Company incorporation, accounting and administration (including payroll) services
Hogg Capital will provide a single source solution to your company’s incorporation, registration and ongoing regulatory obligations through our associated and in-house Legal, Accountancy and Compliance services, as well as enabling you to draw upon our network of locally registered banks, and auditors.
Our services’ offering provides for complete transaction records, related summaries, income statements, transactions’ settlements and fees’ reconciliations, as well as shareholders’ registers and any additional records specific to your operating requirements, to be maintained both electronically and in hard copy.
We will undertake the preparation of interim (frequency as required) and annual financial statements including organisation and full support of annual audit; registered office, nomination of directors, and corporate secretarial services, including the holding and minuting of board meetings, AGM’s, the preparation of resolutions and; the filing of annual returns and other statutory documentation with the appropriate and/or regulatory bodies.
Malta joined the European Union in May 2004 and adopted the Euro in January 2008. Since joining the European Union, Malta’s financial services’ providers have made significant strides in establishing a presence within the European financial services scene and new cross-border opportunities have opened up for fund service providers, finance companies, trust services and occupational pension provision. Malta enjoys a reputation as a serious, respected and well regulated financial services centre. As a destination for foreign investors, Malta has an open economy, and one which seeks to encourage and assist. This applies equally to Government, its agencies, the financial institutions, professional support and prospective local partners. In addition to its EU membership, Malta is actively involved with the OECD, and the British Commonwealth in modelling global regulatory policy. The financial services’ industry is among the fastest growing sectors within the Maltese economy, in the process becoming a major employer locally.
Located at the centre of the Mediterranean, Malta is well placed to provide access to the EU single market, as well as to benefit from its proximity to the surrounding markets of southern Europe, North Africa and the Gulf. The Island’s public and commercial, including financial services’, legislation are based on the English model. Our official languages are both English and Maltese.
Malta is a reasonably priced location where the cost of living is relatively low by European standards as are salaries and wages; it draws upon a well-educated, multi-lingual employment base. A strong international tax treaty network is in place which can provide competitive tax advantages.
An important development in this regard has been the establishment of the single regulator, the Malta Financial Services Authority (“MFSA”). Malta’s regulatory framework is geared towards ensuring the highest standards of probity while not being overly prescriptive. The MFSA is an independent public body and has supervisory authority over all banking, investment and insurance business. It regulates the Malta Stock Exchange and manages the Companies Registry. The MFSA is an active member of the Committee of European Securities Regulators (CESR), the International Organisation of Securities Commissions (IOSCO), the Banking Advisory Committee (BAC), the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) and the International Association of Insurance Supervisors (IAIS).
Malta’s tax framework is fully transparent and is based on the imputation system. No distinction is made between a domestic or foreign-owned company.
Malta embraces international tax standards for transparency and exchange of information and was among the first six countries in the world, and the first in Europe, to reach an advanced accord with the OECD on tax matters.
Under Maltese tax law all companies resident in Malta are subject to income tax at a rate of 35%. The imputation of tax is applied through a refund mechanism whereby the shareholders of a company get a refund of up to 6/7ths of tax paid at the company level upon a distribution of dividend. This system applies to both resident and non-resident shareholders.
Investment funds are fully exempt from corporate tax in Malta. Maltese resident investors are subject to 15% final withholding tax on certain prescribed investments. There is no stamp duty, tax on NAV or capital gains tax on sales of interests by non-residents, or by residents if the interests are listed on the Malta Stock Exchange.
Malta currently has tax treaties with 45 countries, enabling tax efficient structures and relief from double taxation on cross-border transactions.
International Trading & Holding Companies
Before 1st January 2007, Maltese law allowed the formation of International Trading Companies (ITCs) and International Holding Companies (IHCs) which restricted the tax advantages of Malta companies to non-resident shareholders. Maltese Income Tax legislation has been updated to remove the discrimination between local and non-resident shareholders and these changes have been approved by the European Commission.
New Company Tax System (2007 onwards)
The Maltese Company is an onshore company paying tax on a worldwide basis at the normal corporate tax rate of 35% with significant tax refunds to shareholders based on the imputation tax system.
This presents favourable tax planning opportunities for:
- dividends received from a participating holding
- capital gains made from the disposal of a participating holding
- dividends from non-participating holdings
- trading income
- passive income (interest, royalties etc)
1) Company Tax Rate
Maltese Companies are subject to the normal corporate tax rate applicable to all companies registered in Malta, at 35% on their worldwide income.
2) Imputation system
Malta operates the full imputation system of taxation whereby the tax paid by the company is available as a credit to the shareholders when distributions are made to them. Company tax of 35% is available as a credit to the shareholders upon receiving dividends from the company.
3) 6/7ths refund for active income
When dividends are paid by trading companies to the shareholders, these shareholders become entitled to claim refunds of 6/7ths of the Malta tax paid by the company.
Shareholdings may be held by individuals or through a Maltese parent.
The definition of a company has been widened to include an oversea branches (PEs) set up in Malta, companies which although not resident in Malta carry out activities in Malta and also companies which are neither incorporated nor resident in Malta provided that such companies are registered with the local tax authorities.
4) 100% refund for participating holdings / participating exemption
Under the Maltese tax system, the income and capital gains derived by a Maltese registered company from a ‘participating holding’, qualifies for a full refund of the Maltese tax paid by the company when distributions are made to company shareholders.
The latest amendments to Maltese tax laws have enhanced this tax treatment through the introduction of the notion of the ‘participation exemption’ whereby such income may be exempted from Maltese tax provided certain conditions are satisfied.
Dividends derived from a participating holding acquired after 1 January 2007 by a Maltese company may qualify as a ‘participation exemption’ provided certain anti-abuse provisions are satisfied.
In those instances where the participating holding qualifies as a ‘participation exemption’, the Maltese company has the option not to declare the income in its tax return resulting in no tax being payable in Malta.
If the company, however, elects to include the income from its participating holding in its tax return, it will then still qualify for a full refund of the tax paid by the Maltese company. The refund is payable by the fourteenth day from when the claim is made.
For companies having income derived from non participating holdings or from passive interest and royalties, the Maltese tax system still provides for refunds of the tax paid by the Maltese company when distributions are made to shareholders.
5) 5/7ths refund for passive interest and royalties or from non participating holdings
When distributions are made out of profits earned from passive interest and royalties or from non participating holdings, the shareholders of a Maltese company may claim a refund of five-sevenths of the tax paid by the company when distributions are made to them.
The six-sevenths and five-sevenths refunds only apply when the distributions are made by the company which did not claim any form of double tax relief. When dividends are paid out of profits allocated to the foreign income account and in respect of which profits the company has claimed double tax relief, the shareholders may apply for a refund of two-thirds of the tax paid by the Maltese company.
6) Procedure for Refund
These statutory refunds (available since 1994) are legally guaranteed and are payable efficiently by the Inland Revenue Department to the shareholders within 14 days from the day in which the request is made to the Department.
7) Other tax benefits
No withholding taxes, stamp duties or exchange control restrictions apply on distribution of the profits or dividends to the shareholders and there are no taxes or restrictions on the exportation of the dividends from the Malta company. Malta has general anti-avoidance provisions but:
No thin-cap rules or debt : equity ratios
No transfer pricing rules
No withholding taxes on interest and royalties to non-residents
No withholding tax on dividend payments
No capital duties or wealth taxes
8) Access to Treaties & EU Directives
As an EU Member State Malta has adopted, amongst others, the EU’s Parent-Subsidiary Directive and the Interest and Royalties Directive.
9) Trusts/ Foundations
Maltese law enables the setting up and regulation of trusts and foundations.
A choice of trust jurisdiction will inevitably be the result of the careful consideration of a number of factors ranging from the regulatory framework, the expertise of service providers, costs and the judicial system. Since the inception of the concept of trusts way back in 1984, Malta has gone a long way in establishing itself as a trust jurisdiction worthy of serious consideration. A comprehensive regulatory and legal framework exists for trusts and trustees.
The establishment of a Foundation governed under Maltese legislation, can offer not only greater flexibility to Founders and associated Beneficiaries, but also to those vested with the responsibility of administering their assets.
A Private Foundation is a unique form of legal entity, which acts like a Trust and operates like a company, without members or shareholders.