Malta Limited Partnership - A New Solution
Prospera Europe Ltd.
16 January, 2017
In an international tax and estate planning scenario the selection of the location of a trading or holding company is an important decision to be made. For certain international trading scenarios, Malta Limited Partnership has proved to be a very good solution.
Malta Limited Partnership (partnership en commandite or Malta LP) is a tax transparent entity but has legal personality. It can enter into contracts in its own name. Malta LP is an onshore entity registered in Malta. Partnerships are by their nature legally and fiscally more flexible than companies and can give rise to interesting tax planning opportunities. Malta Ltd. companies are the preferred vehicles for operating businesses, both in the local and international context. However, partnerships are subject to less regulatory obligations when compared to limited liability companies.
Malta LP may opt to be treated as a tax transparent vehicle. It is an attractive planning instrument, when the beneficiaries of partners are not resident in Malta. Particularly, should the tax authorities in the country of residence of the partners and beneficiaries recognise the Malta LP as owner of all income attributable to the Malta LP such that the partners/ beneficiaries would only be chargeable to tax in their respective countries of residence after a distribution by the Malta LP of Partnership earnings/ income, capital gains or property in their favour. This is how Malta trusts and foundations work for non-resident beneficiaries when they opt for tax transparency.
If Malta LP is tax transparent, there is no Malta tax issues even if the income is remitted in Malta. The income of tax transparent Malta LP is always subject to be taxed at the personal level of each partner (not at LP level).
Key features about tax transparent Malta LP:
- Malta LP is a separate legal entity, however treated as a tax transparent vehicle in Malta.
- Financial statements need not to be filed in Malta, subject to certain conditions.
- Tax returns need not to be filed in Malta.
- Partnerships are not required to file annual returns with the Registry of Companies.
- Audit is not required, subject to certain conditions.
- VAT registration is possible in Malta. If a Limited Partnership performs trading activities within the EU it is obliged to register for a VAT number.
- If registered for a VAT, Malta LP must file VAT returns quarterly. In this case, VAT returns are the only tax forms that need to be submitted in Malta.
- Malta LP accounting needs to be done for Partners only, if required. No accounting records need to be submitted with the authorities.
- No corporate income tax is paid in Malta by the Malta LP.
- Partnerships are subject to less regulatory obligations when compared to limited liability companies.
- Fiscal flexibility.
- Malta LP consists of one or more partners, called general partners, and one or more partners, called limited partners.
- The liability of the limited partners is limited to the amount, if any, unpaid on their contribution to the partnership.
- Both individuals and legal entities may be partners.
- The administration and representation of LPis vested in the general partners.
- LP is registered by delivering a signed deed of partnership to the Registrar of Companies.
- Upon the issue of the certificate of registration, partnerships acquire a legal personality separate and distinct from that of their partners.
- Partnerships are not full taxpayers where the liability for the payment of tax on partnership income is shifted to the partners.
- As a general rule, partnerships are transparent for tax purposes in terms of the Income Tax Act (ITA) and the partners declare their share of profit in their personal tax returns.
- Tax is therefore chargeable according to the applicable personal tax situation and rates of the partners.
- Partnerships are by default tax transparent.
- Option to be taxed as a company.
- Easy and straightforward liquidation procedure.
For further clarifications on Malta Limited Partnerships, terms and fees please contact the under signed Ms. Katrin Taho by e-mail: Katrin.Taho@prosperainfo.com.
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