Malta Overview


Malta is the smallest member of the European Union (EU) and has one of the fastest growing finance sectors in the world. Malta enjoys the lowest tax rate in the EU, excellent regulation and a highly skilled but affordable workforce. English is the first language and Italian is widely spoken. The currency is the euro and the timezone is GMT +1. Malta offers low tax companies, trusts and funds as well as some products aimed at UK expats such as QROPS. Malta is an important maritime centre with the largest registry in Europe and has an emerging aviation industry. Many world leading companies have relocated to Malta to take advantage of its low tax, affordable workforce, and well regulated financial services industry especially in the area of online gaming and fund administration. Malta’s geopolitical position also makes it a popular choice for trading in the Middle East/North Africa (MENA). Malta’s economic track-record shows constant growth since it joined the EU in 2004 having passed through the global recession without the need for support. The connection with the United Kingdom (UK) from which it became independent in 1964 makes it a popular destination for British migrants and retirees and the legal system is a hybrid of civil law and common law with most commercial law being based very closely on English law. Finally Malta also enjoys a subtropical climate.

Malta’s main appeal is its favourable tax environment. It has the lowest corporate tax rate, intellectual property rate, VAT rate and gaming tax in Europe as well as a host of other financial incentives outlined below.

Malta is a well regulated country and being part of the EU conforms to international standards of regulation. As would be expected banks, lawyers, accountants, auditors, trustees and providers of investment services are licensed. eMoney operators can also obtain a licence in Malta distinct from a banking licence. Employment agents are licensed only if they operate locally and estate agents can operate without a licence. The provision of corporate services such as the formation of companies and provision of professional management is not for the time being regulated though it is likely to become licensed this year (2013). Consultation documents suggest that lawyers and holders of trust licences will be exempt from these requirements. Whilst the decision to regulate this area may affect a handful of smaller providers it is not seen as making any difference to the smooth running of the financial services area in Malta and is generally welcomed.

Companies, Foundations, Funds and Trusts
Companies, foundations and trusts pay as little as 5% tax on trading income, 10% from passive income and 0% on dividends received from subsidiaries while funds may be exempt from tax altogether. This is the lowest tax environment in the EU making it a popular choice for both holding and trading entities where clients do not want to use an offshore solution. Please see our main articles for more details on Maltese companies, foundations, funds and trusts.

Regulated Entities
Many regulated companies are established in Malta given its excellent access to the regulator and fast licence turnaround. These firms take advantage of EU wide passporting rules which often allows them to operate or market in any other EU member. This is especially interesting for funds, online gaming companies and eMoney issuers. For more detail on this please see our main article on funds, eMoney licences and online gaming.

Residency Programmes
Maltese income tax is charged on a tiered basis up to 35% but since little or no income may be chargeable the effective rate can be much lower or nil. Aside from income tax Malta has one of the lowest social security rates in Europe which is capped at around 3,500 EUR annually (total of employer and employee contributions). An EU citizen can pay their Social Security in any member state and many foreign nationals prefer to pay in Malta. Maltese residency is straightforward for European Union citizens who have a Treaty of Rome right to live and work in Malta without the the need for work permits or residency permits. Non-EU citizens can become resident on a number of grounds including following the grant of a work permit and such residency may grant some freedom of movement within the Schengen area. Please see our main article on Maltese residency for more details.

Intellectual Property
Malta can be used as a centre for holding intellectual property (IP) and income from qualifying inventions may be exempt from tax. For more information on how the separating of IP from other income can be used for tax advantages please see our main article on IP in Malta.

Vessel and Aircraft Holding
Malta is an excellent country for registering vessels and has the largest maritime registry in Europe. Malta has also an emerging aviation industry. There are numerous benefits to registration of vessels under the Maltese flag including benefiting from Malta’s excellent tax environment and the use of Malta’s excellent infrastructure of related services and skilled and affordable workforce. For more information please see our main articles on the Maritime and Aviation sectors in Malta.

Value Added Tax (VAT) Reducing Scheme
Malta offers a VAT reducing scheme which can make the importation of vessels into Malta highly attractive as it offers an effective rate of as little as 5.4%. For our main article please see the Maritime and Aviation sections.

Malta is becoming increasingly popular as a banking centre following recent issues in Cyprus as well as the movement of funds out of Switzerland especially by Austrians and Germans. Please see our main article on banking in Malta.

QROPS are of potential interest to anyone who has a UK pension. Malta is able to provide both of these and is the only European state in this position. It is seen by many as the most sustainable of QROPS providers.

Why Malta?
Malta is not in competition with traditional offshore centres which offer no tax companies with little or no reporting and are considerably cheaper. By contrast Maltese structures need to pay some tax (albeit the lowest rate in Europe) and have a much higher standard of reporting and regulation. Malta’s main strength lies in its reputation as an EU member and it is suitable for clients who believe that offshore solutions and 0% tax areas are becoming increasingly difficult to defend.

Malta Private Companies

Although a civil law jurisdiction Malta’s company law is very closely based on UK legislation. Company and contract law in Malta is broadly very similar to the UK and the various common-law jurisdictions. For a general discussion on the benefit of private companies including the protection of limited liability please see our main article on private companies in the product section of the website.

Malta Foundations

Foundations have been described as the civil law alternative to trusts. Maltese foundations are non-commercial incorporated entities which have the benefits of trusts with the added protection of having a separate legal personality. Foundations are not a new concept and apparently trace their origins to the legal traditions of ancient Rome or Greece.

Malta Residency

It is vital to note that the taking up of residency is Malta does not, of itself, shed any previous residency. Frequently it is much harder to dispose of a previous residency than to acquire a new one. Since there is motivation on behalf of an inbound country to make registration as simple as possible and on behalf of an outbound country to keep tax residents as far as possible it is vital to seek advice in the outbound country as well.

Malta Funds

Malta’s fund industry is a major success story showing continued growth throughout global recession. Since Malta’s accession to the EU in 2004 around seven hundred funds holding around €8bn in assets have been licensed in Malta and Malta now competes with industry-leading countries as a centre of excellence for fund registration. In addition to the above it is estimated that around €80bn of assets are controlled by Maltese registered funds operated elsewhere and this sector makes up about 10% of Malta’s economy.

Malta Nominees

Nominee services (also known as mandatory services and sometimes as “bare trusts”) are licensed in Malta. A nominee is a person who holds an asset in name only for the benefit of another person. Unlike a trustee a nominee has no discretion about the use of the asset and can only act in accordance with instructions from the beneficial owner. Nominee shareholders are used in situations where it would be impractical or expensive for an asset to be registered in the name of the beneficial owner and/or privacy about ownership is required.

Malta Business Incubation

Incubation services are designed to ensure that a new start-up business or a newly established overseas branch of a foreign company has the best possible chance of success. In the early stages of a company’s life it may be premature or overly costly to lease its own premises, hire staff and deal with the various other considerations relevant to a newly formed company. The following services are generally available where the company is formed or where the overseas branch is established.

Malta Online Gaming

Malta is an established name in online gaming and as the smallest member of the EU punches well above its weight with around 10% of the world’s gaming companies registered in Malta. Hundreds of online gaming business of all sizes have chosen to operate from Malta to take advantage of its low tax rates (the lowest in Europe), excellent financial services environment, world class hosting facilities, skilled and affordable workforce and unparalleled access to the regulator. Online gaming makes up around 10% of Malta’s economy.

Malta eMoney

eMoney describes any digital form of payment which may be made by voucher or card payments (both related to physical cards and virtual cards). In most countries  the origination of eMoney is licensable and authorised as part of a banking licence however in Malta eMoney issuers can obtain standalone authorisation by application for an eMoney licence and this licence can be passported throughout the European Union (EU).

Malta Maritime

Malta has a long naval tradition due to its location in the centre of the Mediterranean, half way between Gibraltar and the Suez canal. Malta has the largest vessel registry in Europe and the eighth largest in the world. Vessel registration in Malta is straightforward, costly and has numerous benefits. Income from Maltese vessels will generally be exempt from all taxes except a small fixed tonnage tax.

Malta Aviation

Aviation is an emerging sector in Malta. In 2010 the civil aviation authority was subsumed into Transport Malta which is the body responsible for Malta’s maritime sector. Malta has long enjoyed a dominant position in the maritime sector (it has the largest registry in Europe and the eighth largest in the world) and now seeks to use its expertise in this area to establish a world class aviation industry.

Malta Intellectual Property (IP) Holding

Malta has the lowest tax rates for income from intellectual property (IP) in Europe and is a popular destination for the outsourcing of valuable IP and research and development. Intellectual property can be protected upon demonstration of its originality for a number of years (which varies depending on the type of IP) and protected across a geographic area such as Malta or the European Union.

Malta Qualified Recognised Overseas Pensions Schemes (QROPS)

Qualified Recognised Overseas Pension Scheme (QROPS) are schemes operated in foreign countries which have obtained HMRC approval to take receipt of UK pension funds and are relevant only to persons who have a UK pension. For a detailed discussion of the various disadvantages of UK pensions and the benefits which can come from moving them please see our main article on QROPS in the product section.