In this latest in our series looking at Malta, our local Head of Accounting explores its attraction to investors.

Malta has a booming financial services industry which is experiencing a steady growth. The International Monetary Fund published a report in April 2014 showing predictions of a steady growth and low unemployment for Malta through 2014 and 2015.

The IMF identified that the real GDP grew by 2.4% in 2013 compared with 0.6% in 2012. In 2014 the Maltese economy is expected to register a similar level of growth as that achieved in 2013. The IMF also reported that Malta’s financial sector remained sound and resilient during 2013. The core domestic banks registered a strong profit performance which contributed to a further strengthening of their capital ratios. Liquidity in the banking market also remained stable.

In 2011 the Central Bank of Malta and the Malta Financial Services Authority set up a Joint Financial Stability Board (JFSB) to regularly discuss matters related to financial stability. The JFSB implemented measures aimed at tightening the rules of banks’ provisioning practices, ensuring a sustainable contribution of the financial sector to economic growth.

Malta has a robust and single regulator for financial services. The Malta Financial Services Authority (MFSA) is an autonomous public institution which allows investors the flexibility to operate keeping very minimal if any prescriptive regulations; it offers a risk-based supervision and regulation is proportionate to the size and nature of the business. It also offers direct contact with all license holders and provides on and off-site supervision.

Corporates matter in Malta

Malta has a double taxation treaty with 27 EU countries, 13 other European countries and 27 countries from rest of the world.

Malta’s double tax treaties

 EU countries

Other European countries

Rest of the world

Signed but not yet in force

Awaiting signature or under negotiation

 Austria  Ireland  Albania  Australia  Libya  Belgium (protocol)  Armenia
 Belgium  Italy  Georgia  Bahrain  Morocco  India (new treaty)  Azerbaijan
 Bulgaria  Latvia  Guernsey  Barbados  Pakistan  Liechtenstein  Bosnia & Herzegovina
 Croatia  Lithuania  Iceland  Canada  Qatar  Mexico  Curacao
 Cyprus  Luxembourg  Isle of Man  China  Saudi Arabia  Russia  Moldova
 Czech Republic  The Netherlands  Jersey  Egypt  Singapore  Ukraine  Oman
 Denmark  Poland  Montenegro  Hong Kong  South Africa  Thailand
 Estonia  Portugal  Norway  India  Syria  Vietnam
 Finland  Romania  San Marino  Israel  Tunisia
 France  Slovakia  Serbia  Jordan  United Arab Emirates
 Germany  Slovenia  Switzerland  Korea (Republic of)  United States
 Greece  Spain  Turkey  Kuwait  Uruguay
 Hungary  Sweden  Lebanon

 United Kingdom

In 2013 there was a record of new company registrations. The total number of companies on the Register amounted to 63,605 Maltese registered companies.

 December 2009  December 2010  December 2011  December 2012  December 2013
 New registrations  2,678  3,130  3,458  4,016  4,540
 Companies on the register  48,520  51,650  55,150  59,098  63,605

Malta: A high-profile business centre

Stability, flexibility, market growth and availability of professional service providers are among the driving factors making investors feel particularly comfortable and secure when doing business in Malta.

Malta’s reputation as a flexible and reliable centre for business has a proven track record for such success…

  • First EU Member state to introduce the legislation on remote gaming
  • One of the largest ship and yacht registries in the world
  • One of the most competitive fiscal regimes in the European Union
  • An extensive network of 67 double taxation treaties, all of which are based on the OECD model
  • The lowest effective tax rate in the EU
  • 100% tax refund once the Participation Holding exemption criteria is satisfied
  • Intellectual Property (IP) holding companies benefit from tax exemption on income derived from qualifying patents and income derived from qualifying  copyright and trademarks
  • No capital taxes
  • No controlled foreign company (CFC) legislation
  • No thin capitalisation legislation
  • No withholding taxes on interest, royalties, dividend and proceeds from liquidation
  • No transfer pricing legislation