persons’ Rules
The Highly Qualified Persons’ scheme
was introduced by the government as a
further incentive to attract foreign
investment and to bring expertise in
specific industry sectors to the island. The
scheme offers employees holding ‘eligible
office’ the possibility of applying for a
beneficial flat tax rate of 15% on
emoluments instead of the standard rates
of tax. It is available to both EU nationals
as well as third county nationals.
Senior officials working in the financial
services or remote gaming sectors may
qualify under this scheme subject to the
fulfilment of a number of conditions.
Remote Gaming
Malta was the first EU Member State to
provide jurisdictional services to
interactive gambling companies and is
now the largest remote gaming jurisdiction
worldwide and is home to some of the
largest remote gaming operators in the
world. This achievement is largely due to a
comprehensive regulatory framework and
tax planning opportunities for online
gaming operations. As a result, a range of
online services and facilities in the gaming
industry are readily available.
Remote Gaming Operators may apply for
licences in Malta with the Lotteries and
Gaming Authority. A Maltese licence
would enable the licencee to operate
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
across the whole of Europe, subject to any
foreign laws prohibiting gambling.
The Maltese Remote Gaming Regulations
specify that an applicant may apply for
four different classes of licences
depending on the nature of the business,
particularly depending on the gaming risk
the company is exposed to, the nature of
the business and the nature of the games
offered. An application for a gaming
licence in Malta takes roughly 14 weeks
from the stage of its submission to the
moment a system audit is scheduled and
a licence is issued. Remote Gaming
licencees are subject to rigorous
Regulation and are mandated to report to
the Lotteries and Gaming Authority on a
regular basis.
Once acquired a licence is valid for a
period of five years, subject to renewal.
Taxation
Malta licenced remote gaming operators
or platforms are subject to a gaming tax
which differs depending on the class of
licence acquired as shown in the figure
below.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
Key Official
Every licensee is obliged to appoint at
least one key official who is responsible to
supervise his operations and to ensure
that the license holder complies with all
laws, regulations, conditions and any
directives issues by the Lotteries and
Gaming Authority. The key official should
be resident in Malta and appointed as a
director of the gaming company.
Who we are
We are a full service professional services
firm established in Malta in 1991 and have
grown to provide a wide range of services
including accountancy, audit, tax
consultancy, company formation and
gaming related services. Our firm’s
objective is to be a one-stop shop for our
clients so as to centralise all services
under one roof and to simplify and ease
their bureaucratic commitments.
What we do
Company Formation
Our firm can assist you incorporate a
company in Malta. Our services include
the collation of due diligence documents,
the drafting of the Memorandum and
Articles of Association, the preparation of
any relevant forms and the communication
on behalf of the company with the Registry
of Companies until the company is
incorporated.
Banking Arrangements
Prior to incorporation of any company in
Malta, the company is required to set up a
local bank account in which an amount
equivalent to the share capital shall be
deposited.
By virtue of a power of attorney we will be
able to act on your behalf to open a bank
account in Malta with your preferred
banking institution.
Directorship
Private companies are required to have 1
director while public companies are
required to have 2 directors. A Malta
resident director is not required by law
however having a local director would
furnish an indication to the tax authorities
that the general management and controls
of the company are exercised in Malta and
therefore the company should be subject
to tax in Malta.
Apart from a wide range of management
and compliance services, our firm offers
directorship services to companies which
satisfy our due diligence process.
Company Secretary
Although it is not a legal requirement to
have a local company secretary, it is
desirable to have one so as to ensure that
the company incorporated in Malta has
substance in Malta which would be looked
at favourably by the Regulatory and Tax
Authorities in Malta.
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
The role of the company secretary is to
liaise with the directors of the company
and to take minutes at meetings,
particularly board meetings which are held
in Malta, at least once yearly.
Our firm offers company secretarial
services for a minimal yearly fee. In
addition, our firm will be able to assist you
with the organisation and holding of
meetings in Malta, set up a venue for such
meetings and take care of the logistics
involved in the anticipation of the visit by
the company directors to Malta.
Registered Office
Every company incorporated in Malta
must have a registered office situated in
Malta. Our firm will be able to set up a
registered office in Malta under its own
address and will ensure that any mail
which is destined for the company are
communicated to the company in a timely
manner.
Company Compliance
Maintaining a company involves certain
recurring corporate and back-office
services. Through our low cost retainer
agreements our firm will be able to offer
you a number of hours of consultancy and
other services as you may require from
time to time. This would often involve the
preparation of letters and documents to
notify the Registry of Companies of varies
changes which take place within the
company.
Accounting Services
Preparation of Monthly
Management Accounts
Preparation of Final Accounts
Vat Return
Payroll Services
Remote Gaming
Our firm will be able to guide you through
the application process of the Lotteries
and Gaming Authority, advise on an
optimal technically compliant set up, on an
ideal disaster recovery policy, and
facilitate communication with officials of
the Lotteries and Gaming Authority
throughout the process.
Through our extensive list of contacts in
the industry we will be able to connect you
with co-location providers, payment
gateway providers and other gaming
operators and software developers in the
island which will enable you to conclude
all the necessary agreements and make
the necessary arrangements which a
company is required to have in place
before being awarded a licence.
Following the acquisition of the licence the
Lotteries and Gaming Authority keeps a
close eye on all its operators and any
operator who falls foul of its rules will be
sanctioned. In this respect, through our
retainer agreements we will be able to
upkeep the licence and be responsible for
all Regulator-facing correspondence for
the company, including the monthly
submission of player liability reports and
TAX CORPORATE ADVISORY AUDIT www.nmcorporateservices.com [email protected]
ad-hoc incident reports, decommissioning
forms, service provider authorisations etc.
Key Official Services
In the light of the legal requirement by the
Lotteries and Gaming Authority to have a
director who is resident in Malta act as key
official, our firm is able to provide you such
services to ensure full compliance with
any statutory or other requirements and
directives of the Lotteries and Gaming
Authority. Apart from acting as a point of
contact for all communications between
the licencee and the Lotteries and Gaming
Authority, our contract for the provision of
key official services also includes any on-
going compliance throughout the lifespan
of the licence. Additionally, through our
internal technical specialists we will also
be able to advise you on the most
appropriate and legally compliant set-ups
to ensure constant adherence to the
stringent rules of the Remote Gaming
Regulations.
Contact Us
If you are interested in getting to know
more about Malta or would like to receive
more information about our services, do
not hesitate to contact us on the following
e-mail address:
We look forward to being of service to you.