A foreign company may opt to establish a branch in Malta.
In terms of the Maltese Companies Act, a foreign or “oversea company” is a body corporate which is constituted or incorporated outside Malta. Oversea companies setting up branches in Malta are required to register the branch with the Maltese Registrar of Companies within one month from establishing a branch or a place of business in Malta.
Tax treatment
A branch of an oversea company (the business of which is managed and controlled outside Malta) would be taxable in Malta only on income arising in Malta and on income arising outside Malta but received in Malta.
Same corporate tax system as Maltese Companies: The income of the branch would be taxed at the same rate as that of a Maltese company (currently 35%), and the computation of the income would follow that adopted by a domestic company. Non-resident shareholders of overseas companies may qualify for refunds of tax, provided that the relevant conditions are satisfied.
No withholding taxes: Branch office profits are not subject to any withholding taxes at the time of transfer or later. A branch’s profits are only subject to the corporate tax charge at the domestic rate.
Double tax treaties: Subject to any particular conditions in a particular double tax treaty, branches of foreign companies may use the provisions of a relevant Malta double tax treaty with another jurisdiction.
