Malta

Malta is located south of Sicily in the Mediterranean Sea. Great Britain formally acquired possession of the islands in 1814. Malta staunchly supported the UK through both World Wars and remained in the Commonwealth when it became independent in 1964. A decade later Malta became a republic. Since about the mid-1980s, the island has transformed itself into a freight transshipment point, a financial center, and a tourist destination. Malta became an EU member in May 2004.

Malta is an attractive jurisdiction for incorporation, particularly with regard to holding companies. An International Holding Company (IHC) is formed with the purpose of owning and managing overseas assets including equities, real estate, and intellectual property rights, as well as any income associated with these assets. The standard corporate tax rate is 35%. However, double taxation agreements and provisions for tax refunds make Malta very tax-efficient for non-resident shareholders. Foreign shareholders may enjoy an effective tax rate of 0% subject to rules concerning "qualified participations."

An IHC requires minimum issued share capital of Lm 500 or equivalent in foreign currency, of which 20% must be paid up. Two shareholders and one director are required. Nominee directors are permitted. A resident secretary and corporate address are required. The beneficial owner(s) need not be disclosed if nominees are used. Annual audits and returns must be filed.

IHCs are ideal for owning and managing assets. However, an IHC may not engage in trading activities. An organization conducting active trade must incorporate as an International Trading Company (ITC). Similar to an IHC, an ITC is taxed at the corporate rate of 35%, but the effective tax rate for non-resident shareholders may be reduced to an effective rate of 4.17%.

Operating requirements are the same for an ITC and for an IHC with few differences. An ITC is only required to have one shareholder (as opposed to two for an IHC). Also, unlike an IHC, an ITC may migrate from Malta to another domicile.

Bearer shares are not permitted for an ITC or IHC. Financial confidentiality is governed by the Professional Secrecy Act which mandates a high standard of discretion for all professional practitioners and contains both civil and criminal penalties for violation of the Act.