Branch Office in Malta in 2023
Malta is one of the nations in Europe that provides a variety of tax incentives and trained labour at affordable rates. If you are a foreign entrepreneur intending to start a business in Malta and expand your enterprise, then one of the best business structures you can take into consideration is to establish a branch office in Malta.
The branch office functions as an extension of the parent business and carry out similar tasks as that of its parent organization. Since the branch office is not an independent legal organization, for any obligations and debts of the branch office, the parent company is held accountable.
This article will cover in brief how you can register a branch office in Malta. It will further give a brief explanation of the benefits, fees, requirements and documents needed to open a branch office in Malta.
The process to open a branch office in Malta
You can consider incorporating a branch office, if you intend to establish a company in Malta.
Here is the process to open a branch office in Malta:
Recruit a local representative
Recruiting an official representative is one of the most crucial steps for establishing a branch office for businesses looking to expand their operations in Malta.
Decide on the business address
The second step to open a branch office in Malta is to have a registered business address in the country. All relevant documents and correspondence should be addressed to the registered business address.
Gather the incorporation documents
The third step involved gathering the relevant documents needed to setup a branch office in Malta, such as articles of association, declaration of opening a branch and so on. All necessary paperwork must be apostilled and converted into English by a qualified translator.
Enrol with the Registrar of Companies
By completing the form and the required documentation, the foreign business must incorporate the branch with the Registrar of Companies.
Establish a bank account
A business bank account must be established in Malta when opening a branch for the purpose of carrying out prospective banking transactions.
Enrol for tax
Branches must enrol with the tax authorities for a variety of tax-related reasons and also submit yearly tax returns because they are considered taxpayers in Malta.
Documents needed to open a branch office in Malta
In order to open a branch office in Malta, the following paperwork must be submitted:
- Branch registration form
- Copies of the Certificate of Incorporation of the parent firm
- Detail and passport copies as well as references of the branch representative
- Copies of the Article of Association of the main office
- Branch registered address
- Details of the business activity that the branch will engage in
- Copies of the Memorandum of association of the parent business
Requirements to register a branch office in Malta
To register a branch office in Malta, these requirements must be met:
- Local representative: A branch office in Malta has to recruit a local representative.
- Registered business address: A registered business address is essential in order to register a branch office in Malta.
- Business secretary: It is crucial to have a secretary for a branch office in Malta.
- Required capital: There isn’t any minimum capital required to establish a branch office in Malta.
Taxation structure to establish a branch office in Malta
Branch offices owned by foreign corporations are taxed similarly to those owned by Maltese corporations. Since branch offices are a type of business that has its headquarters outside the nation, they would be subject to taxation only on money earned in Malta and revenue earned abroad but returned to Malta.
Branch offices are taxed at the rate of 35%, and foreign stockholders may be eligible for tax rebates. Also, dividends from the branches are only taxable at the local tax rate and are not liable to any withholding charges. Branches in Malta might also profit from the numerous double tax agreements made with other nations, which shield the business from paying taxes twice.
International corporations with branch offices in Malta are obligated to submit tax reports on a yearly basis.
Accounting requirements of a branch office
Annually audited financial statements must be submitted by the parent business to the Registrar of Companies. A branch in Malta must enrol for VAT with the local VAT office and submit quarterly statements. Accounts for taxes that are yearly audited should be given to the Inland Revenue.
Cost to setup a branch office in Malta
The cost to setup a branch office in Malta is an important factor that you must consider if you wish to register a branch office. An entrepreneur has to pay for a variety of charges when incorporating branches of a parent company, including expenditures of hiring local representatives, leasing office space, paying government fees, enrolling for taxation purposes, preparing financial statements, and meeting accounting standards.
Here are some of the expenses mentioned that have to be incurred if you register a branch office in Malta:
- Registration fees: The registration fee to setup a branch office in Malta is €245. Although the nominal amount of the share capital of the international business may determine the registration price.
- Virtual office expenses: The expenses for virtual offices can be approximately €125 every month.
- Physical office expenses: Physical office expenses range in price from €180 to €400 every month. However, the price can vary based on the place of the business.
- Expenses for accounting services: Expenses for accounting services can start from approximately €160 every month, and it includes services like bookkeeping.
Why establish a branch office in Malta?
Malta’s favourable tax rates, robust infrastructure, excellent position, and English-speaking corporate community make it an appealing option for foreign corporations to open branches there.
There are numerous reasons why you can consider opening a branch in Malta, such as:
Tax benefits
There are many tax benefits in Malta that branch offices incorporated in Malta can take advantage of, such as the absence of any withholding taxes on earnings made by branches. Furthermore, Malta has ratified multiple agreements to prevent double taxation, which aids branch offices in avoiding being taxed twice on their revenue generated.
English language
English is among the main languages spoken by people in Malta. As a result, it makes it easier for international companies that open a branch office in the nation to engage with its citizens and conduct business there.
Lower crime rates
Given that Malta’s crime statistics are considerably lower, it provides a secure atmosphere for foreign individuals. Additionally, it simplifies the process of establishing and growing your firm in the country, increasing the likelihood that foreign workers will agree to work there.
Good living conditions
Malta ranks highly concerning variables like GDP growth, life expectancy rates, and social assistance. In addition to that, living expenses in Malta are also moderate. This makes it favourable for foreign entrepreneurs who wish to start a branch office in the country.
Benefits of incorporating a branch office in Malta
There are several benefits of incorporating a branch office.
Some of the advantages are listed below:
- The process to establish a branch office in Malta is a simple and speedy process.
- The registration of a branch office in malta does not necessitate being physically present. As such, a local representative is needed.
- The branch office does not have to pay withholding tax on profits generated.
- There are almost over 65 double taxation treaties which help branches to avoid paying taxes on the same revenues twice.
- Only revenue earned in Malta is taxed in the case of a branch office in Malta.
- There isn’t any minimum capital investment necessary for incorporating a branch office in Malta.
Conclusion
If you want to grow your business in Malta, you should setup a branch office there. You can conduct the same business operations through a branch office as you can through your overseas main office. Branch offices also benefit from a number of tax incentives in Malta. As such only the revenue earned in Malta is taxed in the case of branches of foreign corporations.
You can speak with our business specialists at Odint Consultancy if you have any additional queries concerning the branch offices in Malta. Our professionals will be happy to respond to your inquiries.
FAQ’s
- Recruit a local representative
- Decide on the business address
- Gather the incorporation documents
- Enrol the branch with the Registrar of Companies
- A branch is a separate legal body and a subsidiary is an independent legal body.
- Although the branch solely has to pay tax on revenue earned in Malta, the subsidiary is subject to global income taxes.
- A representative must be hired locally by a branch office in Malta.
- For a branch office in Malta, it is essential to have a secretary.
- To form a branch office in Malta, you should have a corporate address.
- A branch office can be opened in Malta with no minimum capital requirement.
- There is an absence of any withholding taxes on earnings made by branches.
- Malta has ratified multiple agreements to prevent double taxation, which aids branch offices in avoiding being taxed twice on their revenue generated.
- Establishing a branch office in Malta is an easy and quick process.
- It is not necessary to be physically present to register a branch office in Malta. A local representation is therefore required.
- In the event of a branch office in Malta, only income made in Malta is subject to tax.
- There is no least capital needed to establish a branch office in Malta.
