Company Registration in Malta

Southern Europe contains the island of Malta. The largest city in Malta is St. Paul’s Bay, and Valletta is its capital. It is a draw for investors worldwide because it is a great, peaceful nation with a large English-speaking population. Malta offers a variety of attractive business options that draw different investors. Only one shareholder and one director are needed to incorporate a corporation in Malta, making the process simple. Starting a business in Malta does not need having a resident director or shareholder. A firm has the option to register with EU VAT as an added benefit, which opens up a variety of incentives for starting and operating the business.

Benefits of Company Registration in Malta

Following are the benefits of company registration in Malta

• Benefits of Corporate Taxes

Malta’s corporation tax rate, which is set at 35% on trading profits, initially appears to be too high for the businesses. It is one of the nations in the European Union with the lowest net effective tax rates, nonetheless. The Malta Taxes Refund Mechanism enables shareholders to recoup some of the tax they paid in Malta following dividend distribution.

If the firm owner is not a resident of Malta and does not have a domicile there, they may be eligible to reclaim 6/7ths of the 35% relevant tax, which would reduce the effective tax rate to 5% only in cases where the profits are solely from trading activities. The net effective tax rate can be reduced to 5/7ths of the applicable corporate tax when the profits come from passive sources. The net effective corporate tax rate is lowered to 10% as a result. The businesses can also claim tax deductions to lower their net effective tax rate.

• The lower registration entrance barrier-

Any foreign business or individual is permitted to establish a 100% owned corporation in Malta. A corporation must also have a minimum of €245 in paid-up capital to register, and there is a negligible registration cost. Malta has emerged as an appealing location for business registration by foreign investors due to its low entry barriers for company registration.

• Arrangements to Prevent Double Taxation

Businesses are seen as choosing to establish their firms in countries that safeguard them from the peril of double taxation. Due to the approximately 70 double taxation avoidance agreements Malta has struck with other nations to safeguard enterprises from double taxes, foreign investors may find it attractive to establish their firms there.

• Geographical Benefit

Due to its close proximity to the major capitals of Europe and Northern Africa, Malta has a strategic edge over its European rivals due to its location in the Mediterranean Sea. Due to its handy location for business travellers throughout Europe and Northern Africa, Malta is a feasible option for bases of operation.

• zone without visas

Since Malta is a member of the Schengen area, there are no travel restrictions between Malta and other Schengen nations.

• Inclusion of All Cultures

Malta attracts tourists from all over the world due to its culture and beauty, despite the fact that English is a widely used language. Business opportunities have greatly increased as a result of the melting pot of languages and cultures.

• Duty on papers exempt-

Malta also grants exemptions from paying duty on documents related to share transfers and capital expansions. As a result, the process is efficient and daily operations for the businesses are cost-effective.

• Mediterranean conditions

Malta also boasts 365 days of sunshine and Mediterranean weather, which is milder than the harsh weather in the countries of Northern Europe.

Regulatory Authority/ Body for Company Registration in Malta

The Registrar of Companies is Malta’s main regulatory body for company registration. The firms are registered with the Office of the Commission of Revenue in Malta for tax purposes.

Eligible Business Structures under Company Registration in Malta

There are essentially 3 types of business formations in Malta. The business formats listed below are available to entrepreneurs in Malta:

• Individual Member Company:

In Malta, a single-member company can be created either by incorporation or by a single person purchasing all of the firm’s shares. The entity must meet all requirements for a private exempt company in order to be eligible to operate as a single member company. A private limited company that has the following provisions listed in its memorandum and articles of association is referred to as a private exempt corporation:

• There shouldn’t be more than 50 individuals owning debentures in a corporation;

Neither the company nor its directors may be parties to an agreement where the company’s policies are decided by individuals other than the directors, members, or debenture holders of the same company. No corporate person may own or have any interest in any shares or debentures of the company and serve as a director of the same company.

• Partnership-

A partnership in Malta is an exceptional entity with a different legal identity from its participants. A Maltese partnership is also capable of owning and holding real estate in its own name. It is also capable of suing or being sued in its own name.

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In a general partnership, two or more people join forces to engage in any business activity with the intention of making and dividing profits among themselves.

A partnership deed, which outlines the partners’ names and the goals of the partnership’s business endeavours, is used to establish a general partnership in Malta.

In this case, the partners’ culpability is unlimited, and they may be held jointly and severally accountable for the debts and liabilities of the partnership. In Malta, a general partnership continues until one of the partners passes away, retires, or becomes bankrupt.

A Malta-based office is required for any general partnership that registers under Maltese legislation. For taxation purposes, the partners report the profit they received from the partnership on their individual tax returns, which are assessed at the personal tax rate that is in effect at the time.

A limited partnership must have at least two partners in Malta, and at least one of them must be a general partner with unlimited responsibility. If there are multiple general partners, their liabilities are joint and several. A minimum of 1 limited partner who consents to provide the partnership with a particular amount of money is also required for limited partnerships.

Once more, a limited partnership has a different legal personality from its participants, and the partners’ responsibility is limited to the sums they have contributed to the partnership or have pledged to pay but have not yet paid.

The general partner is responsible for managing the limited partnership. On the other hand, unless a power of attorney has been obtained to carry out certain acts, the limited partner is not allowed to carry out any managerial duties or conduct business on behalf of the partnership.

Both of the aforementioned partnerships must submit their partnership deeds in order to register with the Malta Business Registry (MBR). The Partnership Certificate is then given out by the MBR. A PE number must be obtained from the Department of Inland Revenue, and the partnership must register for Value Added Tax (VAT) registration.

• imited Liability Organizations

A Limited Liability Company is the most well-known type of business organisation in Malta (LLC). a ,,,,,,,,,,,,

1. Limited Liability Public Corporations
2. Limited Liability Private Companies

These two types differ from one another in terms of capital structure and the capacity to raise money and issue securities.

Public Limited Liability Companies: In Malta, public limited liability companies have the opportunity to raise capital by selling shares and debentures to the general public as securities. These companies must register themselves and release a prospectus in order to raise money from the general public. The minimal amount of authorised share capital needed to form a public limited liability company is 46,587 euros and 47 cents (46,587.47). At least two people must subscribe to this amount.

Every Public LLC must also have at least 25% of its share capital paid up and nominate at least two directors at the time of incorporation.

A Public LLC may have an unlimited number of stockholders.

In Malta, however, a private limited liability company is not allowed to solicit the general public to subscribe for its shares and debentures. One thousand one hundred sixty-four euros and sixty-nine cents are the minimal amount of authorised share capital needed to form a Private LLC (1,164.69). At least two people must subscribe to this amount.

In Malta, a Private LLC’s shareholders are only liable for their investment in the business. A Private LLC may have no more than 50 shareholders. The number of company operations’ objects is unrestricted so long as they are legitimate and legal.

A Private LLC is required to designate at least 1 Director to oversee the company’s affairs and 1 Company Secretary to oversee the corporate and administrative aspects of the business. Moreover, a Private LLC must have at least 20% of its share capital paid up.

• International Company

A corporate entity that was incorporated outside of Malta is known as an overseas company. Within one month of opening a branch office or other place of business in Malta, an international business that wishes to establish and engage in economic activity in Malta must register with the Registrar of Companies in Malta.

Procedure for Company Registration in Malta

A potential applicant must adhere to the following steps in order to register a company in Malta:

• selecting the company’s optimal business structure
• selecting and reserving the company’s preferred NAME
• Calculation of the company’s authorised share capital, issued share capital, officers, registered address, and duration.
• putting together the necessary DOCUMENTATION for incorporation
• Getting a VAT Certificate of Registration Formalities for Registering the Business After Incorporation

• selecting the company’s optimal business structure

Choosing a suitable business structure for the firm is the first stage in the formation of a company in Malta. The following are some of the most popular business structures for corporations in Malta:

Limited Liability Company (LLC): The most popular type of business structure used by foreign investors to register their enterprises in Malta is a limited liability company. Investors may choose between two kinds of LLCs:

Private LLC: The maximum number of members in a private LLC is 50, and there must be at least 2 members at the time of registration. Some businesses are unable to offer their securities for sale to the general public. Some limitations have been waived for some businesses. They are known as Private Exempt Corporations.

Public LLCs are businesses that can sell their shares and debentures to the general public but do not meet the requirements to be private LLCs.

One Member Company: As the name suggests, these companies are owned by a single owner. A private LLC may convert to a single-member business either at the time of incorporation or when one individual purchases shares.

Overseas Company: Overseas firms are businesses that were founded elsewhere than Malta but have a branch there. Within one month of opening a branch or office in Malta, these businesses must register as branch offices with the Registrar of Companies.

Partnerships: To run small to medium firms in Malta, investors commonly select the Partnership structure. In Malta, there are two different kinds of partnerships:

The partners’ responsibility in general partnerships (En Non-Collectif) is joint and multiple. There is infinite personal liability.

Limited Partnerships (EnCommandite): Limited Partnerships have limited responsibility for their limited partners and at least one general partner with unlimited personal liability. The limited partner is not responsible for conducting the affairs of the partnership. There can only be one general partner.

• Selecting and reserving the company’s chosen NAME –

The next stage is to select the ideal and fitting name for the Maltese business. The name of the business should not be the same as or similar to the name of another business. It shouldn’t contain any language that the general public finds offensive. The name of the business shouldn’t be misleading in terms of the type of business it conducts. If a corporation wishes to use phrases like “Insurance,” “Blockchain,” or “Bank” in its name, it must show that these are the kind of companies it is involved in. The use of such a name can only then be authorised by law. Also, the firm name should be original and distinctive.

• Establishing the company’s officers, registered address, authorised share capital, issued share capital, and duration –

The next step is for the business owner to choose the authorised share capital for the company. The specified legal limits indicated above must be followed when determining the authorised share capital. In addition, at the time the Memorandum of Association is signed, a minimum of 20% of the issued share capital in the case of a Private LLC and a minimum of 25% of the issued share capital in the event of a Public LLC must be paid up. Also, a decision should be made regarding the required minimum of shareholders for incorporation.

Promoters are also required to obtain the lease of the property or the title documents for the location where you desire to open your business because a company must have an office in Malta. The first directors and shareholders of the company must also be chosen by the promoters. Both private and public LLCs must have a minimum of two directors. In the case of single-member companies, there may be a single director. The initial share capital of the corporation must also be paid by the first shareholders.

• The promoter must additionally prepare the relevant paperwork for registering the company when the aforementioned processes have been completed, which comprises the following:

Association Memorandum (MoA): The following information about the company must be included in the MoA:

type of business

The subscribers’ names

Name of the business

The company’s registered office address

firm goals and its primary business activity

Share capital subscribed, share classes, number of subscribers and their share capital, division of shares, and rights associated with each class of shares

Names and numbers of the first directors

Name and address of the chosen company secretary

the duration of the business

Identity of all corporate executives, directors, shareholders, and legal representatives

The promoter must additionally prepare the relevant paperwork for registering the company when the aforementioned processes have been completed, which comprises the following:

Articles of Incorporation (AoA): Every business is required to file an official legal document known as the AoA that establishes internal rules and specifies how the organization’s internal affairs will be managed. The model AoA listed in the First Schedule of the Companies Act shall be applicable by default if the promoters fail to file a self-drafted AoA.

Form BO1: The company’s promoters are required to submit a supplemental document called Form BO1 with the application if any of the company’s shareholders are corporate bodies. The names of the ultimate beneficial owners of the corporation are disclosed on this form.

A registration fee must be paid to the Malta Business Registry in order to register a business, and the amount depends on the company’s authorised share capital. It might range from €245 to €2250.

The Registrar’s office may insist on the attachment of additional supporting documents.

Getting a Certificate of Registration – A certificate of registration is issued by the Registrar if they are pleased with the accuracy of the application and the papers published with it. This indicates that the business has been established and given permission to operate.

The length of time needed to register a business is totally dependent on the nature of the business and the quality of the supporting documentation. The registration procedure usually takes between 5 and 10 days if all the necessary paperwork is submitted and approved by the Office of the Business Registrar.

The company’s registration for VAT –

A firm must register for Value Added Tax (VAT) payment after receiving its certificate of incorporation from the Registrar of Companies. If the company is established as a “trading entity” and not as a “holding entity,” the VAT rate is fixed at 18%.

Corporate Tax in Malta

All businesses with a Malta corporate tax filing requirement must report their global revenue. There would be the ensuing taxes:

• In Malta, the corporate tax rate is 35%. This would apply to all companies that have offices in Malta. Also, there is a provision for double taxation, which businesses can use to avoid paying taxes twice on the same good or service.

Documents for Company Registration in Malta

For the formation of a corporation in Malta, the following documents are needed:

• Memorandum of Association
• Form BO1 for Articles of Association
• Proof of fully paid-up capital (the name of the newly formed firm should appear on the bank’s advising sheet)
• Identification documents, such as copies of passports or identification cards, are required for all employees and officers, including shareholders, directors, and secretaries. Where foreign nationals are the directors and shareholders, a certificate of good standing is required from their respective business registration body.
• Form of Beneficial Owner
• satisfactory bank references for the shareholders who do not reside in the EEA.
• for the registration fee, a check
• All documents that must be provided in duplicate must be certified by a notary public or attorney.
• additional paperwork and forms requested by the registrar’s office

The following paperwork must be submitted in order to register an international business in Malta:

• authentic copy of the overseas company’s charter, statutes, memorandum, articles of incorporation, or any other document describing its governing structure. A translation is required if the document is not in English or Maltese law.
• a list of the company’s directors, secretaries, or other administrators, as well as any individuals having authority to speak on behalf of the business abroad. Names, typical residence addresses, nationalities, and business occupations are all included in the information about these people. If the person in question is a corporate body, its registered or corporate name or registered office address is also included.
• The following information must be included in the returns from the foreign company:
• the company name under which a branch office will be established, if that name differs from that of the parent company.
• the location of the Malta branch office. The location of the company’s main branch when many offices have been open
• The kind of business activity that the Malta branch office will conduct.
• The name and address evidence of the resident individual who has been permitted to represent the branch in Malta.
• the scope of each person’s power to act independently or in concert with other business officers. The name of the extra person if there are more than two people.
• a report including details on the overseas company’s legal structure and the name of the register in which it is registered.

Frequently Asked Questions

How long does it take to register a corporation in Malta?

The registration procedure usually takes between 5 and 10 days if all the necessary paperwork is submitted and approved by the Office of the Business Registrar.

What is the price to register a business in Malta?

The share capital required for a company to be registered in Malta can range from €245 to €2250.

Which organisation registers businesses in Malta?

The Registrar of Companies in Malta is responsible for registering and incorporating companies in Malta.

Malta Business Registry is in charge of registering partnerships and legal entities, documenting commercial partnerships, registering certificates of good standing, reserving company names, collecting registration fees, publishing notices, and imposing penalties. Additionally, it is in charge of carrying out the inquiry and maintaining the partnership’s and company’s registration.

What is the Malta applicable VAT rate?

Malta has set the VAT rate at 18%, which is applicable to businesses registered as trading entities rather than holding entities.

How many shareholders and directors are needed to register a business in Malta?

At the moment of incorporation, a Maltese Private Limited Liability Company needs a minimum of 2 shareholders, 1 director, and 1 company secretary.

Do foreign businesses who want to launch a company have to hire Maltese citizens?

Indeed, foreign companies are required to designate at least one Maltese resident as their representative for all actions taken in Malta.

How much does Malta’s tax rate cost?

The gains produced from trading activities in Malta are subject to a 35% corporate tax rate for Maltese businesses. The net effective tax rate falls to 5% if the profits are from trading activities, although businesses with owners who are not residents of Malta can request a return of 6/7ths of the 35% relevant tax rate. The net effective tax rate is 10% where income is received from a passive source.

What are the advantages of registering a business in Malta?

A lower corporation tax rate, a lower barrier to entry for registration, double taxation avoidance treaties, geographic advantage, exemption from document duty, a visa-free zone, a Mediterranean environment, and cultural variety are just a few advantages of registering a company in Malta.