Malta Entity Set Up

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Malta Subsidiary Entity Set Up

Global expansion into Malta generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our expertise. By using our PEO-service we take care of the complicated paperwork.

Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.

In this guide, we will share which documents you need to establish an entity in Malta, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Malta.

How to set up a Malta Subsidiary

Foreign companies moving into the Maltese economy will typically choose between a branch and a limited liability subsidiary. The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Malta as a local company.

The subsidiary is regulated by the Companies Act and Malta welcomes foreign investment, but beware - the World Bank ranked Malta only 88th out of 190 nations for ease of starting a business in their latest global assessment.

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.

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 share capital
  • Numbers of shared distributed to each shareholder and shareholders’ rights
  • The company directors and company secretary’s information
  • Details of company’s legal representatives
  • A bank account must be opened to hold the minimum share capital of around €1,200 (US$1,374), of which only 20% need be initially deposited
  • The Memorandum of Association, which must be registered with the Registrar of Companies, which issues a registration certificate and number
  • The subsidiary must also register its employees for social security and insurance

The Maltese Institute of Accountants and Maltese Accountancy Board require:

  • Obtaining tax registration number from the Commissioner for Revenue Office
  • Providing office address of company keeping accounting records
  • Mandatory registration for Value Added Tax with turnover above €35,000; registration is optional for turnover between €7,001 and €35,000. Returns can be made on a quarterly basis

What you need to set up a Malta Subsidiary

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 – around €1,200 (US$1,374), of which only 20% need be initially deposited
  • File all required documents with the Trade Register

The documents must 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

Benefits of setting up a Malta Subsidiary

Specific advantages for a foreign company opening a subsidiary in Malta include not being responsible for the subsidiary’s debts or liabilities. The liability of the subsidiary’s shareholders is limited to their investment in shares.

The subsidiary can operate under a different company name while pursuing its own business interests. It operates under Malta’s Companies Law in the same way as local companies. It is taxed on its worldwide income and liable for the standard rate of 35% Corporate Tax on business profits, although the Maltese Government offers many tax incentives in addition to double tax treaties with many nations.

Through its subsidiary, the parent company has the advantage of exploring further afield among other Mediterranean countries and the European Union’s 27 member nations, in addition to enjoying access to North Africa and the eastern Mediterranean markets.

Other benefits for a subsidiary:

  • Easier to obtain regulatory approvals, loans and finance and enter into contracts with other Maltese and European Union companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economy with 500 million consumers.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Malta.

Working with Bradford Jacobs in Malta. Using a global Professional Employer Organization (PEO) such as Bradford Jacobs means staff can be sourced, placed in their roles, and be up-and-running within days, rather than months, and with all the difficulties of payroll, taxation, and compliance under control thanks to our Employer of Record (EOR) services. You have day-to-day operational control of your employees, while we take the hassle off your hands.

Malta Subsidiary Laws

Company formation in Malta is governed by the Maltese Companies Act, including private limited liability companies. Subsidiaries are required to adhere to International Financial Reporting Standards as adopted by the European Commission.

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

Registration and Documentation

  • Memorandum and Articles of Association to be lodged with Registrar of Companies
  • Providing company name and registered office address and details of its business activities
  • Amount of capital deposited in bank
  • Number of shareholders must be registered with amount of individuals’ share capital
  • Details of subsidiaries’ legal representative
  • Employees must be registered for tax and social security
  • File all required documents with the Trade Register
  • Apply for any required permits or licenses depending on nature of business

Accounts and Taxation

  • Ensure the balance sheet, profits and loss accounts, director’s and auditor’s reports reflect the true financial position of the company
  • Obtain tax registration number from Commissioner for Revenue Office
  • Register for Value Added Tax
  • Providing office address of accountants
  • Explore European Union Parent – Subsidiary Directive which can minimize or cancel Withholding Tax on dividends, interest, and royalties to companies in other EU states
  • EU treaties can also minimize tax on corporate profits
  • Deposit the minimum share capital in the chosen bank – around €1,200 (US$1,374), of which only 20% need be initially deposited

Management

  • Founded by a minimum one shareholder to a maximum of 50
  • A minimum of one company director
  • Directors and shareholders can be foreign or Maltese

Take a faster route into the Maltese economy

The cost-effective and time-saving alternative to the expensive and lengthy process of establishing your subsidiary in Malta is to work alongside a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs.

We have over 20 years’ global experience and our in-country specialists will steer you through the complexities of setting up operations by locating and onboarding new employees, then ensuring compliance with all employment and tax regulations.

You retain day-to-day control of your staff – who are in place and operational within days rather than the months it could take to incorporate a legal entity. There is no reason for international borders to stand in the way of your international expansion. Contact us today for more information!