Establishing a Branch in Malta

Dr. Priscilla Mifsud Parker co-authored with Dr Jean-Philippe Chetcuti | 04 Jul 2022

Malta Trading Company

Establishing a Branch in Malta

The Maltese Companies Act (“the Act”) lays down a number of provisions allowing bodies constituted or incorporated outside Malta to establish a branch or place of business within Malta. The Act defines this as an oversea company. This notion creates an alternative to oversea companies which opt to not register a separate legal entity in Malta but to carry on business in Malta by an extension of their foreign corporate vehicles. The advantage of setting up such a branch in Malta is that there are no registration costs.

Registration

The Maltese Companies Act defines an oversea company as a body constituted or incorporated outside Malta. Within one month of the establishment of a branch in Malta, the oversea company shall deliver to the Registrar of Companies for registration the following documents:

  1. An authentic copy of the memorandum and articles of the oversea company or any other instrument constituting such company.
  2. A list of the directors and the company secretary or of the persons vested with the administration of the oversea company. If no directors or company secretary are appointed, there should be provided a list of persons vested with the company’s representation.
  3. A return containing the following particulars:
    1. The name under which the branch is carrying on its activities if different from the name of the oversea company;
    2. The address of the branch established in Malta by the oversea company and where there are more than one branch is established, there shall be indicated the address of principal branch;
    3. The activities to be carried out by the branch so established;
    4. The names and addresses of one or more individuals resident in Malta authorised to represent the oversea company for the activities of the branch established in Malta; and
    5. The extent of the authority of any individual falling within subparagraph (iv), including whether that individual is authorised to act alone or jointly with others, and in the latter case, the name of any person with whom he is authorised to act.
  4. Unless disclosed in the memorandum and articles or any other constituting document, a return containing the following particulars about the oversea company:
    1. Legal form of oversea company, and
    2. Identity of the register in which oversea company is registered and the number with which it is so registered.

Oversea companies constituted outside Malta and which have been registered with the Registrar of Companies before the appointed day shall be deemed to be registered in accordance with the respective provisions of the Act. Oversea companies which have established a branch within Malta before the appointed day and continue to have an established branch after the appointed day must deliver to the Registrar for registration the documents aforementioned within six months of the appointed day.

Taxation

Branches of oversea companies are taxed in the same manner as Maltese companies and are thus subject to the tax rate of 35%. The branch would be taxable in Malta only on income arising in Malta and on income arising outside Malta but remitted to Malta.

Accounting Requirements

The oversea company shall draft and deliver to the Registrar for registration a balance sheet, a profit and loss account and the notes to the accounts in such form and containing such particulars as the directors would, had the company been formed and registered under this Act, be required to draft and lay before the company in general meeting. The accounts have to be delivered within forty-two days from the end of the following periods:

  1. Ten months after the end of the relevant accounting reference period in the case of a private company, and seven months after the end of that period in the case of a public company;
  2. Eighteen months in the case of a company which carries on business or has business interests to the extent of more than ninety percent outside Malta.

Alterations

If any alteration is made to the aforementioned documents, the company shall deliver to the Registrar for registration a return containing such alteration. The return is to be delivered within one month of such alteration and it is to be signed by a director, company secretary or any other authorised officer of the company.

Prospectus

The oversea company establishing a branch in Malta shall, in every prospectus inviting subscriptions for its shares or debentures in Malta, state the country in which the company is constituted or incorporated.

Registry Fees

The Companies Act (Fees) Regulations lays down the fees payable. The sum depends on the registered capital of the company, with the sum of €245 being the lowest in respect of oversea companies.

Penalties

If the oversea company fails to comply with any of the provisions laid down in the Act, any officer or agent of the company who is in default shall be liable for a penalty. In the case of a continuing default, the person in default would be subject to a further penalty for every day during which the default persists.

Bank Branches

The Banking Act provides similar regulations on the establishment of bank branches in Malta.

Given that a branch is an integral part of the institution to which it belongs, a licence issued to an institution incorporated outside Malta to operate its banking business through a branch set up in Malta is deemed to have been granted to the institution as a whole.

In the case of a company licenced outside Malta to carry on the business of banking can establish a representative office in Malta, but only after it has given at least two months’ notice to the Authority delineating its intention to establish such an office. 


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Key Contacts

Dr Charlene Mifsud

Partner, Corporate & Commercial

+356 2205 6298
cm@ccmalta.com

Dr Maria Chetcuti Cauchi

Senior Partner, Property & Projects

+356 22056112
mcc@ccmalta.com

Dr Priscilla Mifsud Parker

Senior Partner, Corporate, Tax & Immigration

+356 22056122
pmp@ccmalta.com

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