Most companies in Malta are limited liability companies (LLC) or Maltese holding companies. Although there are other types of companies, these two structures attract many foreign investors since they have low maintenance costs and an efficient taxation system allowing tax exemptions for foreign businesses.
LLCs can be either private or public. Private LLCs can have up to 50 shareholders, with companies have to go public when the number of shareholders reaches more than that. The benefits of an LLC is that they allow you to have a exemption from tax on dividends or profits from qualifying holdings in Malta (participation exemption) and a 5% tax rate, in compliance with EU law, , instead of the standard 35% rate.
If you’re looking into holding assets, a holding company in Malta is the best way to go. They are considered regular companies whose sole objective is to acquire the participation in other companies, so owns a part of them. If a company is registered as a private LLC, or a public LLC with a shared capital of 1,165€, it can become a holding company.
An advantage of setting up a business in Malta is that they apply a full imputation system to avoid double taxation, which could come from the taxation of dividends received by shareholders, resulting in taxes raised at the company level.
The corporate tax rate is 35% and shareholders benefit from tax credits that can be translated into a 5% tax rate.
Companies that are registered in other countries will only be held liable for the taxation on the income they earn in this country.