The Maltese Islands are a full EU member state since May 2004 and further to recent legislative changes, Malta Companies are EU compliant and EU approved. This renders the Maltese company an excellent vehicle for international business, investment and financial services. Malta by far provides the most advantageous environment for European onshore business and investment, providing a favourable business and tax environment for shareholders of Malta registered companies.
1996 – 2006: International Trading & Holding Companies
Before 1st January 2007, Maltese law allowed the formation of International Trading Companies (ITCs) and International Holding Companies (IHCs) which restricted the tax advantages of Malta companies to non-resident shareholders. Maltese Income Tax legislation has been updated to remove the discrimination between local and non-resident shareholders and these changes have been approved by the European Commission.
Pre-1996: Malta Offshore Companies
Prior to 1996, Maltese law admitted two basic forms of corporate structure which were available to non-residents who wished to register a Maltese company for commercial or asset trading purposes. These were [i] the onshore company with an issued share capital of Lm10,000 (USD25,000) and [ii] the low-tax (5%) offshore trading or zero-tax non-trading company.
In 1996, the offshore regime was transformed into a new onshore regime. Malta adopted a new Companies Act and amended the Income Tax Act to create the International Holding Company (IHC) and the International Trading Company (ITC). These are normal Maltese onshore companies taxed on a worldwide basis at the normal corporate tax rate (35%) and are therefore not perceived to be tax avoidance structures. Significant tax savings can be achieved by refunds received by non-resident shareholders bringing the overall tax liability down to 4.17% and in some cases to 0%.