Malta Incorporation Services
Malta, a southern European island, has quietly emerged as one of Europe’s most stable and innovative financial domiciles. Despite Malta drawing a large influx of tourists due to its warm climate and vast culture, the small and densely populated state has much more to offer. Malta’s decision to join the European Union in 2004 and the Eurozone in 2008 have proved critical to its development as a major finance and business centre.
Malta has strong banking, insurance fund and wealth management sectors that have attracted investment from the world’s leading financial institutions, blue-chip multinationals, and high-net-worth individuals.
Malta offers several benefits for potential business ventures:
- It is one of Europe’s top performers. In recent years, Malta has been ranked among the strongest EU economies in terms of GDP growth;
- English is the nation’s official language, with Italian and French being spoken by many;
- A region of opportunities. Malta is conveniently situated within two to three hours direct flight time from Europe’s major cities;
- A credible challenger. In 2011, the European Commission viewed the competitiveness of Malta’s economy in terms of labour productivity as above average in an EU-wide comparison, while the country has retained its ranking in the Global Competitiveness Report 2011-2012, placing 51st of 142 countries;
- Flexible regulatory framework and regulator. All financial services fall under one regulator, the Malta Financial Services Authority (MFSA). Companies benefit from streamlined procedures, lower regulatory fees, and reduced bureaucracy.
Malta’s Companies Act is primarily formulated around English Law and EU directives and defines the type of Maltese corporate entities or commercial partnerships that may be formed.
The following types of companies are available:
- A limited liability company;
- Limited partnership;
- General partnership.
The incorporation of a Maltese private limited liability company will typically take between three to five working days, from the time the appropriate documents are presented to the Malta Registrar of Companies, to be processed and finalised.
Incorporated companies must comply with the following:
A minimum of two shareholders is required for every private company. In order to meet this requirement, a third party must hold a single share with all the other shares being held by the intended beneficiary. Alternatively, a private exempt company may opt to have a single shareholder.
Registered office and establishment of a branch office in Malta
All companies must have a registered office situated in Malta and Zeta offers exactly this. Companies aiming to expand their organisation abroad may wish to register a branch as an overseas company. Some companies receive tax breaks by continuing to be incorporated in their home country while they attempt to establish a Malta operation.
Registration of a Maltese company
A company is set up by a Memorandum of Association being entered into and subscribed to by the shareholder(s) and a certificate of registration being issued in respect thereof. Included in the Memorandum should be:
- Company name;
- Address and official identification of the subscribers thereto;
- The nature of the company (private or public);
- The registered office of the company in Malta;
- The object and purpose of the company to be incorporated;
- Details of the authorised;
- Issued and paid up share capital;
- The way in which the representation of the company is to be exercised;
- The number of directors and the particulars of the first directors and secretary.
Fees payable to the Maltese authorities
Registration fees upon incorporation of a company are subject to the amount of authorised share capital. The minimum charge is €245 on an authorised share capital of €1,500 increasing up to a maximum of €2,250.
The annual company registration fee is also contingent on the amount of authorised share capital. The minimum fee is €100 increasing up to a maximum of €1,400.
Taxation and Double Taxation Treaties
The company rate of tax is 35% on the chargeable profits based on the audited accounts of the company. Despite this, a system of tax refunds rewarded to shareholders provides substantial fiscal benefits, reducing Malta tax to shareholders to 0% in the case of holding companies, and 5% in the case of trading companies. In both instances, there are specific legal requirements that must be satisfied in order for shareholders to benefit from such refunds.
Accounting and auditing requirements
All accounting records have to be audited at the end of each financial year, in accordance with Malta’s Companies Act (1995) and International Accounting Standards. Financial statements constitute the directors’ report, the auditors’ report, balance sheet, profit and loss account, notes recording the financial statements together with schedules for the profit and loss account.
Malta as a Holding Company Jurisdiction
Particularly by virtue of a participation exemption introduced in 2007, Malta has enhanced its position as a premier EU holding company location. Malta is, in fact, the quintessential destination in Europe to establish a company to hold shares in one or more entities.
Malta Income Tax
Income derived by a Maltese company from a qualifying ‘participating holding’ in a subsidiary company would be wholly exempt from tax in Malta. Furthermore, capital gains realised upon a disposal of the said ‘participating holding’ would likewise be wholly exempt from tax in Malta.
A Maltese company would have a ‘participating Holding’ in a subsidiary should the shares held by the company in the subsidiary carry at least two of the following rights:
- A right to votes; and/or a right to profits available for distribution; and/or
- A right to assets available for distribution in the event of a winding up;
The subsidiary does not own immovable property situated in Malta or any real rights over such property or, directly or indirectly, any shares or interests in any entity or person which owns immovable property situated in Malta. Any real rights over such property where 5% or more of the total value of the said shares may not be owned, nor other interests so held are attributable to such immovable property or rights.
At least one of the six following criteria must also be met:
- The Maltese company holds more than 10% of the shares in the subsidiary; or
- The Maltese company holds shares in the subsidiary having an acquisition value of at least €1,164,000 and its shares are retained for an uninterrupted period of at least 183 days; or
- The Maltese company holds shares in the subsidiary and is entitled, at its option, to call for and acquire the balance of shares in the subsidiary; or
- The company holds shares in the subsidiary and is entitled to first refusal in the event of the proposed disposal, redemption or cancellation of the shares in the subsidiary; or
- The Maltese company holds shares in the subsidiary and is entitled to sit on the board or to appoint a person to sit on the board of the subsidiary as a director; or
- The Maltese company holds shares in the subsidiary for the furtherance of its own business and not as trading stock.
The participation exemption is always available in respect of capital gains realised upon a disposal of a participating holding. However, the participation exemption would only be available in respect of dividends derived from a participating holding in a non-resident subsidiary and, additionally, provided that any one of the following additional conditions is satisfied:
- The subsidiary is resident or incorporated in a country or territory which forms part of the European Union; or
- The subsidiary is subject to foreign tax at a rate of at least 15%; or
- No more than 50% of the subsidiary’s income is derived from passive interest or royalties; or
- The Maltese company’s holding in the subsidiary is not a portfolio investment and the said subsidiary is subject to any foreign tax at a rate which is not less than 5%.
Non-qualifying participating Holdings
Should a Maltese company’s investment in a subsidiary not represent a qualifying participating holding, dividends derived by the company would be subject to tax in Malta at the standard rate of 35%. However, by application of Malta’s double tax relief mechanisms and refundable tax credit system, the combined overall effective Malta tax rate should be reduced to a rate not exceeding 6.25%. Capital gains derived from the disposal of the participating holding would nevertheless be exempt from tax in Malta as aforesaid.
Disposal of shares in the Maltese company
Capital gains realised by any non-resident shareholder upon the disposal of shares in the Maltese Company would generally be exempt from tax in Malta.
Gibraltar Incorporation Services
A number of factors make Gibraltar attractive for offshore business conduct:
- Good geographical location and bilingual (English and Spanish) territory;
- Cost effectiveness and attractive fiscal regime for offshore investors;
- Excellent reputation, stable government, and special status within the European Union;
- Excellent infrastructure and communications;
- Favourable tax status for offshore banks;
- No exchange controls.
In addition to the opportunities arising from Gibraltar’s status in the EU, it is also the only jurisdiction that offers a flexible tax regime (25-year certificates), a specific exclusion from the EU requirement to levy VAT, and regulatory standards matching the EU and UK but retaining the flexibility of a small jurisdiction. All these factors make Gibraltar unique in many respects, and all of them are able to attract offshore investors.
The Gibraltar Companies Act is based on English Legislation and has recently been amended to include relevant EU Directives. A Gibraltar company can be incorporated within two to three days. However, upon payment of an additional fee, same day incorporation can be affected. Clearance of the company’s name is required prior to incorporation.
The following types of companies are available:
- Limited by shares, public or private;
- Limited by guarantee, with or without share capital;
- Unlimited, with or without share capital.
Incorporated companies must comply with the following:
- For a private company, the minimum number of shareholders is one;
- For public companies, the minimum number of shareholders is seven (Corporate and Nominee shareholders are permitted).
A Gibraltar company is required to maintain a registered office in Gibraltar where the Statutory Books are kept. In the case of a private company a sole director is permitted, although a minimum of two is advisable. A public company, on the other hand, must have at least two directors. Directors are not required to hold qualifying shares and corporate directors are also permitted.
An AGM of shareholders is required to be held once a year albeit anywhere in the world (the AGM can be dispensed with if all the shareholders agree).
Many of the facilities available in Company Management in Gibraltar are unique within the European Union. The benefits include swift incorporation, extensive company management services, and favourable fiscal advantages.
There are some points that need to be noted on the subject of company incorporation:
- All companies must comply with the provisions of the Companies Act;
- There are normally fees for the management of a company;
- Company details can be disclosed even if the company is limited by shares;
- Accounts and other returns are necessary and are by and large an annual requirement.
There are numerous regulations governing the administration of a company, with the duties, responsibilities, and liabilities of directors being set out in the Companies Act.
The first step when forming a Gibraltar company is to ensure that the proposed name is acceptable to the Company Registrar. Once the name is approved, the following documents need to be submitted in accordance with the provisions of the Companies Act:
- Memorandum of Association;
- Articles of Association;
- Declaration of Compliance;
- Notice of Situation of Registered Office;
- Statement of Nominal Share Capital.
A registration fee of GIP 50 (GIP 100 as from 1 January 2014) is currently payable at the time of presentation of the documents. The Memorandum and Articles of Association must be embossed with the appropriate stamp duty.
The time taken to incorporate a company in Gibraltar is normally three to five working days, although a company may be incorporated within 24 hours if necessary, for a fee of GIP 100 (GIP 200 as from 1 January 2014). Once a company is incorporated, a Certificate of Incorporation is issued. Under Gibraltar legislation, only barristers or acting solicitors of the Supreme Court may incorporate companies for gain.
Gibraltar companies will not be designed to accommodate bearer shares.
The identity of the directors and shareholders of Gibraltar companies must be filed at the Gibraltar Companies Registry, although these may be corporate directors and/or nominee shareholders.
A minimum of one director and one shareholder (corporate or individual) must be appointed to a Gibraltar company. The director and the shareholder may be the same person or corporation.
Gibraltar companies are required to identify commencement dates for their financial years and to file accounts at the Gibraltar Companies Registry relating to their chosen year-long fiscal period within 13 months of the chosen financial year-end. The year-end date chosen can be any date of the year and there is no set minimum for this date to be amended.
Companies that are classified as ‘small’ are not required to file audited accounts and are able to file balance sheets signed by the directors of the company instead.
All companies with a turnover of over GIP 1,000,000 are subject to a statutory audit. The financial statements may be produced under IFRS or Gibraltar (which is similar to the UK) GAAP and must be signed off by a Gibraltar-registered auditor.
The Gibraltar Companies Registry, which operated solely on a commercial basis (Companies House, Gibraltar), is now fully automated. A company is required to file returns to include the registered office, directors, allotments of shares and an annual return. Moreover, company searches and name clearances can be carried out within a matter of hours.
It should be noted that companies undertaking financial services are subject to licensing and regulation by the Financial Services Commission (FSC). These requirements are distinct and an addition to those that are outlined in the section.
Maritius Incorporation Services
Located in the Indian Ocean, Mauritius is known to be a leading international business centre. The country has enjoyed unparalleled growth and socio-economic development for the past 20 years and has emerged as a political stable democracy that welcomes foreign investors and businesses alike. Mauritius has become a credible jurisdiction for offshore company formation offering a reliability and security to investors through its flexible regulatory framework.
The Mauritian Government is known to actively encourage foreign investment and offshore activity through its Board of Investment. The government’s strategy on development focuses on foreign investment and due to this Mauritius has attracted thousands of offshore entities.
An adherence to the new international requirements involving combating financial terrorism and money laundering has only solidified the credibility of Mauritius for offshore investments. Furthermore this has enabled Mauritius to enjoy a reputation as a trustworthy and well-regulated offshore centre.
Mauritius is also recognised as a country that has substantially implemented internationally agreed tax and transparency standards by the OECD.
English is the official language of business but French and Creole are widely spoken.
Global Business Licence Company - Category 1
Principally governed under the Financial Services Act 2007 (FSA) and the Companies Act 2001, a Category 1 Global Business Licence Company (GBC1) is a Mauritian entity holding a valid global business licence and undertaking any lawful activity which is conducted outside Mauritius. A GBC1 falls under the supervision and monitoring of the Mauritius Financial Services Commission (FSC). A GBC 1 Company will normally take approximately 3 to 4 weeks to set up; subject to being in receipt of all required documentation and that all is found to be in order.
Common Uses of a GBC1:
- Investment holding
- Leasing activities
- Holding Intellectual Property Assets
- Financial Services
- International Licensing & Franchising
- Investment Holding & Commercialisation of Distribution Rights
- Purchase and Rental of Equipment
GBC 1 Companies features and benefits:
A GBC1 needs to comply with the following basic criteria of demonstrating substance in Mauritius according to Section 71(4) of the Financial Services Act 2007 to enjoy the benefits under a treaty:
- Having at least two directors resident in Mauritius of sufficient calibre to exercise independence of mind and judgment
- Providing for meetings of directors to include at least two directors from Mauritius
- Management and Annual Meeting (AM) of shareholders, Corporate Directors are not allowed, Shareholders must hold an AM in every calendar year
- Maintaining at all times its accounting records at its registered office in Mauritius
- Maintaining at all times its principal bank account in Mauritius
- There is no minimum capital requirement for a GBC 1
- Class of shares and shareholders - Only registered shares are allowed. Shareholders may be both individual and body corporate
- (Local Presence - A GBC 1 must at all times have a Resident Director, Resident Secretary and a Registered Office in Mauritius. It must also have a local accountant, auditor and bank account)
- Disclosure requirements: the names of the beneficial owners must be disclosed to the Financial Services Commission. However, such information is not available for public inspection
- Confidentiality: There is a specific provision under the Financial Services Act 2007 relating to confidentiality (Section 83 of the Financial Services Act). Any Disclosure of confidential information without appropriate permission by any official of the Financial Services Commission on the GBC 1 is an offence punishable by imprisonment and fine. It may be stressed that all information is filed in full confidentiality with the Financial Services Commission for its use only and can only be disclosed under the strictly limited provisions of The Financial Intelligence and Anti Money Laundering and The Prevention of Corruption Act 2002 following submission of proof of drug trafficking, arms dealing and money laundering or terrorist financing
- Preparing its statutory financial statements and have the same audited in Mauritius
- Procedure to Incorporate
Once name approval has been obtained, three copies of the Constitution are submitted, together with a notice of the First Directors, Secretary and location of the Registered Office, and consent forms signed by the Officers
- Annual Return and Accounting Requirements
A GBC 1 must file its audited accounts with the Financial Services Commission every year, within six months of the financial year end. No annual returns need to be filed
- Restrictions on Trading - A licence is required to undertake banking or insurance business or solicit funds from the public
- Names Requiring Consent or a Licence. The following names or their derivatives: assurance, bank, building society, Chamber of Commerce, chartered, co-operative, government, imperial, insurance, municipal, royal, state or trust or any name which in the opinion of the Registrar suggests the patronage of the President or the Government of Mauritius
- Powers of Company - A company incorporated in the Republic of Mauritius has the same powers as a natural person
- Language of Legislation and Corporate Documents: The legislation is in English and French whilst documentation may be expressed in any language but must be accompanied by a certified English translation
- Shelf Companies Available: No
- Suffixes to Denote Limited Liability: Limited, Corporation, Incorporated, Public Limited Company, Société Anonyme, Société Anonyme à Responsabilité Limitée, Sociedad Anónima, Berhad, Proprietary, Naamloze Vennootschap, Besloten Vennootschap, Aktiengesellschaft or the relevant abbreviations
Global Business Licence Company - Category 2
GBC2 Companies are private entities that conduct business outside Mauritius; a GBC2 Company is not allowed to conduct business in Mauritius. A GBC2 may be a locally incorporated company or registered as a branch of a foreign company. Confidentiality is a major benefit to a GBC2 and the identity of the beneficial owner can remain largely confidential. A GBC2 is a good structure for holding and managing private assets. It is ideal for investors who require a flexible, simple, tax free, low cost and confidential corporate vehicle to trade, hold assets and investments, collect commissions or royalties, purchase property and provide international consultancy services.
- High degree of privacy protection (through the use of nominee Directors and shareholders)
- Mauritius company formation permits 100% foreign ownership meaning no local nominee is required
- Only one Director and one Shareholder required
- Legal tax exemption for GBC2 Companies but no access to the Mauritian Double Taxation Treaty allowed
- No accounting or reporting requirements which minimise maintenance costs
- GBC2 company enjoys limited liability without any paid up capital (there is no minimum capital required)
- No Withholding Tax on dividends
- No Capital Gains Tax
- No Stamp Duty on transfer of shares
- Free repatriation of earnings
- Migration from a foreign company to/from Mauritius is permitted
- Shareholders and Directors can meet anywhere
- Registered office and agent in Mauritius is required
- Conversion to GBC1 is permitted
Prior to engagement we will require full due diligence documentation on the appropriate individuals or entities involved. Details will be provided separately.
Where we can also help
Zeta provides advice on the most suited corporate structure to suit your requirements. There are various options of corporate structures that can be formed in Luxembourg, with the most common being a Limited company locally know as a S.A.R.L.
The jurisdiction of Luxembourg is also an ideal place to incorporate a Holding Company, which allows our clients to legally minimize tax earnings sourced from other European Countries. Corporate Structuring is common in Luxembourg for cross-border investments. The country is a member of the EU and has a stable Government. The country’s economy significantly lies in the Financial Sector having more than 200 banks, over 3,900 investment funds and approximately 20,000 Holding Companies.
The local authorities encourage foreign investors to set up a fund in Luxembourg. Luxembourg investment funds are split into 3 areas:
- UCI (Undertaking for Collective Investment);
- UCITS (Undertaking for Collective Investment in Transferable Securities – designed for retail investors);
- SIF (Specialised Investment Funds).
All the above-mentioned investment funds are not taxed on their income nor on capital gains obtained in Luxembourg. A stamp duty on the share issues or transfers is not required.
Luxembourg has a large number of double tax treaties concluded by the Grand Duchy with many countries worldwide.
Shelf companies are available for those who want to start doing business without having to wait for the normal length of the incorporation process.
Switzerland is strategically located in the heart of Europe, from a trading perspective, with the neighbouring countries of the European Union. Switzerland ranks as an international financial centre with an excellent reputation.
This confederation is made up of 26 autonomous cantons. Thanks to a flexible fiscal policy based on discretion (confidentiality and anonymity: two strong points of this jurisdiction), as well as its’ wealthy economy, Switzerland allows entrepreneurs to enjoy a number of advantages in order to optimise company’s profits.
- Although Switzerland is not considered a tax haven by the OECD, those who set up their company here can carry out their business enjoying a professional image and excellent reputation at a global level
- Companies most frequently used are the Société Anonyme (S.A.) and the Société à Responsabilité Limitée (S.A.R.L.)
- There are zero limitations regarding the number of shareholders. A single shareholder may be sufficient who can also be an employee of the company. However, it is mandatory that the company has at least one Director resident in Switzerland (Zeta can put you in touch with resident Directors if necessary)
- The minimum capital requirement to be paid at the time of the incorporation of the company is CHF 100,000 for the S.A. and CHF 20,000 for the S.A.R.L.
- Shareholders who set up a S.A.R.L are not anonymous and their identity is listed in the local registry. In some cases, we can offer solutions to preserve their anonymity
- Shareholders who set up a S.A. may choose the bearer report system and thus not appear in the Commercial Register
- By being "out of Europe", Switzerland is not obliged to comply with the decisions of the Euro Zone for fiscal and financial matters. However, in order to nurture relationships with international partners and avoid appearing on blacklists, Switzerland has introduced a new tax convention model. Every company set up in Switzerland pays a tax or duty on the profits that vary depending on both the canton in which it was set up and on its activity
- Similarly, Swiss companies are required to maintain their accounts and file their annual statement
Located in the Indian Ocean, Mauritius is known to be a leading international business centre. The country has enjoyed unparalleled growth and socio-economic development for the past 20 years and has emerged as a politically stable democracy that welcomes foreign investors and businesses alike. Mauritius has become a credible jurisdiction for offshore company formation offering reliability and security to investors through its flexible regulatory framework.
The Mauritian government is known to actively encourage foreign investment and offshore activity through its Board of Investment. The government’s strategy on development focuses on foreign investment and due to this Mauritius has attracted thousands of offshore entities. An adherence to the new international requirements involving combating financial terrorism and money laundering has only solidified the credibility of Mauritius for offshore investments. Furthermore, this has enabled Mauritius to enjoy a reputation as a trustworthy and well-regulated offshore centre.
Mauritius is also recognised as a country that has substantially implemented internationally agreed tax and transparency standards by the OECD. English is the official language of business but French and Creole are widely spoken.
There are two categories of licenses that can be obtained. Principally governed under the Financial Services Act 2007 (FSA) and the Companies Act 2001, a Category 1 Global Business Licence Company (GBC1) is a Mauritian entity holding a valid global business licence and undertaking any lawful activity which is conducted outside of Mauritius. The other is a GBC2 company which is a private entity that conducts business outside Mauritius but is not allowed to conduct business within the country. This type of company may be a locally incorporated company or registered as a branch of a foreign company.
GBC 1 Companies features and benefits:
A GBC1 needs to comply with the following basic criteria of demonstrating substance in Mauritius according to Section 71 (4) of the Financial Services Act 2007 to enjoy the benefits under a treaty:
- Having at least two directors resident in Mauritius of sufficient calibre to exercise independence of mind and judgment;
- Providing for meetings of directors to include at least two directors from Mauritius;
- Management and Annual Meeting (AM) of shareholders every calendar year - Corporate Directors are not allowed to attend;
- Maintaining at all times its accounting records at its registered office in Mauritius;
- Maintaining at all times its principal bank account in Mauritius;
- There is no minimum capital requirement for a GBC 1;
- Only registered shares are allowed and shareholders may be both individual and body corporate;
- A GBC 1 must have a Resident Director, Resident Secretary and a Registered Office in Mauritius at all times. It must also have a local accountant, auditor and bank account;
- Disclosure requirements: the names of the beneficial owners must be disclosed to the Financial Services Commission. However, such information is not available for public inspection;
- Confidentiality: there is a specific provision under the Financial Services Act 2007 relating to confidentiality (Section 83 of the Financial Services Act). Any disclosure of confidential information without appropriate permission by any official of the Financial Services Commission on the GBC 1 is an offence and punishable by imprisonment and a fine. It should be stressed that all information is filed in full confidentiality with the Financial Services Commission for its use only and can only be disclosed under the strictly limited provisions of The Financial Intelligence and Anti-Money Laundering Act 2002 and The Prevention of Corruption Act 2002 following submission of proof of drug trafficking, arms dealing, money laundering or terrorist financing;
- Preparing its statutory financial statements and have the same audited in Mauritius;
- Procedure to Incorporate.
- Once name approval has been obtained, three copies of the Constitution are submitted, together with a notice of the First Directors, Secretary and location of the Registered Office, along with consent forms signed by the Officers.
- Annual Return and Accounting Requirements
- A GBC 1 must file its audited accounts with the Financial Services Commission every year, within six months of the financial year-end. No annual returns need to be filed
- Restrictions on Trading - a licence is required to undertake banking or insurance business or solicit funds from the public.
- The following positions, or their derivatives, require consent or a license; assurance; bank; building society; Chamber of Commerce; chartered; co-operative; government; imperial; insurance; municipal; royal; state or trust. Moreover, any name which, in the opinion of the Registrar, suggests the patronage of the President or the Government of Mauritius also require consent or a license
- Powers of Company - a company incorporated in the Republic of Mauritius has the same powers as a natural person
- Language of Legislation and corporate documents the legislation is in English and French whilst documentation may be expressed in any language but must be accompanied by a certified English translation
- Shelf companies are not available.
Global Business Licence Company - Category 2
- High degree of privacy protection (through the use of nominee Directors and shareholders);
- Mauritius company formation permits 100% foreign ownership meaning no local nominee is required;
- Only one Director and one shareholder required;
- There is a legal tax exemption for GBC2 Companies but access to the Mauritian Double Taxation Treaty is forbidden;
- Accounting or reporting requirements are not needed which minimise maintenance costs;
- GBC2 company enjoys limited liability without any paid up capital (there is no minimum capital required);
- No Withholding Tax on dividends;
- No Capital Gains Tax;
- No Stamp Duty on transfer of shares;
- Free repatriation of earnings;
- Migration from a foreign company to/from Mauritius is permitted;
- Shareholders and Directors can meet anywhere;
- A registered office and agent in Mauritius is required;
- Conversion to GBC1 Company is permitted.
Yachting and Aviation
The history of Malta is the history of transit across the densely navigated sea lanes of one of most historically significant bodies of water in the world. Malta is indeed a consequence of its strategic location in the narrowest stretch of water between Sicily and Africa, and practically in the middle of the way between the Western and Eastern Mediterranean. Across the millennia, Malta was coveted and colonised as the most ideally located base of operations and maritime support in the entire Mediterranean. It is no coincidence that Malta was always held by the dominant naval superpower of the time, for apart from its unrivalled position, it offered exceptional facilities for anyone in need of rest, repair and supply in the middle of their naval journeys or patrols. Malta’s historical vocation of offering support to travellers and vessels crossing the Mediterranean is still going strong today, and, in keeping with the times, Malta now offers excellent facilities not just to the maritime and yachting industries, but also to aviation.
The most iconic images of Malta are photos of its Grand Harbour brimming with powerful battleships mingling with passenger ships, pleasure yachts and Malta’s own endemic dgħajjes. This tradition is not only alive today, but flourishing on a global scale. For Malta’s merchant ship register is now the sixth largest in the world, and the largest in the EU. Malta offers one of the most comprehensive and sophisticated suites of integrated services for the Maritime industry. The Maltese jurisdiction caters for all kinds of vessels, and provides them with all the imaginable services that the industry may require.
While the image of a battleship steaming out of Malta is one of the most representative of its colonial period, nothing is more representative of the vibrancy of contemporary Malta than the majestic superyachts lapping up the Mediterranean sun under the venerable bastions of the island. The service and support of pleasure craft goes back a long way in Malta, but since Malta joined the EU, it has become one of the most enticing bases of operations for yachts of all sizes across the Mediterranean. The laws of Malta differentiate between yachts and other craft, and in so doing they offer many significant benefits to yacht owners and operators. Moreover, the authorities are committed to maintaining, improving and increasing the the facilities available particularly to yachts as distinguished from those offered to other vessels.
A maritime base right in the middle of the Mediterranean is of undisputed appeal. It is equally so for aviation where the existence of supply, repair, administrative and legal services make Malta an outstanding node of aviation services connecting Europe with Africa and the Middle East. Like the legislation concerning it’s maritime sibling, Aviation Law in Malta is comprehensive and has been developed over many years to offer the best services to aircraft owners and operators. Consequently, Malta is now the headquarters, or major base of operations, for aircraft of all sorts, from private aircraft, including small planes and jets, to commercial airlines. Added to the logistic and geographic advantages of Malta as an aviation base, interested parties may rest assured of the continuous support of all authorities in keeping Malta one of the most competitive and efficient jurisdictions for the aviation industry.
The Advantages of Malta
Malta’s position right in the middle of the Mediterranean, on the major routes of transportation between Asia, Africa and Europe make Malta one of the most significant and important transport hubs in the history of the entire world. As a consequence of its history servicing the ships and planes of superpowers, Malta has a highly trained workforce very passionate and very committed to servicing these vessels, and this workforce is universally fluent in English and generally fluent in a number of other languages. Moreover Malta is home to many specialist companies, offering unparalleled legal, administration, tax, financial, and logistical services to anyone wishing to operate in these industries. The proverbial weather and dynamic social life of the island have entertained crews and passengers time out of mind, and remains a powerful draw to anyone in any industry. Above all, Malta has developed extremely friendly legislation for this industry, and is committed to maintaining and developing its support in the years to come.
Zeta offers a full spectrum of services related to the maritime, yachting and aviation industries, and it is ideally positioned to set up new operations in the sector as quickly and efficiently as possible. Interested parties may contact Zeta for more information. Not so very long ago, Malta was called an “unsinkable aircraft carrier”, paying testimony to the regard in which its maritime and aviation services were held. And for good reason. It is time to find out why, contact us today.
Aircraft Leasing Malta
In 2012 the Malta VAT Department has launched the guidelines which explain the Department’s interpretation of aircraft leasing arrangements, particularly applicable to any aircraft that are not employed by airline operators. Essentially, such guidelines provide that the VAT payable by these non-airline operators on such aircraft leasing supplies is exclusively applicable to the amount of time spent by the aircraft within EU airspace.
In accordance with these guidelines, an aircraft leasing supply occurs when the lessor, a company registered in Malta, contracts the use of the aircraft to the lessee, which has to also be a company registered in Malta, for a consideration. For VAT purposes, the supply of aircraft leasing is treated as a supply of services which is taxable at the standard rate and which rate is solely applied to the percentage of use of the aircraft within the airspace of the European Union.
How is the percentage of use of the aircraft within the airspace of the European Union calculated?
In view of the practical difficulty to establish the actual use of the aircraft within the European Union’s airspace, the local authorities apply an expert technical test which takes into consideration essential features of the aircraft and aims to provide an estimated percentage of the use of the aircraft within European airspace. This expert test takes into consideration a mix of the following specifications of the aircraft.
- MTOM (Maximum take-off mass)
- Maximum fuel capacity
- Fuel burn
- Optimum altitude
- Optimum cruising speed
Mechanics of the arrangement
- The lessor, which would ideally be a company incorporated in Malta, would be exploiting the aircraft for business purposes (i.e. the leasing of the aircraft to the lessee) and for which, in return, it would be receiving a consideration from the lessee. On this basis, any input VAT incurred in the furtherance of the economic activity of the company would be deductible in the hands of the company. This is particularly relevant for the purposes of acquiring the aircraft from a foreign (EU) entity and for which VAT would have to be accounted for under the reverse charge mechanism
- The monthly lease charges made by the lessor to the lessee would be subject to 18% VAT; however the 18% VAT would only be applicable to the percentage of use of the aircraft within the EU airspace which is determined by the above-mentioned formula
- At the end of the lease period, the lessee may have the option to purchase the aircraft. In case the option to purchase the aircraft is exercised, a VAT paid certificate will be issued by the VAT department.
The above VAT treatment shall apply only insofar as the following criteria is satisfied:
- The lease agreement shall be entered into by a lessor who is established in Malta and a lessee which is also established in Malta and who would not be eligible to claim input tax in Malta;
- The lease agreement shall be for a period of not more than 60 months and the lease instalments shall be payable on a monthly basis;
- The Director General (VAT) may request the lessor to submit details regarding the use of the aircraft;
- Prior approval must be sought in writing from the VAT Department and each application shall be considered on its own merits.
Yachting in Malta
The new guidelines relate to the lease of pleasure yachts by a lessor to a lessee, also clarifying the manner in which VAT is levied on the leasing of pleasure yachts at each chargeable event.
The new rules issued by the Commissioner for Revenue are still based on Article 59A of the VAT Directive. take into consideration the place of supply of the leasing of pleasure yachts and the overall VAT incurred on the leasing of such yacht which may be reduced substantially depending on the use and enjoyment of the yacht when a yacht is supplied by a Lessor to a Lessee in Malta. No Maltese VAT is applied when the lessee makes use of the pleasure yacht outside of European territorial waters.
An initial ratio calculation will be used for the first or first and second annual tax period depending on the start of the lease. The Guidelines stress the importance that the lessor maintains adequate records which includes documentary evidence and/or technical data to determine the ‘actual’ effective use and enjoyment ratio throughout the term of the lease. Furthermore, an adjustment of the difference will be made in the next VAT return.
The New VAT Guidelines impose specific obligations that need to be fulfilled for the guidelines to apply:
- A Malta registered company, is to own the private yacht and act as the lessor and is VAT registered in Malta.
- The lessor will enter into a long-term yacht lease agreement (i.e. a lease covering more than 90 days’ continuous possession or use) with a non-taxable third party (Maltese/non-Maltese).
- The conditions of the lease, including its duration and the consideration to be paid by the lessee to the lessor, shall be agreed contractually between both parties.
- The yacht must be placed at the disposal of the lessee in Malta (effective from the commencement of the lease agreement).
- Prior approval in writing must be sought from the Maltese VAT department approving the application of Maltese VAT based on effective use and enjoyment.
- That the effective use and enjoyment of the yacht in EU territorial waters is evidence-based. The lessor is required to obtain from the lessee documentary and/or technological data to demonstrate the yacht’s movements within/outside EU waters;
- An annual declaration is to be submitted by the lessor with the Commissioner for Revenue within the prescribed timeframe.
The 2019 Guidelines may be accessed here for ease of reference.
Zeta provides advisory services and assistance to individuals and entities who are looking at setting up corporate structures as well as to register pleasure or commercial yachts under the Malta flag.
Do get in touch with us and we will be happy to assist you further.
Any company and/or corporation may establish a branch in Malta. The establishment of a branch in Malta confers upon its parent entity many advantages. The process to set up such a branch is straightforward. There is no requirement to establish a physical presence, although a local representative must be appointed for this branch. Such a branch may confer certain fiscal advantages, as well as offer facilities for maximising tax efficiency. Malta has a strong double-tax treaty with over 65 countries. The country’s booming financial sector is underpinned by unanimous political support as well as the support of the general population. Moreover, it offers a predominantly English-speaking but also multi-lingual and highly trained workforce.
Setting up a company branch in Malta is straightforward and requires little more than the submission of a particular form to the Malta Registry of Companies within one month from the establish of the branch. This form contains all relevant information needed for compliance with local legislation. Documents must be submitted with these forms, and they must be either originals or suitably certified. Very reasonable fees are payable on submission of this form.
Partnership en Commandite
A Partnership en Commandite, also called a limited partnership, offers the possibility to two or more shareholders to operate under a partnership name. It is a limited partnership because its obligations are guaranteed by the liability of its partners, known as the general partners. The partners shoulder unlimited, joint and/or several liability.
The capital of this limited partnership is funded by the shareholders and can be represented by shares. The Partnership en Commandite operating in Malta needs to be registered in Malta and its company headquarters must be in Malta.
Partnership en nom Collectif
A Partnership en nom Collectif is also known as a general partnership. It may be formed by a plurality of partners, from two upwards. These partners come together to operate under the name of partnership. Its obligations are guaranteed by the unlimited and joint and several liability of all of its partners.
In Malta, a partnership en nom collectif registered locally must have a registered office on the island. It is transparent for tax purposes and the partners declare their respective profits in their personal tax returns.
Private Limited Companies
A private limited company is one that that restricts the right to transfer its shares, limits the number of its shareholders to not more than 50, and prohibits the sale of its shares to the public. Such a company must have the name of the company ending with “limited” (abbreviated to ‘ltd.’) and have an authorised share capital of at least €1165, at least 20% of which must be paid up.
When setting up a private limited company, it is necessary to list in detail the main activities and powers of the company. The business of the company must principally consist of the activities laid out in this list. These companies need at least one director, though this director does not need to be a Maltese resident. A company secretary is also necessary. An auditor must be appointed and must be resident in Malta. The company has to have its registered office in Malta.
All these details and other relevant details are to be worked out and put down in the Memorandum of Association. There are provisions to turn the private limited company into a public one by altering the Memorandum and Articles of Association.
Public Limited Companies (Limited/ltd.)
When the needs of a company fall outside the parameters of a primate limited company, then it is set up as a public limited company. Essentially, a public limited company is a limited liability company that can offer its shares and bonds to the public. However, to do so, they must be registered and they are obliged to produce a prospectus when they come to issue their shares and bonds.
The requirements to form a PLC are not onerous. While private limited companies have a name ending in “limited” or “ltd.”, the public limited company needs to add the abbreviation “PLC” to its name. As long as the Company Register raises no objections, the PLC may take any name it pleases. The PLC needs a minimum of two shareholders and it must have a registered office in Malta. It must also have a minimum authorised and issued share capital of €46,587.47, at least 25% of which must be paid up. Responsibility for, and representation of, the PLC is vested in the board of directors, which is responsible for running the PLC in compliance with all relevant regulations and norms. The PLC also needs an auditor who is resident in Malta, and it must produce regular and annually audited financial statements.