Source¸ Dr Sarah Tua¸ PKF Malta¸ July 2012.

As published on the Lawyer Monthly Magazine 

Malta is widely considered as a highly attractive business environment for foreign investment globally. To find out why¸ Lawyer Monthly speaks to Dr Sarah Tua¸ from Maltese law firm¸ PKF Malta.

 

Q: What are the most complex legal issues that foreign investors should be aware of when looking to invest in Malta?

 At PKF Malta we understand that every client’s needs are different. One therefore has to identify what the client wants and draw up a strategy which would ensure the most benefits¸ at the least cost.  It is advisable that both the onshore and the offshore jurisdiction are consulted in regards to the legal¸ financial and fiscal matters of the proposed set up. Any investment proposed by the foreign client may entail risks which may be high¸ moderate or low. Each risk factor brings with it a different proportion of opportunities which have to be forgone.

Malta has a number of attractive tax schemes aimed at attracting foreign investment¸ such as a beneficial corporate tax structure which¸ after applying for refunds¸ results in an ultimate taxation rate of 5%¸ the Highly Qualified Persons Rules¸ The High Net Worth Individual Rules¸ around 60 double taxation treaties signed with different countries around the globe¸ the possibility of claiming unilateral relief or a flat rate foreign taxation credit¸ as well other fiscal incentives. Generally speaking¸ a non-resident set up needs to be structured so as to optimise the fiscal benefits it may obtain.

A foreign investor should therefore be well-informed of all the financial and corporate set ups and options available to suit his or her needs¸ and to fully understand the fiscal implications which it brings along.

Q: What are the different types of corporate entities?

The most commonly used corporate entity in Malta is the limited liability company. It has separate legal personality from its members¸ whose liability is limited to amount of unpaid share capital. The minimum share capital requirement is around Euro 1165¸ 20% of which must be paid up.  Generally speaking¸ companies do not require trade licenses to engage in offshore trade. Certain company activities however¸ such as the gaming sector¸ tourism sector¸ investment and funding sector¸ necessitate licensing¸ which may require the company to have a greater share capital different than the minimum specified.

There is also the public limited liability company which may be listed or non-listed.  The main difference between a private and a public company is that a private company must restrict the right to transfer its shares¸ limit the number of its member to 50 and prohibit any invitation to the public to subscribe for any share of the company

In Malta a company must have at least two members subscribing to its shares. Through the use of nominee services provided by licensed service providers¸ such as PKF Malta¸ notwithstanding the require