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Open A Company In Malta
The most common form of business entity in Malta, be it for trading, holding or other purposes, is the limited liability company. A Maltese limited liability company may have the status of a private or public limited liability company.
How to open a company in Malta
Once a decision has been made to open a company in Malta, the company must be registered with the Maltese Registry of Companies (ROC). The Maltese ROC falls under the remit of the Malta Financial Services Authority (MFSA). The ROC is an open public registry and its responsibilities include registering new commercial partnerships (including companies), registering all documents related to commercial partnerships and maintaining the company and partnership register. Information regarding a Maltese company’s registered shareholders, directors, company secretary, registered address, etc is available from the Maltese ROC.
All companies registered in Malta must have a registered office address in Malta. There are no nationality or residency restrictions applicable to individuals holding the office of director or company secretary in a Maltese company.
Maltese private limited liability company (Limited or Ltd)
A Maltese private limited liability company must, by its memorandum or articles of association, restrict the right to transfer its shares, limit the number of members (shareholders) to 50 and prohibit any invitation to the public to subscribe for any shares or debentures of the company.
The minimum number of shareholders in a Maltese private company is 2. However, a single member company may be registered if it is set up as a private company with exempt status (marginally lighter regulations) and its main activity is indicated in the memorandum of association. A private company with exempt status may not have a corporate director.
The minimum share capital of a Maltese private company is €1,165 (or its equivalent in another currency) and it must be at least 20% paid up.
A Maltese private company may have corporate directors (ie a company may serve as the director of a Maltese private company), unless it is set up with exempt status.
The minimum number of directors in a Maltese private company is 1 and it must have at least 1 company secretary (who must be an individual). The company secretary cannot also be the sole director, unless the company is set up with exempt status.
Maltese public limited liability company (p.l.c.)
A Maltese public limited company (p.l.c.) is a limited liability company whose shares can be offered to the general public and subsequently freely transferred/traded without the restrictions applicable to a private limited liability company (ltd). A Malta public limited company can have its shares dematerialised and listed on the Malta Stock Exchange or any other Stock Exchange outside Malta. A Malta public limited company can also have its shares dematerialised without being listed on a Stock Exchange, thereby easing the trading process of the shares in the company (eg by settling trades via Clearstream).
The minimum number of shareholders in a Maltese public company is 2.
The minimum share capital of a Maltese public company is €46,588 (or its equivalent in another currency) and it must be at least 25% paid up.
A Maltese public company may have corporate directors, however if the company is to be listed on a stock exchange, most such exchanges do not allow for corporate directors.
The minimum number of directors in a Maltese public company is 2 and it must have at least 1 company secretary (who must be an individual). Directors in a Maltese public company must express their consent to act as directors in writing before their appointment can be registered.
Procedure to open a company in Malta
The procedure to open a company in Malta includes registering a memorandum of association subscribed and signed by its members (shareholders) with the Maltese ROC and the issuing of a certificate of registration by the Maltese ROC.
The memorandum of association of the company must state the following:
- The name of the company
- The registered office address of the company
- The objects of the company
- Whether the company is a private or public company
- The amount of authorised share capital of the company, the division thereof into shares of a fixed nominal amount, the number of shares issued to the subscribers and the amount paid up of each share and the rights attached to different classes of shares (if applicable)
- The name, residence and identity of each subscriber and the number of shares subscribed for
- The number of directors and the name, residence and identity of the first directors of the company and the manner in which the representation of the company is to be exercised
- The name, residence and identity of the first company secretary of the company
- The period, if any, fixed for the duration of the company
In the case of a public company, a document showing the total amount (or estimate) of formation costs and a description of any special advantage granted to persons taking part in the formation of the company must also be filed with the ROC.
Articles of association may also be registered. These normally regulate the relationship between the company and its members and between the members themselves. The articles typically deal with matters such as transfers of shares (and any restrictions applicable), procedures of general meetings and board meetings, resolutions, notices and dividends. If you open a company in Malta and do not register any articles of association, the model contained in the Maltese Companies Act becomes the articles of association of the company.
Upon the registration as per above, the ROC will issue a certificate of registration showing that the company is registered and is authorised to commence its business from the date of registration indicated on the said certificate.
Authorisation to do business in Malta
Some areas of business require authorisation or licensing to be able to carry out activities in or from Malta, eg investment services, financial institutions, insurance, igaming, trust and fiduciary services, company services, banking, etc. The authorisation and/or licensing process is separate from the process of registering the company with the ROC.
After the procedure to open a company in Malta is finalised, the company must register for VAT purposes in Malta, if it is going to carry out an economic activity (including any trade or business, profession, vocations, personal services and exploitation of immovable and intellectual property in Malta.
The general rate of VAT in Malta is 18 percent.
Passive holding companies that only owns shares in subsidiaries and receive dividend income from such subsidiaries are not deemed to carry on an economic activity in Malta and cannot therefore be registered for VAT purposes in Malta.
Income tax registration
When you open a company in Malta, the company will be registered with the Maltese Inland Revenue Department as a taxpayer in Malta and will be issued with a tax registration number.
All Maltese companies must submit an annual income tax return with the Inland Revenue Department. The return must be accompanied by audited financial statements.
The general rate of tax for companies in Malta is 35 percent. However, a system of tax refunds and participation exemptions may result in shareholders of a Malta company getting back 6/7 (active income such as trading and consultancy income) or 5/7 (passive interest and royalties) of the tax paid by the company when distributing profits, reducing the effective tax rate down to 5 or 10 percent.
Holding companies with a participating holding may avail themselves of a participating exemption, meaning that income from such holdings may be exempt from tax altogether.
Malta does not charge any withholding taxes on payments made by a Maltese company to its shareholders.
Although there are certain audit exemption thresholds based on the size of the balance sheet, turnover and number of employees in the Maltese Companies Act, all Maltese companies need to file a set of audited financial statements with its income tax return. In practice therefore, all Maltese companies need to have its financial statements audited every year.
The standard used in Malta is IFRS. Smaller entities can use GAPSME if they qualify for it.
Registration as an employer in Malta
If you open a company in Malta and intend to employ persons in the company, you need to register the company as an employer in Malta.
Salaries paid to employees by a company in Malta need to be paid over the company’s payroll using the Final Settlement System whereby income tax and social security contributions are deducted from an employee’s salary and paid to the authorities on a monthly basis, accompanied by the relevant monthly report. An annual reconciliation exercise must also be carried out and an annual filing requirement in this regard is in place.
A company in Malta who employs persons in Malta is liable to pay social security contributions (employer’s share) calculated at 10 percent of the salary of the employee. The contribution is capped at a maximum payment of €43.85 per week (2017) per employee.
Papilio Services Limited is registered to act as a Company Services Provider by the Malta Financial Services Authority and can assist with company formation and any ongoing administration services. Visit www.papilioservices.com or send an email to: email@example.com to learn more.