Investment Legislation in Malta

Malta is a small, but a well-developed country located in the Mediterranean, at the confluence of Europe and Africa. The main elements that make Malta attractive for investors are the business environment and the taxation system which transformed Malta into a tax-heaven. The official languages are Italian and English, which represent an advantage for the business environment, the tourism and also for the multi-lingual workforce in Malta. Our company formation specialists in Malta can assist you when investing in Malta, by dealing with the entitled authorities among other things.

Why is Malta considered an appealing foreign investment destination?

Because Malta is a member of the European Union, this important status led to the increase of the export market, as foreign investors setting up companies take advantage of the facilities offered the country’s freeport. The Government also has offered numerous incentives throughout the years which contributed to a large number of foreign investors coming to Malta during the past decades. The authorities also enabled various programs in order to attract foreign direct investments in sectors like tourism, IT, agriculture, research, and development. Our company formation consultants in Malta can provide you with information about the latest investment schemes applicable in the country and about the legislation involved for investing in Malta.

Foreign investments in Malta

The geographical position of Malta attracts foreign investors in the Mediterranean zone and helps entrepreneurs wanting to invest their money in tourism. Malta lies between Europe and Africa which makes it a meeting place for different cultures. Below is information about the key points of Malta that sustain the investments in this country:

1. The most attractive factor in Malta is the taxation system that offers a lot of possibilities for companies. 
2.  Malta has signed double taxation treaties with more than 50 countries. These treaties ensure that the profits companies make in Malta are exempt from taxes in their resident countries.
3. Even if the corporate tax rate is set at 35%, the tax is actually taken down to much lower values due to the participation holding shareholders are allowed to have. 
4. Shareholders are entitled to ask for refunds of the 6/7th part of the tax on dividends, therefore the tax will be taken down to 5%.
5. Malta is very attractive for pensioners also, as the laws grant foreign pensioners who move to Malta a tax of 15% and the pensioners’ capital gains or incomes in other countries are not subject to taxes in Malta.

Workforce in Malta

As mentioned above, the workforce in Malta is highly appreciated due to the fact that English is an official language, but Maltese people also speak Italian, German or French. Maltese people are very educated and well trained which make these qualities very important when searching for workforce in Malta. Maltese companies benefit from a large pool of skilled workforce that will deliver motivated employees. The quality of education is a key factor leading to qualified workers. Malta offers great possibilities in terms of legislation when it comes to jobs for non-residents.

Is it hard to open a company in Malta?

No, there is no need to think that a business in Malta starts hard due to the registration formalities involved. For instance, if you decide on opening a Maltese limited liability company, the most recommended business structure in the insular state, the incorporation is quite easy and it involves a series of conditions, such as:

1. EUR 1,200 is the minimum share capital for opening an LLC in Malta, and 20% of this sum needs to be deposited in a local bank account at the time of incorporation.
2. At least two shareholders can form and register a limited liability company in Malta.
3. A registered business address and a company representative are mandatory conditions for forming an LLC in Malta.
4. Such a company cannot commence the activities if the registration for tax purposes and social contributions is not concluded.

Branches and subsidiaries can be easily established in Malta and such entities can run under the rules of limited liability companies (public or private) or joint stock companies if it is the case. Feel free to get in touch with one of our consultants and find out more about how you can open an LLC in Malta. They can also help you register for VAT.

Political and economical features of Malta

Foreign investors are also attracted by a country’s political and economic stability, so Malta is quite appealing and tempting from this point of view. The diversified and modern economy, a strong and stable legal framework which is based on a large percent on the British and Roman laws, having two major political parties and therefore no complexities in matters of social views and openings, a stable macroeconomy and an opened business climate are among the reasons why international investors are attracted by Malta.

Opening a company as a foreign investor in Malta

Compared to other countries, Malta provides a complete and consistent business environment for international players, meaning that they can benefit from excellent logistics and technological infrastructure (with connections to Africa, Europe, Asia, America), a competitive and flexible tax regime, low operational costs, efficient and highly specialized services providers, qualified and productive workforce. More than that, forming and managing a business in Malta is not complicated, not even for foreign entrepreneurs in this country, and that because the authorities implemented all sorts of measures to encourage the investment field as much as possible.

The real estate sector in Malta

Malta offers a high investment potential in the real estate sector and many entrepreneurs know that the tourism field offers a multitude of possibilities. Most of the businesses in the real estate sector involve rental houses for tourists or retirees, expensive villas and apartments for rent in cities like Valletta (the capital), Birgu, St. Julian’s, Cospicua, Mdina or Sliema. As for the prices for buying a property in Malta, these normally vary and for example, an apartment in Valletta might cost approximately EUR 200,000.

The citizenship by investment scheme might also be attractive to foreigners in Malta who can purchase properties worth at least EUR 350,000 to receive 5 years residency in Malta. Even family members can join this program and benefit from the same advantages by contributing to the development fund with approximately EUR 25,000 per each member. After one year of having residency in Malta, persons will receive the Maltese passport that allows them to live, study or work in any European country part of the Union.

What are the main sectors of investment in Malta?

The main sectors worth for investment in Malta are electronics, pharmaceutics, communications, agriculture, tourism and many more which are sustained in a large percent by Malta’s infrastructure, another strong point of the country. The infrastructure is very developed in Malta, allowing the small insular state to have connections with countries worldwide. The living standards are very high but have a low cost, with a lot of cultural sites and shopping centers. The retail sector is quite developed and large companies from abroad can decide on opening companies in this field. Below you can find interesting information about the business and the investment direction in Malta:

• • the UNCTAD 2019 World Investment report reveals that a total FDI stock of $206 billion was registered in 2018;
• • approximately 97% of the total FDI flow registered in 2018 in Malta was directed to the financial and insurance sector;
• • at the moment, there are more than 200 international enterprises that have branches and/or subsidiaries in Malta;
• • according to the “2019 Doing Business Report”, Malta ranks 84th out of 190 countries in the world.

Why invest in Malta?

Apart from its legislation which favors foreign investments, Malta has a lot of other attributes which make foreign enterprisers choose it over other EU countries. Among these are:

• -  the skilled and cheap workforce which is also fluent in English and other European languages;

• -  the country’s excellent infrastructure which links all small islands;

• -  the taxation system which, at the moment, is one of the most favorable in Europe;

• -  the incentives, grants and exemptions the Government offers to those setting up companies here;

• -  the economic stability.

What are the laws encouraging foreign investments in Malta?

Malta has very strong regulations that encourage foreign investors in opening companies in the country. The oldest legal document promoting foreign investments in Malta dates back in 1948 - the Income Tax Act that states an unique corporate tax rate of 35% applies to limited liability companies.

In 1988, Malta enabled the Industrial Development Act, that was amended in 2001, which included new incentives for companies in the manufacturing sector. The Investment Services Act was adopted in 1994 with the purpose of regulating investment services and financial institutions, but also to attract more foreign investors interested in the financial sector. However, the primary source of law for companies is the Maltese Commercial Code that sets out the regulations for company registration in the country.

Incentives for foreign investors in Malta

Perhaps the main reason why Malta keeps attracting foreign investors is its taxation system. Malta’s taxation system is very different from other tax systems in the EU. But the Maltese government tries to boost foreign investment by providing other incentives also. Among these incentives, there are investment allowances that can go up to 50% for machinery in industrial facilities, incentives for companies creating job opportunities and even work permits for foreign shareholders provided if certain requirements are met.

Tax benefits for foreign enterprisers coming to Malta

Malta provides numerous tax incentives to foreign entrepreneurs compared to other EU countries, among which:

• -  preferential rates on the income tax than can decrease to 5%;

• -  investment allowances of 50% of the taxes paid on the employees’ salaries for the first two years;

• -  reduced rates on profits reinvested in other businesses;

• -  reduced tax rates for companies working in Malta FreePort, the country’s customs free zone.

Recently, Malta has also introduced various citizenship and residency programs based on investments. One of the most successful programs is the one based on investments in real estate.

If you want to invest in Malta, our company incorporation agents in Malta can provide you with legal assistance, so feel free to contact our team at any time.