This process in Malta is quite straightforward and as set out by The Malta Companies Act 1995 which is modelled on its UK counterpart.
Griffiths + Associates’ experts may assist you with the company registration procedure, and you will be satisfied with the outcome within meeting the legal requirements set out in Malta.
Malta Company Registration Process:
1. Fill in a company application form and due diligence documents on the directors and shareholders.
2. After evaluation of documentation by our experts, we will make a formal proposal entailing all the details, price, terms, and payment.
3. We begin working immediately when we receive the client’s confirmation and prepayment, following client acceptance post due diligence. The memorandum and articles of the established company will be drafted for signature.
The usual deadlines:
– for a private limited liability (“ltd.” or “Limited”) – about a week,
– for a public limited liability company (“p.l.c.”) – after MFSA’s approval – around one week.
Malta Company Incorporation Overview:
1. Select a trade name and choose a business form, each option comes with its own pros and cons, it depends on your business model and the level of risk you’re willing to take.
|Limited Liability Company||Self-Employed|
|Pros||Having a LLC has a more formal and official status which looks more impressive to potential clients. It also protects the owner by separating the business from the individual person. This implies that if anything had to go wrong with a company stakeholder (customer, supplier, employee), such stakeholder would have to resolve the issue with the company and not its shareholders, personally. Another pro, company liabilities is limited to the amount of authorised share capital. That means, if the company had to be sued and its assets do not suffice, the liability imposed on the company shareholders is capped / limited to the amount of authorised share capital. The company is also subject to an annual audit that is considered to be pros when it comes to securing big clients/suppliers, dealing with banks, and tendering for work.||The self-employed route needs fewer steps and less paperwork, only a few obligations: preparation of an annual P&L statement, filing of an annual personal Tax Return, payment of NI contributions in 3 installments (April, August, December)
|Cons||Some additional bureaucracy such as at least two named shareholders who appear on the registration or the formal closure of a LLC entails the formal process of a liquidation, which also would trigger additional costs. Statutory reporting obligations – annual audited Financial Statement, annual corporate Tax Return, annual Return – must be submitted regardless of whether the company is in operation or not. In the case of a trading company, there also is the obligation of registering for VAT purposes and submitting quarterly VAT returns.||A self-employed individual operates under his/her personal name that means the owner is at personal risk from law suits and debts without the protection of limited liability. Any issues with business stakeholders are to be resolved with the self-employed individual on a personal level.|
Here are another few considerations worth weighing on:
— Cost of setup procedures
The setup process of a self-employment is less bureaucratic and thus less costly. The incorporation of a company requires one to draft the companies Memorandum and Articles of Association. Furthermore, such a process would also require the submission of additional applications and disclosures and the registration of the company for tax purposes. In terms of timelines, both set-ups can be managed within one week.
— Corporate and Personal Taxes
Overall income would be your deciding factor here. Companies are subject to a flat income tax rate of 35% on profits. On the other hand, self-employed individuals are subject to progressive tax rates starting at 0% and gradually increasing to 15% then to 25% and finally to 35%.
— Malta Tax Refund System
Malta’s tax refund system for international investors can only be availed of by corporate structures and thus not by self-employed individuals.
— Grants / Tax Credits
any government incentives schemes like grants and tax credits are usually equally available to all registered businesses regardless of whether they operate as a company or self-employed business.
2. Prepare registration documentation (the Memorandum and Articles of Association) and register them with the Registry of Companies. For self-employed status this step is not necessary.
3. Open up a bank account and deposit the minimum share capital. The amount of money invested as capital should make up part of the Memorandum and Articles of Association. The minimum share capital must be more than €1,200, but only 20% of the agreed sum needs to be deposited at a bank at the beginning.
4. Register with MFSA. This step is only needed for a LLC and involves sending documents to the MFSA: a company registration form needs to be completed and sent in to the authority along with the share capital receipt from the bank, the Memorandum and the Articles of Association. There is a registration fee to pay, usually this takes a couple of days.
5. Obtain necessary licence for your business.
6. Tax registration: get a tax identification number, register with the VAT department. You just need to complete an online form. Once you have the TIN you will need to submit yearly tax returns whether you are a LLC or self-employed. VAT registration process is free and quick.
7. Register with the JobsPlus, when applicable, and obtain a PE number from Inland Revenue Department. All businesses must register with Jobs Plus when a new business is started; a new form must be completed for every employee taken on and upon termination of an employee, further forms must be filled and filed. Getting a PE number is another free and quick process, you just need to complete the form online that can be found at the Inland Revenue Department’s website and in three days you will gain the PE number. A PE Number is only required for Limited Liability companies as you will be one of the employees by default.
8. Register for with the Data Protection Commissioner, when applicable. If your business is going to collect personal and sensitive data from clients, you must register a company for data protection and comply with the GDPR requirements when collecting data.
Core Benefits Of Malta Company Formation:
✓ Generally Maltese law does not impose any restrictions, but you need to know that certain activities of the majority of company-selected industries in Malta are regulated by MFSA or LGA.
✓ Minimum number of shareholders: a Malta LLC only requires one shareholder and one director, whom can be of any nationality and do not need to reside in the country;
✓ Minimum annual government fee €100 (if the authorised share capital of the Company does not exceed €1,500)
✓ Minimum authorized/issued share capital is:
- 46,600 Euros for public LLC limited companies of which only 25% needs to be paid up
- 69 Euros for private LLC limited company (it could be rounded up to €1200 – 1200 shares of €1 each) of which 20% (€ 233) must be paid up
✓ If properly-structured, registering a company in Malta is an ideal, tax-efficient way to conduct international business, because:
Malta has a full-imputation system of corporate taxation and therefore any income tax that is paid by a Maltese company is fully imputed or credited to the shareholder who receives dividends of the company, enabling the same to benefit from the full relief of economic double taxation of corporate profits.
Although the standard rate of taxation in Malta currently stands at 35% of the chargeable income of the company, a shareholder of such company would be entitled to a refund of any tax paid by the company of 5/7, 6/7 or 7/7 depending on the source of income of the company, which typically results in an effective net tax rate of approximately 10%, 5% or 0% respectively.
Such refund may be reduced if double taxation relief is claimed on the income;
✓ Capital gains tax which is derived by non-residents on transfers of shares and increases of share capital are not subject to tax in Malta if the assets of the company do not include immovable property situated in Malta;
✓ Exemption from Duty on Documents. Malta companies carrying out international activities are exempt from duty on documents, which effectively means that transfer of shares and increases of share capital of the company are exempt from duty;
✓ Licenses in Malta are valid for the entire EU; but in Malta, costs for obtaining and administrating the authorization are much lower whether online-gaming, shipping, airline or investment-funds;
© By Olga Saliba – Grififths + Associates
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