Maltese company law
derives chiefly from civil or 'Roman' law,
rather than common law. A new Companies
Act 1995 replaced the old Commercial Partnerships
Ordinance, and set up a new regime for commercial
entities under the Registrar of Companies.
Companies set up under the old regime had
until 1st January 1998 to convert themselves
into the new formats, except that 'Offshore
Companies', which can now no longer be formed,
had 10 years to adapt. Shipping companies,
and, while they survived, offshore companies,
continued to be subject to the old Commercial
Partnerships Ordinance.
In
March, 2006, the European Commission formally
requested Malta under EC Treaty state aid
rules to abolish the tax regime for Maltese
Companies with Foreign Income (CFI), and
the International Trading Companies' (ITC)
regime by the end of 2010 at the latest.
Competition
Commissioner Neelie Kroes observed that:
"The schemes provide sizable aid to
companies that are owned by non-Maltese
and produce revenues outside of Malta, and
are therefore highly distortive without
promoting growth of the Maltese economy."
In
May, the Maltese government formally decided
to gradually abolish the existing aid schemes.
Competition
Commissioner Neelie Kroes announced: "I
welcome the abolition of Malta's preferential
regimes as a further important step towards
eliminating selective tax incentives that
significantly distort the location of business
activities in the Single Market."
Malta's
acceptance of the EC recommendation meant
that:
- The
existing ITC and CFI schemes were effectively
abolished by 1st January 2007;
- A
new refundable tax credit system was
to be enacted by Malta provided that
it does not effectively favour foreign-owned
companies over domestic-owned companies;
- The
tax status of ITC is prohibited to any
new company registered in Malta after
31st December 2006;
- The
existing ITCs benefitted from the system
only until 31st December 2010; and
- The
number of newly created ITCs between
the date of acceptance of the appropriate
measures and 31st December 2006 was
limited to the yearly average number
of ITC companies created in the previous
five years.
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Malta
Private Limited Company
The
private limited company, (or 'partnership
anonyme' in civil code terms), has the suffix
'Limited' or 'Ltd'. The company is formed
by submission of the Memorandum and Articles
to the Registrar (in English), together
with the appropriate fee. Once all documents
and information have been submitted to the
registrar, incorporation may take as little
as 24 hours.
The
following are the chief characteristics
of a private limited company:
- only
one member is necessary;
- only
one director is necessary, and must
be a natural person, but can be of any
nationality and resident anywhere;
- there
must be a company secretary, which must
be a licensed Maltese Nominee Company;
- there
must be a registered office in Malta;
- the
minimum authorised and paid-up capital
is EUR1,164.69, where the capital is
does not exceed the minimum, it must
be fully subscribed in the memorandum.
Where it exceeds the minimum, at least
20% of the nominal value of each share
must be paid up
- shares
can be registered but not bearer; preference
or redeemable shares are permitted;
and shares do not have to carry voting
rights;
Registration
and annual return fees for paper documents
are as follows:
Share
capital, Euro |
Registration
Fee, Euro |
Annual
Return Fee, Euro |
below
1,500 |
245 |
100 |
1,500
to 5,000 |
245
+ 15 for every additional 500 of
capital in excess of 1,500 |
140 |
5,001
to 10,000 |
350
+ 20 for every additional 1,000
of capital in excess of 5,000 |
160 |
10,001
to 50,000 |
450
+ 20 for every additional 2,500
of capital in excess of 10,000 |
350 |
50,001
to 100,000 |
770
+ 20 for every additional 10,000
of capital in excess of 50,000 |
400 |
100,001
to 250,000 |
870
+ 20 for every additional 15,000
of capital in excess of 100,000 |
600 |
250,001
to 500,000 |
970
+ 10 for every additional 10,000
of capital in excess of 250,000 |
800 |
500,001
to 1m |
1,220
+ 20 for every additional 20,000
of capital in excess of 500,000 |
900 |
1mio.
to 2.5m |
1,720
+ 10 for every additional 50,000
of capital in excess of 1mio. |
1,200 |
2.5m
+ |
2,250 |
1,400 |
The
fees for online registration and submission
of returns are slightly less. Full details
can be found at: www.mfsa.com.mt.
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Malta
International Holding Company
The International Holding Company (IHC)
is similar to the old International Trading
Company except that as its name implies
it holds participations in foreign companies.
Its effective tax rate is 11.67% or less;
if dividends emanate from a 'participating
holding', ie one of more than 10% in the
paying company, then the effective rate
of tax is nil. See Offshore
Legal and Tax Regimes for further details.
The
IHC can make use of Malta's Double Taxation
Treaties.
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Malta General Partnership
General Partnerships are formed under the
Companies Act 1995 as a partnership 'en
nom collectif' which has a partnership name.
There is a Deed of Partnership giving the
names of the partners, the address of the
registered office, the objects of the partnership,
its duration, and the amount of capital
contributed by each partner. The Deed is
registered by the Registrar of Companies.
The
partners are liable jointly and severally
for the full debts of the partnership.
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Malta
Limited Partnership
Limited partnerships in Malta have general
partners, who are responsible for management,
and have unlimited liability, and limited
partners, who are liable only to the extent
of their capital contributions to the partnership.
A limited partnership is formed under the
Companies Act 1995 as a Societe en Commandite
Simple and is subject to the same rules
as a general partnership. The SICAV (Societe
d'Investissement a Capital Variable) is
also formed under the Act, but as a partnership
limited by shares (Societe en Commandite
Limitee par Actions), and is used by mutual
funds.
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Malta Branch of Overseas
Company
Branches of foreign companies are permitted
but are taxed at the same rate of income
tax as domestic companies. No additional
taxes are withheld on profits transferred
back to head office.
Malta
Trusts
The
Offshore Trusts Act 1988 was amended by
The
Trusts and Trustees Act 2004, which became
effective in January 2005, and allows Maltese
residents and firms to use local trusts,
while also furthering Malta's international
obligations on non-discrimination, transparency
and the prevention of money laundering.
The
government believes that the legislation,
which creates a more streamlined and simplified
trust regime, will make Malta much more
attractive to both international and domestic
clients, by offering greater flexibility
and certainty. The new Act eliminates the
nominee company regime, and introduces a
licensing regime for professional trustees.
Until
2005, trusts in Malta were based on the
Offshore Trusts Act 1988, which was largely
based on Jermal trust law, itself a common
law implant stemming from English trust
law. Trusts under this Act must have non-resident
settlor and beneficiaries, and trust assets
must not include Maltese real estate (permitted
under the new Act).
The
Recognition of Trusts Act 1994 gave effect
to the Hague Convention, and results in
a division of trusts into:
- Maltese
trusts, where the proper law of the
trust is Maltese, and the governing
legislation is The Trusts and Trustees
Act 2004; and
- Foreign
trusts, governed by whatever law the
settlor has nominated..
All
trusts, including foreign ones, must register
with the Maltese Financial Services Centre
(MFSC), which costs EUR250 for application
and processing and EUR100 upon approval.
A further EUR2,500 is payable upon the issuance
of approval and annually thereafter. Foreign
trusts which do not register with the MFSC
will not benefit from the tax advantages
of registered foreign trusts (they are tax-exempt).
Under the 2004 Act, transfers of assets
into a trust or a change of beneficiaries
may give rise to a charge to tax.
Under
the 2004 Act, a registered trust must have
a Maltese Professional Trustee as one of
its trustees, which files an annual declaration
of conformity with the law.
It
is likely that a Malta-registered trust
will often be a more effective holding vehicle
than the International Holding Company (see
above, and see Offshore
Legal and Tax Regimes). Trusts are able
to use the extensive network of Maltese
Double Taxation
Treaties.
Unit Trusts
There are no special provision in Maltese
law covering Unit Trusts, which are therefore
treated in the same way as ordinary Maltese
trusts, and have the same tax
regime.
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