The establishment of overseas company operations in Malta is governed primarily by Part XI of the Companies Act (Chapter 386), which regulates “Bodies Corporate Constituted Outside Malta”.

An overseas company is defined under the Act as “a body corporate constituted or incorporated outside Malta”. Such entities may establish a presence in Malta through various structures, each subject to specific registration and compliance requirements with the Malta Business Registry (MBR).

An overseas company once registered with the Malta Business Registry will receive a registration number beginning with ‘OC’.

A Malta branch operates as an extension of the foreign parent company and does not constitute a separate legal entity. The branch represents a permanent establishment for tax purposes while remaining legally integrated with the overseas company

Foreign companies establishing branches in Malta must register with the MBR within one month of establishing a branch or place of business. The registration process requires submission of:

• Authentic copy of the company’s charter, statutes, memorandum and articles of association, or other constituting instrument
• Certified English translation where the original documents are not in English or Maltese
• List of directors and company secretary or persons vested with administration/representation of the overseas company
• Comprehensive return containing specific business details

• Branch name: May differ from the overseas company name if specified
• Malta address: Physical address of the branch or principal place of business in Malta
• Business activities: Detailed description of activities to be carried out by the Malta branch
• Authorised representatives: Names and addresses of Malta-resident individuals authorised to represent the overseas company
• Authority scope: Extent of authority granted to local representatives, including whether they may act individually or jointly

• Audited financial statements must be prepared annually according to International Financial Reporting Standards (IFRS)
• Filing deadline: Financial statements must be submitted within 42 days after the 10-month approval period for private companies or 7-month period for public companies
• Consolidated reporting: Branch financial information may be included in group consolidated statements

• Effective Corporate income tax: 5% on trading income following the application of shareholder refunds applied to Malta-source income and foreign income remitted to Malta
• VAT registration: Required if turnover exceeds applicable thresholds
• Annual returns: Tax returns must be filed by statutory deadlines
  

• No minimum capital requirement: Unlike subsidiary incorporation
• Direct control: Streamlined decision-making through parent company control
• Tax efficiency: Access to Malta’s refund system and double taxation treaty network
• Limited registration costs: Lower setup expenses compared to subsidiary incorporation
• Treaty benefits: Potential access to Malta’s extensive double taxation treaty network

• Effective Corporate income tax: 5% on trading income following the application of shareholder refunds applied to Malta-source income and foreign income remitted to Malta
• VAT registration: Required if turnover exceeds applicable thresholds
• Annual returns: Tax returns must be filed by statutory deadlines
  

• Territorial basis: Branches taxed only on Malta-source income and foreign income remitted to Malta
• Corporate tax rate: Standard 35% rate applicable to taxable profits
• Refund system: Shareholders eligible for tax refunds ranging from 2/3 to 6/7 of corporate tax paid
• Effective rates: Potential effective tax rates as low as 5% for trading income after refunds
• Withholding taxes: No withholding taxes on profit remittances to parent company

• Standard rate: 18% on most goods and services
• Reduced rates: 12%, 7%, 5%, and 0% for specific categories
• Return periods: Quarterly filing for most registered entities
• Record keeping: Comprehensive documentation required for six-year retention period

• Universal requirement: All companies and branches must prepare audited financial statements
• Audit exemptions: Limited exemptions available for micro companies meeting specific criteria
• Filing deadlines: Private companies within 10 months of year-end; public companies within 7 months
• Registry submission: Financial statements must be filed with MBR within 42 days of approval deadline

• Accounting frameworks: IFRS or GAPSME (General Accounting Principles for Small and Medium-Sized Entities)
• Auditor requirements: Malta-registered auditors must conduct statutory audits
• Consolidated statements: Required for branch operations as part of group reporting

• Risk tolerance: Branches expose parent company to unlimited liability
• Capital requirements: Subsidiaries require minimum share capital and ongoing capital adequacy
• Tax planning objectives: Different effective tax rates and planning opportunities
• Operational autonomy: Subsidiaries offer greater local market flexibility
• Regulatory oversight: Branches subject to oversight from both jurisdictions

• Timely filing: Ensure all registration documents submitted within statutory one-month deadline
• Professional assistance: Engage qualified Malta legal and accounting professionals
• Document preparation: Maintain certified translations and apostle documents as required
• Representative appointment: Select appropriate Malta-resident authorised representative

• Annual obligations: Timely preparation and filing of financial statements and tax returns
• Change notifications: Report structural, directorial, or operational changes within required timeframes
• Professional relationships: Maintain relationships with Malta registered auditors and tax advisors
• Regulatory monitoring: Stay informed of legislative and regulatory developments affecting overseas companies
  

• EU market access: Direct access to 450 million consumers in European Single Market
• Geographic position: Gateway to European, North African, and Middle Eastern markets
• Modern infrastructure: Advanced telecommunications, financial services, and transportation facilities
• Skilled workforce: English-speaking professionals across multiple sectors

• Business-friendly policies: Supportive regulatory environment and streamlined procedures
• Investment incentives: Various sector-specific support schemes and incentives
• Political stability: Established democratic institutions and rule of law
• Professional services ecosystem: Well-developed legal, accounting, and corporate services sector

To know more as to how Acumum’s MFSA licensed corporate service provider firm can assist you in tax structuring your corporate vehicle, please contact us