General Introduction to Malta

Malta is situated in the very centre of the Mediterranean; it boasts an enviable combination of beautiful scenery, frenetic nightlife, rich history and a people noted by St. Paul as “unusually friendly.”

The country has two main islands, Malta and Gozo. It has one of the smallest populations in Europe with around 400,000 inhabitants and one of the highest population densities in the world with 1290 inhabitants/km2. Malta has two official languages, Maltese and English. It is an independent democratic republic which joined the European Union in 2004.

Malta is a cross between an open air museum and a hedonistic Mediterranean resort and remains one of the safest English speaking countries in the world. As a result, its popularity amongst students, workers and travellers has been growing steadily.

Work Residence Permits in Malta

With hardly enough land area and resources to accommodate its ever increasing population, Malta instinctively tends to adopt a protective stance to immigration movements into the Island. Until now Governments have always applied very rigid immigration policies and foreigners are allowed to come to settle on a permanent/temporary basis, or work in Malta only in exceptional circumstances, that is, where it is felt that they could contribute to the general well-being of the Island.

Spending time working on Malta is very rewarding and offers the chance for total immersion in a unique melting pot of cultures. Malta’s small size means the traveller can find himself caught up in the magical local atmosphere without difficulty.

The following is an overview of certain features, relative to the immigration position of foreigners residing/working on the Island.

Working in Malta

Since its accession to the European Union it is now possible for any European citizen to live and work on the island. Australian citizens under 30 can also

work on Malta for a year as part of the "Working Holiday Visa" program. Unfortunately, for those from other countries it is harder to find the necessary permits as the government tightly controls labour markets.

For those eligible to work there are some specific types of jobs that are easiest to obtain. Anything involving computers, technology, sales or translation work promises the highest salaries, which are low by European standards.

Work Permit

All foreign nationals require a work permit to work in Malta. In respect of foreigners, the Government maintains a very restrictive policy and employment licences are granted only in exceptional circumstances. Such work permits are issued to employers wishing to engage foreigners for a determined period and for a specific purpose, only after it has been ascertained that every effort has been made to engage a suitable Maltese citizen.

The Department for Citizenship and Expatriate Affairs is the organization responsible for the issue of such licences.

Conditions for the Issue of a Licence
- The applicant must be in possession of a job offer from an employer in Malta.
- The applicant must possess a specialist skill or qualification which is lacking in Malta.
- A significant demand must exist in a particular sector e.g. construction workers, qualified nurses, tourist guides with particular language skills.

Upon the request of a potential employer and on satisfying the above criteria, an employment licence will be issued by the Director of Labour. The work permit should be applied for at least ten clear days before the start of employment and the application fee is of Euro 60.

Validity & Renewal

Employment licences are normally issued valid for one year. Licenses valid for up to three years may also be applied for at the express request of the employer and provided sufficient justification is given. Licences may be renewed thereafter where a request to that effect is justified. An extension of the employment licence should be applied for one month before it is due to expire. The application fee for the processing of the extension to the employment license is Euro 60.

Indefinite licences

Where a foreign national is an investor in the manufacturing or financial services sector and holds substantial shareholding (40%) in the enterprise, the relative licence may be issued indefinitely.

Non-residents who have no job offer from an employer in Malta must first find a job. Only then will the immigration consultants be able to assist you with the application.

Applying for a Job

Job applications typically have an accompanying letter, curriculum vitae (CV), copies of certificates, and references where applicable. Application for jobs can be either typewritten or handwritten. Copies of your educational attainments, employer recommendations and any other documents you consider useful should accompany your CV.

The application letter is a vital tool to give the employer information about career intentions, educational background, professional experience and availability. The CV is usually up to two pages long. It is recommended that the standard European Curriculum Vitae format is used. The CV should include the following elements: personal details, education, knowledge of languages, computer skills, particular areas of competence, career information, and hobbies.

Some employers provide their own application forms to be filled in by applicants. Certain forms are standard, while others ask more about previous work experience and use more unstructured questions.

Nature of Employment Contracts

The most common employment contracts are full-time contracts with an indefinite period, sometimes called a permanent contract. However fixed term, temporary employment contracts are becoming more common in Malta. Latest trends in the employment market show that fixed term contracts are becoming more common in both higher managerial grades and in skilled labour for project contracts.

Income Tax

The rates of tax for an individual are 15% - 35%. Reduced rates of taxation are in force for low income earners. The taxation of an individual's income increases with progressive income brackets. The higher the income, the higher the tax rate.

The following schedule shows the exhaustive rates of income tax.

Single Rates (in Euro)

Married Rates (in Euro)

Residents pay tax on income whether they are wage earners or self-employed. A person who meets the criteria of a permanent resident, usually resident for more than 183 days a year, will be taxed on his income in Malta and overseas. A foreign resident who is employed in Malta pays tax only on the income he earns in Malta.

The law stipulates that an employer is obliged to deduct at source, each month the amount of tax payable on a wage. Certain payments are deductible from the taxable income of an individual that are allowable for tax purposes. For dividends paid to Maltese residents there is an obligation to deduct tax at

source at a rate of 15%. A dividend paid by a Maltese registered company to its shareholders confers a tax credit on its shareholders that is the equivalent of the tax paid by the company on the profits that represent the source of the dividend distributed.

Value Added Tax

The standard Value Added Tax rate applicable to purchase most goods and services is 18%. Every 3 months, a taxable person registered for VAT and providing Intra-Community Supplies from Malta is required to send to the VAT Department in Malta a Recapitulative Statement with breakdown of all the exempt supplies made in the course of the previous calendar quarter. This statement should include the VAT numbers of the customers from the other member states and the total value of Intra-Community Supplies made to each of these customers. There is a penalty of €24 per month for failure to submit this Recapitulative Statement in time.

Taxable persons are considered as those who carry on an economic activity, whatever the purpose or the result of that activity. Also exempt persons such as medical doctors or insurance companies, and persons operating below the established threshold for small undertakings are considered as taxable persons even though they are not obliged to charge and collect VAT.

Taxable, means taxable at:
- A standard rate of 18%
- A reduced rate of 5%

Supplies that are taxable at 5% are:
- Accommodation in a hotel or guest house
- Accommodation in any premises, where for the purpose of that accommodation, it is required that the premises be licensed in terms of the Malta Travel & Tourism Act.
- Supply of electricity
- Confectionery and other edible items
- Medical Accessories
- Printed Matters
- Items for the exclusive use of the disabled
- Works of Art, collector's items and antiques.

The rate for all other taxable supplies is 18%.

Basis of taxation of companies

A company incorporated in Malta is treated as domiciled and resident in Malta and is subject to tax on its worldwide income and capital gains. A company

that is not incorporated in Malta is resident in Malta if its management and control are exercised in Malta. Like other taxpayers, a company that is resident but not domiciled in Malta is subject to tax on income and capital gains arising in Malta (at a rate of 35%) and on foreign income, but not foreign capital gains, received in Malta. The test of management and control is usually applied by reference to the place where the shareholders’ and directors’ meetings are held and where the important decisions are taken. The fact that a foreign company has a branch in Malta does not, of itself, constitute residence. A company that is not resident in Malta is taxable on income and capital gains arising in Malta.

Social Security

Malta’s current social welfare system is the result of the development of a set of laws over several decades. National insurance contributions and benefits are the backbone of social welfare, aimed at reducing the financial hardships of sickness, disability, injury, old age and unemployment.

Malta’s social welfare is carried out by the Department of Social Security located in Valletta. National insurance is collected by the taxation department, but the fund is administered by the social security authorities. The health and housing divisions also play an instrumental role in providing medical care and housing support.

Employees are entitled to wages during illness according to Maltese law and collective agreements. The length of entitlement to sick pay depends on for how long a time the employee has worked for the employer. When the illness continues in the long tern the employer is no longer obliged to pay wages. The employee is entitled to sickness benefits from the Social Security. A national insurance number issued by Social Security Department is needed for social benefits payments.

National Insurance Contributions for Employers and Employees

Category: A
Type of Person Employed Weekly contribution rate to be paid by employee: Persons under 18yrs, who do not fall under category E of this table and who’s monthly salary does not exceed €135
Weekly contribution rate to be paid by employer: €7
Weekly contribution rate to be paid by employer: €7

Category: B
Persons older than 18yrs, who do fall under category F of this table and who’s monthly salary does not exceed €135
Weekly contribution rate to be paid by employer: €14
Weekly contribution rate to be paid by employer: €14

Category: C
Persons who do not qualify under categories E and F and who’s basic monthly salary is more than €135 but not more than €320
Weekly contribution rate to be paid by employer: 10% of the monthly salary calculated to the nearest cent.
Weekly contribution rate to be paid by employer: 10% of the monthly salary calculated to the nearest cent.

Category: D
Persons who do not qualify under categories E and F, who’s basic monthly salary exceeds €320
Weekly contribution rate to be paid by employer: €32
Weekly contribution rate to be paid by employer: €32

Category: E
Persons under 18yrs of age, doing a full-time study course or learning under the student worker scheme or other similar schemes (including extended skills training schemes but excluding worker/student schemes
Weekly contribution rate to be paid by employer: 10% of basic monthly salary to the maximum rate of €5
Weekly contribution rate to be paid by employer: 10% of basic monthly salary to the maximum rate of €5

Category: F
Persons of more than 18yrs of age, doing a full-time study course or learning under the student worker scheme or other similar schemes (including extended skills training schemes but excluding worker/student schemes, which involve distinct periods of work and study for which they are being paid.
Weekly contribution rate to be paid by employer: 10% of basic monthly salary to the maximum rate of €8
Weekly contribution rate to be paid by employer: 10% of basic monthly salary to the maximum rate of €8

Non-residents, provided they are not owned by, controlled by, or acting on behalf of, a resident of Malta, and provided they are not otherwise operating in Malta through a permanent establishment, are exempt from Maltese tax on the following:
- interest and royalties arising in Malta;
- the disposal of shares or securities in Maltese companies the assets of which do not consist wholly or principally of immovable property situated in Malta;
- the disposal of shares or units in a collective investment scheme; and
- the surrender or maturity of linked long term policies of insurance.

Jobs

www.vacancycentre.com: For recruitment and jobs.
www.people.com.mt: For recruitment and jobs.
www.etc.org.mt: You can access some job opportunities through the Employment and Training Corporation’s site.

Living in Malta

Permanent residence

A residence permit is automatically granted with the approval of a work permit for the applicant and his/her spouse. However, this does not entitle the spouse to work or automatically qualify for an employment licence unless demand for work is felt in the respective field.

A residence permit is also issued to a seasonal worker employed for a period of more than three months for the expected duration of the seasonal work. The

period of employment shall be shown in the licence. A citizen of the European Union, who enters Malta to take up employment for three months or less, whether seasonal or otherwise, shall not be entitled to a residence permit but may stay in Malta for the duration of the work period on the basis of a licence.

The processing of applications for permanent residence permits may take about 3 months. A fee of €117 is payable to the Director, Department for Citizenship and Expatriate Affairs, once the permit is issued. The prescribed fee for a replacement of the permit is €23. If a new permit is issued in order to include a dependent or dependents, the prescribed fee is €70.

At the end of the first year of residence and subsequently at the end of every calendar year, you will be required to complete an Annual Declaration form to confirm that you have fulfilled the conditions attached to your permit. An updated list of permanent residence permit holders is published in the Government Gazette every month. Since 1988, a person applying under the said Scheme would have to meet the following financial conditions:
- an annual income of Euro 23,300 or the possession of a capital equivalent to Euro 349,000;
- the remittance to Malta of an annual income of Euro 14,000, and an additional amount of Euro 2,400 in respect of each dependent.

A tax rate of 15% is charged on all income remitted to Malta which is subject, however, to a minimum income tax of Euro 2,400 per annum.

The residence permit holder is required also to either purchase property valued at not less than Euro 116,300 (Euro 70,000 in the case of an apartment) or lease/rent property for not less than Euro 4,200 per annum.

Permanent Residents are subject to the following Income Tax Rates:

Single Rates (in Euro)

Married Rates (in Euro)

Temporary residence

Malta also hosts a number of 'temporary' residents. Any foreign national may proceed to Malta, with an entry VISA, if that is required from the foreign

national concerned. Nationals from practically all European and Mediterranean countries may remain in Malta for a period of three months from their date of entry under the 'no employment' condition and such 'permit' is endorsed on their passport upon arrival in Malta.

If a person wishes to stay here for a longer period, he or she is required to apply for an extension of stay to the Principal Immigration Officer, Central Immigration Office, Police General Headquarters. Normally foreign national would have to show that they have sufficient means at their disposal to subsist on.

The foreign national concerned would have to follow this procedure each time he or she wishes to extend the permission that has been granted to him or her by the Principal Immigration Officer, if that person wishes to continue to reside in Malta.

The Central Immigration Office, which forms part of the structure of the Police Department, is responsible for all the administrative tasks related to temporary residence in Malta.

VISA Information

If you are from a country that is not a member of the European Union you must obtain a work visa or permit to work in Malta. Nationals of certain countries can visit Malta for up to three months without a visa but will need to be granted a work permit to take up employment.

The following nationalities may visit Malta without a visa for up to 3 months: Algeria, Andorra, Argentina, Australia, Austria, Belgium, Bolivia, Brunei Darussalam, Brazil, Bulgaria, Canada, Chile, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Egypt, El Salvador, Estonia, Finland, France, Germany, Greece, Guatemala, Honduras, Hong Kong, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Latvia, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Mexico, Monaco, New Zealand, Nicaragua, Norway, Panama, Paraguay, Poland, Portugal , Republic of Korea, Romania, San Marino, Singapore, Slovak Republic, Singapore, Saudi Arabia, Slovenia, Spain, Sweden, Switzerland, The Netherlands, Tunisia, United Kingdom, United States of America, USA, Uruguay and The Vatican City, Venezuela.

Nationals of countries not mentioned above will need a visa to visit Malta.

To apply for visas or for further information please contact the nearest Embassy or Consulate of Malta or visit Malta Ministry of Foreign Affairs Website:

http://www.foreign.gov.mt. Where no embassy or consulate is available, a written request should be made to the Commissioner of Police.

Doing Business in Malta

The Maltese economy is based on the free-enterprise system. The role of the government is mainly the promotion of development and general welfare within the system, economic planning and the provision of public utilities.

A distinction must be made regarding the nationality of the person interested in working in Malta. A further distinction must be made as regards the intended market of the business.

EU nationals wanting to do international business while based in Malta but not for the local Maltese market

Malta's accession to the European Union has had no effect on this situation. Any person who wants to base himself in Malta and run a corporate business for international trade, but who has no intention of undertaking also trade on the local market, can incorporate an International Trading Company (explained in greater detail on page 25). The director would require a work permit from the local authorities but this is guaranteed and cannot be refused.

EU nationals wanting to do business on the local market

Prior to Malta's accession to the EU on May 1, 2004 it was practically impossible for non-Maltese shareholders to incorporate a Maltese company with the intention of doing business on the local Maltese market.

This has now changed completely and any EU national can freely incorporate a Maltese company and trade on the local market in any branch of trade (explained in greater detail on page 31). The company, for tax purposes, is treated like any other local company and is taxed at 35% on its world-wide profits.

EU national wanting to work in Malta

Prior to Malta's accession to the EU on May 1, 2004 it was practically impossible for non-Maltese to obtain work permits and take up jobs with local Maltese companies. Again this has now completely changed and any EU national can find a job in Malta. A work permit is still required but this is a mere formality for EU nationals.

Forming a Company in Malta

The Companies Act

The Companies Act, 1995 came into force on 1st January 1996. The Act provides the statutory basis for the regulation of commercial partnerships. A commercial partnership may be of the following kind:

- the limited liability company, based on the English company model;
- the partnership ‘en nom collectif’, where the partners have unlimited liability for the debts of the partnerships;
- the partnership ‘en commandite’ where at least one partner had unlimited liability for the debts of the partnership. This category is similar to the limited partnership existing in certain foreign countries.

These commercial partnerships, once constituted, enjoy a distinct legal partnership.

The limited liability company is the most common form of commercial society in Malta. A company can take the status of a public company or a private company. A private company is one which has the following restrictive provisions laid out in its Memorandum and Articles of Association:

- limitation on the right of transfer of its shares;
- limitation on the numbers of its members to 50; and
- prohibition on calls to the public to subscriptions in shares or debentures of the company.

A public company is a company which does not qualify as a private company. A public company can offer its shares or debentures to the public; however calls for shares of debentures cannot be issued unless the company is not registered and the form is not issued in prospect.

Registration Procedure

A company is formed by means of a capital divided into shares held by its members. The members’ liability is limited to the amount, if any, unpaid on the shares respectively held by each of them.

A company shall not be validly constituted under this Act unless a Memorandum of Association is entered into and subscribed by at least two persons, and a certificate of registration is issued in respect thereof. Companies formed and registered under the Ordinance shall comply with this Act in accordance with the provisions of article 428.

The Memorandum of Association submitted by the members has to be forwarded for registration to the Registrar of Companies, who falls under the regulations of the Companies Act and who is responsible for ensuring compliance with the provision of the same Act.

The memorandum of every company shall state:

- whether the company is a public company or a private company;
- the name and residence of each of the subscribers thereto;
- the name of the company;
- the registered office in Malta of the company;
- the specific objects of the company;
- the amount of share capital with which the company proposes to be registered (hereinafter referred to as "the authorised capital"), the division thereof into shares of a fixed amount, the number of shares taken up by each of the subscribers and the amount paid up in respect of each share and, where the share capital is divided into different classes of shares, the rights attaching to the shares of each class;
- the number of the directors, the name and residence of the first directors and, where any of the directors is a body corporate, the name and registered or principal office of the body corporate, the manner in which the representation of the company is to be exercised, and the name of the first person or persons vested with such representation;
- the name and residence of the first company secretary or secretaries;
- the period, if any, fixed for the duration of the company;
- the proposed financial year end of the company;
- the currency in which the capital and accounts are to be denominated.

In the case of a public company, there shall be annexed to the memorandum a document providing:

- the total amount or an estimate of all the costs payable by the company or chargeable to it by reason of its formation up to the time it is authorised to commence business, and of all the costs relating to transactions leading to such authorisation; and
- a description of any special advantage granted prior to the time the company is authorized to commence business to anyone who has taken part in the formation of the company or in transactions leading to such authorisation.

Along with the Memorandum, the Articles of Association could also be registered. The Articles set up the operation rules of the company.

These documents should be given to the Registrar of Companies for registration. With the registration, the Registrar should certify with his signature that the company has been registered, and that the company is in operation from the date of registration, which date is shown on the certificate.

Time needed for Incorporation

The time needed for incorporation depends on the type of the company and on whether the documentation is available and as required. If so, such a process could take only up to 48 hours.

Minimum and maximum number of members

The minimum number of members is two. However companies with only one member can also be registered (the main commercial activity should be specified in the Memorandum). In the case of a public company, there is no limit to the possible number of members of shareholders.

Minimum capital requirement for the registration of companies

On January 2000 the Central Bank of Malta removed the minimum capital requirement of Euro 23,300 (of which 50% was to be paid up) for the registration of companies (with local activities) having non-resident participation. The minimum capital requirement for such companies is now in line with that stipulated in the Companies Act, 1995 – i.e. Euro 1,200 with a minimum of 20% paid up with the signing of the Memorandum, in the case of private companies and Euro 46,500 with a minimum of 25% paid up with the signing of the Memorandum, in the case of public companies. Private companies which obtain the status of a company exempt can have one member, who can also be the director of the company. As a result of this change companies with non-resident shareholders are now subject to the same minimum capital requirements applicable to companies that are fully resident owned.

Before registration of the company, a copy of the bank receipt, showing the nominal amount of share capital in the name of the company, should be given to the Registrar of Companies.

Directors

The directors of a company are responsible for the general direction and administration of the company. A public company shall have no less than two directors (the directors of a public company should give their written consensus to their appointment as directors). A private company on the other hand is allowed to have at least one director.

Company Secretary

Every company should have a company secretary, who should be an individual and who should not be a director unless the company does not have the status of private exempt.

Meetings

Every company must hold in each year a general meeting as its annual general meeting in addition to any other meetings in that year.

Company Returns

Annual returns are to be filed annually by all onshore companies. Annual returns must be sent to the Registrar of Companies accompanied by a payment depending on the authorised share capital.

Authorisation Fees

Fees payable by the company to the Registrar of Companies are calculated as follows:

Authorised Share Capital: Up to Euro 4,700
Fee Payable: Euro 350

Authorised Share Capital: Over Euro 4,700 but not exceeding € 11,600
Fee Payable: Euro 350 plus Euro 25 for each Euro 2,500 or part thereof in excess of Euro 4,700

Authorised Share Capital: Over Euro 11,600 but not exceeding €58,000
Fee Payable: Euro 420 plus Euro 12 for each Euro 2,500 or part thereof in excess of Euro 4,700

Authorised Share Capital: Over Euro 58,200 but not exceeding €232,600
Fee Payable: Euro 650 plus Euro 12 for every Euro 4,700 or part thereof exceeding Euro 58,200

Authorised Share Capital: Over Euro 232,600
Fee Payable: Euro 830 plus Euro 12 for every Euro 4,700 or part thereof exceeding Euro 232,600 provided that a maximum fee does not exceed Euro 1,800.

If a company subsequently increases its authorised share capital, the difference in registration fees would be levied.

For more information on this subject and for online registration, the Malta Financial Services Authority (MFSA), the authority responsible for the listing of companies and for their registration, can be accessed on www.mfsa.com.mt or through their Company Registration link, http://registry.mfsa.com.mt.

Malta’s Tax System

Malta’s tax system is designed to promote international investment in Malta, support actively the development of financial services in Malta and ensure that company profits are not taxed twice - i.e. at company and again at shareholder level.

Under Malta’s tax system, a company is considered resident if it is incorporated in Malta or, in the case of a foreign body of persons, if its control and management are exercised in Malta.

All companies pay 35% on chargeable income; however tax paid by the company is then imputed to the shareholder in the event of a dividend distribution. As Malta operates a full imputation system, there is no withholding tax on dividends.

Upon distribution of dividends, shareholders will be entitled to a refund of a part or whole of the tax paid by the company on the profits out of which the dividends were paid.

The amount of the tax refund is set at 6/7ths of the tax paid by the company (5/7ths in the case of passive interest and royalties). This refund will be reduced where the distributing company would have claimed double taxation relief.

The resident shareholder will be taxable for the total amount of net dividend and refund received. The non-resident shareholder is not taxed in Malta.

When dividends received from a participating holding are distributed by a Maltese company to its shareholders such shareholders are entitled to claim a refund of 100% of the tax paid on the distributed profits.

With regard to acquisitions of participating holdings made on or after 1 January 2007, where the non resident company, having mainly passive income, is not resident or incorporated in an EU Member State or is subject to tax at a rate which is less than 15%, the following additional conditions must be satisfied:

- the shares in the non-resident company must not be held as a portfolio investment; and
- The non-resident company or its passive income must have been subject to tax at a rate which is not less than 5%.

Resident individual shareholders will be subject to Malta tax on the dividend and tax refund while non-resident shareholders and resident corporate shareholders in receipt of the dividend and tax refund will not be subject to tax thereon.

As from 1 January, 2007 a participation exemption has also been introduced. This exempts dividends derived from participating holdings and gains derived from the disposal of such holdings. The participation exemption is also subject to the anti-abuse provisions described above for participating holdings. Where the participation exemption applies obviously the refund system in respect of participating holdings will not apply.

If the conditions to qualify as a participating holding or for the participation exemption to apply are not met the normal general tax system including the normal tax refunds will be applicable.

I am also attaching a document showing the current About Malta page and the changes which need to be made. Kindly make sure that all fonts, line spacing, etc are the same.

Accounting And Legal Documents Required

VAT Information

To register for VAT one needs to present a Legal Identification Document (I.D. Card / Passport). If the applicant is a limited liability Company then a copy of the Articles of Association may be required. The Income Tax Registration No. and a copy of the I.D. Card / Passport of the director who signs the application.

A business is allowed to opt for registration as an exempt person when the turnover of the business is below the thresholds established by law. If you are a person whose turnover is below the established entry threshold for your type of business activity then you may apply to register under article 11 of the VAT Act in order to be exempt from charging VAT when you supply taxable goods or taxable services. This would mean that you would not be able to claim deduction or any input VAT that you incur in your economic activity. You will also have an identification number without the MT prefix.

The turnover of a business is the total value of sales, excluding:

- Exempt without credit supplies
- The transfer of a business as a going concern
- The sale of fixed assets
- Supplies made to the business and deemed to be made by that business under the reverse charge provisions

The three applicable thresholds are:

- Euro 14,000 in the case of a service provider, where the value of the service has a very high content of value added, i.e. the value of the goods incorporated with the supply are minimal, e.g. services of an accountant or a lawyer
- Euro 23,300 in the case of a service provider where the value of the service includes goods which are incorporated in the value of that service, e.g. an electrician or catering services
- Euro 34,900 in the case of suppliers of goods

The thresholds for each economic activity pertaining to the same category are assigned by the Department and apply across the board for that category.

A person who is registered as an exempt person is required to:

- Issue fiscal receipts or tax invoices, as the case may be, on all supplies made by him
- Submit a declaration (simplified tax return) at the end of each calendar year which must be submitted by the 15th February of the following year

If you are registered under article 11 as an exempt taxable person and you intend to make Intra-Community Acquisitions and pay VAT thereon in Malta, then you need to register also under Article 12 to obtain a valid identification number for this purpose and qualify for such an arrangement. You are obliged to register under Article 12 if the total value of such purchases exceeds the threshold of 10,000 Euros since the start of the calendar year.

There are two types of exempt supplies:
- Exempt with credit, where no VAT is charged on the value of the supply but the registered person is entitled to claim back input VAT incurred in the provision of that supply
- Exempt without credit, where no VAT is charged on the value of the supply but the supplier is not entitled to claim back input VAT incurred in the provision of that supply. In this case the supplier is not required to register with the Department.

In order to determine whether input tax incurred on supplies made outside Malta may be claimed back or not, one must establish whether they would, had they been made in Malta, be treated as taxable supplies or exempt with credit supplies. In the affirmative, the value of these supplies is to be included in the

VAT return as exempt with credit supplies. If no right to claim back input tax exists, their value is to be included in the VAT return as exempt without credit supplies. It should be noted that in the case where the nature of the use of immovable property on which input VAT had been claimed has changed from a taxable or exempt with credit operation to an exempt without credit one part of that input VAT claimed is to be refunded back to the Department.

The chargeable income of a company, which includes its taxable income and capital gains, is taxed at 35%. Cooperative societies are, however, exempt from tax.

Banking in Malta

The Central Bank of Malta

The Central Bank of Malta carries out the usual basic functions of Central Banks generally. It administers Exchange Control, is responsible for currency notes and coins issues for monetary and exchange rate policy. It also manages the country’s official external reserves and acts as financial advisor to the Government. The Bank operates a clearing house for the collection of local cheques.

Local Commercial Banks

The commercial banks in Malta comprise HSBC Bank Malta plc, Bank of Valletta plc, Lombard Bank (Malta) plc., and APS Bank Limited all of which have correspondent relationships with major banks world-wide and operate on the SWIFT transfer mechanism. Deposits are accepted not only in Maltese liri but also in a wide range of foreign currencies. Commercial banks also provide foreign exchange services and the standard lending services including loans, repayment of which extends up to 5 years.

International Banks

There are several international banks, two being wholly-owned subsidiaries of Bank of Valletta and HSBC Bank Malta plc - Bank of Valletta International Ltd. and HSBC (Overseas) Ltd. - and other leading international banks such as Volksbank Malta Ltd., Turkiye Garanti Bankasi A.S., Demirbank (Cingilli Group), Austrian Raiffeisen Malta Bank Limited and First Austrian Bank Malta Ltd.

These banks are licensed to undertake business only with non-residents and offer private banking as well as corporate banking facilities.

Bank Documentation

Account Opening Information – Corporate Accounts

1. Know Your Corporate Customer Form
2. Know Your Customer Form – Corporate Customers
3. Demand Deposit Account Maintenance Form
4. Appointment of Bankers – Companies
5. Identification of Shareholders/Ultimate Beneficial Owners
6. Positive Identification Statement
7. Fax Indemnity Form
8. Hold Mail Indemnity Form
9. Money Laundering Declaration (only required for Maltese registered ITCs/IHCs)
10. Authority to Approach Your Existing Bank (Personal)
11. Authority to Approach Your Existing Bank (Corporate)

The following documentation/information is required:

1. An up-to-date certified copy of the company’s Memorandum and Articles of Association.

2. A certified copy of the company’s Certificate of Registration.

3. Resolution of the Board of Directors to open an account with the bank and to confer authority on those persons who are to operate the account. This should bear the company’s Common Seal where the Articles indicate the existence of such a seal.

4. If the company is not required to file information on its directors with the Registrar of Companies in the jurisdiction where it is registered, then it should provide the bank with a copy of the Resolution appointing the current directors. 5. All directors and signatories to the account must be positively identified. If any director or signatory does not appear in person at the bank, a “Positive Identification Statement” in respect of every such person should be duly completed, and certified by a bank, Maltese Embassy or any other acceptable party. A copy of the relevant Passport pages of the person concerned should be submitted with each “Positive Identification Statement”.

6. A) For Foreign Registered Companies all beneficial owners of the company must be disclosed, and a declaration signed by each beneficial owner whose shares are registered in the name of Nominees or to whom bearer shares have been issued. This declaration is to be witnessed by a bank, Maltese Embassy or any other acceptable party, and should be accompanied by a copy of the relevant Passport pages of the person concerned.

B) For Maltese registered ITCs/IHCs banks generally require the name, date of birth, nationality of the beneficial owners plus Money Laundering Declaration Form.

Together with 5 and 6A above, a certified copy of the relative pages of the applicant’s Passport is generally required, this to enable verification of identity, showing:

- Passport number
- Signature
- Nationality
- Place of issue
- Expiry date
- Date & Place of birth
- Photograph
- Date of issue

A clear legible photocopy of the relevant pages should be taken and all these pages should be arranged to be certified with exactly the following wording “a true copy of the original document and a true likeness of the person applying for business”. The Certifier should sign the copy document, print their name clearly below the signature and state their address and position on it.

7. Suitable introductory references on all the beneficial owners, directors, signatories who are not in possession of a Maltese passport or ID are required. These should be provided by a Prime Bank or Financial Institution.

8. A detailed description of the company’s business activities, operations and past/anticipated turnover should be provided on our Know Your Corporate Customer form and Know Your Customer Form – Corporate Customers.

9. If the Bank will be required to act upon faxed instructions, A Fax Indemnity Form should be signed by the person(s) authorised to operate the account.

Know Your Clients (KYC) Documents Required

1. Copy of passport of each shareholder/director
2. Copy of a recent personal utilities bill for each shareholder/director showing permanent residency address
3. Three recent passport sized photos of each shareholder/director
4. Curriculum Vitae of each shareholder/director holding more than 10% of the company
5. When the shareholder is a company the following documents are required: - Latest financial statement
- Proof of registration of company such as certificate of good standing or certificate of incorporation

- In the case of non-EU shareholders – a copy of the Memorandum and Articles of Association
- In the case on non-EU shareholders – evidence that the share capital came from abroad
- Group structure make-up (if applicable)

The ultimate beneficiary/shareholder of the company and copy of passport, CV, latest utility bill and bank reference for such shareholders. 6. Personal Income tax registration of each shareholder/director

7. Bank References of each shareholder (whether corporate or individual) to be sent to the locally appointed company bankers and also to the professional services firm setting up the company

8. When directors are corporate: same documents are required as in the case of corporate shareholders except for bank references

Accounting Fees

Accounting firms in Malta are ready to offer specific and general services towards the formation of companies in Malta. The hourly fees charges depends on the level of expertise of the person engaged and also on the size of the firm, however hourly fees usually fall in the range of €25 to €150 including VAT.

Company Formation Services and Fees

Company Maintenance Services and Fees

Operating As Self-Employed

A self-employed working in Malta needs to apply for a Value Added Tax (VAT) number; this allows such a person to be in conformity with the Maltese Taxation laws. Such a VAT number can be applied at on the VAT Departments web-site, www.vat.gov.mt or on the following link https://secure.gov.mt/vat/reg_form.asp?lang=en .

Apart from the VAT Registration, a self-employed would also have to apply for a National Insurance number as mentioned previously, whilst also applying for Income Tax purposes at the Inland Revenue Department (web-site: www.ird.gov.mt ).

The National Insurance Contribution rates for a self-employed are as follows:

The below indicated rates exclude benefits for maternity, children’s allowance, and all ex-gratia pensions paid under the Social Security law (Chap 318).

Category Self-Employed Weekly contribution rate

SP: More than €1000 and not more than €6,800, €20
SA: Not more than €8,300, €25
SB: More than €8,300 but not more than €16,200 Equivalent to 15% of net profit calculated to the nearest cent.
SC: More than €16,200, €50