International trading activities through a Malta company
An international trading company is a business that trades across many countries and jurisdictions. 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, which in turn will usually report back to a parent entity or head office which could be situated in that country or in another jurisdiction completely. For smaller organisations, it is likely that one company manages and controls the whole of its operations from a base that is situated in one country. Increasingly, Malta is being chosen as a centralised hub for controlling and managing operations of one company that cross many jurisdictions.
What are the benefits of setting up an international trading company in Malta?
Malta is located in the Mediterranean Sea 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 thus open up air transportation to the rest of the world.
Attractive Tax System
Malta benefits from an attractive tax system that offers many tax planning opportunities for a trading operation. Whereas many countries adopt the classical tax system, Malta adopts 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 in the majority of cases taxed again in the hands of the individual shareholder. The Maltese Full Imputation system of company taxation by virtue of its refund system sees corporate profits taxed at company level at 35% but not again in the hands of the shareholder. For a trading operation set up in Malta it is possible to claim a 6/7 refund on the tax paid, which could bring 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 could offer an advantage compared to other higher charging jurisdictions. As Malta is also located within the European Union it could be possible that certain transactions and supplies between businesses made across EU member states are exempt from charging VAT at all as they could qualify as an intra community supply or acquisition. There would still be a reporting requirement if the supply is an economic activity that requires VAT registration in Malta.
EU Parent Subsidiary Directive
Malta as a member of the European Union benefits from the Parent Subsidiary Directive which has the purpose of eliminating tax on dividend distributions between a parent company and a subsidiary that are in different EU member states.
Double Taxation Treaties
Malta, as a member of the European Union is already well connected with its other EU member states. It also benefits from EU Single Market access. Notwithstanding this Malta has in place around 70 double taxation agreements with countries from all over the world such as Australia, USA and China to name a few. This allows for many tax planning opportunities for those considering using Malta as a central hub for the management and control of their international trading company or organisation.
The two national languages of Malta are Maltese and English. All legislation is available in both and business is generally conducted in English. Malta over the last few years has attracted many people from different nationalities and it is now possible to easily employ someone who speaks a certain language or a couple of languages which further enhances Malta as a possible base for an international trading company.