Malta
An International Finance
Centre in the Mediterranean
June 2004
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First, quick resume of Malta
3 islands at the heart of the Mediterranean
90km from Sicily, 290km from North Africa
398,985 people
Mixed and open economy
Wholly democratic and stable
Neutral
UN member
EU member
Services (48%) Production (37%) Public Services
(15%) – GDP contribution
Growing by around 2% a year
Inflation stable at around 1.3%
Employment 94.3%
Bank base rate 3%
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So why should
MALTA
be Your Choice?
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Benefits
Economic and political stability
EU Member
Adaptable regulatory regime
Local stock exchange
Fast and simple incorporation process
High standards of professional services
Well educated workforce
Excellent telecommunication facilities
Attractive location with good air transport
network
Fees & other costs are very reasonable in
international terms
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Why you should
pack your bags and
bring your business
over to Malta
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What Makes us Different?
A world leader in regulatory policy
Modern legislation, modelled on EU lines
The first European country to reach tax accord
with the OECD
We’ve renewed and refreshed all our finance
sector laws since 1994
Officially not a “tax haven”
Playing a pivotal role with OECD in policy
development
Global best practice regulatory regime
US IRS approvals for “Know your customer”
procedures
Greater confidence for you, your partners and
your customers 6
What Makes us Different?
Tax efficient for companies
International Trading Company status
Foreign Tax Accounts
41 Double Tax Treaties
Tax efficient for ex-pat staff
Possibility of grants and other financial
assistance
There’s a danger your finance director might get excited
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And with regards to
Double Taxation
Treaties …..
We have….
41 Double Taxation
Agreements in Force
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Albania Cyprus India Norway Switzerland
Australia Czech Italy Pakistan Syrian Arab
Republic Republic
Austria Denmark Korea Poland Tunisia
Barbados Egypt Latvia Portugal United
Kingdom
Belgium Estonia Lebanon Romania USA
Bulgaria Finland Libya Slovakia
Canada France Luxembourg Slovenia
China Germany Malaysia South Africa
Croatia Hungary Netherlands Sweden
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Double Taxation Agreements
initiated or in negotiation
Kuwait
Lithuania
Morocco
Russia
Singapore
Thailand
Turkey
Ukraine
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The EU Savings Tax
Directive
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EU Savings Tax Directive
The ultimate aim of the Savings Tax Directive is
to enable savings income in the form of interest
payments made in one Member State to
beneficial owners who are individuals resident
for tax purposes in another Member State to be
made subject to effective taxation in accordance
with the laws of the latter Member State.
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EU Savings Tax Directive
Belgium, Luxembourg and Austria shall levy a
withholding tax at a rate of 15 % during the first
three years of the transitional period, 20 % for the
subsequent three years and 35 % thereafter.
Such Member States shall retain 25 % of their
revenue and transfer 75 % of the revenue to the
Member State of residence of the beneficial
owner of the interest.
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And with regard to
International Companies
How does Malta
compare to
Luxembourg?
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Country Malta Luxembourg
Type of Company ITC/ IHC 1990 Soparfi Holding
Common or Civil Law Civil Civil
Jurisdiction
Time to Incorporate 2 - 5 days 2 days
Taxation on foreign profits Credits/ Refunds Normal rates
Standard minimum paid up Lm500 20% paid up Euro 31,000
capital
Standard authorised share Lm500 Euro 31,000
capital
Permitted currencies of capital Any Any
Double Taxation Treaty Access Yes Yes
Requirement to file accounts Yes Yes
Requirement to file annual return Yes Yes
Time Zone GMT +/- 1 1
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Country Malta Luxembourg
Minimum no. of members ITC – 1, IHC - 2 2
Minimum no. of directors/ 1 3
managers
Corporate directors/ managers Yes Yes
permitted
Local directors/ managers No No
required
Company secretary required Yes- local No
Public record of directors/ Yes Yes
managers
Public record of members Yes No
Location of directors/ managers Anywhere Anywhere
meetings
Location of members meetings Anywhere Anywhere
Telephone board/ managers Yes Yes
meetings permitted
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And now ….
Here are some more
details about ITCs
and IHCs in Malta
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International Trading Companies
An international trading company is
one that is engaged in trading
activities carried out from Malta but
not in Malta
Trading activities should be carried
out from Malta (but not in Malta) and,
with persons who are not resident in
Malta
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ITC
An ITC is liable to Malta tax at the rate of
35% on its adjusted profit like all other
companies
The fiscal benefits have been shifted
from the company to the non-resident
shareholder
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ITC
Upon distribution of profits a non-
resident shareholder is liable to tax at
27.5% and may claim a refund of 2/3 of
the tax paid by the company
Indeed the total tax paid in Malta by
the non-resident shareholder is at an
effective rate of 4.17%
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International Holding Companies
A Maltese IHC may qualify to hold a
participating holding in an overseas
company
A participating holding means a holding
of at least 10% of the equity shares of a
company not resident in Malta
If the shareholding percentage is less
than 10%, its shareholding may still
qualify as a participating holding
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IHC
Profits are taxed at the full rate of 35%
Yet, the IHC enjoys a refund of full tax
suffered when it distributes its dividend,
provided it has a participating holding of at
least 10%
In addition, refunds of tax due to IHC must
be effected within 14 days from the end of
the month during which the dividend is paid
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Who May Incorporate
A limited liability company may be registered
by the shareholders or their authorised agent.
In practice, a local firm of lawyers,
accountants or consultants is engaged to carry
out all necessary formalities
Subscribers may be individuals or corporate.
Nominee shareholding is also permissible
through the services of a local nominee
company licensed by the Malta Financial
Services Centre
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Shareholding
The minimum number of
shareholders is normally two,
however a “single member
company” may also be registered
under the Companies Act, 1995
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Directors and Secretary
All companies must have at
least one director and a
secretary. The secretary must
be an individual but no specific
qualifications other than a
general competence are
required
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Redomiciliation of Foreign
Companies to Malta
Recent changes to the law of Malta have
introduced the concept of redomiciliation
of foreign companies to Malta
Companies that are incorporated outside of
Malta may change their domicile to Malta
under certain terms and conditions.
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Redomiciliation of Foreign
Companies to Malta
Foreign companies that wish to register in Malta
now need not wind up their foreign business and
re-incorporate in Malta, but can move their
domicile to Malta while the former company set-
up remains in existence.
An advantage is that foreign companies that
redomicile to Malta can do so under the structure
of the existing legislation for ITC, i.e. they can
benefit from the very attractive tax advantages
offered to ITC.
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Thank you for
your attention
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PKF FIDUCIARIES INTERNATIONAL LTD. MALTA
We will be glad to provide you with any consultation you
may require to come out with a solution regarding
The Savings Tax Directive
Contact Person: Fiorella Parascandalo
Tel: (00356) 21493041, 21484373
Fax: (00356) 21484375
E-mail:info@pkfmalta.com
http: //www.pkfmalta.com
http: //www.maltaconference.com
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