Branches of Foreign Companies

branches of foreign companies

Malta’s taxation system invariably provides a very attractive regulatory environment whereby foreign companies, even those registered outside of the European Union, may set-up a branch in Malta.

Such Maltese branches of foreign companies may also register for VAT purposes in Malta and benefit from obtaining an-EU widely recognised VAT number.

Moreover, the Maltese branch of the foreign company would be taxable on a remittance basis, which means that only foreign income remitted to Malta would be taxable therein. Apart from this basis of taxation applying, any foreign profits remitted to Malta by the Maltese branch would be taxable at 35%. However the shareholder of the Maltese branch would be able to benefit from the relative tax refunds available in terms of Maltese law which may enable the effective tax rate to be lowered down to 5%.

Highlights of Maltese branches:

Taxable on a remittance basis, which means that foreign income only remitted to Malta is taxable.

Eligible to apply for a Maltese VAT number, even if the foreign company is non-EU registered.

Shareholders of the Maltese branch can benefit from the tax refund mechanism, in the event that any income tax is paid by the Maltese branch.