Malta’s limited liability companies (Limited or Ltd) represent one of Europe’s most sophisticated and tax efficient corporate structures, originating from English company law and combining robust legal protections with exceptional fiscal advantages, while maintaining full compliance with European Union regulations.

This comprehensive analysis examines the key features, regulatory framework, and substantial fiscal benefits that make Malta companies an attractive choice for international business structuring and operations.

Acumum is licensed by the Malta Financial Services Authority (MFSA) as a Class C corporate services provider. A Class C license is the widest licensed issued by the MFSA and allows Acumum to provide:

• Malta Company Incorporation
• Directorships
• Company Secretary
• Registered Office

As well as the licensed services above, we also provide ongoing management, tax, vat and bookkeeping services alongside our legal services such as corporate legal advice.

Malta limited liability companies operate under the Companies Act of 1995 (Act), which is based on English company law principles but adapted to meet EU requirements and Malta’s specific regulatory environment.

The Act provides a comprehensive framework governing company formation, administration, dissolution, and corporate governance requirements.

Malta’s Company’s Act establishes two primary types of limited liability companies: private companies (limited to 50 shareholders with restricted share transfers) and public companies (unlimited shareholders with public share offerings permitted). Private companies may further qualify as exempt companies under specific conditions, providing additional operational flexibility

Malta limited liability companies require minimal formation share capital, with €1,165 minimum authorised share capital for private companies, of which only 20% = €233 must be paid upon incorporation.

This low barrier to entry makes Malta particularly attractive for startups and SMEs seeking European market access.

The incorporation process is notably efficient, typically completed within 24-48 hours, subject to all documentation requested being provided.

Required documents include the Memorandum and Articles of Association, certified identification documents for all parties, bank references, and beneficial ownership disclosures

Malta companies demonstrate remarkable flexibility in their governance structure. One director minimum is required, with no nationality or residency restrictions.

Directors may be individuals or corporate entities, providing structural versatility for complex ownership arrangements.

The company secretary role extends far beyond administrative functions to encompass crucial governance responsibilities, including:

• Maintaining statutory registers and company records
• Ensuring timely filing of returns and regulatory notifications
• Organising board and shareholder meetings
• Acting as interface with regulatory authorities
• Ensuring compliance with Companies Act provisions

Malta’s most distinctive feature is its full imputation tax system with comprehensive refund mechanisms. While companies initially pay 35% corporate tax on worldwide profits, sophisticated refund provisions can reduce effective tax rates to as low as 5% for most types of business trading income.

The system operates through five distinct tax accounts that determine refund eligibility:

• Foreign Income Account (FIA) – foreign-source profits eligible for refunds
• Malta Taxed Account (MTA) – Malta-taxed profits not in other accounts
• Immovable Property Account (IPA) – Malta property income
• Final Tax Account (FTA) – income subject to final withholding
• Untaxed Account (UA) – remaining profits

Different categories of income attract varying refund rates, creating highly competitive effective tax rates:

6/7ths Refund (5% Effective Rate)
The most common refund provides 30% of tax paid back to shareholders, resulting in a 5% effective rate on trading income, business profits, and most foreign-source income. This rate makes Malta one of the most tax-efficient jurisdictions in the European Union.

5/7ths Refund – 10% Effective Rate
Passive income such as interest and royalties receives a 25% refund, creating a 10% effective rate.
Even this higher rate remains highly competitive internationally.

Full Refund – 0% Effective Rate
Qualifying participating holdings can receive 100% refunds, eliminating Malta tax entirely on dividend income from subsidiaries meeting anti-abuse conditions.

Participation Exemption Regime – 0% Tax on Subsidiary Income
Malta’s participation exemption provides complete tax exemption on dividends and capital gains from qualifying shareholdings. A participating holding requires at least 5% equity ownership with specific substance and anti-abuse tests.

The exemption can apply to Non-EU subsidiaries, but applies automatically when the subsidiary is EUresident, subject to at least 15% foreign tax, or derives less than 50% income from passive sources. This regime makes Malta ideal for holding company structures and international tax planning.

Double Taxation Relief Network – Over 70+ Double Tax Treaties
Malta maintains an extensive double tax treaty network with over 70 countries, most based on OECD models. These treaties provide crucial protection against international double taxation through credit mechanisms and reduced withholding rates.

The treaties are complemented by domestic provisions for unilateral relief, flat-rate foreign tax credits, and Commonwealth relief, ensuring comprehensive protection against double taxation even with nontreaty countries.

No Withholding Taxes
Malta imposes 0% withholding taxes paid to non-residents, regardless of treaty status, on:

• Dividends
• Interest
• Royalties

This zero-withholding environment significantly enhances after-tax returns for international investors and facilitates efficient capital repatriation.

A Malta company must maintain comprehensive compliance with annual reporting requirements to preserve good standing.

Key obligations include:

• Annual Returns: Filed within 42 days of each incorporation anniversary, containing company details, shareholding information, and director particulars. Company Registrar fees depend upon the amount of authorised capital of the company
• Financial Statements: Audited accounts must be filed within 10 months of year-end. All companies require statutory audits regardless of size
• Tax Returns: Corporate tax returns must be filed within nine months of year-end, accompanied by tax payments to avoid interest charges

The company secretary role extends far beyond administrative functions to encompass crucial governance responsibilities.

Key duties include:

• Maintaining statutory registers and company records
• Ensuring timely filing of returns and regulatory notifications
• Organising board and shareholder meetings
• Acting as interface with regulatory authorities
• Ensuring compliance with Companies Act provisions

Maintaining good standing requires adherence to multiple regulatory frameworks.

Malta companies must on an annual basis:

• File beneficial ownership information and annual confirmations
• Notify the registry of any material changes to the company within 14 days
• Maintain proper accounting records and statutory registers
• Comply with corporate governance codes and best practices

Non-compliance can result in substantial penalties, including fines for late annual returns and late accounts.

Malta permits both inbound and outbound redomiciliation, allowing foreign companies to transfer their legal domicile to Malta without liquidation – as well as for Malta companies to transfer their legal domicile to another registry. This flexibility supports corporate restructuring and international expansion strategies.

Recent legislative amendments have introduced simplified liquidation procedures for dormant companies, reducing administrative burdens and compliance costs.

As a full EU member, Malta companies enjoy unrestricted access to the European single market, enabling free movement of goods, services, capital, and persons. This access is coupled with regulatory certainty through EU directive compliance and harmonised legal standards

Malta offers comprehensive investment incentives through an agency of the government Malta Enterprise and related legislation. These include:

• Investment tax credits up to 35% of qualifying expenditure
  
• Cash grants and interest subsidies for eligible projects
  
• Special incentives for R&D activities and high-value manufacturing
  
• Reduced rates for companies in assisted areas or Gozo

Malta’s sophisticated financial services sector provides comprehensive banking, fund administration, and treasury management services for international businesses. Malta companies benefit from established relationships with major European banks and access to EU payment systems.

The sophisticated tax refund system, comprehensive double taxation relief, and zero withholding taxes create effective tax rates as competitive as 5% while maintaining full regulatory compliance.

The robust legal framework, efficient incorporation process, and extensive compliance support infrastructure make Malta particularly attractive for international holding structures, trading operations, and EU market entry strategies. Combined with Malta’s strategic location, skilled workforce, and business-friendly environment, these features establish Malta companies as premier vehicles for international business optimization and European market participation.

For businesses seeking to combine tax efficiency with regulatory certainty and EU market access, Malta limited liability companies provide an unparalleled platform for international expansion and wealth optimisation strategies.

To learn more as to how Acumum’s MFSA licensed corporate service provider firm can assist you, please contact us.