Malta Company Uses By Individuals – Common Activities
Maltese Company Law places no restriction on the nationality of shareholders, effectively meaning that individuals of any nationality (whether EU or otherwise) may subscribe for shares in a Maltese company, free to pursue any trading activity.
Furthermore, the minimum share capital requirements for a Maltese private company are set at just EUR 1165, or any equivalent amount in any other currency, of which only 20% needs to be fully paid up. This low threshold makes it accessible to many individuals.
Although the Companies Act prescribes that a private limited liability company has at least two shareholders, it is possible to have a single member company, provided that the main trading activity of the Company is specified in the Memorandum and Articles of Association of the Company.
The most common activities of Malta Legal Entities that are currently being used by individuals are set out below (The list of such activities is not exhaustive):
Entrepreneurs & Professionals
Entrepreneurs and professionals, who start off with a Malta Structure can receive strategic benefits. The use of Malta Entities offers entrepreneurs enhanced investment returns, access to global markets, better after-tax profits, and improved risk mitigation. A Malta Entity can own corporate assets without exposing the entrepreneur’s personal assets – this also reduces business risk.
Executives can use Malta Entities for various aspects of their corporate agendas. This can also help them restructure their compensation and stock programs, so as to take advantage of reduced tax, asset protection, and access to global markets.
Entertainers, Authors & Athletes
Entertainers are taxable in Malta at 10% of gross payments on performances which exceed 15 days a year in Malta. It would be therefore beneficial for entertainers, who exceed the aforesaid threshold of performances a year, to incorporate a Maltese company and benefit from lower rates of taxation (ultimate tax leakage of 5% or less).
Furthermore, entertainers may make use of a Malta Entity, to enter into contractual obligations performed by themselves. The Malta Entity earns income, and the entertainer, author or athlete is compensated for services rendered to that company, thereby mitigating their personal tax liability.
Intellectual Property Owners
Due to the low withholding tax rates for royalties provided in most of Malta’s Double Tax Treaties and the use of the EU Directives, establishing a royalty company in Malta can be a very attractive proposition.
Royalties and licensing rights for intellectual property can be owned by or assigned to a Malta Company. Intellectual Property may include computer software, technical knowledge, patents, trademarks, trade secrets & methods, and copyrights.
Royalties and licensing fees for intellectual property can be owned by or assigned to a Malta Company.
The Malta Company can then enter into license or franchise agreements with other companies interested in exploiting these rights. Royalty payments would normally be deductible expense insofar that they are used in the production of the income.
Wealth Inheritors – Individuals
Individuals who inherit wealth can use a Maltese Entity to reduce their inheritance taxes by converting the inheritance into money in low or non-tax jurisdictions, instead of high-tax jurisdictions. Gains of a capital nature are not taxable in Malta, so any inheritance remitted to Malta, shall insofar that it does not constitute a gain of an income nature, not be taxable in Malta.
Individuals can also restructure the income that their inherited portfolio generates so as to protect their assets and the income compounds to be tax-free. As a rule of thumb, immovable property is regulated by the lex situs, so any immovable property owned by the testator shall be regulated by Maltese Law. Whilst the devolution of immovable property in Malta, even by succession, may give rise to duty on documents tax, there are no inheritances taxes in Malta, and most assets devolved by way of inheritance, may be exempt from tax.
Malta Yacht Leasing
The Maltese VAT Department has issued guidelines on the VAT Treatment of yacht leasing applicable to pleasure yachts, which offer a very attractive VAT regime to owners, allowing an effective and low-cost solution for the acquisition of an EU VAT paid certificate.
Yacht Leasing Agreement
In order to avail oneself of the advantageous VAT rate (described above), a financial leasing agreement (whereby the lessee retains an option to purchase the craft at the end of the lease) would be entered into between the Maltese Company (the lessor) and the lessee.
The Maltese Company must be the owner of the craft (either bought directly from the owner or if craft is new, directly from yacht-builder). The Maltese Company shall lease the craft to a lessee (no nationality restrictions, and the lessee can be a physical or legal person).
Please contact us directly to discuss any operations not covered in this section.