At E&S, we offer the full array of Corporate Services required by Maltese Companies. Our team consists of Lawyers, Qualified Accountants and administrators. Additionally, E&S holds a License to provide Corporate Services in Malta. We also offer such services to companies incorporated in other Jurisdictions. We are thus in a position to the full array of corporate services the client would require, being it a small Malta Company or a Multinational Group which has a Maltese Corporate element in their group structure.

Malta Companies

The use of a limited liability company incorporated in Malta offers flexibility and favourable taxation albeit in a highly regulated onshore environment. Also, one can incorporate a company in Malta for the purpose of carrying on any activities anywhere. This is also true whether such activities are of a ‘trading’ or ‘holding’ nature. Such limited liability companies can therefore trade in any sector and may also hold assets whether tangible or intangible, movable or immovable.

 Jurisdiction to Tax

Firstly, the authorities consider a company,  incorporated in Malta, to be resident for tax purposes in Malta.  This implies that the Malta Company will be taxable in Malta on a worldwide basis. This holds true irrespective of where its management and control happens, being in Malta or elsewhere.

Secondly, one considers a non Malta company, tax resident in Malta where it is management and controlled from Malta. Such company’s liability to tax limits itself to chargeable income or gains earned in Malta. This includes also income derived from or realized in Malta, or income remitted to Malta. Foreign source gains would not be taxable in Malta even if remitted to Malta.

Rate of Tax

There is no corporate taxation in Malta. Companies are however subject to income tax at a flat rate of 35% (equal to the marginal rate taxed on individuals). The overall Malta effective tax rate is lowerable either by a refundable tax credit or by application of the participation exemption.

 Taxable income

A Malta company’s taxable income would include gains or profits derived from a trade or business, dividends, premiums, interest or discounts; rents, royalties and other profits arising from property, any charge, annuity or annual payment, and certain chargeable capital gains.

 Participation Exemption

A Malta company in receipt of income derived from a ‘participating holding’ (typically an equity shareholding of 10% in a non-resident entity, although other alternative conditions exist), or gains derived from the disposal of shares in such a participating holding, such company may at its option exempt such profits (participation exemption).

Shareholders of Malta Companies
Dividend income – The Full Imputation System

Malta operates a full imputation system for the taxation of dividends. This entails that a shareholder (whether an individual or a corporate entity) in receipt of a dividend distributed by a Malta company would suffer no further tax. it is not mandatory to declare this income  in his, her or its tax return.

It follows that Malta therefore has no withholding tax on dividends in terms of its domestic law.

Shareholders of a Maltese Company are generally  entitled to a refund of the tax paid on distributable profits. Such refunds of tax are applicable to all shareholders in Maltese companies regardless of their legal form of status, or tax residence or otherwise of the shareholders, to the extent that they register for this purpose.

 Refunds of Tax

A shareholder in receipt of a dividend paid out of profits of a company registered in Malta is generally entitled to claim a refund of part or all of the tax suffered by the company on the said profits.

Such refund would typically be of 6/7ths of the Malta tax paid on the distributed  profits. The refund can however fall to 5/7ths.  Based on whether the dividend arises out of profits derived directly or indirectly from ‘passive interest or royalties’ as defined. Furthermore,  in certain cases  2/3rds applies where the company claims  double taxation relief on certain profits.

It is also possible to declare  income derived from a participating holding or gains derived from the disposal of shares in a participating holding  for tax purposes. This as opposed to being exempt from tax in terms of the participation exemption. In such cases,  this entitles the shareholder  to claim a full (100%) refund of tax. The  taxed distributed profits are the basis of the refund.

Other Taxes

Malta, subject to certain conditions,  has is no withholding tax on outbound interest or royalty payments.

A Non Resident individual may dispose of shares in a Malta company without further tax. He would also be exempt from any form of capital gains tax in Malta as well as any applicable stamp duties.

Corporate services that we offer:

The MFSA (Malta Financial Services Authority) regulates the Provision of Corporate Services in Malta . Each Corporate Service provider in Malta must pass a strict application process as well as strict background and capability checks. This gives added comfort to clients considering using Malta Company as part of their International Group Structure. E&S Group has 3 Corporate Service licenses which allows the group to offer the full array of Corporate Services.

 

Contact us on +356 20103020 or by mail at [email protected] to find out how E&S can help you in ‘making things happen’.