International Trading Activities Through a Malta Company
An international trading company is a business that trades products and services across many countries and jurisdictions for consumer, business or government use.
For larger organisations, an international trading company is likely to have a legal entity such as a limited company or partnership based in that country of business. Meanwhile, the entity will usually report back to a parent entity or head office, which could be situated in that country or another jurisdiction entirely.
For smaller organisations, it is likely that one company manages and controls all its operations from a base in one country. Increasingly, businesses are choosing Malta as the centralised hub for managing operations across many jurisdictions.
What are the benefits of setting up an international trading company in Malta?
Located in the Mediterranean Sea, Malta sits between Italy and North Africa. All major European cities are only a short flight away. Major air transportation hubs such as Heathrow, Dubai, Istanbul and Frankfurt are all within easy reach and therefore creating easy links to the rest of the world.
Attractive Tax System
Malta benefits from an attractive tax system that offers many tax planning opportunities for companies. Many countries adopt the classical tax system, whereas Malta uses the Full Imputation System method of taxation.
Under the classical tax system, corporate profits are generally taxed at the level of the company and then again in the hands of the individual shareholder.
However, Malta taxes corporate profits at 35% but isn’t taxed again in the hands of the shareholder. For a trading operation set up in Malta, it is possible to claim a 6/7th refund on the tax paid. Therefore, this brings the effective rate of tax down to 5%.
The VAT rate in Malta is one of the lowest in the European Union at 18%, which offers an advantage over other higher charging jurisdictions in the EU.
EU Parent-Subsidiary Directive
Malta is a member of the European Union and benefits from the Parent-Subsidiary Directive. In simple terms, it aims to eliminate double taxation on profit distributions between associated companies in the various EU Member States.
Double Taxation Treaties
Malta has over 70 double taxation agreements in force with countries from all over the world, such as the USA, China and South Africa. These treaties allow for many tax planning opportunities for those considering using Malta as a central hub for their international trading company.
The two national languages of Malta are Maltese and English. However, the primary language used for business is English.
Malta over the last few years has attracted many people from around the world who typically speak two or more languages. Therefore, it is possible to employ someone who speaks a specific language much easier than other locations. Therefore, this further enhances Malta as an excellent choice for an international trading company base.