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Malta offshore incorporation

Maintaining your competitive edge may not always be possible in your current location. Transferring all or part of your operations overseas may provide you with important cost savings. An incorporation in Malta can benefit you through:

• Cheaper production / financial/ administration costs
• Greater proximity to your source of supply and/or your customer
• Direct and indirect assistance by the local authorities
• Lower taxation suffered.

The above principles are nothing new. In fact the earliest inhabitants of Malta itself were the Phoenicians, who came here from the Middle East and established their trading base here to service our Southern European and North African neighbours.

Whilst transferring a manufacturing operation may mean a huge new investment and therefore requires detailed studies, service companies can achieve this objective with much more ease and less financial risk. However, experience has shown that both types of operation have much to gain from such a move.

Manufacturing companies can utilise an overseas company for one or more of the following reasons. However some of these benefits will be most tax efficient if the share capital in the home company is actually owned by the overseas company, and not vice versa in view of the general trend for parent companies to be taxed on their world wide income.

Management Services

The overseas company may have exclusive rights to the management and personnel service requirements of the home company thereby generating income in a low tax environment.

Investment Holding

Holding assets overseas (including shareholding of the onshore company itself) can make a lot of sense both as a means for better asset protection as well as overall tax planning.

Intellectual Property

Intellectual property can be sold or assigned to an overseas company which will in turn license or franchise such property to others thereby leaving the income so generated in a low tax environment.

Sales and Invoicing

An overseas company may undertake worldwide sales for the home company.

Asset Leasing

The home company may lease its operating assets from the overseas company and leave income so generated in a low tax environment.

Finance

Using offshore finance can sometimes be most effective for inter-company financial arrangements. Both interest rates and withholding taxation can be more competitive than in the home country.

Investment Incentives

Many locations offer very attractive incentives to manufacturing concerns transferring operations to their territories and thus generating employment and foreign earnings.

Servicing companies can also benefit from several of the above ideas especially in view that they are less restricted by territorial constraints.

Requisites of an ideal offshore location for incorporation will include:

• Political stability
• Good legal infrastructure
• Modern financial services
• Latest technical tools
• Attractive tax regime that encourages foreign investment
• A solid reputation
• Cost Competitiveness
• Ease of access

Why a Malta offshore incorporation?

Thousands of companies have already taken advantage of all the benefits that this small island state offers to the overseas investor. And although our International Trading Companies suffer an overall tax charge of 4.1%, and International Holding Companies suffer a Nil tax charge, the OECD has officially excluded Malta from its list of Tax Havens.

Disclaimer

The above information is being provided as a general guide only and should not be considered as a substitute for professional advice.

George Farrugia is the founding partner of MGI Malta. He can be reached at

The following articles may be of interest:

E-Commerce in Malta

Redomicilation

Malta - your partner in film production

Industrial Incentives in Malta

The Maltese Tax Refund System

Holding and Trading Companies
in Malta