News

Malta as Preferred Funds Jurisdiction

Malta Retains Status As Preferred Funds Jurisdiction

Malta has been a favoured fund jurisdiction since joining the European Union. The fund industry has flocked to Malta due to the introduction of favourable, simple and efficient legislation which caters for the interests of both the fund business as well as the investors. Fund managers and promoters may choose from a set of frameworks available, including SICAVs, unit trusts, investment companies with a variable share capital and Professional Investor Funds (PIFs) in order to meet their objectives.

This, together with the fact that investment funds that are registered in Malta may be passported to any of the other twenty seven EU member states and a low cost and advantageous fiscal base have pushed the number of funds registered in Malta to well over six hundred.

Earlier in 2016, the Malta Financial Services Authority announced its intention to consolidate and reduce the number of fund frameworks which are available to fund promoters in terms of the Investment Services Act and the applicable Investment Services Rules. This aims at streamlining fund legislation, making it simpler for fund managers and promoters to find their way amongst the sometimes overlapping laws and better explaining the rights and obligations of all the players in the industry.

The authority is now seeking feedback from the industry on the proposals it is putting forward in an attempt to get everyone on board and make this exercise a truly collective one, ensuring that the changes are the best possible so as to take the industry forward and guaranteeing its long-term viability.

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Contact one of our officers NOW to get information about Malta FOREX and Funds Licensing Procedures and initiate the process for the licensing of any financial services activity in Malta. Simply fill in the contact box below or contact us by email on enquiries@fbsmalta.com or by calling at +356 2338 1500

Pharmaceutical Companies Registered in Malta and Growth of the Industry

Pharmaceutical Companies Registered in Malta and Growth of the Pharmaceutical Industry in Malta

The Pharmaceutical industry in Malta has developed and grown significantly in recent years, becoming a strong contributor to the local economy. This dynamic industry has taken advantage of the many positives that Malta has to offer. Apart from the obvious geographical advantages which provide for the development and manufacturing of medicines with the quick opportunity to infiltrate markets such as south Europe and North Africa, Malta offers linguistic skills with the promotion of multilingualism throughout the Maltese educational system, individuals with academic degrees in chemistry and skilled work labour force in the use of high-precision machinery.

Malta’s legal framework offers significant advantages to such organisations. It allows pharmaceutical companies to undertake all the preparatory work, including clinical trials and testing, for the purposes of obtaining regulatory approval or other commercial purposes prior to the expiration of the lifetime of an existent patent. Subsequently, once the patent expires, the Malta based generic pharmaceutical company may immediately put its newly developed product on the market without undue delay and before any of its competitors.

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Medicinal products which have been placed on the Maltese or EU market need to have a marketing authorisation as per the medicines act and the medicines regulations. Being a full member of the European Union, Malta employs the Mutual Recognition Procedure whereby once any one member state has been granted marketing authorisation by any local EU competent authority, this shall be held in common with other member states. Pharmaceutical companies established in Malta and looking to trade with the rest of the EU, are thus not required to attain further authorisations from any other competent EU authority as they benefit from the mutual recognition of marketing authorisations.

Pharmaceutical companies registered in Malta may also take advantage of the various tax refunds available to such companies, ultimately resulting in an ultimate tax leakage of just 5%.

Contact one of our officers to initiate the incorporation of a Maltese registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbsmalta.com or by calling at +356 2338 1500

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Malta Registered Securitisation Vehicles VAT clearance

Malta registered Securitisation Vehicles obtain important VAT clearance

Following the publishing of Legal Notice No. 383 of 2016, Securitisation Vehicles will now also fall under the exemptions of investment scheme management services as provided by item 3(6), Part Two of the Fifth Schedule of the Malta VAT Act. This will mean that securitisation vehicles established or operating from within Malta will not need to be registered for VAT purposes and will not be charging any VAT on their services.

As defined under Chapter 484, Securitisation Vehicles may take the form of a company, a trust created by a written instrument or any other allowed legal structure. The term securitisation is defined by the same chapter as a transaction where assets are acquired, risks are assumed or secured loans are granted whereby these are financed through the issue of financial instruments/securities. Any type of asset may be securitised, be it moveable or immoveable, tangible or intangible, current or future. Securitisation brings about a number of advantages namely the closing in of financial and capital markets by converting financial assets into capital market commodities. Securitization allows for the reduction of funding costs, risks as well as the changing of illiquid portfolios into liquid stocks, which can be sold to many individual investors.

Securitisation Vehicles are generally not licensable in Malta, however there is the need for registration with the Malta Financial Services Authority. Such a vehicle is still subject to the provisions of Chapter 484 Securitisation Act. Public securitisation vehicles, i.e. securitisation vehicles which issue or plan to issue financial instruments to the public on a continuous basis, do however need to apply for a licence before commencing any activities.

The change in the VAT treatment will mean that, going forward, Securitisation Vehicles will benefit from a reduction in irrecoverable VAT costs associated with the function they provide.

Malta Aircraft Registration Tax Incentives

Malta Aircraft Registration Tax Incentives. Malta Aviation – setting new highs.

In recent years, Malta has managed to put in place a well-defined strategy to become a reputable aviation centre by attracting and making available comprehensive airline services, comprising of aircraft and engine maintenance, repairs, overhaul, aircraft management, aircraft maintenance training and other ancillary support services.  Subsequently this has been attracting enterprises involved within the industry to set up base in Malta with the Malta Aviation Registry registering continuous growth. As of September 2016, the aviation registry boasted the registration of 232 aircrafts, an increase of 13 aircrafts in just 5 months.

The attracting factors contributing to the aforesaid growth is Malta’s status as an EU Member State,  an appealing corporate tax regime, the adoption of the provisions of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol (“the Convention”) into the Maltese legislation.  The latter also maximises flexibility, integrating important provisions such as the adoption of the Recognition of Fractional Ownership (allowing an aircraft to be owned my multiple persons in specified fractions or percentages, with each part allowed to be consequently given as a security), the possibility of registering aircrafts under construction, the specific tax treatment for finance leases, no withholding tax on lease payments to non-tax resident lessor and reasonable depreciation period on aircraft/engine.

Registration of an aircraft in Malta is restricted to “qualified persons” which can be an individual or a company resident in any part of the world, meeting the criteria set.

In terms of taxation, a company incorporated outside Malta and managed and controlled in Malta deriving income from the ownership, leasing or operation of aircraft or aircraft engines is deemed as resident in Malta for tax purposes.

Income derived from the ownership, leasing or operation of aircraft or aircraft engines engaged in the international transport of passengers or goods is deemed to arise outside Malta for Maltese income tax purposes, irrespective of the country of registration of the aircraft/engines and whether the aircraft calls at or operates from Malta.

In terms of Malta’s remittance basis of taxation, foreign source income is not taxable in Malta unless it is remitted to Malta. The remittance basis of taxation applies to persons (individuals or incorporated entities) which are either resident or domiciled but not both.

Moreover other jurisdictions would not be able to tax such income since in terms of the double tax treaties signed by Malta, based on the OECD Model Convention, profits derived from the operation of an aircraft in international traffic are taxable only in the Contracting State in which the place of effective management of the enterprise is situated. Thus if the effective management of the company is situated in Malta, such profits are in terms of the tax treaty only subject to tax in Malta, which in any case would be exempt from tax unless received in Malta.

Malta Budget Measures

Malta Budget Measures for 2017

The Maltese finance minister, Edward Scicluna on the 17^th of October presented the budget plans for the year 2017, with special focus on the areas of social justice and investment.

Budget Minister Scicluna reiterated his absolute and unequivocal support for the financial services sector and his reliability on Malta’s tax system declaring that the Maltese tax system is expected to be introducing numerous structures which include group tax consolidation and notional interest reduction. In order to ensure Malta’s competitiveness and compliance in an international landscape with fast evolvement, the government emphasized that is firmly committed to the advanced progress of its statutory framework.

A snippet of the key measures broadcasted:

• Tax credits for private pension schemes; companies which offer private pensions to their employees may now start considering their contribution to the scheme as a non-taxable expense. This measure aims at encouraging employers to make contributions to such schemes. Moreover, this measure will entitle employers to a tax credit of 15% for every EUR 1,000 contributed to the scheme. This new measure not only benefits the employer but also the employee who upon investment in the scheme is allowed a maximum tax reduction of EUR150 against his income, such reduction is dependent on the amount contributed.

• Group tax consolidation; the government will be looking at issuing regulations aimed at giving companies that form part of a group the option to work out their profits and losses jointly. The aforementioned comes as a recent enchantment to the Maltese tax system.

• Encouraging startups; startup companies whose turnover does not exceed EUR80,000 per annum now have the option of either benefiting from being exempted from having their financial statements audited for the first two years of their operation or choose to have the financial statements audited and then claim a tax deduction which amounts to a maximum of EUR700 per annum or 120% of the audit fee

Malta Credit Rating Upgrade by S&P

Credit Agencies Upgrade Malta’s Rating

Malta Credit Rating Upgrade by S&P. The US based credit-rating agency Standard & Poor’s has recently revised its long term rating for Malta, raising it from BBB+ to A-. The improved rating is driven by consistent GDP growth which is expected to average 3% during 2016 to 2019, increases in the productive labour supply as well as growths in both exports and investment. The improvement economic performance will also have a knock-on effect on the Country’s fiscal performance with general deficit below 1% for the 2016 – 2019 period, sustainable current account surpluses that will average 1.9% of FDP and a general improvement in Malta’s balance of payments and external accounts.

In its report, S&P also singled out the effect of large-scale projects in education, healthcare, tourism, and transport industries, as well as energy projects, including the conversion of power stations to cheaper energy sources and the gradual integration of Malta’s power system into the European grid as other contributing factors. The credit-rating agency stated that the country is in the forefront of a strong medium-term economic expansion in the Eurozone, having had the second-highest average GDP growth rate between 2010 to 2015 and the third-highest expected real GDP growth in the 2016 – 2019 period. The stable outlook reflects S&P’s view that the upside potential of Malta’s economic and fiscal performance is counterbalanced by downside risks related to Brexit, external flows, and the structure of the financial sector, particularly the size of its banking sector. It must be however said that the latter’s significance to the local economy is, to say the least, very contained.

Malta’s economy has transformed itself over the past twenty years with the emergence of new economic sectors. Malta is today a highly industrialised, service based economy. Its strengths are derived from its strategic location, its fully developed open market economy, a multilingual population, a productive labour force, low corporate taxes and well developed finance and ICT clusters.

Malta Development Bank

Malta to Have its First Development Bank

Malta is expected to have its first Development Bank after the government’s proposals have been given the green light by the European Commission. The proposals will be presented and voted upon in the Maltese Parliament where it is expected to be formally approved and implemented. The country will thus have another important tool in achieving its desired economic and social targets.

The Malta Development Bank will contribute to economic growth by funding sectors and projects that are not catered for by commercial banks. The Bank will be able to grant loans for specific national or regional projects to private or public bodies or may operate in conjunction with other financial institutions. This will result in the strengthening of the local financial base and a diversification of financing possibilities for local entrepreneurs and other economic operators. The Development Bank will also be particularly interesting for SMEs due to the difficulties that these face when trying to access funds. The bank will serve as the ideal platform to facilitate small businesses’ access to available funding as well as other projects related to strengthening the Maltese economy.

It will be within the bank’s remit to provide attractive wholesale financing and risk sharing facilities. The proposals include the possibility for the bank to be able to raise money by issuing bonds in order to finance projects. This would eventually attract wealth funds who are not interested in investing in projects to buy such bonds. This will be a powerful tool to bring to realisation more economically feasible projects.

The government-owned bank will have an authorised share capital of €200 million. This will allow it to eventually leverage this to around €1 billion in loans. The initial issued and paid-up share capital is expected to be around €30 million, with further allotments being made to accommodate the bank’s increasing needs.

Malta’s Option to Treat Partnership as Opaque

Malta’s Option to Treat Partnership as Opaque as from Year of Assessment 2016

As from year of assessment 2016, the updated definition of “company” to the Income Tax Act has been extended to include any partnership en nom collectif and any partnership en commandite with its capital divided into shares, which would have elected to be treated as a company.

The definition of “dividend” has been updated to include distributions by a company to its shareholders or partners and any amount credited to the shareholders or partners. Consequently, the following change shall apply to partnerships electing to be treated, from a purely fiscal perspective, at par with companies:

• The special residence rules applicable to companies will now be applicable to partnerships which elect to be treated as companies;
• Such partnerships will no longer be considered transparent and instead of being subject to tax at the partners personal level, the partnership will be taxable on its income at the rate of 35%;
• Upon distribution of dividends from allowable profits, tax paid at the partnership level is deducted in full from the partners’ tax liability, such that income taxed at partnership level is not taxed again at the partners’ level (The Full Imputation System on distribution of dividends);
• Trading losses of such partnerships can be surrendered to other companies within the same group (group as defined by Malta tax laws);
• An additional double taxation relief, the Flat Rate Foreign Tax Credit (FRFTC), which is exclusively available to companies will be also available to such partnerships;
• Partners of such partnerships will be eligible to Tax refunds (up to 100%) under The Refundable Tax Credit System;
• The Participation Exemption will also be available to such partnerships, whereby dividends and capital gains received by such partnerships will be exempt from Malta tax, provided certain conditions are met.

Malta’s Economic Growth Continues

Malta’s Economic Growth Continues to Impress

Economic growth in Malta increased by 5.2% during the first quarter of 2016 when compared to an already high rate of 6.3% recorded in the same quarter of 2015. The Maltese economy is estimated to have grown by 7.6% when considering that the EU and the Euro Area are growing at 1.8 and 1.7% respectively.

This significant growth reflected strong increases in both investment and private consumption. In the first quarter of 2016, investment activity recorded a significant increase of 16.2% or €57.6 million and private consumption increased by 5.9% or €58.5 million, over the previous year. Exports of goods and services also registered an increase of 0.5%.

Another noticeable growth area was also recorded in the real estate sector which increased by 11.9% and the professional, scientific and technical activities sector which increased by 11.2%. Noticeable increases were also recorded in the information and communication sector, in the wholesale and retail trade, along with the mining and quarrying and the agriculture and fishing sectors. Another area recording strong and consistent growth was that of the manufacturing sector which recorded a significant increase of 6.79%.

Reflecting the dynamic performance in the labour market, compared to the corresponding quarter last year, the increase in GDP at current prices of €153.4 million is estimated to have been distributed into a €54.5 million increase in compensation of employees, a €65.4 million increase in gross operating surplus of enterprises, and a €33.6 million increase in net taxation on production and imports.

Minister for Finance Edward Scicluna remarked that the Government’s target to achieve a potential growth in Malta’s economy has been a success. He added that this was achieved by increasing labour force participation and measures to attract local and foreign investment by attaining economic and fiscal stability.

Malta Company Registry Steady Growth

Malta Company Registry Records Steady Growth

As at the end of 2015, the Malta Registry of Companies counted active 87,971 companies. This is a net increase of 8,516 companies from the prior year, or 10.9% over 2014. 11,721 new businesses were constituted during 2015, with de-registrations of business units reaching 3,205. Data from the National Statistics Office (NSO) shows that 39,965 Companies are listed as having sole ownership or are constituted in the form of a partnership. Limited liability companies make up just over 50% of the population, while 3,251 are listed as ‘other’.

According to the data published, 85,673 are so called ‘micro’ companies, and employ less than 10 persons. 1,758 companies employ 10 to 49 people, 440 employ 50 to 249 and a 100 companies are classified as ‘large’ and employ more than 250 persons.

The NSO report also analysis the list of companies by sector and economic activity. Units in financial and insurance activities, professional, scientific and technical activities, administrative and support service activities, and construction amounted to 15.6, 11.3, 7.8 and 7.7 per cent respectively of the total registered units in 2015.

The increase in unit count is an encouraging figure in evaluating Malta’s economic performance during 2015. According to the last World Economic Forum Competitiveness report, Malta represents a good jurisdiction for doing business due to its attention to property rights; intellectual property protection; judicial independence; quality of port and air transport infrastructure; health and education; financial market sophistication and soundness of banks; and the availability of latest technologies and firm-level technology absorption. On the other hand, the government is working to reduce government inefficiencies and bureaucracy which is listed as the biggest hurdle to Malta’s competitiveness by the World Economic Forum.

Malta Launches Revamped New Residence Scheme

Malta Launches Revamped New Residence Scheme

Following on the success of the Maltese Individual Investment Programme, leading to citizenship, the government of Malta has recently enacted changes to its residence scheme – with the launching of a new Residence and Visa Programme seeking to attract high-net worth individual investors.  The new residence scheme, shall seek to provide a more definitive and long-lasting base to applicants, as compared to the Global Residence Programme, whereby residence was renewable on a yearly basis.  The main applicants would be high net worth individuals, or retirees, seeking to make Malta their permanent base, whilst relocating to a stable and reputable jurisdiction, within the Schengen area.

Applicants of the new scheme must be persons over the age of 18 and with a clean police conduct.   The latter requirement would also extend to his dependents. Eligibility criteria would also mandate the acquisition of immovable property for a value ranging from EUR 270,000 to EUR 320,000 (depending on location), or alternatively to a rental of immovable property ranging from EUR 10,000 to EUR 12,000 per year.

The application could also be eligible for residence, if he can shop an income of at least EUR 100,000 annually as well as own funds in excess of EUR 500,000.  A condition to the attainment of the residence permit shall be the contribution of an investment of at least EUR 250,000 in approved government bonds, which need to be retained for a minimum of five years.

Contrary to the Maltese Individual Investment Programme, there would be no limitation on the number of applicants.  Applications would be subject to the strictest probity, and must be channeled via approved government agents.  Such residence permits, once approved, would extend to the applicant, and his immediate family, and would be retained, insofar that the residence conditions, and ‘fit and proper’ test would be adhered to on a continuous basis.

Highly Qualified Person Rules in Malta

Malta Extends Highly Qualified Person Rules to Aviation Industry

The Maltese Commissioner of Inland Revenue has extended the exceptionally favourable personal tax regime – Highly Qualified Persons Rules (“Rules”) to include high ranking officers within an undertaking holding an air operators certificate.   In accordance to such rules, such employees may opt to be taxed at a rate of 15%.  Local source income arising in Malta, would however, be taxable at the normal individual tax rates.

The extension of the Rules to the aviation industry, underscores the importance attributed by the Maltese Government to this young, yet fledging industry.  Originally confined only to industries licensed by the Malta Financial Services Authority – such as insurance and financial services company, the Rules were gradually expanded to include other key industries, most notably the Remote Gaming Regulations (for online gaming companies).  The further expansion to the aviation industry is further testament to the commitment of the Maltese authorities to give added-value to core industries.

The aforesaid personal tax incentives further embellish what is already a favourable fiscal regime for companies operating in the aviation industry.  Under the general fiscal rules, companies incorporated in Malta are deemed to be taxable on a worldwide basis, however, companies that are incorporated outside Malta but which establish their effective management and control in Malta are taxable only on income arising in Malta, and foreign source income remitted to Malta.

Therefore, by using the aforesaid legal and tax rules, it is possible for foreign aviation companies to establish their residence in Malta, and have income generated from the ownership, leasing or operation of the aircraft (or even the aircraft engine), not taxable in Malta, insofar that such income arising from the aforesaid leasing or operations is not remitted to Malta.  Companies engaged in the international transport of passenger or goods arising outside Malta, are eligible to benefit from the aforesaid rule.

Malta Gaming Authority Cruise Casino Regulations

Malta Gaming Authority Releases Cruise Casino Regulations

The Malta Gaming Authority has finally issued the Cruise Casino Regulations (the Regulations) as subsidiary legislation to the Gaming Act – Chapter 400 of the Laws of Malta.

The rationale of the Malta Gaming Authority Cruise Casino Regulations is to blend two of the most prominent industries in Malta – the maritime industry with the gaming industry.  Malta has been on the forefront of both industry, with the island being the largest maritime registry by tonnage, and the Malta Gaming Authority, having issued multiple licences to some of the largest players in the gaming industry.

Nevertheless, prior to the enactment of the Regulations, gaming activity could not be undertaken on board cruise liners berthed or in transit in Maltese ports, irrespective of the flag state of such  cruise liners.   The running of casinos within the Maltese territory was confined only to land based casinos, approved by the Malta Gaming Authority, following a concession from the Maltese government. Notwithstanding that most cruise liners have onboard casinos, these would effectively be closed down as soon as the vessel entered into Maltese territorial waters.

Following the enactment of the Regulations however, the Malta Gaming Authority has established a regulatory framework whereby cruise liners shall be allowed to operate on-board casinos within Maltese territorial waters, or even when berthed in Maltese and Gozitan ports.  This opening shall ensure that the island’s popularity as a cruise liner destination shall be bolstered, whilst allowing passengers to act within a regulated legal framework.  Cruise liners wishing to avail themselves of such possibility are required to pre-emptively inform the Malta Gaming Authority, during their stay in Malta, insofar that they abide by the parameters and restrictions of the Regulations, including but not limited to the certified payout ratios, operating hours and restricting play only to passengers.

Malta Registry of Companies Surpasses 5000 Company Mark

Malta Registry of Companies Surpasses 5000 Company Mark in 2014

The registry of Companies has issued an official report for 2014 concerning the number of Maltese incorporated vehicles. 2014 has seen a total of 5,019 new companies incorporated, a 10.8% increment over 2014.  This brings the total number of incorporations of companies to 68,676, complemented by 1,640 partnerships.

There was also a 1.5% decline in the number of company liquidations and a 9% decline in mergers.  These statistics, are often seen as significant bellweathers in assessing the maturity of a financial jurisdiction, all pointing towards a consolidation of Malta as a corporate hub.

On the redomiciliation front, 85 companies were continued into Malta in 2014, down from the record number (111) registered in 2013, whilst the number of outward redomiciled companies was 16.  The lion’s share of inward redomiciliations (75%) were understandably from non-EU jurisdictions, with the remaining 25% of redomiciliations being from EU member states.

Of the total companies redomiciled in 2014, over a third were involved in property activities, 20% were private investment companies, and around 14% were holding companies.

Over the past years, Malta has registered continuous and steady growth in the number of incorporations, often in the range o f 8-10% increases from previous years.  This relentless increase, is particularly significant in the light of the challenging EU financial climate, with investors eager at seeking a safe haven from financial turmoil.  Malta’s blend of highly attractive fiscal regime, transposition of EU directives, access to EU Markets, extensive double tax treaty network, a  multilingual and skilled labour force, flexible yet respectable regulator, political and financial stability (endorsed by a series of independent rating agencies) have all been contributing factors to this steady increase.

MFSA New Rules for Alternative Investment Funds

MFSA Releases Clarifications Regarding AIFMs Transparency Reporting

The Alternative Investment Fund Manager Directive (‘AIFMD’) introduced new rules for Alternative Investment Funds (‘AIFs’) (including hedge funds, private equity and real estate funds).   Previously these funds were regulated largely by national regimes and codes of conduct, rather than via a trans-European framework.

The AIFMD sought to create an EU framework for AIFMs as well as setting transparency requirements which would create a level playing field for investors.  Thereby, the investors must be privy to key information regarding the fund, such as investments strategy, special arrangements re: illiquidity such as side pockets, valuation procedures, fund leverage limits etc;

The AIFMD does not specify the medium in which the information is provided, nor the frequency of such disclosures.  Such disclosures may therefore be in the form of letters, newsletters, emails etc;  The medium and frequency of communication is a matter that is at the discretion of the AIF Manager and the AIF.  However, the disclosures must also be relayed to the national competent authorities of the AIFM.

The AIFMS also requires the inclusion of a list of systemic risk reporting, which include:

• the breakdown of investment strategies of AIFs;
• the principal markets and the financial instruments in which an AIF trades;
• total value of assets under management of each AIF managed;
• turnover of the AIFs;
• principal exposures and most important portfolio concentration of the AIFs.

In the case of high-leveraged AIFs, the amount of leverage must also be disclosed.

The aforesaid transparency disclosure signal a marked change of route – in a sphere which until recently, was subject to slight regulation, on the understanding that professional investors, did not require the same level of protection as retail investors.  The transparency rules, have set a framework for uniform standards, allowing investors, even professional investors, to make an informed and thorough decision.

Malta Fund from Citizenship by Investment Programme

Malta Sets up Fund from Proceeds of Citizenship by Investment Programme

The Government of Malta has set up a legal framework for the administration of proceeds of its highly successful Citizenship by Investment Programme (“MIIP”).  As of 2014, Identity Malta has received over four hundred (400) applications, with further growth set at approximately three hundred (300) applications for 2015.

The MIIP allows investors, to accede to citizenship, conditional to a thorough and rigorous due diligence process and adherence to an investment programme.  The main applicant must commit to a contribution of EUR 650,000, with spouses and children below the age of 18 contributing a further 25,000 each.  Unmarried children aged between 18 to 26 and dependant parents over the age of 55 must contribute a further EUR 50,000.

Furthermore, the main applicant must acquire an immovable property in Malta with a value of at least EUR 350,000 or rent a property with a lease value of EUR 16,000 per year.  In addition to such investment, the main applicant must commit to an investment in government approved bonds, stocks or debentures with a value of at least EUR 150,000 which have to be held for at least five (5) years.

The proceeds of the MIIP shall be administered by the National Development and Social Fund Agency, an entity that has been established ad hoc by virtue of Legal Notice 2 of 2015.  The aforesaid agency has established a series of criteria for the investment of such funds, all aimed at the furtherance and development of the island’s social and economic development.  A percentage allocation system shall be in place to ensure an equitable distribution, with allocations being assured towards projects of national importance, of projects that promote and support education and justice, as well as nurturing job creation and catalysts to competitiveness.

Malta Reveals Steady Increase in Licensed Entities

MFSA Reveals Steady Increase in Licensed Entities During 2014

The Malta Financial Services Authority (MFSA) has issued statistics for the year 2014 which underline steady and organic growth.  Notwithstanding the difficult economic environment, stricter regulation and higher licensing requirements, the number of financial services licenses as of end 2014 is in excess of 800.  Seventeen (17) new Category 2 licences (asset managers and white label FX companies) were issued during 2014, whilst a total of 22 managers were issued with new or revised licences to operate in full compliance of the Alternative Invesmtment Fund Managers Directive (AIFMD).  Six new licences were issued in other categories, including the recently enacted Category 4b depositary, as prescribed under the new Investment Services Rules.  A contrario senso, and evidence of a stricter and tighter regulation, nine licences were surrendered or withdrawn.

Notwithstanding the radical changes brought over by the aforesaid AIFMD, a total of 39 collective investment schemes (CISs) were licensed, bringing the tola number of new sub-funds up to 118, with funds approved as Professional Investor Funds (PIFs) taking the lion’s share with 106 of the aforesaid 118.

In the banking sector, three (3) new credit institutions were licensed, whereby two others had their licences extended to widen their activities within their already acquired banking icence.  A significant growth area, was also seen in the electronic money institutions, which albeit of relatively recent enactment, has already proven to be a success story.

In the insurance sector. 2014 saw the licensing f three new insurance undertakings, including one Protected Cell Company, bring the total number of cells within PCCs to 27.

Retirement schemes also rose to 35 with two new retirement scheme administrators and five new asset managers.  The number of new companies is in line with the past three years, with over 5000 companies registered in 2014 alone.

The aforesaid statistics have further cemented Malta’s reputation as a proven domicile for financial services and a mature corporate registrar.  A plethora of new legislation is expected to be enacted in 2015 allowing investors full access to an ever more sophisticated legislative base, through which to channel their investment.

Malta Investment Aid Tax Credits

Malta Enterprise Launches Revised Investment Aid Tax Credits

Malta Enterprise, the para-government arm that promotes foreign direct investment in Malta, has announced a series of fresh schemes for the period running until 2014 in a bid to promote and incentive industrial and economic development in Malta.

The schemes apply to initial investments – be them of tangible or intangible assets.  Applicants seeking to setup a new start-up, diversify the output or an existing concern or simply change the overall production process of an existing establishment.

The schemes apply to a series of sectors, concentrated in the industry sectors such as manufacturing and R&Ds, as well as in the service industry such as call centres, audio-visual productions and ICT.  Educational and medical services are also eligible.

The investment aid is calculated in a sliding scale, depending on the size of the applicant, and range from a maximum of 35% for small enterprises to a minimum of 15% for large enterprises or hotels.  The aforesaid tax credits are calculated as a percentage of qualifying expenditure provided that such assets (tangible or intangible) satisfy a number of cumulative criteria, these being:

• The assets must be first time used in Malta;
• Have been acquired from a third party; and
• Kept of a minimum of three (3) years for SMEs and five (5) years for large companies

Under the new rules, wage costs are also eligible, insofar that the qualifying wage costs include the wages covering new employments created within three (3) years of the completion of the investment project and are directly connected with the economy activity.

Applications, which may be processed on behalf of clients, shall be entertained, insofar that Malta Enterprise is satisfied that such investments positively contribute to the development of the Maltese economy.

The aforesaid schemes, are a welcome innovation towards the cementing of Malta as an attractive hub for foreign direct investment, tied to job creation and economic development, and follow in the path of similar schemes successfully implemented and subscribed to by investors eager to espouse Malta’s attractive fiscal regime, with tangible, on-the-ground development.

MFSA New Rules Regarding Malta Forex Companies

MFSA New Rules Regarding Malta Forex Companies

The Malta Financial Services Authority (MFSA) has issued new guidelines governing the license rules for companies, seeking to operate in Forex, under the Investment Services Act. The guidelines, which have retrospective effect as of 20^th October 2014, have significantly tightened the statutory criteria for applicants seeking licensing in the Forex Industry – both as a white label operator or PAMM as well as a market maker.

Prior to the issuance of the aforesaid notification, white label licence holders (acting as a white label to licensed prime brokers) were obliged to retain a minimum own funds requirement of EUR 125,000. Under the new rules, however, there has been a marked convergence between white label licence holders and margin makers, with the two licences now sharing several common ground. The new requirements may be succinctly summarised as follows:

• Minimum own funds for applicants wishing to act as white label FX providers has been increased to EUR 730,000 or equivalent in any other currency;
• The shareholding structure shall, irrespective of the licence applied for, require the involvement of at least one entity holding an equity participating in the prospective licence holder, which is licensed or regulated in a reputable jurisdiction;
• More onerous local presence requirements – with the avoidance of over-concentration of powers into one / two individuals

The use of expert advisors (FX Bots) is not precluded – but clear policies governing their use must be provided to clients.

Irrespective of the licence applied for (white label forex / PAMM or market maker) the licence holder is expected to retain real time access to and control over all transaction data. The MFSA shall expect that the adequacy of any proprietary online trading platform (whereby bespokely developed or otherwise) has been independently certified by an IT Auditor, and that such certification is renewed on an annual basis. However, the use of online trading platforms (e.g. MetaTrader which are industry benchmarks) shall be considered more favourably by the MFSA.

Malta – Turkey Maritime Agreement

Malta Signs Maritime Agreement with Turkey

January 2015

Malta has further cemented its position as a major maritime player with a maritime agreement entered into in January 2014 between Transport Minister Joe Mizzi and his equivalent Turkish counterpart Lufti Elvan.

Although Malta and Turkey have already concluded several memoranda of understanding in the maritime sphere, the agreement is aimed at consolidating the existing framework, by embellishing relations and cooperation in maritime trading, including but not limited to the enhancement in the safety and security measures in navigation. This maritime agreement comes in the wake of tighter ties between the two countries, following the ratification of the double tax treaties between Malta and Turkey as of June 2013. The maritime ties also complement the now excellent logistic ties between the two countries – with the daily connections between Istanbul and Malta increasing up to ten flights a week as from March 2015, thereby acting as a catalyst for Turkish businessmen to tap into the excellent fiscal incentives currently on offer on Malta.

The maritime agreement signed with Turkey is further testament to the ongoing clout of Malta as a maritime power. Apart from the highly successful yacht leasing scheme (over 400 registered superyachts), which has allowed pleasure yacht owners to benefit from a reduced rate of VAT (as law as 5.4% for yachts in excess of 24m), this move serves to increase the ever-growing number of vessels registered under the Maltese flag. Malta is currently the largest ship registry by tonnage in Europe, surpassing the Greek registry, with double digits growth from 2010 to date. Currently the cumulative tax tonnage of ships registered in Malta is of 51.8 million gross tons.

Malta Proposes Regulatory Regime for Skill Games

December 2014

The Lotteries and Gaming Authority has recently issued a policy document outlining guidelines regarding games of skill.

Currently games of skill, are outside the scope of a gaming licence, which licence is confined only to games of chance (such as lottery / slot machines – the outcome of which is decided by an independent arbitrator) or games of chance of chance and skill (such as poker – whereby even if the game is a strategy based one, ultimately the sequence of the cards is mandated by a random event).

Skill games are defined as games whose outcome hinges entirely or a major degree on intellect, knowledge, speed of execution, dexterity etc; The applicability of these skill games can include puzzle games, music games board games, action games etc; irrespective of whether the medium for play is internet or mobile applications.

Social games, are at least for the time being, outside the scope of the aforesaid discussion, albeit the Lotteries and Gaming Authority has reserved judgment as to whether these forms of social games, shall be subject to regulation in the not so distant future.

The main reasons for the discussion to regulate skill games has been motivated by the need to regulate transaction, in which vulnerable players, may be lured into gaming for a monetary prize. Other consideration include the possibility that such forms of gaming could be used as a pretext for the laundering of illicit proceeds of crime. There are also considerations, given the fact social games have a wider audience (in terms of age-group) than regulated games, that these be regulated to ensure protection for the most vulnerable players and an element of fairness and impartiality in the distribution of prizes.

The said policy document therefore should be interpreted as a positive sign towards ensuring an element of certainty and formality in this wide and potentially lucrative market. Whilst the consultation process is still ongoing, and shall be subject to final changes, our directors shall be reverting back with the final legal position, as soon as skill games have been enacted into a legal framework.

Malta Implements Important VAT Updates

Malta Implements Important VAT Updates Related to the Mini One-Stop Shop

The 1^st of January 2015, shall bring in sweeping changes to the Maltese VAT legislation, as the Maltese VAT Act, Chapter 406 of the Laws of Malta, shall include and implement changes regarding the place of supply rules in a number of services, including but no limited to the consumption of telecommunications, broadcasting and electronically supplied services, with the effect that as of 1^st January 2015, the chargeable VAT is the one where the customer is established.

Until the 31^st December 2014, this would render necessary the registration of a supplier, providing any of the aforesaid services in each and every Member State where the provision of the services is provided. Given the bureaucratic requirement of registering in several Member States, with a tangible hindrance on cross-border trading, the European Commission has introduced a Mini One-Stop Shop (“MOSS”).

The main scope for a MOSS is for suppliers to retain one VAT registration number, in lieu of multiple ones, with an obligation nevertheless, to report supplies made to customers established or residing in other Member States through a bespoke MOSS VAT return, to be filed electronically with the VAT authorities of the jurisdiction in which the supplier is established. The effect is therefore to have a more streamlined system, allowing small-medium sized suppliers to contain their administrative costs. The main benefit of the MOSS is that it also allows an intra-community recognised channel through which payment of all VAT due would be made directly to the Member State of registration, thereby significantly simplifying the statutory VAT payments.

For a better understanding of the implementation of the MOSS and how the practical repercussions on your existent or potential commercial activity, please do not hesitate to contact one of our partners, for immediate, thorough and prompt assistance by sending an email to enquiries@fbsmalta.com or by calling us at +356 2338 1500.