The provisions of the Malta Companies Act offer the possibility for companies incorporated or constituted outside Malta to conduct business in or through Malta by using a branch or a place of business in Malta.
This creates a viable alternative when such companies opt not to register a separate legal entity yet carry out business in or through Malta by an extension of their foreign corporate vehicle.
The Malta tax benefits granted to companies incorporated or resident in Malta are also extended to branches. This renders the use of a branch an optimal solution in international tax planning strategies particularly in the light of complex anti-avoidance legislation, such as controlled foreign corporation legislation present in foreign jurisdictions.
The Companies Act does not impose any restrictions on the activities which may be carried out by the Malta branch. To this end, a Malta branch may carry out any activities in Malta or outside Malta. Such activities could include:
- Holding of shares in non-resident companies
- Holding and leasing of assets
- Holding and licensing of intangible assets
- Financing activities
- Trading activities with persons in Malta or outside Malta
A Malta branch of an overseas company is taxed in the same manner as a Malta company and is subject to the tax at the rate of 35%. Likewise the tax refund provisions at the level of the shareholders of the foreign company would apply. These considerations coupled with the fact that Malta does not levy a branch remittance tax or similar tax on the profits deemed to be distributed to the head office, render Malta an excellent location to establish one’s branch of business.
At WDM International we can assist our clients in setting up their Malta branch through our legal and tax practices, which work hand in hand in order to provide a complete solution. We also service our clients in relation to the annual maintenance obligations pertinent to the Malta branch.