The Unique Benefits of Registering a Company in Malta

By Ron Atkinson. 11th September 2014

Malta is a unique place. It is situated in the Mediterranean Sea between Sicily and Libya, and is historically regarded as one of the most important centers of maritime trade in the world.

To register a company in Malta, it is necessary to file paperwork with the Maltese Registry of Companies. There are numerous benefits to such a registration, not the least of which is Maltese companies may have flexible ownership structures, including foreign ownership. This is a vital consideration, especially for companies that plan to grow and are likely to invite investors from both the European Union and other financial centers.

Primary Benefits in Malta

Dividends to foreign shareholders are not restricted either, meaning that foreign investment is not only possible, but potentially compelling to shareholders, as there are no expenses associated with expatriating earnings. In fact, not only can funds be moved freely, they can be held in banks outside of the republic, while the company is still considered resident for legal purposes.

The combination of a modern banking system combined with the strength in Malta’s intermediary financial services, including insurance companies, means that new businesses will have numerous options. The republic is a signatory to a variety of international agreements which provide a supportive and forward-thinking environment for modern high-speed business.

Kinds of Businesses in Malta

These factors are vital to companies likely to grow quickly, or ones that are part of larger corporate structures requiring flexible objectives and creative operations. For example, a company registered in Malta might be established to handle exchanges between two corporations in different nations. One corporation may need to convert product into cash quickly, while another company is able to take that same product and stockpile it for a manufacturing process that has a longer time horizon but generates significant excess cash at regular intervals.

The Maltese company could act as a broker between the two corporations, buying the first corporation’s product for cash and then selling it to the second corporation on a long contract with funds due at a future date. Each of the two businesses can utilize the flexibility of the Maltese intermediary to meet their specific objectives. This is one of the most valuable features of company formation in Malta.

It is interesting to note these features are precisely the kinds of advantages Malta has offered to merchants and businesses for thousands of years. Its central location, although important, is sometimes considered secondary to its renowned friendliness to sometimes widely divergent business objectives.

Capital Requirements and Company Types

There are capital requirements, but they do provide limited liability for companies that meet the necessary minimums. Malta also offers two distinct business structures in addition to the standard limited liability company: the International Holding Company (IHC) and the International Trading Company (ITC). The former can serve as the foundation for a corporate group of affiliated companies, while the latter can specialize in coordinating exports and movement of goods in other countries. This is undoubtedly the kind of company formation Malta and other business-friendly nations seek.

Tax Rates in Malta

One of the most inviting benefits is assuredly the tax rate. Maltese companies are taxed at a rate of 35% of incoming dividends, but can apply for a refund of up to six units against every seven paid, meaning the effective tax rate can be as low as five percent. Although some Maltese sales are subject to a value-added tax (VAT), a 5% rate on incoming dividends can sometimes make the difference between success and failure compared to other options inside the European Union or elsewhere.

As with any important business step, it is recommended that managers, shareholders and board members obtain competent counsel and consider all their options before making a decision. If the decision is made to register a company in Malta, however, it could turn out to be quite important to your company’s future.