The jurisdiction of Malta provides a lot of benefits to structures looking for international tax efficiency. Malta is a country geographically comprised by a group of small islands in the Mediterranean Sea, located in the South of Sicily, and North of Libya. Its geographical location has given it strategic importance, and has historically been used as a base by many countries including the Phoenicians, Romans, Arabians, Normans, Spaniards under Habsburgs, French and finally the British Empire, from whom Malta achieved its independence in 1964, and eventually becoming the Republic of Malta in 1974.
Early after its independence Malta started to look out for foreign investment and to promote itself as a hub for a number of activities. It has developed a very strong maritime tradition and following its membership in the European Union, it has also become an important player in the corporate and financial services industry.
Among Malta’s strengths in international financial services, one notes:
- A stable international financial center. The World Economic Forum recently ranked the Maltese Banking System in the 12th position from a total of 144, in relation to its banking soundness.
- Membership in the European Union.
- A wide treaty network to avoid double taxation; currently with more than 60 countries and jurisdictions.
- An attractive tax regime for companies receiving income relating to international business activities with special regimes for income arising from intellectual property royalties (patents and trademarks) and from the holding of shares in foreign companies.
- The absence of any withholding tax in respect of remittance of dividends, interests and/or royalties to non-residents.
- Regulatory flexibility as to transfer pricing.
- No rules on Controlled Foreign Companies.
- The possibility of having the Share Capital and accounting maintained in foreign currency.
- Simple incorporation of non-regulated companies.
- Advanced rulings on international transactions from the Tax Authority.
- No capital taxes.
- Low incorporation costs for companies.
Then, when should you think of Malta?
- When you wish to allocate income-generating intellectual property assets (royalties) either belonging to companies of a same group (subsidiaries or affiliated) or of non-related third companies.
- For incorporation of holding companies or companies operating in other jurisdictions, to possibly avail of a participation exemption on dividends and ensuring these are not taxed in Malta.
- For trading structures, since reimbursement system in Malta ensures one of the lowest effective and legal taxes of all Europe.
Summarizing, Malta is a jurisdiction that provides a strong tradition in international services, with the European Union seal, complies with the highest international standards in financial, corporate and anti-money laundering regulations, and is not included in any black or grey list of the Organization for Economic Cooperation and Development (OECD) or related organizations. Your company may highly benefit, if you consider Malta for incorporation and allocation of assets (and, in consequence, of income) in connection with patents, trademarks, copyright, holding companies and international business activities.