Re-domiciliation allows a foreign company to transfer registration to another jurisdiction, while retaining its existing assets and liabilities. Here's an overview of re-domiciliation in Malta.
Under the terms of Malta's Continuation of Companies
Regulation, a company registered or incorporated abroad may
re-domicile to Malta, while retaining its existing assets and
liabilities.This option promotes "continuation" and
prevents the foreign company from having to wind-up its business,
crystalise any gains or losses and set up a new company in
Malta.
Below are the potential reasons a foreign company might re-domicile
to another jurisdiction:
- when a shareholder moves residence and the current holding company is in a 'blacklisted jurisdiction'
- when there is no longer a double tax treaty in place to benefit the shareholder or a subsidiary incorporated under the holding company.
Under the Companies Act, a foreign company may
request to be registered as "being continued" in Malta
– provided that there is a provision in the law of that
country or jurisdiction authorising it to do so, and provided it is
also authorised to do so by its charter, statutes or memorandum and
articles or other instrument defining the company.
Continuation is an efficient and effective method of retaining
ownership of all the history and relationships of the migrating
company, without transferring the assets, rights, obligations and
liabilities to a third party, which may trigger various tax
consequences.
The continuation of a foreign company to Malta does not trigger any
Maltese tax, nor is it subject to any stamp duty or entry
tax.
A foreign company that re-domiciles to Malta becomes tax
resident in Malta for Maltese tax purposes and subject to tax on
its worldwide income and capital gains. Companies resident in Malta
will obtain access to Malta's extensive double taxation treaty
network and become entitled to the other forms of relief from
double taxation, including the unilateral relief and the Flat Rate
Foreign Tax Credit. As Malta applies the EU Parent-Subsidiary
Directive, dividends received by a Malta company and capital gains
derived from the disposal of 'participating holding' will
benefit from the Participation Exemption, provided certain
conditions subsist.
In Malta, non-resident shareholders are entitled to claim a tax
refund of up to 6/7ths of the standard 35% corporate tax paid by
the company upon a distribution of dividends. This leads to an
effective tax leakage of 5%. The percentage of refund varies
depending on the type of income derived by the resident
company.
Malta also benefits from a wide range of double tax treaties, which
can be viewed at https://www.financemalta.org/double-taxation-agreements/.
TMF Malta can help foreign companies incorporate and
re-domicile their companies to Malta. Our local experts can also
provide the administrative support needed to comply with local
authorities' requirements once the company is re-domiciled to
Malta.
Find out more about how our services can help your companies reach
new heights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.