The financial crisis within the European Union has caused investors to view the European financial markets with certain apprehension. While many established EU countries are seeking “bail-out” packages or attempting to avoid them, the Maltese economy remains strong, with the prospect of future sustainable, long-term economic growth.
Influential factors affecting Malta’s success are detailed below.
Banking and Financial Stability
The World Economic Forum Global Competitiveness Report recently rated Malta as 10th out of 139 countries in relation to banking, reflecting the soundness of the banking sector in Malta. The report concluded that Malta offers the most stable banking system in the European Union. In addition, within the financial service sector, Malta was placed 11th recognising the development of the financial sector, in particular in terms of its regulation and efficiency.
The 2010 Annual Malta Financial Services Authority report on financial service activity in Malta further demonstrates financial buoyancy with a record 3061 companies being established in Malta during 2010. Positive projections for 2011 are consistent with the numbers reached in 2010.
These achievements were further enhanced with one of Malta’s largest banks, Bank of Valletta, performing exceptionally in the 2011 EU “stress testing,” a test monitored by the European Banking Authority.
Malta's Gross Domestic Product increased by 2.8% in real terms in the second quarter of 2011. The growth which is significantly higher than across the EU as a whole, was registered across most economic sectors.
Malta is also not suffering to such an extent, from exposure to the turbulent debt problems, being experienced by many other EU member states.
Malta is a parliamentary republic with a proud democratic history. Maltese politics has long been dominated by two political parties, the Nationalist and the Labour Party. Both are democratic in stance and have significant bases of support.
Recent credit ratings by both Fitch and Moody's identified the political stability of the Maltese economy as a positive factor. In addition, the World Bank Index of Country Governance Indicators for Political Stability has classified Malta in the top 15% of all countries surveyed.
Financial Regulation is overseen by the Malta Financial Services Authority. They adopt a firm but flexible approach which has enabled Malta to enhance its reputation as a compliant, white listed EU financial service centre of excellence.
Since accession to the European Union, much of the development of the Maltese economy has been attributed to its multilingual and skilled workforce with a flexible approach, able to adapt to the ever changing rules across the financial world. Malta has lower employment costs than many of its European neighbours, establishing itself as a cost effective and attractive location for back office operations.
Malta is also strategically situated in the centre of the Mediterranean, in close proximity to continental Europe and North Africa. This is beneficial for conducting international trade given the excellent transport links.
Incentives Available to Professional Staff to move to Malta
Malta introduced a "Highly Qualified Persons" programme in March 2011, aimed at attracting financial service professionals to Malta. Qualifying individuals are taxed on their income at a highly attractive flat rate of 15%. Any income earned over €5 million is exempt from taxation.
In addition to the "Highly Qualified Persons" programme, on 15th September 2011 Malta launched a "High Net Worth Individuals Scheme" to attract wealthy individuals to Malta by offering residence at a highly competitive 15% flat tax rate on foreign income remitted to Malta. The scheme has established different sets of rules for EU and Non-EU nationals.
To qualify for the scheme an EU national must purchase a property for at least €400,000 or pay €20,000 in annual rent. The individual must also spend a minimum of 90 days a year in Malta. The minimum amount of annual tax payable is €20,000 with an additional €2,500 per dependant.
In addition to the property/rental and minimum length of stay requirements, Non-EU nationals must renew their residence visa every three months or, alternatively, enter into a contract with the Government with a financial bond of €500,000, plus an additional €150,000 per dependant. The 15% flat tax rate, on foreign income remitted to Malta is applicable, with the minimum annual tax payable by the individual of €25,000 and €5,000 per dependant.
In addition to Malta’s geographical importance and cost effective labour force in comparison to many of its European neighbours, Malta also offers investors significant tax advantages, with corporate tax rates typically between 0 and 10%.
These tax advantages are further enhanced by practical, competitive company legislation within the EU framework generating benefits for international trading companies, holding companies and royalty structures as well as shipping and e-gaming companies. This has helped to secure Malta’s position as a leading European financial service centre.
How can Dixcart help?
Malta offers an attractive proposition as a location for corporations. Malta’s financial strength and efficient regulation, together with an attractive tax regime and political stability have helped to further enhance this jurisdiction.
The Dixcart office in Malta can assist with:
- Company secretarial services
- Formation and management of Malta companies and trusts
- Intellectual Property
- Preparation of corporate tax and VAT returns
- Yachting and shipping
If you have any questions or require any additional information regarding the opportunities available through the jurisdiction of Malta, please speak to your usual Dixcart contact or to Sean Dowden at the Dixcart office in Malta: firstname.lastname@example.org.