Malta Entity Set Up Guide

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Malta Entity Subsidiary Set Up Guide

Both subsidiaries and branches are recognized as business vehicles by Maltese Commercial Law and there are few substantial differences between them. A Maltese subsidiary requires at least two shareholders and a minimum share capital of €1,165. If the company’s share capital exceeds the minimum, only 20% of the capital need be deposited. The company must appoint a director and company secretary and have a registered office in Malta.

The subsidiary is a 100% local Maltese entity with full independence from the parent company and follows the same incorporation procedure as any company in Malta. A Maltese subsidiary can also benefit from taxation concessions, while the foreign parent company has no liability for its activities or any debts.

Although this may appear a convenient route for exploring new markets, setting up a subsidiary in Malta incurs a daunting administration workload in addition to potentially moving staff across the world or sourcing them in-country. Human resources, payroll tax processing and filing, workforce management and compliance with Maltese employment law will eat up time and revenue.

Remove this burden by partnering with an Employer of Record (EOR) company such as Bradford Jacobs. Initially we source your new staff through our Professional Employer Organisation (PEO) international recruitment specialists and then our EOR experts handle all legal and compliance issues. Instead of the cost and inevitable delays in going solo, companies can be up-and-running with a presence in their new territory within days rather than months.

How to set up a Subsidiary in Malta

To incorporate a subsidiary in Malta, the parent company must comply with the Maltese Companies Act. Both private and public limited liability companies must produce a Memorandum of Association and Articles of Association including the following information:

  • Company name and registered office address
  • The type of company and its business activities
  • Details of the shareholders
  • The amount of capital
  • Numbers of shared distributed to each shareholder and shareholders’ rights
  • The company directors and secretary
  • Details of company’s legal representatives

A bank account must be opened to hold the minimum share capital. The Memorandum of Association must be delivered to the Registrar of Companies, which issues a registration certificate and number. The subsidiary must register its employees for social security and insurance.

Accountancy measures in Malta are overseen by the Maltese Institute of Accountants and the Maltese Accountancy Board. Requirements include:

  • Obtaining tax registration number from the Inland Revenue Department
  • Providing office address of company keeping accounting records
  • Value Added Tax registration is mandatory; returns can be made on a quarterly basis
  • The balance sheet, profits and loss accounts, director’s and auditor’s reports must reflect the true financial position of the company

Maltese Subsidiary Laws

Company formation in Malta is governed by the Maltese Companies Act, under which a private limited liability company must have a minimum of two shareholders, a manager and company secretary. There are no restrictions on the nationality of these personnel. A minimum of 20% of the share capital must be deposited in a Maltese bank account, with a larger percentage deposited for a public limited liability company.

Subsidiaries are required to adhere to International Financial Reporting Standards as adopted by the European Commission. Malta subsidiaries must obtain a tax registration number from the Inland Revenue Department.

The Companies Act requires compliance with other regulations, such as:

  • Providing office address of accountants
  • Registering for Value Added Tax
  • Ensuring the balance sheet, profits and loss accounts, director’s and auditor’s reports reflect the true financial position of the company
  • Obtaining tax registration number from the Inland Revenue Department
  • Providing company name and registered office address and details of its business activities
  • Details of the shareholders, the amount of capital, the number of shares distributed to each shareholder and their rights
  • The company directors and company secretary and details of legal representatives

Benefits of setting up a Subsidiary in Malta

Maltese subsidiaries can benefit from a number of double tax treaties signed with other states. The EU Parent-Subsidiary Directive allows for special provisions between the parent company and subsidiary. These treaties regulate minimising or cancelling withholding taxes on dividends, interests or royalties paid to companies in European Union states or treaty countries. The taxes on profits are also subject to these treaties.

Among legal advantages of a limited liability subsidiary is that the parent company’s shareholders and directors are not liable for the activities or any debts of their overseas entity. The subsidiary is free to develop its own business activities while increasing the global credibility as its parent company as it explores new markets. However, the process has its own disadvantages. It is costly and time consuming with no guarantee of long-term success at the end of the process.

The proven successful alternative is to use a Professional Employer Organisation (PEO) such as Bradford Jacobs to source staff in-country, place them in their roles and be up-and-running within days, rather than months. In addition, all the difficulties of payroll, taxation and compliance will be under control thanks to our Employer of Record (EOR) services.

What you need to set up a Subsidiary in Malta

  • Companies planning to expand into Malta with a subsidiary must comply with the Maltese Companies Act. Main steps include:
  • Reserve a company name with the Maltese Commercial Register
  • Draft and notarize the company’s Memorandum and Articles of Association
  • Deposit the minimum share capital in the chosen bank
  • File all required documents with the Trade Register

The documents include:

  • The Memorandum and Articles of Association
  • Confirmation the company name has been registered
  • Bank receipt confirming deposit of minimum share capital
  • Passport copies of the shareholders, directors and company secretary

A typical timescale might be:

  • Reserving business name – a few hours
  • Drafting and notarizing incorporation documents – one day
  • Depositing share capital – one day
  • Company and tax registration – two days
  • Value Added Tax registration – seven days
  • Obtaining an employer identification number – three days
  • Registration for employment purposes – two days

Working with Bradford Jacobs

Bradford Jacobs deal with all of the above – and more. Our Professional Employer Organization worldwide recruitment specialists will find the staff to fill the designated roles. Then our Employer of Record experts are based in Malta to assist in preparing all of the documentation. We can liaise with the Maltese Companies Registrar, tax and social service authorities and obtain any necessary permits. You know it makes sense. Contact Bradford Jacobs today.