Malta Corporate Accountancy

Malta is an European Union member state with an effective corporate tax rate of 5% and very advantageous personal tax rates and incentives for individuals and organizations moving to Malta. As a result of the above Malta has become a highly popular choice for company registration, fund registration, online gaming, vessel registration and tax residency. Because Malta is English speaking and enjoys a subtropical climate it is also very popular for non-economic migrants such as retirees from the UK.

In Malta bookkeeping can be done by any person but this is a service offered by accountants and is usually billed by the hour.

Credit Control
In Malta credit control can be done by any person however debts can only be enforced by lawyers. Credit control functionality is provided by accountants and is usually billed by the hour and debt collection is provided by lawyers and is also billed by the hour.

Preparation of Accounts
The preparation of accounts can be done by any person but since all Maltese companies must prepare audited accounts and these accounts must be filed it is generally advisable to have an accountant provide this service. For simple companies with limited or no trading activity the accounting may be included with the audit fee and the client will not save money by preparing the accounts themselves since the accountants will need to review them in any case. The fees for accounting in Malta are very reasonable and amongst the lowest in the European Union.

All Maltese companies and foundations must prepare audited accounts but the cost is highly competitive, one of the lowest in the European Union. For simple companies with limited or no transactions the fees for accounts may be included with the audit. Many accountants also offer generous packages for accounting for multiple companies as may be necessary if a Maltese two tier structure is adopted.

Maltese employees are liable to income tax only if they are resident in Malta and (excepting Maltese nationals) are taxed only on income arising in or remitted to Malta. Maltese income tax is charged on a tiered basis up to 35% but since little or no income may be chargeable the effective rate can be much lower or nil. Aside from income tax Malta has one of the lowest social security rates in Europe which is capped at around 3,500 EUR annually (total of employer and employee contributions). An EU citizen can pay their Social Security in any member state and many foreign nationals prefer to pay in Malta. Maltese residency is straightforward for European Union citizens who have a Treaty of Rome right to live and work in Malta without the the need for work permits or residency permits. Non-EU citizens can become resident on a number of grounds including following the granting of a work permit and such residency may grant some freedom of movement within the Schengen area. Malta imposes no restrictions on the movement in or out of capital and if part of the EU no restriction can be imposed by the outbound country either. Please see our main article on residency for more details.

Value Added Tax (VAT) Registration and Administration
VAT is a European-wide sales tax. As an EU member Malta is part of the European Value Added Tax (VAT) system which makes possible the registration of both Maltese and foreign companies for Maltese VAT. Registration in Malta is simple (one of the fastest in the EU) and since registration can be in any EU country many clients prefer to register in Malta. The advantages of registration in Malta include fast turnaround times (around one week) and the affordability of accounting resources to prepare and file returns. VAT registration in one EU country means (in most cases) that VAT will not be charged by or to other EU countries under the reverse charge mechanism this means that VAT will not be a cost. The VAT rate in Malta is 18%.

VAT Schemes
Malta operates VAT schemes for the reduction of VAT on the purchase of pleasure vessels or aircraft (to as low as 5.4%) for our main article on Malta VAT leasing please see the relevant section regarding either vessels or aircraft.

Maltese accountants and auditors can provide valuations of business capitalization, flotation, loan financing or other purposes. This is a requirement in the case that a Maltese company has a non-cash share capital. It is to be noted that Malta does not have thin capitalisation rules so an alternative to non-cash contributions would be to transfer the asset in later by way of a shareholders’ loan. The benefit of this method is the avoidance of the requirement for an auditor’s report as well as a reduction in formation and ongoing fees due to the company’s registry since these are based on the size of the capital. Finally it is possible that a valuation could be required for the endowment of a Maltese foundation with a non-cash asset. This requirement can however generally be avoided, please see our main article on Maltese foundations for more detail.

Tax Advice
Maltese accountants are competent to give advice on local taxation issues but may also be part of a network of advisors who can give consideration to multinational tax matters. This area is addressed in more detail in our main article on advice in Malta.