Business Incentives

One of the most significant decisions which entrepreneurs will need to make early on in the life of their business is choosing the best jurisdiction through which to do business. Therefore, finding a jurisdiction where it is safe to do business, yet which has fostered a competitive and advantageous business environment full of opportunities is crucial. Malta offers various business incentives through its pro-business approach and has established itself as a centre of excellence in the financial services sector, prompting several businesses to set up shop within our shores. Additionally, Malta offers competitive individual and corporate tax regimes to foreign entrepreneurs, high net worth individuals and investors who are looking to set up shop in a cost-effective European jurisdiction.  

Why choose Malta?

The Maltese Authorities are incessantly working to foster the perfect economic environment through which to do business, and have been commended by international business owners who have chosen to invest in Malta for the professionalism shown in such dealings. Moreover, Malta offers several business incentives, such as its effective system for relief of double taxation through an extensive network of double tax treaties, a full imputation system and an excellent system of tax refunds, as well as a participating exemption for companies which qualify as participating holdings.

As an EU member state, Malta has adopted the Euro as its currency and is also part of the Schengen Area. In the light of the above, Malta becomes one of the best European jurisdictions through which to conduct business with Europe. Moreover, Malta’s strategic location at the heart of the Mediterranean and its excellent relations with all its neighbouring countries make it an ideal location to tap into the Middle Eastern and North African markets.

Business Incentives: Malta as a Prime Financial Services Centre

With the financial services sector accounting for 13% of its GDP, Malta now vaunts a thriving business-oriented market. By offering a number of business incentives (as outlined below) to several diverse industries, Malta has made headway in becoming a centre of business excellence and a financial services hub. Proof of this can be seen by the fact that it managed to register financial growth during times of global economical turmoil thanks to the strength of its banking system.

Furthermore, Malta has also established itself as a reputable hub for funds and fund managers, with a number of fund vehicles and investor bases for the setting up of Funds in Malta (including Professional Investor Funds (PIFs), Private Schemes, Specialist Schemes and Retail funds). As an EU member, Malta has brought in line its local legislation with the relevant EU directives, and offers numerous business incentives to non-EU investment services operators as it gives them facilitated access to operate within the Financial Services sector in Europe.

Malta companies as business incentives for international business

Maltese companies can trade and provide services/consultancy/intermediation internationally throughout Europe (having a Maltese/EU VAT registration), as well as outside the EU, while enjoying a net 5% effective tax rate after refunds to shareholders. While Maltese companies are not low tax companies (with a corporate tax rate of 35%), the (confidential) refunds are payable to the shareholders. They are excellent vehicles for royalty routing, treasury operations, iGaming and e-commerce operations.

Moreover, Malta trusts may elect to be treated as companies, thus they will be taxed in the same way as a Maltese company would be taxed. This offers cost-effective asset protection for the benefit of beneficiaries.

Helping Entrepreneurs: The Business Promotion Act

In order to attract more foreign investment, the Maltese Government has enacted the Business Promotion Act (Chapter 325 of the Laws of Malta) which provides for several business incentives to entrepreneurs. The Act provides business incentives to those industries showing growth and employment potential, particularly those which are engaged in particular manufacturing and qualifying activities.

Business Incentives for Malta holding companies

Malta holding companies provide asset protection for business assets of any form (real estate anywhere, fixed assets, investments, securities, bank accounts, intellectual property, etc ), as well as also personal assets including any luxury items, depending on the shareholders involved.

Maltese holding companies benefit from cost-effective tax rates on world-wide profits as follows: 

• 0% on dividends received from a participating holding, that is:
  • where it holds at least 10% of the equity in a subsidiary; or
  • where it holds an investment in a subsidiary of at least € 1.5 million and holds that investment for more than 183 days)
• 0% on capital gains on the disposal of a participating holding
• 5% on dividends from non-participating holdings
• 10% on passive income (interest, royalties etc)

Business Incentives for Shipping

Several advantages are offered to those who register their ships or yachts under the Maltese flag:

• low company formation and ship registration costs;
• no restrictions on the nationality of the ship owner;
• complete tax exemption for private yachts and ships over 1000 Gross Tons;
• effective tax rate of 5% and VAT exemption for chartering of commercial yachts;
• no restrictions on the nationality of the master, officers and crew;
• no restrictions or taxation on the sale or transfer of shares of a company owning Maltese registered ships;
• no restrictions or taxation on the sale and mortgaging of Maltese registered ships;
• no trading restrictions and preferential treatment to Maltese ships in certain ports;
• Any vessel can be registered under the Maltese flag provided it is owned by a Maltese registered company or by a person habitually resident in Malta.

Business Incentives for EU Yacht Registration

Yachts can be registered under the Maltese flag either by appointing a resident agent in Malta or through the incorporation of a Malta Shipping Company which owns the yacht. Guidelines issued by the Malta VAT department give the possibility to yacht owners who wish to import their yachts into the EU to pay a reduced rate of VAT as low as 5.4%.

Business Incentives for the iGaming industry

The iGaming sphere in Malta has expanded very rapidly, to the extent that Malta is now renowned as a European hub for iGaming companies and the attainment of a gaming licence. There are several business incentives which motivate investors in the iGaming sector to set up shop in Malta, including the island's location which is ideal to conduct business within Europe, North Africa and the Middle East, a multi-lingual skilled workforce, favourable corporate and gaming tax regimes, low fees and reputability of the licence. Malta has also enacted an excellent legal framework for gaming operators, which at the same time never foregoes high levels of player protection. Thus, Malta has become a jurisdiction known for a high level of professionalism, regulation and trust in the iGaming sector. Malta offers 4 classes of licences for gaming companies depending on the type of business they will carry out.