Corporate Services Provider

War Chest Corporate Services Ltd is a Company Service Provider registered with the Malta Financial Services Authority to provide a variety of corporate services to companies and individuals alike. Our goal is that of providing our clients with an excellent and reliable service, with tailor-made solutions for the needs of the client. We pride ourselves in being able to offer our clients the opportunity to work within the ambit of a Maltese companies since Maltese companies are flexible and useful vehicles which can be formed within quick turn around times, capital requirements are low, bank accounts can be held in third countries and business can be conducted internationally.

Why a Maltese Company?

Malta’s is an onshore jurisdiction on the OECD white list and is hence not considered as a tax haven. It has been a member state of the European Union since 2004 and a member of the Eurozone since 2008. All of this makes Malta a respected and well-regulated jurisdiction where financial legislation confirms to international best practice. Additionally Malta also has a vast network of double taxation treaties and a sound banking system.

Malta’s primary piece of legislation in terms of companies is the Companies Act, with legislation in Malta being best described as being comprehensive and business friendly. The authority responsible for administering the register of all Maltese companies is the centralised Registry of Companies which is physically located in the same premises as the Malta Financial Services Authority. It is largely modelled on the Anglo-Saxon model of a centralised company register.

A Private Limited Liability Company in Malta may be set up in as little as 48 hours. The authorised and issued share capital of a private company must be of a minimum of EUR 1164.69 of which at least 20% is to be paid-up.  In the case of public companies, the minimum authorised and issued share capital shall be of EUR 46,587.47 of which at least 25% must be paid-up. Companies may have their share capital denominated in any major currency.

Malta’s Limited Liability Company

Limited liability companies in Malta can be of two types: private or public. The Companies Act identifies two requisites for limited liability company formation in Malta: (i) entering into and subscription by at least two persons of a memorandum of association and (ii) the issue of a certificate of registration by the Registrar of Companies.

A Private Limited Liability Company in Malta restricts the right to transfer its shares, limits the number of its member to 50 and prohibits any invitation to the public to subscribe for any of its shares or debentures. A Private Limited Liability Company may also qualify as a Private Exempt Company which is less strictly regulated to a Private Limited Liability Company.

Private Limited Liability Companies must have at least 2 members, save for the scenario of a Private Exempt Company in which a company may have a single member.

The objects of a company may not simply be any lawful purpose or trade in general and, accordingly, the main trading activities and powers of a company are typically listed in detail. Private Limited Liability Companies may be set up as Holding Companies wherein such companies can be set up in order to hold shares and securities and business assets in any form such as real estate, fixed assets, aircraft, investments, bank accounts and intellectual property as well as personal assets including any luxury items such as yachts, residential property, works of art.

The objects clause in the Memorandum of Association of a single member company must specify the nature of its main trading activity and the business of the company must then principally consist of that activity.

How does one set up a Limited Liability Company?

  1. Prepare a Memorandum and Articles of Association ensuring that such Memorandum and Articles of Association are compliant with the legal requirements of the Companies Act and any other relevant legislation;
  2. Reserve the name of the company with the Registry of Companies;
  3. Deposit the initial share capital of the company with the proposed bankers of the said company;
  4. File the necessary documentation at the Registry of Companies, duly signed and completed
  5. Once the company is incorporated, proceed with the setting up of a bank account (the bank may be both local or foreign) and any other registration required (eg. Obtaining a Tax Identification Number [TIN]).

War Chest would be able to assist its clients in the process set-out above, ensuring at all times that the client remains compliant with the law whilst also ensuring that the client will be benefitting for the best tailor-made solution legally possible.

What is a Memorandum and Articles of Association?

The Memorandum and Articles of Association is the constitutive document of a company. Such a document must necessarily include:-

  • The name of the company;
  • The name, address and official identification of the subscribers thereto;
  • The Nature of the company, specifically whether the company is a private company or a public company;
  • The registered office of the company in Malta;
  • The objects of the company;
  • Details regarding the authorised, issued and paid-up share capital;
  • The number of directors and the particulars of the first directors and secretary,
  • The manner in which the representation of the company is to be exercised.

Annual Costs of a Limited Liability Company

Registration and annual MFSA fees depend on the amount of authorised share capital that the company is allowed to issue. Registration fees range from €245 to €2,250, while annual fees payable to the MFSA range from €100 to €1,400, such annual fees are paid yearly with the presentation of the Annual Return which states the share capital, and lists the shareholders, directors and company secretary.

Other Annual Costs which a Limited Liability Company would have to face are costs related to the preparation of Annual Audited Financial Statements. Maltese Companies are obliged by law to prepare audited Financial Statements. Financial Statements may be audited by authorized auditors or audit firms. Fees for such a service vary from firm to firm and according to the size and complexity of the company.

Maltese Companies Tax Regime

Maltese Companies are onshore companies paying tax on a worldwide basis at the normal corporate tax rate of 35% having significant tax refunds to shareholders based on the imputation tax system and with the possibility of confidential beneficial ownership.

This system presents a favorable scenario in terms of tax planning for:

  • Passive Income
  • Dividends from non-participating holdings
  • Capital gains made from the disposal of a participating holding
  • Trading income
  • Dividends received from a participating holding

Imputation System and Tax Rate

Malta operates a full imputation system of taxation. In such a system the tax paid by the company is available as a credit to shareholders when distributions are made to them.

Maltese Companies are subject to the normal corporate tax rate applicable to all companies registered in Malta namely 35% on their worldwide income.

6/7ths Refund for Active Income

When trading companies pay dividends to shareholders, they become entitled to claim refunds of 6/7ths of the Malta tax paid by the company. This results in an effective Malta tax rate of 5%.

100% Refund/Exemption for Participating Holdings

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 the shareholders. Such income may be exempted from Maltese tax provided a number of conditions are satisfied.

In those circumstances where a 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 such company chooses 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.

The Maltese tax system still provides for refunds of the tax paid by the Maltese company when distributions are made to the shareholders when such companies have income derived from non-participating holdings or from passive interest and royalties.

Participating Holding

For a Maltese resident company to hold a “participating holding” in a company incorporated abroad, it must hold at least 10% of the equity shares in the non-resident company. In the case of a shareholding of less than 10%, such holding may still qualify as a “participating holding” if the Malta Company:

  • holds 10% or more of the shares of the foreign company; or
  • is entitled at its option to purchase or has the first right of refusal on a disposal of the balance of the equity shares of the foreign company; or
  • is entitled to be represented on the Board of Directors of the foreign company; or
  • holds a shareholding exceeding EUR1,165,000 or equivalent for an uninterrupted period of 183 days; or
  • holds equity shares in the foreign company for the furtherance of the business of the Maltese company (not trading stock).

Participating Exemption

At the option of the taxpayer, dividends and capital gains derived from a Participating Holding are exempt from Malta tax.

Light anti-abuse provisions apply if the Participating Holding is acquired after January 1st 2007 namely the foreign subsidiary must:

  • be resident or incorporated in an EU country or territory; OR
  • be subject to any foreign tax of at least 15%; OR
  • not have more than 50% of its income derived from passive interest or royalties;

Where none of the conditions set out above are satisfied then both of the following two conditions must be satisfied for the income to be eligible for the participation exemption:

  • the equity holding by the company registered in Malta in the body of persons not resident in Malta is not a portfolio investment and for this purpose the holding of shares by a company registered in Malta in a body of persons not resident in Malta which derives more than fifty per cent of its income from portfolio investments shall be deemed to be a portfolio investment;

AND

  • the body of persons not resident in Malta or its passive interest or royalties have been subject to any foreign tax at a rate which is not less than 5%.

5/7ths refund for Passive Interest and Royalties

Shareholders of a Maltese company may claim a refund of 5/7ths of the tax paid by the company when distribution is made when said distributions are made out of profiles earned from passive interest and royalties.

Both the 6/7ths and 5/7ths refund only apply in the case of distributions made by the company on which no form of double tax relief was claimed. 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 2/3rds of the tax paid by the Maltese company.

Other Benefits

The Maltese tax system is such that in the case of the distribution of the profits or dividends to the shareholders no withholding taxes, stamp duties or exchange control restrictions apply. Furthermore there are also no taxes or restrictions on the exportation of the dividends from the Malta company.

Malta has 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 payment and no capital duties or wealth taxes.

Directorship and Company Secretary

Two important officials of a Maltese Company are Directors and the Company Secretary. Directors of companies in Malta may be Maltese or foreign individuals or Corporate Directors. War Chest Corporate Services Limited is authorized by the MFSA to act as a Corporate Director.

The Company Secretary, on the other hand, is a natural person resident in Malta responsible for the keeping of registers, the notification of meetings, the keeping of minutes and the filing of annual returns and other documentation with the Registrar of Companies. War Chest can assist clients in the engagement of such a Company Secretary.

How can War Chest help?

War Chest is able to assist its clients with the incorporation of Maltese Companies including drafting tailor-made Memoranda and Articles of Association, incorporation at the Registry of Companies, provision of Corporate Directorship, engagement of a Company Secretary and provision of a Registered Office.

War Chest would also be able to assist clients with ancillary needs in the process of setting up a company including but not limited to opening of bank accounts with local banks and assistance in any registration needed with local authorities. Click here to get in touch with us and discuss your needs.