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Better understanding on Re-Domiciliation of companies in Malta

Re-domiciliation regards the relocation of any company from one jurisdiction to another and simultaneously retain the existing assets and liabilities. The re-domiciliation in Malta falls under Malta’s Continuation of Companies Regulations. Any company which is formed or registered abroad can re-domicile to Malta under this Continuation Act. Hence, it prevents companies from opening a company in Malta or to dissolve the old one in order to form a new one. Below are the primary reasons, why a foreign business will show interest in re-domiciling procedures and in doing business in Malta:

1. When a shareholder moves to another country and his current company is located in a blacklisted jurisdiction.

2. It saves from paying tax in both countries as Malta offer a broad list of double taxation agreements with several jurisdictions.

How does it work?

According to the “Companies Act” a foreign company may request for “being continued in Malta”. However, the re-location of the company is only possible if the foreign company allows it and if it’s according to the contract or memorandum of the company.

Continuation is the most effective way of getting the ownership with all the history and partnerships of the company without transferring the assets and liabilities to a third party, which also can avoid unnecessary taxation. Among the benefits of re-domiciliation in Malta is that Malta does not make an issue for tax, stamp duty or even entry tax.

Local tax for re-domiciled foreign firms

A foreign company that re-domiciles officially becomes a tax payer in Malta. Companies which are resident in Malta get access to double taxation treaty, and a flat rate foreign tax credit. Non-resident shareholders in Malta, are entitled to claim tax refund of 6/7th of a total 35% corporate tax. This causes tax leakage of 5%.

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