- An Overview of Malta’s Corporate Tax System
- Incorporating a Company in Malta
- Substance Requirements
- Setting Up a Company in Malta: Key Steps
- Consolidated Group (Income Tax) Rules 2019
- Benefits of Registering a Maltese Company as a Fiscal Unit
1. An Overview of Malta’s Corporate Tax System
Companies registered in Malta which are effectively managed and controlled therein are considered to be resident and domiciled in Malta and thus are subject to income tax in Malta on a worldwide basis at the standard corporate tax rate of 35%.
Malta operates a full imputation system of taxation where, upon a dividend distribution, the immediate shareholders receive a full credit of the tax paid on the distributable profits at the level of the distributing company.
The full imputation system mentioned above, is accompanied by the tax refund mechanism, in respect of which following a distribution of profits in favour of the shareholders, the same they are entitled to claim a refund of the Malta tax which was paid at the level of the distributing company. The nature and source of the income should be taken into consideration to determine the amount of refund which the shareholder can claim. The tax refund system can reduce the effective tax rate from 35% to 5%, in some cases even lower.
The different types of refunds are highlighted hereunder:
- 100% tax refund on dividend income derived from an investment which qualifies as a participating holding provided that the anti-abuse provisions are met and/or from the disposal of such holding;
- 5/7ths tax refund if the income received is passive interest or royalties or income and/or capital gains derived from a participating holding which does not qualify for the participation exemption;
- 2/3rds tax refund if double taxation relief has been claimed;
- 6/7ths tax refund in all other cases.
2. Incorporating a Company in Malta
The setting up of a company in Malta provides an effective EU-based solution with an attractive tax system which can be highly beneficial for the ultimate beneficial owners of the company. The process of incorporating a company in Malta is relatively straightforward and can take a couple of days if the necessary documentation is received in a timely manner.
The company’s Memorandum and Articles of Association to be submitted to the Registry of Companies will include the following:
- The objectives of the company (both primary and secondary);
- The name and registered office of the company;
- The authorised and issued share capital;
- The name and residential addresses of the shareholders, directors and company secretary;
- The manner in which the judicial and legal representation of the company is to be exercised.
The minimum authorised and issued share capital of a private company must be EUR 1,164.69 of which 20% should be paid up. Upon incorporation, a registration fee is payable to the Registrar of Companies which fee is based on the value of the authorised share capital of the company. The minimum amount payable is EUR 245 while the maximum is EUR 2,250.