Business Incentives

Business Incentives-img

Choosing the best jurisdiction where to do business is one of the most crucial decisions which entrepreneurs will need to make early on in their business ventures. There are a hundred and one matters which they will need to take into consideration, but choosing a jurisdiction which offers excellent business incentives should be a priority.

Thus, Malta and Cyprus become very attractive options.  Both jurisdictions have taken a positive approach to business promotion and development, offering significant advantages to foreign entrepreneurs, high net worth individuals and investors who are looking to set up shop in a safe, yet attractive business environment with a European standard of living and a Mediterranean lifestyle at a cost-effective price when compared to other European jurisdictions.

Why choose Malta?

Malta has created the right economic environment to meet the demands of the global investment market and is in the perfect position to offer a multitude of business incentives which are waiting to be explored.

Malta’s EU membership, its adoption of the Euro and entry in the Schengen Area make it an ideal platform to conduct business within Europe. Moreover, Malta enjoys excellent relations with its neighbouring countries and has established trade links not only with the European market, but also with the Middle Eastern market and the relatively untapped North African market.

Business Incentives: Malta as a Prime Financial Services Centre

Malta has also established a prime business-oriented market, with financial services accounting for 13% of its GDP. Malta has strived to become a centre of business excellence and a financial services hub, offering various business incentives in different industries which allowed it to become one of the only two European countries which managed to register financial growth during times of financial crisis. This shows the strength of its banking system.

Moreover, Malta’s reputation as a hub for funds and fund managers continues to thrive. Malta offers various fund vehicles and investor basis for the setting up of Funds in Malta (including Professional Investor Funds (PIFs), Private Schemes, Specialist Schemes and Retail funds. Maltese law has been aligned with relevant EU directives and offers golden opportunities to investment services operators as it gives them facilitated access to operate within the Financial Services sector in Europe.

Malta companies as business incentives for international business

A Maltese company can trade and provide services/consultancy/intermediation internationally throughout Europe (having a Maltese/EU VAT registration) as well as outside the EU, enjoying a net 5% effective tax rate after refunds to shareholders. Maltese companies are not low tax companies (the corporate tax rate is 35%) as the (confidential) refunds are payable to the shareholders. They are excellent vehicles for royalty routing, treasury operations, iGaming and e-commerce operations.

Helping Entrepreneurs: The Business Promotion Act

The Business Promotion Act (Chapter 325 of the Laws of Malta) is instrumental in attracting foreign investment and encouraging foreigners to invest in Malta by offering varoius business incentives. The Act provides business incentives for those industries demonstrating growth and employment potential that are engages in particular manufacturing and qualifying activities. It does so by providing attractive fiscal incentives for companies engages in manufacturing and qualifying activities.

Business Incentives for Malta holding companies

A Malta holding company can provide asset protection for business assets of any form (real estate anywhere, fixed assets, investments, securities, bank accounts, intellectual property, etc ) but also personal assets including any luxury items, depending on the shareholders involved.

Maltese holding companies enjoy low effective tax rates on world-wide profits as follows: 

  • 0% on dividends received from a participating holding, that is:
  • where it holds at least 10% of the equity in a subsidiary; or
  • where it holds an investment in a subsidiary of at least € 1.5 million and holds that investment for more than 183 days)
  • 0% on capital gains on the disposal of a participating holding
  • 5% on dividends from non-participating holdings
  • 10% on passive income (interest, royalties etc)

Business Incentives for Shipping

Registration of ships and yachts under the Maltese flag offers several advantages:

• low company formation and ship registration costs;
• no restrictions on the nationality of the ship owner;
• complete tax exemption for private yachts and ships over 1000 Gross Tons;
• effective tax rate of 5% and VAT exemption for chartering of commercial yachts;
• no restrictions on the nationality of the master, officers and crew;
• no restrictions or taxation on the sale or transfer of shares of a company owning Maltese registered ships;
• no restrictions or taxation on the sale and mortgaging of Maltese registered ships;
• no trading restrictions and preferential treatment to Maltese ships in certain ports;
• Any vessel can be registered under the Maltese flag provided it is owned by a Maltese registered company or by a person habitually resident in Malta.

Busines Incentives for EU Yacht Registration

A yacht may be registered under the flag of Malta either by appointing a resident agent in Malta or else by incorporation of a Malta Shipping Company and the latter company shall own the yacht. Apart from the above, the Malta VAT department has issued guidelines which provide for the possibility of yacht owners who wish to import their yachts into the EU to pay a reduced rate of VAT as low as 5.4%.

Business Incentives for the iGaming industry

Malta has rapidly become a highly successful European hub for iGaming and is now considered as a top jurisdiction for the attainment of a gaming licence, offering a number of business incentives to investors. Apart from its strategic location and full access to the European market, Malta vaunts an experienced multi-lingual work force and favourable corporate and gaming tax regimes, low fees and reputability of the licence. However, the key factor which helped Malta make this leap is its excellent legal framework for gaming operators, which at the same time never foregoes high levels of player protection. This has produced a foremost gaming jurisdiction associated with professionalism, regulation and trust. Malta offers 4 classes of licences for gaming companies depending on the type of business they will carry out.

Trusts and Foundations as Business Incentives

The setting up of trusts in Malta is regulated by the Trusts and Trustees Act. The Act provides for the creation of trusts and for the authorisation and supervision of trustees. Trusts can opt to be treated as companies for tax purposes and there is also the possibility of applying the transparency rule. 

Under Maltese law, a foundation may be set up by natural or legal persons, whether Maltese residents or not and irrespective of their domicile. There are mainly two types of foundations recognised by the law being:

  • A public foundation may be set up for a purpose, as long as it is a lawful purpose.
  • A private foundation is a fund endowed for the benefit of one or more persons or of a class of persons (the beneficiaries) which become autonomous and acquires the status of a legal person when it is formed in the manner prescribed by law. 

Foundations may be set up either during a person's lifetime or by will on that person's death




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