Transferring a foreign company to Malta without liquidating it
Company Migration-Malta: a company law perspectiveFrom the point of view of company law, it is sometimes possible to transfer companies to Malta without liquidating them. Company migration to Malta is lengthier than incorporating a new Malta company but saves on expensive liquidation costs and ensures continuity.
Company migration or redomiciliation to Malta is done in one of the following ways:
- The best alternative is often to use Maltese company migration legislation which is only applicable, however, when companies come from jurisdictions with matching legislation.
- The second alternative which offers a de-facto redomiciliation is possible by conducting a cross-border merger, where the company resulting from the cross border merger is Maltese. This option is possible if the company being transferred to Malta is registered in a European Union Member State since the de-facto redomiciliation would take place pursuant to the Cross Border Mergers Directive (Directive 2005/56/EC).
Company Migration-Malta: a tax perspectiveCompany migration to Malta from a company law perspective is different from migration to Malta from a tax perspective. A company incorporated in Malta would be ordinarily resident and domiciled in Malta and would consequently be taxed in Malta on a worldwide basis. On the other hand, a foreign company may be resident in Malta should it result that its business is controlled and managed in/from Malta. Therefore, although a Maltese company is ordinarily resident in Malta, a company incorporated outside Malta may have its fiscal residence in Malta should it result that its business is controlled and managed in/from Malta.
Which companies are most likely to benefit from transferring their tax residence to Malta?1) Companies with international operations
Companies having international activities are the ones most likely to benefit from transferring their corporate residence to Malta. Typical examples are international service providers, import-export companies, e-commerce companies, central purchasing companies and those active in franchising. On the other hand, businesses having industrial activities are generally not likely to benefit from such a set up since their activities imply a physical presence in the jurisdiction concerned.
2) Companies incorporated in high tax jurisdictions
Of course, companies currently incorporated in high tax jurisdictions are the companies which stand to gain most from moving their company to a low-tax jurisdiction. According to the Forbes 2009 tax misery index, France, Belgium, Sweden, the Netherlands and Austria are the five most heavily taxed countries in the EU.
3) Profit-Making companies
Since tax is chargeable on the profits of a company, the shareholders of profitable companies stand to gain from moving their companies to a low-tax jurisdiction.