Types of Companies in Malta to Register a Business

Are you looking to set up a company in Malta? Choosing among the various types of companies in Malta can be tedious for someone starting their own company. The Malta company types determine the incorporation requirements, capital requirements, and ongoing compliance of a business. Our blog covers the basics of company structures in Malta along with their suitability for different businesses.

Benefits of Setting Up Companies in Malta

Malta is one of the top countries for business setup due to a range of available benefits. An entrepreneur setting up one of the Malta company types can avail of the advantages mentioned below:

1. Full Imputation Tax System

One of the most significant advantages of setting up a Malta company is the full imputation tax system. Under this tax system, an active trading company pays a corporate tax rate of 35%. Upon receiving dividends, shareholders can claim 6/7th tax refund, which effectively brings the tax rate down to 5%.

2. Access to the European Market

Malta became a European Union (EU) member in 2004. By setting up a company in Malta, an entrepreneur can easily trade within the EU with no customs checks at internal borders. On top of that, a company does not have to obtain any additional regulatory approvals to trade with another EU member state.

3. Stable Currency

Malta adopted the Euro as its official currency in 2008. This move provides extensive protection from currency fluctuations, as the Euro is one of the most stable currencies. Moreover, it makes international trade easier as it is accepted worldwide and requires no conversion, especially within the Eurozone.

4. Extensive Network of Double Taxation Treaties

Malta has a robust network of double taxation treaties (DTTs) with over 70 active agreements worldwide. This prevents businesses and individuals from paying tax twice on the same income in both Malta and their home country.

5. Amicable Business Environment

Malta has a business-friendly environment that fosters growth. The business environment is supported by a strong legal framework, an effective corporate tax system, and numerous double taxation treaties.

6. Participation Exemption

Participation exemption is another significant advantage that prevents holding companies from paying taxes on the income derived from foreign subsidiaries.

What are the Types of Companies in Malta?

The right company structure lays the foundation of how a business operates in Malta and the compliance requirements it needs to meet. Selecting an appropriate structure is a crucial decision that an entrepreneur undertakes. Here are the key types of companies in Malta that you can choose from during company incorporation:

• Limited Liability Company (LLC)

Limited Liability Company is one of the most preferred types of companies in Malta and is governed under the Part 5 of the Companies Act of Malta. As per the Act, an LLC is a separate legal entity with capital divided into shares held by members. The members also enjoy limited liability and are liable only up to the amount unpaid by them. Setting up an LLC in Malta requires a minimum of two members with no restrictions on the residency. Under the Act, a Maltese limited liability company is of three types:

• Public Limited Liability Company

A public limited liability company is a registered firm in Malta with a minimum of 2 directors and one company secretary. This type of firm can issue shares to the public, and must clearly outline share transfer rules and requirements in the Memorandum of Association.

• Private Limited Liability Company

It is one of the most popular types of companies in Malta, specifically among non-resident entrepreneurs. A private limited liability company can have a minimum of two members and a maximum of fifty members. For seamless business operations, it must also appoint at least one director and one company secretary.

• Single Member LLC

Contrary to the above requirements, a limited liability company in Malta can also be set up with only one member, provided it meets certain requirements, including specification of the core trading activity in the object clause of the MoA.

• Commercial Partnership

Partnership is also one of the significant types of companies in Malta. It is governed under the Parts 2, 3, and 4 of the Companies Act. Under the Act, a partnership is a legal arrangement that constitutes a separate legal entity. That means it can hold properties, enter into contracts, or open a bank account in its own name, unless struck off from the register. Moreover, there are two types of partnerships in Malta:

• Partnership En Nom Collectif

Part 3 of the Act governs the Partnership en nom collectif in Malta. It is essentially a general partnership with two or more partners sharing unlimited and joint liability to repay the entity's debts. Both individuals and corporations can form a partnership. However, if only corporations with limited liability form a partnership, then the corporate-style accounting and auditing requirements will apply.

• Partnership En Commandite

Part 4 of the Act governs Partnership en commandite. It is essentially a limited partnership. This type of partnership has two classes of partners: general partners with unlimited liability and limited partners with limited liability. Just like other types of companies in Malta, both individuals and corporations can form limited partnerships. However, a firm needs to follow corporate accounting standards when a limited liability company is a general partner.

• Sole Proprietorship (Trader)

Title 1 of the Maltese Commercial Code governs the trader or sole proprietor in Malta. A trader is defined as a person who conducts and holds business in his own name. As per Article 13 of the Commercial Law, a trader is required to maintain accurate records of every transaction and inventory. On top of that, a trader in Malta has unlimited liability and is personally responsible for paying off the debt.

• Overseas Company or Branch Office

Articles 385 to 389 of Part 9 of the Maltese Companies Act govern the overseas company or an establishment of a branch office in the region. An overseas company must outline the activities that it intends to conduct in Malta. Moreover, it must submit the parent company's charter and incorporation documents, which the headquartered in another jurisdiction, within one month of formation. Additionally, it is one of the most popular types of companies in Malta for businesses wanting to explore the local market and demographics.

• Societas Europaea (SE)

It is a European public limited liability company which is primarily governed by the European Law and the Maltese law. These types of companies in Malta are easily transferable across EU member states without dissolution or reincorporation. Moreover, these must also have a subscribed capital of EUR 120,000 and be formed by at least two existing companies with their registered and head offices in an EU member state.

Which is the Appropriate Company Structure for Your Business?

Choosing the right structure from the types of companies in Malta depends on your business goals and requirements. The table below covers the basics:

How Can Business Setup Worldwide (BSW) Help?

Malta’s comprehensive legal framework for business incorporation attracts entrepreneurs from across the globe. However, selecting the right structure from the types of companies in Malta can be a challenging decision to make. That’s where BSW’s guidance can be game-changing. Our experts, with comprehensive knowledge of the local legal requirements, ensure you choose the right Malta company type to structure your business. Contact us to begin Malta company formation.