The main legislation regulating companies and commercial partnerships in Malta is the Companies Act 1995.
The Companies Act defines and regulates the types of commercial partnerships that may be established. These are:
- Limited Liability Companies;
- General Partnerships;
- Limited Partnerships.
Where income tax is concerned, all business associations must be transparent as laid down in the Income Tax Act. The applicable laws on income tax are:
Types of collaboration
Business associations may take up the following legal structures:
- A partnership en nom Collectif or general partnership is formed by two or more partners. At least one of the partners must be either an individual or a body corporate who's obligations are guaranteed by one or more of its members;
- A partnership en commandite or limited partnership operates under a partnership-name and has its obligations guaranteed by two types of partners - general or limited;
- A limited liability company is formed by means of a capital divided into shares held by its members. The limited liability company may be either private or public.
New types of European business structure
European Economic Interest Grouping (EEIG)
EEIGs can be set up under Maltese Law by virtue of the European Economic Interest Grouping Regulations issued under the Companies Act. Reg. 3 provides that an EEIG may be formed by groups or associations consisting of not less than two and not more than twenty persons for the purpose of facilitating or developing the economic activities of its members, or to improve or increase the profits or benefits of such activities. EEIGs must be registered with the Registrar of Companies.
European Company or Societas Europaea
Council Regulation (EC) on the Statute for a European Company (SE) is directly applicable in Malta and as such European Companies can be registered with the Registrar of Companies.
Other options for expanding your business are taking over an existing one, merging with another company or opening a branch in another EU country.
The Registry of Companies is housed by the Malta Financial Services Authority (MFSA). Its core responsibilities regulated by the Companies Act include:
- registration of all types of business associations namely companies and partnerships;
- registration of documents/forms related to these business associations;
- collection of registration and other fees;
- publication of notices;
- issue of certified documentation;
- issue of good-standing and other certificates;
- reservation of company names;
- imposition and collection of penalties;
- investigation of companies.
Registration of Business Associations
Partnership en nom collectif and Partnership en commandite
A partnership will not be considered valid unless a deed of partnership is entered into and signed, and a certificate of registration is issued. The deed of partnership must state:
- the name and residence of each of the partners;
- the partnership name;
- the registered office in Malta of the partnership;
- the objects of the partnership;
- the financial contribution of each of the partners;
- the period fixed for the duration of the partnership.
The deed of partnership should specify which of the partners are general partners and which are limited. Where this is not stated, the partnership becomes a partnership en nom collectif. This deed should be delivered to the Registrar. Business can commence from the date on the certificate.
Limited Liability Company
The members' liability is limited to the amount unpaid on the shares held by each member. A company is not considered valid unless a memorandum of association is entered into and a certificate of registration issued. The memorandum of every company should state:
- whether the company is a public or private company;
- the name and residence of each subscriber;
- the name of the company;
- the registered office in Malta of the company;
- the objects of the company;
- the amount of share capital with which the company proposes to be registered, and how it will be divided;
- the number of directors, the name and residence of the first directors, and where applicable the name and registered office of any body corporate;
- the name and residence of the company secretary;
- the period, if any, fixed for the duration of the company.
In the case of a public company, there must be an accompanying document stating:
- the total or estimated amount of all the costs payable by the company or chargeable to it due to its formation;
- any special advantage granted before the company is authorised to commence business to anyone who has taken part in the formation of the company or in transactions leading to such authorisation.
Any company resident in Malta, or which carries out its business activities in Malta, must register for a tax registration number with the Inland Revenue Department (IRD). Tax returns can be filed electronically. VAT-registered companies must settle their liabilities with the IRD. Some small businesses can be exempt from VAT, although they will still need to register.
Double Tax Relief
The Income Tax Act allows companies formed in partnership, which derive income or gains from outside Malta, to claim double tax relief. Malta currently has 59 double tax treaties in force.
The Inland Revenue offers information on the legislation that supports the country's tax laws, including in relationship to partnerships. Services include a tax return calculator, information on social security contributions and tax rates.