Redomiciliation of companies to Malta is possible, provided that the laws of the originating country, allows it and as long as such company is authorized to do so by its charter, statutes or memorandum and articles or other instrument constituting or defining the company. This is regulated by Subsidiary Legislation issued under the said Companies Act, entitled “Continuation of Companies Regulations”.
Benefits of a Redomiciliation
Shareholders who want to move an existing company to Malta have the option of actually moving such existing company to Malta rather than having to go through a winding up/liquidation process of such existing company so that the business is transferred to a newly set up company in Malta.
The concept is based on the idea that an existing company, being a separate and distinct legal entity with its own legal personality, may opt to transfer its domicile to Malta. This way the existing company originally formed in the foreign jurisdiction remains in existence and retains all its history and relationships. The migrating company would retain all of its assets, rights, obligations and liabilities it had in its original country of registration. Avoiding such a transfer (when opting to migrate instead of forming a new company in Malta) is beneficial as such transfer of assets and liabilities could trigger various tax consequences.
Local tax consequences as a result of the re-domiciliation
Once a company is re-domiciled to Malta it becomes tax resident in Malta and is subject to tax at the standard rate of income tax of 35% on its worldwide income. The re-domiciliation process itself is not subject to any tax in Malta.
Once the company becomes subject to tax in Malta its shareholders will be entitled to refunds, which would entitle them to claim a refund of 6/7th of the Malta tax, paid (for operational companies). This is 6/7th of the 35% – meaning a 30% refund – and an effective tax rate of approximately 5%.
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