Malta Company Formation

ESSENTIAL FACTS

LOCATION: 35 50 N, 14 35 E
Malta is an archipelago in he Mediterranean Sea, south of Sicily, Italy.

POPULATION: 401,880
Of all of Malta’s islands, the entire population is living on Malta, Ghawdex or Gozo, and Kemmuna or Comino due to excellent harbors.

CURRENCY: Maltese lira (MTL); euro (EUR) after 1 January 2008

LANGUAGE: Maltese (official), English (official); Italian is also heard often due to its proximity to Sicily.

CLIMATE: With a Mediterranean climate, Malta enjoys mild, rainy winters and hot, dry summers.

EDUCATION: Almost 93 percent of Malta citizens age 10 and over can read and write.

PUBLIC HOLIDAYS: Independence Day, 21 September (1964)

HISTORY AND GOVERNMENT

HISTORY
From 1814 – 1964, Malta was a proud member o the British Commonwealth. But Malta’s diverse culture and remaining temples, ruins and other landmarks belie its previous history, including occupations by Romans, Arabs and the French.

POLITICAL SYSTEM
Malta is a republic, with a President, a Prime Minister, and a Cabinet. It has a unicameral legislative branch with a House of Representatives elected by popular vote.

JUDICIAL SYSTEM
Malta’s legal system is based on English common law and Roman civil law. The judicial branch has a Constitutional Court and a Court of Appeal.

COMMERCE AND TRADE

COMMERCIAL ACTIVITY
Agriculture: Potatoes, cauliflower, grapes, wheat, barley, tomatoes, citrus, cut flowers, green peppers; pork, milk, poultry, eggs
Industry: Tourism, electronics, ship building and repair, construction, food and beverages, pharmaceuticals, footwear, clothing, tobacco

TRADE PRACTICES
Exports: Machinery and transport equipment, manufactures to France, Singapore, US, Germany, UK, Japan, Hong Kong
Imports: Machinery and transport equipment, manufactured and semi-manufactured goods; food, drink, tobacco from Italy, UK, France, Germany, Singapore, US

BANKING, FINANCE AND INVESTMENT

FINANCIAL FACTS
Malta imports over 80 percent of its foodstuffs and greatly dependent on foreign trade. The continental shelf between Malta and Tunisia has been the subject of possible agreements that would boost economic activity, as there would be possible oil exploration and other commercial activity surrounding it. The manufacturing industry mostly produces pharmaceuticals and electronics, and tourism is also a large source of revenue for Malta.

Fiscal year: Calendar year

STOCK MARKET
The Malta Stock Exchange has been in existence for 16 years. The market value of publicly traded shares is well over USD$4 billion. Remote trading is available, since as of 2001 there is no physical stock exchange floor.

MEMBERSHIPS
Australia Group, C, CE, CPLP (associate), EBRD, EIB, EMU, EU, FAO, IAEA, IBRD, ICAO, ICCt, ICRM, IFAD, IFC, IFRCS, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, MIGA, NSG, OPCW, OSCE, PCA, Schengen Convention, UN, UNCTAD, UNESCO, UNIDO, Union Latina (observer), UNWTO, UPU, WCL, WCO, WHO, WIPO, WMO, WTO

FOREIGN INVESTMENT
Malta is not recognized by the OECD as one of the blacklisted countries due to heavy offshore banking and financial activity. This presents a unique opportunity for offshore investors, as establishing a presence in Malta does not show up on others’ “radar” as being an obvious tax haven. Its location in Southern Europe as well as the turnover to the euro this year has helped many international trading companies based in Malta to receive a VAT number, which has opened up a whole new world of European trading and investments.

IMMIGRATION

VISAS
EU freedom of movement rules apply for Malta. EU citizens must only show their national identity cards; all others must show passports; visas are necessary for countries that require a visa for entry into anywhere in the EU.

EMPLOYMENT
Unemployment is very high right now in Malta, which means that not only must there be hard proof that no Maltese is eligible for the position; often, it will be necessary to hire a Maltese to be trained on the position you’ve filled with a foreigner.

Expatriates who own more than 40 percent of a foreign company registered and based in Malta can secure work permits for his or herself and one other foreign national to be employed by them.

RESIDENCE
A residency permit requires proof of financial independence from Malta, whether by up to USD$400,000 in lump sum on hand or by an annual income of at least USD$27,000.

BUSINESS

BUSINESS ENTITIES
In Malta, business entities usually form as either an International Holding Company or an International Trading Company. Their activities are pretty much as they seem to suggest in their titles. The incorporation process begins with confirmation of the capital, then moves on to the Articles of Association and a bank reference from one other than a Maltese bank.

TRUSTS
There are two types of general trusts – a Maltese Trust that follows Maltese trust law, and a Foreign Trust that follows the trust law of the country other than Malta named by the settlor of the trust.

The settlor and the beneficiary may be one and the same person under Maltese trust law. The duration of a Maltese trust can be no more than 100 years. Trustees have a broad range of decision making power and other tools at their disposal in the administration of a Maltese trust.

TAXATION

PERSONAL TAXATION
Taxes are determined not by national status of the company or employer, but of the tax-paying employee. The advantages of filing taxes in Malta as an expatriate range from tax-exempt benefits; income tax cap of 30 percent; exemption from customs and stamp duties; and other benefits specific to the type of company (as opposed to status of company) one works for.

CORPORATE TAXATION
International Trade Companies are taxed 27.5 percent on gross dividends and receive tax credits on the profits made. International Holding Companies in Malta are taxed a flat 35 precent on all profits.

DOUBLE TAXATION
Malta recognizes the double tax treaty agreements of 45 countries, and within a few years that number will rise to 62 countries. If the country in question is not part of a double tax treaty, Maltese tax authorities offer tax credits up to 25 percent.

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