Company Formation in Malta

Advantages of Company Formation in Malta

Company formation in Malta offers favorable conditions for setting up and conducting business, making this jurisdiction a preferred choice for many entrepreneurs. The country has a stable economy, political stability, attractive tax and corporate legislation, and numerous sectors that are advantageous for investment. Starting a business in Malta provides the following key benefits:

1. Malta is a member of the European Union and actively participates in the Council of Europe (CoE) and the Organization for Security and Co-operation in Europe (OSCE). Its well-established international relations create a strong foundation for developing global business cooperation. Registering a company in Malta facilitates access to international markets, particularly within the EU.
2. Malta ensures a high level of confidentiality. The protection of personal data and commercial information is regulated by strict standards and laws.
3. Malta offers an advantageous tax system. Various tax refund mechanisms for corporate profits can significantly reduce the effective tax rate. Additionally, Malta has concluded double taxation avoidance agreements with over 70 countries.
4. Registering a company in Malta is a straightforward process. Provided that all required documents are available and no additional information is requested by the Malta Business Registry, a company can be incorporated within 24–48 hours.
5. The Maltese government actively supports business development. There are various programs to promote small and medium-sized enterprises, offering loans, grants, and other incentives.

Legal Forms of Companies in Malta

The legal forms of Maltese companies are defined in Part II of the Companies Act (1996). Company formation in Malta may take place under the following legal structures:

Commercial partnerships in Malta include:

• Partnership en nom collectif – a general partnership where two or more partners share unlimited joint and several liability for the partnership’s obligations.
• Partnership en commandite – a limited partnership that includes general partners, who have unlimited liability, and limited partners, whose liability is restricted to their contribution.

Limited Liability Company – this is the most common form for registering a business in Malta and can be either private or public.

Procedure for Company formation in Malta

Company registration in Malta is carried out through the Malta Business Registry. To start the registration process, original documents for the company’s founders are required (contact our team for details), along with the following information:

• 2–3 proposed company names in order of preference;
• the company structure (directors, shareholders, and beneficial owners);
• the intended business activity.

The company formation in Malta process is simple and includes the following stages:

1. Checking and reserving the company name (up to 3 hours).
2. Preparing the Memorandum and Articles of Association.
3. Opening a bank account and depositing the share capital.
4. Submitting documents to the Registry for incorporation (2–5 days).
5. Preparation of company incorporation documents and company seal.
6. Certification and apostille of statutory documents (average 10–12 days).
7. Delivery of certified documents and company seal to the founder’s address.

Key Features of Company Formation in Malta

• The Maltese government maintains a highly favorable policy towards entrepreneurs. Company formation in Malta is encouraged through various initiatives, investment incentives, and development programs aimed at attracting global investors.
• Malta has an extensive system of tax benefits and deductions. Both individuals and legal entities may qualify for partial or full tax refunds under specific conditions.
• Malta offers an attractive legal framework for ICOs, blockchain projects, cryptocurrencies, and gaming. The licensing procedure for gaming businesses is relatively straightforward.

Corporate taxation in Malta

Corporate income tax – 35% (refunds and rate reductions available)

Capital gains tax – 0%

VAT – 18% (exemptions may apply)

There is no separate legislation for corporate income tax; taxation is governed by the Income Tax Act.

According to the Commissioner for Revenue (CFR), Malta’s tax framework promotes international investment and ensures transparency. Tax rates depend on residency: companies registered or managed and controlled in Malta are considered resident and taxed on worldwide income, while non-resident companies are taxed only on income generated in Malta.

Resident companies are subject to a corporate tax rate of 35% on worldwide income and capital gains. However, shareholders may claim refunds of part or all of the tax paid by the company, meaning the effective rate can be reduced to 5% or even 0% in some cases.

There are four main tax refund categories:

1. 6/7 refund (effective rate – 5%) – applies to trading income;
2. 5/7 refund (effective rate – 10%) – applies to passive income (interest, royalties);
3. 2/3 refund (effective rate – approx. 11%) – applies under specific tax relief schemes;
4. Full refund (effective rate – 0%) – if the Maltese company holds shares in a foreign entity.

Dividend income may also be exempt if the subsidiary is a Maltese or EU resident company or is subject to a minimum 15% tax in its jurisdiction. Non-residents receiving dividends, interest, or royalties are generally not subject to withholding tax.

The standard VAT rate is 18%, although many businesses are exempt.
Capital gains tax does not apply.

Accounting and reporting requirements in Malta

After company formation in Malta all businesses must prepare and file annual financial statements. The fiscal year generally coincides with the calendar year but may be adjusted upon notification to the Commissioner for Revenue (CFR). For companies whose financial year ends between January and June, the filing deadline is March 31 of the following year; for others, it is nine months after year-end.

During these periods, companies must file a Tax Return and Self-Assessment.

Under the Companies Act, every company director must present individual accounts for each reporting period, including:

• balance sheet;
• profit and loss account;
• notes to the accounts;
• and other documents required by law.

Audits are mandatory, and auditors must report to shareholders on the accuracy of financial documentation.

Accounting records must be kept at the company’s registered office (or another approved location) for 10 years after the end of the financial period and be available for inspection by authorities.

Conclusion

Opening a company in Malta means choosing a reputable and advantageous jurisdiction. Company formation in Malta provides access to a stable legal system, transparent taxation, and numerous opportunities for international business.