is a form of legal entity chosen by foreign investors in Malta
. The company abroad is separate from the operating company in Malta and the parent company can still control the subsidiary
through owned stock.
benefit from the large number of double tax treaties
signed with other states. An important treaty is also the EU Parent-Subsidiary Directive
which allows for special provisions between the two related companies. These treaties regulate the minimization or cancellation of the withholding taxes on dividends, interests or royalties paid to EU members or treaty countries. The taxes on profits are also subject of these treaties and they may be abolished or refunded in Malta based on their regulations.
The subsidiary in Malta
is incorporated as a separate Maltese legal entity. This can be done in the form of a limited liability company
, either public or private. The parent company abroad partially or totally owns the capital of the subsidiary
A private limited liability company
formed in Malta must be incorporated by at least one founder and cannot have more than fifty shareholders. The minimum share capital
must consist of at least 1,200 EUR, from which 20% must be paid up before registration. The management is assured by at least one director and at least one company secretary. Shareholders and directors can be local or foreign.
A public limited liability company
is formed by at least two founders and it can have more than 50 shareholders. The minimum share capital is larger than for the private company, at 46,588 EUR, from which at least 25 % must be paid up prior to registration. At least two directors
must assure the company’s management. This type of company is generally more suited for large businesses as it can be listed on the Stock Exchange and offer shares to the public.
The main difference between a branch and a subsidiary in Malta
is that the foreign company is not loable for the debts and obligations of the Maltese subsidiary.
Incorporating a subsidiary in Malta
In order to incorporate a subsidiary
the investor must observe the provisions of the Maltese Companies Act
. Both types of limited liability companies are based on a Memorandum of Association that includes the most important information about the newly founded company:
- the activities performed by the company;
- details regarding the shareholders;
- information regarding the amount of capital;
- the number of shares distributed to each shareholder and their rights;
- details regarding the company directors and secretary;
- period of availability (if any);
- the name and details of the company’s legal representative.
A bank account must be opened and the capital must be deposited there. The desired name must be checked online and if it’s available, it must be reserved. The Memorandum of Association along with the decision of opening the subsidiary in Malta must be delivered to the Registrar of Companies
which will issue a certificate of registration and a registration number.
The last step that must be taken before starting the commercial activities of the Maltese subsidiary is registering for social security and insurance for the company’s employees
Subsidiaries in Malta
must observe the same principles for annual accounting and audit as any other company incorporated in the country. A balance sheet, profits and loss account, a director’s report and an auditor’s report must reflect the true financial situation of the company. Our experts can help you with professional accounting services in Malta