SA2 - The Advantages of Re-Domiciling a Company to Malta

Since its entry into the European Union (EU) in 2004, Malta has gained a reputation as a leading financial centre within the EU Zone. Malta’s geographic proximity to continental Europe and to North Africa, its expanding transport network, multi-lingual workforce and comparatively low overhead costs have helped to develop a favourable location within the EU to conduct international trade.

Why Consider Re-domiciling a Company to Malta?

• Foreign companies can re-domicile to Malta, enabling them to continue their activity in Malta without having to close branches elsewhere and without having to incorporate a new company in Malta. The company can maintain the same corporate personality.
• No taxes are levied by the Maltese authorities on the movement of corporate domicile to Malta.
• Malta has an extensive network of double taxation treaties. Many countries levy punitive withholding taxes, property taxes and other deemed charges on income paid to non treaty jurisdictions and/or blacklisted jurisdictions. This is not the case with the jurisdiction of Malta.
• Malta is on the OECD white list of countries.
  Please note that re-domiciliation can only be achieved if the laws of the foreign country allow for it, and providing that the company is authorised to do so by its constitutional documents.

Tax Benefits Available to Maltese Companies

There are a number of fiscal advantages in using a Maltese company for international trade and investment, these include:

• An impressive network of double taxation agreements exist, which provide relief from withholding tax on income received from other jurisdictions. Where double taxation treaties do not apply, Malta applies unilateral relief from foreign tax suffered on income received by Maltese companies. In certain instances, flat rate foreign tax relief also applies. Malta also benefits from the EU Parent Subsidiary Directive and from the Interest and Royalties Directive.
  
• No withholding tax on income paid to the shareholders of a Maltese company.
  
• The Participating Holding Regime exempts dividends and capital gains received from a participating holding in a non-resident company from income tax in Malta.
  
• Although the rate of corporate taxation in Malta is 35%, the imputation system of taxation allows shareholders to enjoy low effective rates of Malta taxation. This is achieved through the refunds received on distribution of profits. The effective rate of Maltese taxation for a non resident shareholder is 0% on participating holding income, 5% on Maltese trading income and 10% on passive interest and royalties.

Documentation

The following documents need to be filed with the Registrar of Companies in Malta for a foreign company to be registered under the laws of Malta:

• A resolution of the foreign company authorising it to be registered as “being continued” in Malta
• A copy of the revised constitutional document of the company
• A certificate of good standing of the company to be issued by the authorities of the foreign country
• A declaration by two directors confirming the solvency of the foreign company
• A list of the directors and the company secretary of the foreign company
• A declaration by two directors confirming
  • The name of the foreign company and the jurisdiction where it is incorporated
  • The date of incorporation
  • The decision to have the foreign company registered as continuing in Malta
  • That the foreign company has given formal notice to the authorities of the foreign country of its intention to shift domicile to Malta
  • That no proceedings have been commenced against the foreign company

Additional Information

If you would like further information regarding the Maltese corporate tax regime and the re-domiciliation of companies to Malta, please speak to Sean Dowden at the Dixcart office in Malta or contact us.