At a time when regulatory changes on EU and OECD levels are reshaping the international business landscape, Malta offers global corporations a package that includes fully EU-compliant legislation, low cost structures and highly developed professional services, all within a respected, well-regulated finance centre. The island has already caught the attention of ‘blue chip’ corporations and corporate planners who use Malta for international transactions and investments into Europe and emerging markets around the world. With a growing supply of quality office space available for companies that wish to establish substance and physical presence, Malta presents itself as a location where this can easily be achieved.
Malta has served as a corporate structuring base for several decades, since offshore companies were first introduced in the 1980s. Subsequently, with the country’s decision to move onshore a few years later, these companies were converted into structures compatible with EU law. With Malta’s accession to the EU in 2004, the country’s tax regime – which had been in place since 1948 – was approved by the European Commission. Malta operates a full imputation tax system under which companies are taxed at a rate of 35%. However, shareholders are entitled to refunds for the tax paid by the company. This system meets international tax standards, and Malta is included in the so-called ‘white list’ set out by the OECD. With a regulatory framework that has been assessed numerous times, Malta has developed a reputation as a quality jurisdiction that offers strong regulation, high levels of transparency and good governance.
Incorporating a company in Malta only takes a few days. Every company must be registered with the Registrar of Companies at the Malta Financial Services Authority (MFSA), which now lists over 79,000 companies. The most commonly used vehicle for international business is the Limited Liability Company, but businesses can also choose to set up General Partnerships, Co-operatives and Limited Partnerships. Malta has also introduced special legislation, mostly used in the funds and insurance sectors, for the formation of Protected Cell Companies (PCC), Incorporated Cell Companies (ICC) and Securitisation Cell Companies (SCC).
A Malta company is the ideal vehicle for a wide range of business activities, as holding or trading companies, ranging from property ownership to the management of eCommerce activities and licensed financial services provision. Malta companies are also being used for shipping and maritime activities, as well as for aircraft transactions. A Malta holding company can hold shares in other companies, as well as equities, bonds, loan portfolios, real estate and other asset classes. In addition, Malta-registered companies can be used for listing on foreign stock exchanges.
With a regulatory framework that has been assessed numerous times, Malta has developed a reputation as a quality jurisdiction that offers strong regulation, high levels of transparency and good governance.
Incorporation & Relocation
The island has seen a steady increase in incorporation of companies and the structuring of deals through Malta in recent years, with 5,230 companies and 104 partnerships registered in 2017. In addition to new incorporations, Malta is also seeing more redomiciliations of companies from other European jurisdictions, such as the Netherlands, Cyprus and Portugal, as well as the relocation of management and effective control of companies to Malta. New regulation such as the OECD Common Reporting Standard has resulted in a greater emphasis being placed on substance, and Malta is seeing companies and their intermediaries establishing a stronger physical presence. Professionals and advisors highlight that tax is not the only reason why companies should look at Malta. There are a number of reasons, including the country’s labour force, economic and political stability, the way of life, the professional attitude of the service providers, and English as an official language.
Mergers & Acquisitions
Malta is also being used as a platform for M&A transactions, with foreign companies establishing a Malta company as a European base, which then either acquires another European company or group, or carries out a cross-border merger. Malta is perceived as a flexible and efficient jurisdiction for this kind of work due to its attractive corporate law and regulatory environment, as well as the advantageous fiscal treatment of locally registered companies used as vehicles for cross-border acquisitions. Equally important, the minimal tax leakages mean bidders using a Maltese company to launch an offer for a foreign firm are able to put in a more attractive bid in an auction process. Malta’s network of some 70 double taxation treaties further strengthens the country’s position as a key corporate location. Thus far, the majority of transactions coming through Malta are European, but there is increased interest from outside the EU, including America and Asia.
Malta’s position as a top international business hub is solidly underpinned by a regulatory framework aimed at attracting reputable players, and fuelled by the relentless commitment of the MFSA, and practitioners alike, to retain a quality service and high standards of business regulation. The Maltese legal structure is a hybrid system of Civil and English law. While it is based on the civil law pattern of continental Europe, most administrative and fiscal legislation is constructed on the English model. This unique legal and regulatory framework also gives it an advantage in M&A activity, as practitioners have a cultural affinity to both systems and can easily bridge the gap between continental European and UK legal frameworks. Maltese legislation also allows foreign companies to change their domicile to Malta, without the need of winding up their operations in the foreign country and incorporating a new company in Malta. This ensures substantial cost savings for the company and makes it attractive for already established companies to move their seat to Malta, while Maltese law allows for companies to re-domicile out of Malta in an equally straightforward process. As part of the 4th Anti-Money Laundering Directive, Malta has established a register of beneficial owners, and all corporate entities are required to submit up-to-date and full information to the MFSA.
Experienced Service Providers
Malta’s service providers are able to provide clients with the full range of services, having acquired the experience and in-depth knowledge of company formations, mergers and acquisitions that comes with frequent exposure to international transactions. Their reputation is excellent, and most of the country’s legal firms are part of international networks, such as Lex Mundi and Lexis Nexis, and are regularly ranked on Chambers, Martindale-Hubbell and Legal 500. The ‘Big Four’ accounting firms have a presence in Malta, while the large number of small and medium-sized firms have made significant strides in establishing the country as a serious financial services centre. Most firms also offer company secretarial, management and directorship services and are authorised by the MFSA to offer trustee and fiduciary services.
Malta stands out as a cost-effective EU jurisdiction with a well-educated workforce that is able to deliver innovative solutions to complex transactions.
The Malta Solution
While taxation and corporate structuring of multinationals and high-net-worth individuals have become matters of public interest, Malta emphasises that it is not a tax haven and is keen to keep up its reputation as a transparent jurisdiction. The country keeps its regulatory framework in sync with the changing demands of the industry and in line with the requirements laid out at EU level. This ensures that Malta retains maximum relevance, effectiveness and attractiveness to the international financial community. As the international trend shifts away from brass-plate practises towards substantial, bricks-and-mortar presences, Malta stands out as a cost-effective EU jurisdiction with a well- educated workforce that is able to deliver innovative solutions to complex transactions.