Malta Branches – Oversea Companies
Malta’s Company Act (‘Act’) contains specific provisions enabling foreign companies to establish a branch or place of
business in Malta, without the necessity of incorporating a limited company.
The Act applies a wide definition of ‘companies’, allowing all body corporates, whatever their type – constituted or incorporated outside Malta – to be designated as “oversea companies”.
By establishing a place of business in Malta and by setting up a branch in Malta, the Malta branch:
Does not have separate legal personality from its foreign counterpart
Is not ‘re- incorporated’ in Malta . The only criterion for its establishment in Malta is that it has a ‘ place of business in Malta’
The registration fees for setting up a branch are the same as the registration of new companies.
Registration & Documentation Requirements
Within 1 month of establishing a place of business in Malta, the oversea company must deliver to Companies Registry the relevant documents and prescribed statutory forms .
Therefore it is necessary to have:
An address at which the place of business is effectively established; and
A person resident in Malta who is authorised to represent the oversea company in Malta in respect of the activities of the branch or place of business established in Malta (the extent of the authorised representative’s authority must be disclosed) Continuing Obligations Malta Companies Registrar must be kept up to date and notified should there be any changes to:
The Memorandum and Articles of Association or constitutive documents, charter or statute of an oversea company; or
The director/s or company secretary or the persons vested with the administration or the representation of an oversea company; or
The names or addresses of the individuals authorised to represent the oversea company; Within 1 month of any of the above changes, the oversea company, must deliver to the Companies Registry for registration, a return containing the particulars of the alteration, signed by a director, the company secretary or other authorised officer of the company.
Each year, the oversea company must deliver to Companies Registry one of the following set of documents:
(i) A balance sheet, profit and loss account and notes to the accounts prepared and approved before a general meeting – in the same manner as an ordinary limited company is required; or
(ii) Companies Registrar may accept the registration of a balance sheet, profit and loss account and the notes to the accounts prepared in the form required under the law of the place of the oversea company’s constitution or incorporation if, in his opinion or if as prescribed, such accounts give substantially the same as or greater than the
information required to be given by companies formed and registered in Malta; or
(iii) if the information is not sufficient or as required by Maltese law, the Companies Registry may accept the accounts, as long as the accounts are also accompanied by a profit and loss account, a statement of assets and charges in Malta and notes to the accounts concerning the oversea company’s operations, profits or losses in Malta
and assets located in Malta – as if the branch were a separate company registered in Malta, as well as an auditor’s report. Special rules apply to the form and content of such financial statements.
Further, a branch must keep the usual trade books for the branch operations and transactions in Malta – as well as
records concerning taxable supplies under VAT legislation.
Branches of overseas companies are included in the definition of a “company registered in Malta”, which includes
both a company that is resident in Malta as well as a company that, although not resident in Malta, carries on
any activity in Malta.
As such, subject to proper registration with the Inland Revenue, branches enjoy all aspects of Malta’s highly competitive effective tax rate of 5% – 10% following the application of the tax refund system.
As with any Malta company, branches also enjoy Malta’s full imputation system, whereby the tax suffered by the
branch is imputed to the shareholders who suffer no taxes on any dividends they receive.
Therefore, both Malta registered companies and branches of foreign companies are treated exactly the same for taxation purposes.
About Malta’s Tax System – 5% Effective Corporate Tax Rate
Due to Malta’s system of tax refunds, the corporate tax rate of 35% can be reduced to 5%. Added to which are a
number of exemptions such as patent royalties, which suffer 0% tax.
Full Imputation System
Unique within the European Union and one of only a handful of countries world-wide, Malta’s corporate tax system
employs the full imputation system. Meaning that tax paid at the corporate level is fully imputated at the shareholder
level—shareholders’ dividends are not taxed.