Frequently Asked Questions
What is Malta's relationship with the United Kingdom?
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Malta is an Independent state having its own President and Prime Minister and having a democratically elected legislature. It is a distinct jurisdiction with its own constitution having been granted independence from Britain in 1964.
What is the basis of law in Malta?
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Private law in Malta, which preceded British rule, is based on the continental systems, mainly the Code Napoleon, while public law finds its main sources in UK principles and common law systems. Professionals are equally comfortable with both civil law and common law concepts
Has Malta implemented all EU Directives related to financial services?
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Yes. Malta has implemented all EU Directives and the Malta Financial Services Authority (MFSA), which monitors and supervises closely the professionals who undertake to act for clients in the field, are extremely pro-active in encouraging in attracting financial institutions to Malta and the growth of the financial service industry generally.
What type of tax regime does Malta operate?
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Malta’s status as a financial centre means it can offer a more tax-effective environment. Malta has numerous tax treaties with many other countries and continues to negotiate treaties with others with which no relationship yet exists. Malta's government does levy VAT at 18%, but there is no inheritance tax or wealth tax.
What is the “Imputation Tax System”?
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The system whereby the shareholders of a company, whether resident in or outside Malta, are credited against their own tax liability for any tax paid by the Company on its profits.
What is the “Tax Refund Mechanism”?
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The mechanism whereby a trading company is taxed at the normal corporate tax rate of 35%. HOWEVER, non-resident shareholders may benefit from partial refund of tax, potentially reducing the incidence of tax to 4.17%. On the other hand the non-resident shareholders of a holding company are entitled to a full refund of the tax paid.
What is 'passporting'?
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'Passporting' means that businesses registered in Malta may conduct business in any other EU Member State without need of further licensing. Obtaining corporate residency in Malta is fast, efficient and straightforward, and allows a company to gain the benefits of becoming an EU resident.
What rate of corporate tax applies?
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This depends on the type of company established, but of the types of companies that can be established in Malta, the most popular with foreign companies is the International Trading Company (ITC) or the International Holding Company, These companies, as the names suggest, cannot trade within Malta
• Non-resident shareholders and ITCs pay 4.2% net tax on profits of ITC
• Non-resident shareholders and Holding Companies pay 0% net tax on profits of holding company;
• Insurance and captive companies are treated as ITCs.
• Dividends payable to non-resident shareholders are not subject to withholding tax.
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