Despite being one of the smallest European states, Malta is a highly attractive location to do business in the EU. In the wake of the uncertainty created by Brexit, several companies have eyed Malta as an ideal relocation destination in the European Union in view of the benefits which it offers as a business hub.
A Hard or Soft Brexit – British Businesses in Crisis Mode
In June 2016, the British public made the historic decision to leave the EU. This decision was consolidated when Prime Minister Theresa May triggered article 50, formally starting the two-year process that will see the UK’s days as an EU member state come to an end. Each milestone in this looming divorce heralded more uncertainty than ever before, and while changes will not happen overnight, the clock is ticking and the two year period within which the EU and the UK will need to come up with an agreement that redefines their new relationship is passing by swiftly. The prospect of a hard Brexit, which would see the EU and the UK part ways without a concrete agreement on salient issues such as trade and migration has destabilised the markets and created vast uncertainty and instability.
While politicians squabble over technicalities, British businesses are not willing to wait out the storm. There is even talk that Brexit will not happen. The lack of clarity on what Brexit will actually mean to UK business and the impending possibility that such business will lose their passporting rights to the EU has led a number of businesses to relocate to an EU domicile such as Malta. While some seek to relocate entirely, others opt to set up a part of their operation in Malta and retain passporting rights to the EU. In the light of Malta’s excellent relations with the UK and full EU-citizenship, a number of UK domiciled companies have already chosen to relocate to Malta and benefit from its business-friendly culture.
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Benefits of Relocating your Business to Malta
In response to the uncertainty created by Brexit, Malta seeks to foster an environment where businesses can relocate with the peace of mind that they will be operating within a stable environment which promotes business growth without unnecessary hindrance.
- Malta has a highly skilled, English-speaking workforce, a favourable tax regime, and several businesses incentives.
- Buoyant and Stable Economy - Malta shared the limelight with Germany as the only two European States to register growth during the 2008 financial crisis.
- Relatively low establishment and operating costs when setting up or relocating
- A Tax-efficient jurisdiction - despite a rather high 35% corporate tax, Malta's tax regime provides for a number of reductions (2/3, 5/7 and 6/7), a participation exemption regime for qualifying holdings, and it is also the only EU jurisdiction to apply a full tax imputation system. Malta has also entered into over 70 double tax treaties and set up various regimes which provide for relief from double taxation.
- A business hub that is ripe with opportunities for investors and businesses - Malta is a jurisdiction where both large multinational companies seeking to extend their operations to a cost-effective European business hub as well as budding SMEs seeking to raise finance can thrive. Malta offers listing options that grant international visibility to large companies through its Main List and the Alternative Companies List, as well as to SMEs and family business through its newest list, Prospects.
- Malta has already succeeded in attracting various industries, including financial services, funds and fund managers, iGaming, Pharma and more, and continues to invest in its industries.
- Gaming - Since 2004, Malta has established itself as a pioneer in iGaming regulation. Its regulatory effort, coupled with a low gaming tax have transformed Malta into a true hub for gaming companies.
A Thriving Financial Services Sector
Building on the success of its robust banking industry, Malta has taken the opportunity to style itself as a European financial services centre and the funds jurisdiction of choice in the Mediterranean. Malta offers a whole gamut of innovative funds structures, including:
- The Professional Investor Funds, commonly referred to as PIFs, the Maltese hedge fund that does not fall under the AIFMD;
- Alternative Investment Funds (AIFs);
- Notified AIFs, an innovate fund product offered in Malta which may be incorporated and market to investors within just 10 days;
- UCITS (retail funds);
- Private Funds; and
- Recognised Incorporated Cell Companies.
Despite the fact that it has a significantly smaller market size than much larger centres such as London, the Maltese financial services sector has grown for its ability to create innovative solutions through regulation. Malta offers fully EU-compliant funds and products such as PIFs and Notified Alternative Investment Funds which offer a refreshing alternative solution to European products. Moreover, as an EU member state, Maltese funds such as AIFs and Notified AIFs benefit from the possibility of EU Passporting.
We are happy to discuss and look forward to speaking to you on how Malta could be an ideal jurisdiction for your business, being it Funds, Investment (MiFID) Services, Banking and other areas falling within the realm of Financial Services.
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