Setting up a company in Malta

Setting up a company in Malta is relatively easy. The process involves the following:-

• Preparation of the Memorandum & Articles of Association for the Company (this is the Statute of the company);
• Registering the Memorandum & Articles of Association with the Malta Financial Services Authority (MFSA);

The preparation of the Memorandum & Articles of Association requires some fundamental information and documentation:-

• Main Objects of the Company (activities);
• Details of the shareholders of the Company;
• Details of the directors of the Company;
• Details of the Authorised Share Capital;(minimum €1,200)
• Details of the Issued Share Capital;(minimum €1,200)
• Details of the Company Secretary;
• Details of the Registered Office (has to be in Malta and can be provided by Contact).

In case of individual shareholders, documents that are required are:-
- Certified True copy of the Passport
- Bank Reference

In the case of corporate shareholders, certified copies of the following documents are required:-
• Certificate of Incorporation
• List of shareholders, directors
• Certificate showing Registered Office of the Company
• Memorandum & Articles of Association or similar document;
• If company is incorporated outside the EU, a bank reference is required – if this is not available, a professional reference would suffice.

Once the Memorandum & Articles of Association is drafted it is submitted to the shareholders for review and signing. When the original document is returned to us, together with the funds representing the issued share capital (and fees for MFSA charges), the Memorandum and Articles of Association is forwarded to the MFSA.

It normally takes between 3 – 4 days to have the company registered and official copies of the Memorandum & Articles of Association together with original Certificate of Incorporation ready for collection.

It is possible, under Maltese law, for licensed fiduciary service providers to hold shares on behalf of ultimate beneficial shareholders. This gives the ultimate beneficiary privacy and anonymity. In order to be able to act as fiduciaries to clients, full KYC documentation will be required. These include:-
- Birth certificate;
- Certified copy of Passport;
- Police Conduct Certificate (not older than 3 months);
- Bank Reference (not older than 3 months);
- Utility Bill (as proof of address).

It is also possible, for a small fee, to reserve the proposed name of the company for a period of 3 months. This will ensure that any preferred names, if available, will be held for the use of the promoters for 3 months.

How can Contact Advisory Services help?

Our services relative to setting up a company in Malta take the following form:-
• Drafting of Memorandum & Articles of Association for the company;
• Provision of Company Secretary services;
• Provision of Registered Offices;
• Provision of Fiduciary (nominee) services;
• Provision of Nominee Directors;

Fiduciary services are offered to shareholders. These are provided through our licensed company. In order to obtain a license to carry such services, fiduciary service providers go through a rigorous due diligence process and are audited by MFSA personnel on a yearly basis to ensure licensees are fully compliant with the regulations.
We also offer the services of Opening of Bank accounts in the name of the company, as well as for individual shareholders.

WHAT NEEDS TO BE DONE AFTER INCORPORATION OF THE COMPANY?

Once the company is set up, a number of processes need to be carried out. These include the following:-

- Opening of a Bank Account (share capital will be transferred to this account);
- Registering the Company with the Tax Authorities;
- Application for Exemption from payment of Duty (on eventual sale of shares);
- Application for Value Added Tax Number (depending on the activity of the company);
- Registering under the Data Protection Act (depending on the activity of the company);

These services are provided as part of the package we offer on the incorporation of the company.

OTHER ONGOING OBLIGATIONS?

All companies set up in Malta have a number of ongoing compliance obligations. In summary, these are the obligations:-
- TAX
- Yearly Income Tax Return – to be submitted within 9 months of year end ;
- Payment of Income tax – if any;

REGISTRY OF COMPANIES
- Filing of Annual Return – on anniversary of the company incorporation;
- Payment of Annual Return Fee – on anniversary of the company incorporation;
- Filing of Audited Financial Statements – within 10 months of year end;

VAT (if applicable)
- Filing of periodic VAT Returns (either 3 monthly or yearly);
- Payment of VAT due (if applicable)

DATA PROTECTION
-Payment of Annual Data Protection Fee

THE MALTA TAX SYSTEM

All companies in Malta are taxed at the rate of 35% on the taxable profits for the period/year. Taxable profits are arrived at by producing financial statements based on International Financial Reporting Standards and in line with the Companies Act, 1995 of the Laws of Malta.

For non-resident shareholders, upon the distribution of dividends by the company, the non-resident shareholder is entitled to a refund equivalent to 5/6 of the tax paid. This means, that in most cases, the non-resident shareholder will incur tax at the rate of 5%.

A number of conditions exist mainly:-
• Dividends have to be declared, otherwise if the company holds on to its profits, no refund can be claimed by the shareholder;
• Tax must have been paid by the company;
• The amount of dividends that can be distributed cannot exceed the Distributable Reserves of the company;

With regards to taxation of the income in the country of residence of the non-resident shareholder, one has to consult local tax legislation and also review any Double Taxation arrangements that may exist between Malta and the relative country.

Author: Angelo Vella
Contact Advisory Services
Date: July2010