Setting up a company in Malta is a very exciting prospect. Malta is not only a great place to do business but it also is a place that many visitors fall in love with, thanks to the local people, gorgeous weather and the beautiful scenery. Here, we give you the top reasons, which are not all related to the aesthetics and culture of the island, why you should consider setting up a company in Malta.
1. Lowest effective corporate taxes in the European Union
At first glance, the corporate tax rate of 35% might look extremely high and very noncompetitive when compared to the rest of the European Union. However, it is entirely possible to reduce this tax rate to between 5 and 7% by simply distributing all profits to a holding company which is registered in another country. Typically, the best countries to consider for this purpose are Cyprus, the Seychelles or Gibraltar.
Malta has several tax benefits which will reduce the company income tax through the full imputation and tax credits available when distributing profits to the shareholders.
2. Sane Income Taxes
It’s true that Malta does have rather high-income tax rates and that if you were to take a high salary you would face a big tax burden. The trick is to only take out as much as you need, this then effectively cuts the tax rate because the income tax rates are in bands. Malta has an intuitive income tax system in that earners only pay the higher percentages owed on the amount where they have exceeded a band. For illustration, these are the income tax bands at the time of writing:
Earnings under €8500 – 0% income tax
€8,501 – €14,500 – 15%
€14,501 – €60,000 – 25%
€60,001 and upwards – 35%
A salary of €14,400 per year would attract an income tax rate of approximately 6-7% because the first €8,500 does not attract tax, the full amount is not taxed at 15% as some might think.
3. Lower Minimum Wage
Malta has a minimum wage requirement of €720 per month, with most employees being satisfied with a monthly salary around €1000-2000 for the average job. Saving money on wage costs can obviously help your business to be more profitable.
4. Share capital requirement is only €1,165
Setting up a company in Malta can be done more cheaply than most other places around the world. This is due to the minimum amount of capital required to start a business being only €1,165. Better than this though is the fact that only 20% of this capital needs to be in the business bank account, meaning it takes less physical money to start up in business. It is also worth noting that an annual fee of €100 also applies.
5. Low social securities
Social security is paid both by the employee and the employer, with both parties having to pay 10% of salary. This low percentage does not add too much on to the cost of hiring employees.
6. Fewer restrictions on expenses
Maltese legislation is very laid-back in terms of costs that you can claim back through your business. Business travel costs, for instance, are very rarely questioned meaning that those who like to travel and work can claim back much of the costs through their business.
There are also a variety of personal reasons why setting up a company in Malta is ideal.
7. Stay safe with low crime
Crime is very low on the island and during my time here I have only known about a few crime-related incidents. I feel extremely safe here, even when walking about at night.
8. Enjoy a decent climate
The sun shines here approximately 300 days out of the year, the weather is pretty much beautiful all year round. The island receives its fair share of rain during the winter season but this is very concentrated and rainfall usually only lasts a few hours at a time.
9. Less of a language barrier
English is spoken by many people in Malta that it is considered, alongside Maltese, to be an official language of the country. Some of the older islanders are not very fluent in English but all official paperwork and signs are translated into English, making setting up a company in Malta very easy.
10. More like-minded entrepreneurs
The ease of setting up a company in Malta has attracted entrepreneurs from all over the world to the island. This can make it easy to find advice to help you successfully run your business but is also great for making social contacts.
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