Just setting up a Maltese company to invoice your Algerian clients for goods being shipped from India to Algeria is not enough to qualify your goods as MADE IN EUROPE.

Normally to get the EUR1 certification confirming that goods are of EU origin, the bilateral treaty between the EU and the respective country (Algeria) would stipulate a percentage of the value of the goods ( i.e. import price into Algeria) that must be added in the country of the exporting company (in this case Malta). It is therefore best to check on these percentages by asking your Algerian client to check with the relevant authorities in his country.

If you decide to go ahead, the way to do this is to carry out some processing in Malta of the goods before these are sent to final destination. The cost of such processing plus the profit margin of the Malta operation needs to come to the required PERCENTAGE (i.e. difference between landed cost of goods in Malta to invoiced price from Malta). It would be best if such operations are carried out through a Malta registered company.

To carry out such processing operations the MALTA FREEPORT has a DUTY FREE ZONE with factory facilities whereby goods landed at the Freeport and processed in these factories are considered as NOT IMPORTED INTO MALTA and therefore do not attract customs duty. However costs of operating in this zone are quite expensive and unless turnover is high, perhaps it would not make economic sense.

Another possibility is that of operating in one of Malta's other industrial zones. Here cost of operation are much lower and goods imported into Malta as raw material for processing and re export again do not attract customs duty.

A Maltese company operating in this manner can benefit from substantial taxation benefits on profits and therefore any such tax savings when compared to your current taxation costs should be considered as offsetting the additional costs of operating from Malta. If you need addition details of such taxation and other benefits please refer to our website for the publication Industrial Incentives in Malta.

Another possibility you may consider is the setting up of an Export Company in Malta, i.e. one that buys the goods from India and resell to Algeria. The profits derived by such companies are subject to tax at the rate of 35%. However, when these profits are distributed, the shareholder/s may claim a refund of the tax paid in Malta. The shareholder/s may claim a refund of 6/7ths, 5/7ths or 2/3rds of the Malta tax. The refund ensures that a low effective rate of tax is suffered in Malta. Given that Malta does not levy any withholding tax on the distribution of dividends, this ensures high tax efficiency when using a Maltese company for the international trading of goods.
 
If you need addition details of such taxation and other benefits please refer to our website for the following publications:

Holding and Trading Companies in Malta

Malta as a hub for international operations

The Maltese Tax refund system 

1. I am an EU citizen. Are there any restrictions to the type of business I can operate in Malta?
2. My UK Company develops software in India which it markets all over the world, with our major market being the United States. Can such trading be conducted through a Malta registered company?
3. I am an American citizen and own a yacht which I would like to register under the Maltese Flag. Can you please assist?
4. What is the rate of corporation tax on the profits of an International Trading Company?
5. I have been told that to trade in Malta through a company structure, a foreigner will need a Maltese partner. Can you please advise?