The gem of the Mediterranean

Sunny Malta has become a popular destination for entrepreneurs looking to set up a company or to relocate their existing business. What makes this little island stand out? How to start a company in this beautiful country? Is it worth considering, and why?

Malta simply offers numerous benefits for entrepreneurs, including a favorable tax environment, a stable political and economic climate, and a strategic location that makes it an attractive gateway to Europe, Africa, and the Middle East.

Benefits of Setting Up a Company in Malta

Malta offers one of the lowest corporate tax rates in the European Union. The standard corporate tax rate stands at 35%, which is lower than many other European countries. However, through Malta's full imputation system and tax refund mechanisms, effective tax rates can be significantly reduced, making it highly competitive on an international scale. In fact, eligible companies can benefit from an effective tax rate as low as 5%. Malta also has an extensive double taxation treaty network with over 70 countries, making it an attractive destination for businesses that conduct international trade.

Shareholders have the opportunity to seek a refund of 5/7ths of the tax paid in Malta under specific circumstances. This refund applies when dividends are distributed from passive interest and royalties or from a participating holding that does not meet the anti-abuse provisions. As a result, this provision leads to an effective tax rate of 10%.

It is important to highlight that interests and royalties, which have already been subjected to a tax rate of 5% or higher, are no longer categorized as passive. Consequently, they qualify for the 6/7ths refund mentioned earlier.

Another benefit of setting up a company in Malta is its stable economic situation. Malta is a member of the European Union, the Commonwealth, and the United Nations, providing businesses with access to a wide range of markets and opportunities. The country has a strong legal system and a business-friendly environment, making it easy for entrepreneurs to start and grow their businesses.

Malta has excellent air and sea links, making it easy to access major markets in the region. This makes it an ideal location for businesses that operate in multiple countries and need a base of operations that is centrally located.

Find out more about the benefits in this article.

Tax Conditions in Malta

As mentioned earlier, Malta has a favorable tax environment for businesses. The country's corporate tax rate is 35%, but there are several tax incentives and exemptions available to reduce the effective tax rate. These include:

• Full imputation system: This allows shareholders to receive a refund of the tax paid by the company on their dividends.

• Participation exemption: This exempts the income and capital gains derived from a participating holding from tax.

• Double taxation relief: This prevents the same income from being taxed twice in different jurisdictions.

• Patent box regime: This provides a reduced tax rate of 5% on income derived from patents.

In addition, Malta has a range of tax incentives available for specific industries, such as the gaming and film industries, which offer a reduced tax rate of 5%.

Procedure of Setting Up a Company in Malta

Setting up a company in Malta is a relatively straightforward process, and can be completed in a few steps:

1. Choose a unique company name.

2. Register the company with the Malta Financial Services Authority (MFSA). This involves submitting the company's memorandum and articles of association, details of the company's directors and shareholders, and other relevant documents. The advantage of this program is its fast processing. The registration of the company typically takes 5 to 10 business days.

3. Obtain a VAT number: If the company will be engaging in taxable activities, it must get a VAT number from the Malta VAT department.

4. Register for social security: If the company will be employing staff, it must register with the Malta Department of Social Security.

5. Open a bank account: The final step is to open a bank account in the company's name, which will be used for business transactions.

Setting up a company in Malta is a relatively easy process, thanks to the country's business-friendly environment and streamlined registration procedure. The MFSA allows entrepreneurs to complete the process quickly and efficiently thanks to their one-stop-shop service for company registration. 

Citizen Lane will make the process effortless for you, thanks to years of experience on Maltese market and having helped many companies to relocate to the Mediterranean. Contact us today, find out more and consider changing your environment.