Economic Presence: What Does It Mean to Have Substance in a Company?

November 30, 2022

What does it mean to have substance in a company?

A company’s substance is its economic presence in a jurisdiction. The need for having substance in a company within its jurisdiction is becoming more prevalent and essential if you are setting up a company overseas. When setting up a Malta company, it’s important to have a clear definition and understanding of the management and control requirement. Papilio Services recommends the following measures are considered by a business owner when thinking about setting up a business in Malta.

– Establishing a Board of Directors with at least 50% of members being Maltese nationals or having a permanent place of residence in Malta
– Conducting business decisions in Malta and recording minutes locally, such as regular board meetings and annual general meetings
– Demonstrating economic substance within Malta through the establishment of an office and employees based in Malta

Each business will be unique in its requirements of how it is set up and what substance requirements are necessary to ensure compliance.

Substance in the form of a registered office in Malta

As international tax laws and substance requirements for companies set up overseas are constantly changing, having a registered office in Malta can help. A registered office in Malta that can serve as a valid address for delivering documents to the company and its directors, shareholders and officers is a legal requirement when setting up a company in Malta. This registered office can be different from where the company’s trading and business operations are carried out, but it will be responsible for holding Malta company formation documentation, registers, and copies of annual accounts.
Opening your business overseas can be expensive and time consuming. Moreover, finding an office in a foreign country can lead to its own challenges. At Papilio Services, we want to make the process of setting up a company as easy as possible, and that includes finding an office. As a licensed provider, we can assist with setting up a registered office for you.
However, it is important to keep in mind that different jurisdictions have different requirements when it comes to substance. Therefore, we recommend taking a tailor-made approach according to the specific needs of the company. If you’re looking for a registered office, Papilio Services offers 360-degree support from the company formation in Malta to back-office support such as bookkeeping, tax advice and more.

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