Malta Real Estate Laws and Procedures – Explained
Beverly Tonna
October 1, 2024
Whether you are in the process of setting-up your business, or simply require assistance in relation to employment related matters, novolegal’s team is available to assist you throughout all stages of the process.
Malta has become a jurisdiction which is sought after for incorporating a company. To start with, Malta provides a viable tax regime, which includes a full imputation system and vast network of double taxation agreements. Additionally, the company formation process is relatively swift.
In order to set-up a company in Malta, a memorandum of association must be first drafted and registered with the Registry of Companies in Malta. The memorandum of association should incorporate the following details:
The law stipulates that a Maltese company must have its registered office situated in Malta irrespective of where the company’s business is being carried out. The registered office is required for delivering documents to the company and is also the address where the company incorporation documentation, registers and copies of annual accounts are kept for public inspection.
novolegal offers the provision of a registered office to its clients and hence provides clients with an address which they can use as the company address to establish legal presence in Malta. Clients can rest assured that any mail addressed to the company or its directors, received at the registered office of the company, will be forwarded in a timely manner.
The Companies Act regulates:
A partnership en nom collectif is formed by two or more partners in which the partners are held jointly and severally liable for the partnership’s debts and obligations.
A partnership en commandite or limited partnership has its obligations guaranteed by the unlimited and joint and several liability of one or more partners, called general partners, and by the liability, limited to the amount, if any, unpaid on the contribution, of one or more partners, called the limited partners.
One can set up two types of limited liability companies in Malta:
The limited liability company is the most preferred vehicle in Malta, namely because it has a separate juridical personality. This means that:
The company will enjoy rights and be subject to liabilities which are different from the rights and legal liabilities of its members.
A limited liability company can be private or public. The distinguishing features between the two types of companies lie in the share capital requirements as well as the fact that a public company may trade list its shares on the capital markets and trade their shares on the Malta Stock Exchange and invitations to subscribe for shares to the public is allowed. This is not the case with private companies. The minimum share capital of the Malta public company is of approximately EUR 47,000 and at least 25% of the share capital must be paid when the company is formed, whereas the minimum share capital of a private limited company should be of approximately EUR 1,165 and at least 20% of the capital must be paid upon formation of the company.
The law provides that a private limited liability company must restrict the number of shareholders to 50 and stipulates that at least 2 persons must subscribe for shares in a Malta company and hence there should be a minimum of 2 shareholders. Nevertheless, subject to certain conditions in the Companies Act, being satisfied a company may also be a single member company. Public limited liability companies have no minimum restrictions to the number of shareholders.
A private limited liability company is required to have at least one director and a company secretary whereas a public limited liability must have at least 2 directors. At novolegal we offer Corporate Support Services.
novolegal strives to provide fully-fledged legal advice to those clients wishing to set-up a business in Malta and advises clients on which company should be set-up in order to achieve the most efficient structure which will cater for the client’s requests.
The company formation services with novolegal include,inter alia, drafting the necessary statutory formation documents which are ‘tailor-made’ to satisfy the clients requests, providing legal advice throughout the whole incorporation process as well as on the administration of Malta companies, liaising with the authorities and assisting with the licensing procedures.
Under the Continuation of Companies Regulations, (Subsidiary Legislation 386.05) a company which is incorporated outside Malta may continue to exist in Malta without being wound up in its country of origin. This means that a company may move its domicile to Malta and retain its ‘history’ and the business set-up which it initially had in its country of incorporation. This also applies for companies which are set-up in Malta and wish to continue their existence in a foreign jurisdiction.
A foreign company which is formed and incorporated or registered under the laws of an approved country (such country or jurisdiction other than Malta, is required to satisfy the following requirements in order to be eligible to continue in Malta:
Once the above-mentioned documentation is vetted and accepted by the Registry of Companies, the Registry of Companies issues a Provisional Certificate of Continuation in favour of the Company. During this time-period, the company is to submit documentary evidence to the Malta Registrar of Companies confirming that it has ceased to be a company registered in the country where it has initially been incorporated.
Once the Registry of Companies is satisfied with the documents provided a Final Certificate of Continuation in favour of the company is issued. The final certificate is issued upon the return of the provisional certificate. At this point, the company will be subject to Malta law.
One of the advantages of continuing a company in Malta is that a company is entitled to claim a step-up in the base cost of assets situated outside Malta. Once the company is continued in Malta it can avail itself of Malta’s corporate tax regime. This means that the company may choose to revalue the assets from historic costs to a fair market value at the time of domicile to Malta. The revaluation will apply for the purpose of determining gains on the following disposal of assets with the result that any previously accrued profits will be exempt for income tax purposes in Malta.
Other advantages of continuing the company in Malta is that once re-domiciled to Malta it becomes tax resident in Malta and is subject to tax at the standard rate of income tax of 35% on its worldwide income. Despite this standard rate of taxation, a shareholder of such company would be entitled to a refund of any tax paid by the company of 5/7ths, 6/7ths or 7/7ths depending on the source of income of the company which typically results in an effective net tax rate of approximately 10%, 5% or 0% respectively.
A company registered in Malta may be eligible to be registered as being continued outside Malta where:
novolegal provides the following services: