Following a period of rapid development in terms of infrastructure, industry and economic growth in Malta, in 1992 the government of the day applied for European Union membership. In March 2003 a referendum to determine EU membership was held which resulted in a vote in favour of membership. Malta signed the EU Accession Treaty in April 2003 and formally became a full member of the European Union.

Overview
The business practices and etiquette in Malta are very similar to Anglo-Saxan practices, having resulted from the presence of British Forces in Malta.

Language
Maltese is the national language but for both official and business purpose both Maltese and English are official languages. Besides being very fluent in both the above two languages, many Maltese can also speak one or more additional languages such as Italian, French and German. Laws and regulations are published in both official languages – English and Maltese.

Punctuality and Dress Code
Punctuality is expected and appreciated. Business dress code is conservative and smart. Meeting appointments should be arranged several days in advance and confirmed nearer the date.

Meetings
It is customary to shake hands when meeting someone or being introduced and also when leaving. Business cards are normally exchanged at the beginning or the end of a meeting and during social events, cards may be exchanged if specifically requested by the other party.

Office Hours
Typical office hours are Monday to Friday 08:30 to 17:30 with a typical one hour break between 13:00 and 14:00, however, some may work longer. Business is not normally conducted at the weekend unless it is specific to the retail industry that normally works between 09:00 and 13:00 on a Saturday. Business entertaining can be conducted during a meal and it is customary for the person who initiates the meeting to pay for the meal.

Titles
You should address your Maltese business contacts, especially those in senior positions, by their personal (Mr., Mrs., etc.) or professional titles and their family names. It is quite common to use first names in Maltese business when a good working relationship has been established, but wait for your Maltese business contact to initiate the use of first names.

Women in Business
Maltese society is very family-oriented and strongly influenced by the Catholic Church. Women are generally treated on an equal basis as men in Maltese business, and many women are found in senior business positions.

Strengths of the Malta Economy

Strengths of the Market

» European, western business culture
» Highly educated / skilled work force (mostly UK educated)
» Easily accessible (Daily flights, cargo facilities etc)
» High Awareness of international products and Brands
» English widely spoken
»A gate-way to the Middle East, Europe and North Africa

The significant advantages of Malta as an international business centre

» Member of the European Union
» Democratic country with a free market economy
» Political stability
» Government incentives to investment
» Low crime rate
» Pleasant climate and agreeable topography

Other benefits of Malta companies

» Competitive fees for company formation and administration
» Low capital requirements
» Strong legal system based on English common law
» A significant number of tax treaties

Malta: A Financial Services Centre

Malta is continuing to diversify its economy to include a range of services which draw strength from its location, the education and skills of its people and its centuries old tradition as a hub on one of the most important trading routes of history. An important development in this regard has been the establishment of the Malta Financial Services Centre, a regulatory body aimed at ensuring that the significant advantages that Malta offers are used in a manner that both offers fiscal benefits to the foreign investor and is consistent with Malta's international obligations.

Together with the establishment of a financial services centre other measures taken include:

» Ensuring that income originating from overseas is not subjected to double taxation, even if there is no double taxation agreement in existence. This is achieved by providing relief from double taxation on a unilateral basis and through a system of flat rate foreign tax credits AND refunds to non-resident shareholders on tax paid on dividend payments from overseas.
» Advance rulings by the commissioner of Inland Revenue to provide certainty and clarity on international tax issues. These rulings guarantee the tax position for a minimum of five years and may be renewed for a further five year period.
» Limiting the maximum tax liability of non-residents to Malta taxation on dividends from international business companies.
» A taxation scheme for groups of companies allowing offset of losses between fellow subsidiaries.
» A definition of qualifying participation in foreign holding companies
» A law regulating collective investment business schemes and investment services in general.
» Amendment of existing company law incorporating, inter alia, the introduction of new concepts for Malta such as SICAVS and incorporation of a number of concepts from EU company law.
» Professional secrecy legislation. This provides levels of protection of personal and commercial privacy comparable to other Western countries offering reassurance to foreign investors without obstructing proper supervision.
» Money laundering regulations.
» Ratification of the Hague Convention on recognition of Trusts and incentives for the management of unit trusts from Malta whilst still allowing such trusts to be governed by foreign trust law.
» Insider trading rules.

Source: PWC

Financial Services

A Financial Services Centre of International Repute
Malta can offer a number of advantages in an international tax strategy. As a reputable financial centre with money laundering and professional secrecy legislation based on the EU model, it is not viewed with suspicion and is therefore a reputable jurisdiction from which one may carry on international business. It also offers a number of tax benefits and a vast Double Taxation Treaty network. Malta is nowadays considered to have one of the most interesting fiscal set-ups in the world and the fact that it is not a well-known centre renders it an even better prospect.

Financial Services offered by the Maltese jurisdiction
Maltese Trust law is a fairly recent addition to the Statute Book and is modelled on the Jersey Law of Trusts. Malta is a signatory of the Hague Convention on the Law Applicable to Trusts and on their Recognition and the proper law applicable to a trust is decided in terms of this Convention. Where a trust adopts the Law of Malta as its proper law, it must be registered with the Malta Financial Services Authority (MFSA). One of the trustees of such a trust must be a Maltese nominee company.

There is no legal requirement for foreign trusts to be registered in Malta even if they are administered from this jurisdiction. Trusts registered in Malta pay a flat rate tax per annum on the aggregate income of the trust and on any income of the beneficiary. Trusts do not pay any annual registration fees, death duty, stamp duty. or customs duty on property imported into Malta. They are also exempt from Exchange Control regulations. Absolute confidentiality in respect of the identity of the beneficiaries of a trust is guaranteed.

Malta as a hub for the Registration of Ships and Yachts

Malta is an ideal base for ship operations. Malta has a centuries-old maritime tradition. Its strategic location and its British Maritime tradition make it the ideal base for locating shipping and yachting activities in the Mediterranean Sea. Malta offers a whole range of international maritime services and facilities: deep natural harbours, well equipped ports, extensive bunkering, ship supplies and towage services, ship building and ship repair yards capable of taking the largest ships afloat, a high level of training for both deck and engineering officer, international yacht marinas backed by efficient repair and shore support services.

Only Maltese nationals (whether natural or legal persons) may register ships or yachts with the Maltese Shipping Registry (one of the largest in the world). Maltese shipping companies are formed specifically for the purpose of registering a ship or yacht with the Maltese Registry. These companies are exempt from tax and may be registered within 24 - 48 hours.

It is also possible to incorporate special types of Ship Management Companies (which take the form of the above described ITCs) which can also be used for the management, administration of ships whether the vessels are registered in Malta or elsewhere. The non-resident shareholders of such companies have an ultimate tax burden of 4.17% on net profits.

There is also full exemption from Exchange Control Regulations, Death and Donation duties, stamp duties, Social Security contributions and capital gains tax.

Maltese ships benefit from a favourite tax regime with a total exemption from Malta tax on profits derived from the ownership and operation of vessels. Registration and annual fees are also relatively low.

Registering a Ship in Malta - The Benefits

» Favourable weather conditions
» Low berthing and maintenance costs
» No requirement for the ship/yacht to be berthed in Malta
» Low company formation and registration costs
» A legislative framework which is mainly based on UK legislation
» No restrictions on the nationality of the shareholders of the ship owning company and of its directors, on the master, officer and crew of the ship/yacht
» A complete tax exemption for the owners, charterers and financiers of Maltese ships over 1000 tonnes which can be extended to smaller ships
» A complete tax exemption on the profits derived from the ownership or the operation of a ship
» A complete tax exemption on dividends
» No EC VAT is payable on the acquisition of the ship by the Maltese company. The EC rule is that the shipping vessel will not be liable for EC VAT so long as it does not spend more than six months (whether continuous or not) in any one year in EC territory. EC Member States also have their own specific rules. Further details of such rules are available on request.
» No restrictions on the sale or transfer of the shares and no capital gains tax or stamp duty
» No succession duty
» A wide Double Taxation Treaty network

The Registration of the Ship or Yacht by the Maltese registered company

The shipping vessel must then be registered in the name of the Maltese company. Maltese law distinguishes between provisional registration and permanent registration. Provisional registration, which has a validity of six months (renewable by a further six months), has the same legal effects as permanent registration but it does not include the authority to operate the ship. Provisional registration can be effected very quickly pending the preparation of all the documentation required for permanent registration.

The authority to operate a ship will only be given once the Malta Maritime Authority is satisfied that the vessel conforms to the standards set in international conventions through the submission of all the necessary documentation. At this point, the registration of the ship becomes permanent. Ships which are 20-25 years old must pass an inspection by the authorised flag state inspector before or within one month of the provisional registration.

Ships which are 25 or more years old must pass an inspection by the authorised flag state inspector before provisional registration.

Bareboat charter Registration of foreign ships or yachts registered in compatible Registries may also be effected.

Other Fiscal Benefits offered by the Maltese Jurisdiction

1. The Maltese Permanent Residence scheme
Foreigners may reside in Malta if they acquire a Permanent Residence Permit or an Employment Licence. A Permanent Residence Permit entitles the holder to a flat income tax rate of 15% on all income remitted to Malta subject to a minimum annual liability after any double taxation relief which is due. A permanent residence permit holder is prohibited from engaging in gainful employment while in Malta.

A remittance of about attracts the minimum tax of approximately 10%. The rest of the residence permit holder's income could be remitted elsewhere.

A foreigner who establishes his permanent residence in Malta is bound by law to purchase or lease a residence on the Islands. Foreigners are normally allowed to purchase one holiday home (flat or house). A recent legislation allows a derogation from the one property limitation rule for certain special designated areas.

Foreigners who are not permanent or temporary residents are also allowed to purchase one holiday home in Malta with the same minimum value restrictions. They are not subject to any tax liability as long as their stay in Malta does not exceed six months at any one time.

2. Incentives for Manufacturing Companies
The Industrial Development Act, 1988 offers a number of incentives for persons establishing manufacturing businesses in Malta, the main one being a complete tax holiday for companies exporting at least 95% of their products. In addition, most products manufactured in Malta are entitled to duty free access into the European Union.

3. Malta's Double Taxation Treaty Network
Malta is often marketed as a Treaty jurisdiction. It currently has more than fifty five operative double taxation agreements with such countries as the UK, Germany, Switzerland, Italy, France, the Netherlands, Belgium, Switzerland, Austria, Australia, Finland, the United States, China and South Africa.

Most of the Treaties are based on the OECD model and generally provide for the possibility of final withholding taxes in the case of dividends, interest and royalties. The income of entertainers and athletes is also subject to particularly favourable treatment.