Re-domiciliation 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 Re-Domiciliation
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 transfer it’s 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, obligation 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.
The company must lodge a request for authorization of inward re-domiciliation with the Registrar of Companies and this request must be accompanied by the following documents:
(a) an extraordinary resolution or equivalent document of the migrating company authorizing it to be registered as being continued in Malta;
(b) a copy of the revised constitutive document (Memorandum and Articles of Association) of the Migrating company;
(c) a certificate of good standing or equivalent document in respect of the migrating company issued by the competent authority or other evidence to the satisfaction of the Registrar that the migrating company is in compliance with the registration requirements of the authority;
(d) a declaration signed by at least two directors of the migrating company confirming:
(i) the name of the foreign company and the name under which it is being continued;
(ii) the jurisdiction under which it is incorporated;
(iii) the date of incorporation;
(iv) the decision to have the foreign company registered as continuing in Malta;
(v) that the foreign company has given formal notice to the relevant authority of its country of its decision to be registered as continuing in Malta in accordance with the procedure laid down by law and, together with the declaration, there shall be annexed evidence of such notification;
(vi) that no proceedings for breach of the laws of its country have been commenced against such company, unless such proceedings arise out of an event which on the date of the occurrence thereof did not constitute such a breach;
(e) a declaration signed by at least two directors of the migrating company, confirming the solvency of the company and that they are not aware of any circumstances which could negatively affect in a material manner, the solvency position of the company within a period of twelve months;
(f) a list of directors of the migrating company as well of the company secretary, if any;
(g) such material as the Registrar may require to satisfy himself that:
(i) such request is permitted by the laws of the country of the migrating company; and
(ii) the consent of such number or proportion of the shareholders, debenture-holders and creditors of the migrating company as may be required by the laws of that country;
(h) the relevant registration fees.
The documents referred to above must be in English or translated into English and certified to be a correct translation.
Once the Registrar verifies that the above mentioned documents are in order, the company is given a provisional certificate of registration and the migrating company can start operating in
Within six months from the issue of such certificate, the company must submit documentary evidence to the satisfaction of the Registrar that it has been struck off from the register of the original country.
The Registrar will then issue a Certificate of Continuation confirming that the company has been registered as continuing in Malta.
Special conditions for Public Companies
The regulations stipulate that, without prejudice to the other requirements stipulated in the law, where a foreign company is a public company, it must:
Provide the most recent prospectus or equivalent document in compliance with the requirements of the Maltese Companies Act, if it has offered its shares or debentures to the public;
If the company is quoted on a recognised stock exchange, it must give evidence to the Registrar that the consent of the relevant authorities of that exchange to the Company being registered as being continued in Malta has been obtained. This can take the form of a document from the Exchange that they consent to the redomiciliaiton. This document must be in English, or be accompanied by a certified translation in English.
A list of current shareholders (or members) of the company, authenticated as the Registrar deems fit. The registrar demands that the list of of the shareholders is provided by the company’s registrar at a date which is close to the day when the application for the redomiciliation to Malta is submitted.
The 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.
The company is entitled (but not obliged) to claim a step-up in the base cost of assets situated outside Malta without any adverse Malta tax consequences. The company may opt to, for Malta tax purposes, revalue the assets from historic costs to fair market value at the time of domicile to Malta. The re-valued base cost should be notified to the Commissioner of Inland Revenue and should not exceed the market value of the asset. The revaluation will apply for the purpose of determining gains on a subsequent disposal of assets with the result that any previously accrued profits would be exempt from Malta income tax.
Once the company becomes subject to tax in Malta its shareholders may then avail themselves of the 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 approxamitely 5%.