Setting Up A Company In Malta: Step By Step Guide - Shareholders - Malta (2024)

The Republic of Malta offers a wealth of benefits to those whodecide to open a company locally: from tax exemptions to low costsfor company formation and maintenance, one can see why foreigninvestors favour setting up their business on the island. But whyopen shop in Malta? Here are some of the top reasons to open acompany in Malta.

Benefits of Setting Up a Business in Malta

Setting up a company in Malta can enable you to benefit from avariety of advantages that the country offers. The following are alist of such perks:

• TaxationBenefits: Malta is renowned as one ofthe EU states with the lowest net effective tax rates. It offers avast array of investment opportunities to both EU and Non-EUinvestors.
  The "Malta Taxation Refund System" is arguably the mostpopular and sees shareholders able to claim back a portion of taxpaid in Malta after a distribution of dividends is made. A companyin Malta pays 35% tax on trading profits; however, if the owner ofthe company set up in Malta is not resident and domiciled in Malta,they can generally recover 6/7ths of the aforementioned tax,resulting in a Net Effective Tax Rate of 5% in Malta if the profitsderived are of a trading nature or a 5/7 refund if the profits areof a passive nature, thus resulting in a Net Effective Tax Rate of10% in Malta.
  Further tax reductions are also offered, which our team will behappy to discuss in detail. Some of these are No Exit Taxes, WealthTaxes, Payroll-based Tax or Trade Tax, there is alsothe possibility of setting up a Fiscal Unit in Malta, whereby theMalta group of companies can be consolidated and as a result thenet effective tax rate of 5% can be paid immediately as opposed tothe refund system mentioned above, subject to certain conditionsbeing met.
• Low Incorporation and Maintenance Costs: Theminimum share capital to open a company in Malta is €1.165,20% of which should be paid up, with a total of €245 to bedeposited. Registry fees are also low, making Malta a veryattractive jurisdiction within which to do business.
• Exemption from Duty on Documents: for thosecarrying out international activities, an exemption from duty ondocuments is in place which covers transfer of shares and increasesof share capital.
• Double Taxation Treaties: Malta has signedover 70 Double Taxation Treaties, meaning you are safeguarded frombeing taxed twice on the same income.
• A strategic position: TheRepublic of Malta is located in the middle of the MediterraneanSea, a short couple of hours flight from major capitals of bothEurope and Northern Africa.
• Multicultural and multilingual: the country isextremely diverse, ushering foreigners from all over the world toexperience its culture and beauty. This creates a Babylonia oflanguages and cultures, with English as the common denominatorbetween them all.
• 360 sunny days: the weather is one of the bestin Europe, with the majority of days being blessed by sun and onlya few rain showers to cool down the hot temperature.
• Visa-Free Zone: as a member state of the Schengen Area, there are no travelrestrictions between Malta and the remaining countries that befallthe Zone.

Malta has this and much more to offer to those investors whodecide to open a company in Malta - a comprehensive rundown ofwhich our advisors will be able to give you should you decide toavail yourself of our holistic services.

Step-by-step guide on how to open a company in Malta

If you are intrigued by the benefits the country has to offerand would like a brief overview of the process of opening a companyin Malta, look no further. Though one can easily get lost in theintricacies of how to start a company in Malta, it is a fairly easyprocedure. Here is a step-by-step guide on what you can expect itto look like:

Step 1: Choose your company type

There are four different types of company you can choose fromwhen setting up shop in Malta:

1. Limited Liability Company, the most commontype which, in turn, can be:
   
   1. Private if it limits the number of members tofifty, and it prohibits any invitation to the public to subscribefor any of its shares or debentures. Some private companies mayqualify for certain advantages if they meet specific criteria thatenables them to list themselves as Private Exempt Companies.
   2. Public if it does not qualify as a privatecompany and publicly offers shares or debentures.
2. General Partnership are best suited formedium-to-small sized businesses and can be:
   
   1. En Nom Collectif, which refers to apartnership between two or more partners, one of which must beeither an individual or a corporate body.
   2. En Commandite, also known as LimitedPartnership, where members hold limited liability over thecompany.
3. Single Proprietorship or Single MemberCompany, an enterprise held in ownership by one person. This canhappen either at the time of incorporation or through theacquisition of all shares by one person only.
4. Overseas Companies, having a corporate bodyoutside of Malta with a branch located in Malta

Step 2: Choose your company name

Of great importance is not only the type of company you arewilling to set up but also its name. The name of a firm must not bea copy of a pre-existing enterprise, and must not contain specificwords which may be deemed offensive. On top of this, a company namemust not misrepresent the nature of the enterprise. In certaincases, you must be able to show evidence showing that you areallowed to use certain words as part of the company name such as"Insurance", "Blockchain", "Bank".

In short, it must be an original name that properlyrepresents the firm's endeavour.

Step 3: Prepare the necessary documentation

Once it has been established what type of company you wish toopen, a few documents must be prepared to be submitted to theRegistrar of Companies Association of Malta.
First and foremost, the Memorandum and Articles of Associationsmust be prepared. The Memorandum is a document that containsimportant and relevant information such as:

• The type of company;
• Complete identification of its subscribers be it persons orcorporate body;
• The company name;
• The company's registered office in Malta;
• The objects of the company and the main trading activity (thelatter if it's a Single Member Company);
• The amount of share capital, its division into shares, thenumber of which taken by each subscriber, and the rights attachedto each class of share;
• The number of directors and their identifications;
• The name and residence of the first company secretary;
• If fixed, the period of duration of the company;
• Identification of each shareholder, director, legal andjudicial representatives and company secretary.

The Articles of Association, on the other hand,are documents that outline the internal regulations of the company.If not registered, it is implied that the company adopts the modelarticles found in the First Schedule to the Companies Act.

Furthermore, if you are registering a new company and any of itsshareholders is a corporate entity, a supplementary document knownas Form BO1 must be annexed. This will containinformation on the identification of the company's ultimatebeneficial owners.

Evidence of paid-up share capital should alsobe produced, and can be submitted in the form of bank depositadvice.

Additional supporting documents may berequested at the Registrar's discretion.

A registration fee will also have to be paid– the amount depends on the company's authorised sharecapital.

CSB Group will be there every step of the way to guide youthrough the process of submitting these documents, aiding you insourcing them and applying to the Registrar for a Certificate ofRegistration.

Step 4: Gain a Certificate of Registration

In case all the necessary documentation is provided and acceptedby the Registrar, a Certificate of Registrationwill be issued. This certificate proves that the company has comeinto existence and is authorised to conduct business starting fromthe date of issuing of said certificate.

The time required for incorporation of a company in Maltadepends on the type of company being registered, if alldocumentation is satisfactory, and if any supplementary informationmust be provided to the Registrar. If all is in order, thisnormally lasts between 5-10 days.

Step 5: Register for VAT in Malta

When you create a company in Malta and it is officiallyrecognised by the Registrar with a Certificate of Registration, itmust then be registered to pay VAT which is set at 18% in Malta,especially if the company would be incorporated as a'trading' and not a 'holding' entity. There aredifferent routes to be taken in order to do sodepending on whether the applicant is a SoleProprietor, a Company Legal Representative in possession of a validMaltese ID Card, or a foreigner who does not have a Maltese IDCard.

The process may take as little as a day and it is easilyachieved by submitting, as a rule of thumb, the followingdocuments:

• An Application Form submitted through a Registered Practitioneralongside an Authorisation Letter.
• A Practitioner's or Company's Legal Director'sidentification document.
• Self-registration vested as a Company's legal Directorthrough eID.
• Self-registration using a valid Identity/Residence card (if inpossession of one) and Document Numbers.

If in any doubt, contact CSB Group's experts who will behappy to guide you through the application for VAT process.

Step 6: I have officially opened a company in Malta, whatnow?

Starting a business in Malta also means, upon officialincorporation, having to provide Annual Returns &Accounts every year.

The Annual Returns should be signed by a company secretary ordirector and submitted to the Registrar within 42 days from thedate of incorporation of the firm – if not, a penalty forlate filing would be imposed. The Annual Returns can take bothpaper form or digital form, and should include the followinginformation:

• Company name;
• Registered address;
• The share capital and its details such as percentage of whichis paid up;
• Identification of all shareholders, directors, secretaries, andcorporate bodies.

A fee will also be payable to the Malta Business Registry whensubmitting the Annual Return which depends on the amount of sharecapital of the company.

Furthermore, if any changes happen within the company such as anew director taking office or if the enterprise changes address,these must be notified to the Registrar expeditiously. Differentforms are available depending on the changes being reported, knownas Form H for Increase in Share Capital; Form Kfor changes among directors, secretaries or representation of thecompany; Form Q for changed in Registered Office of aCompany; Form T for Transfer or Transmission of Shares,just to name a few.

CSB Group offers Corporate Services such as Company Formation in Malta, Company Redomiciliation, Branch Establishment, Directorship & Company Secreterial, Malta Back Office Administration, Trusts, Escrow & Fiduciaries, Foundations, Global Company Formation, Start-up Undertaking Criteria, Private ExemptCompany, assisting in Sourcing Employees through bespoke solutions,Accounting & Auditing, alongside general Tax Services, Risk & Compliance, Bookkeeping, Payroll Administration, Company Liquidation & Dissolution, amongstmany others.

CSB Group's team of specialists expertly guide clientsthrough the process of opening a company in Malta, providingassistance and advice throughout. Start your company in Malta nowby contacting info@csbgroup.com.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.