Malta Invest 2023 by Content House

23 Malta

Invest Malta’s International Investment Guide 2023 Global Reach:

€20 (where sold)

MaltaInvest2023

Contents Chapter 1: Why Malta? Overview 24 Macroeconomic and Fiscal Structure 30 Response to the Covid-19 Pandemic 32 Legal System 33 Access to Finance 35 Taxation 36 Access to Talent 38 Infrastructure 42 Buoyed by Prosperity in Stormy Seas 46

Chapter 2: Setting Up Your Business In Malta Overview 55 Where to Start 56 Licensing and Support 60 Tax Planning 63 Setting Up a Company in Malta

Malta Enterprise: Building the Economy of the Future

Business 1st: A One-Stop-Shop for the Business Community and Aspiring Entrepreneurs

Chapter 3: Industry Overview 82 Manufacturing 85 Life Sciences and Pharmaceuticals 88 Information Communication Technology 90 Areas of Growth 93 16

Shaped by Legacy… Shaping the Future

Malta’s International Investment Guide 2023

Chapter 4: Financial Services Overview 104 Investment Funds 108 Private Wealth 120 Banking, FinTech and Virtual Finance 122 Insurance 126 Finding Success in Succession with Family Values

128

Chapter 5: Residency Overview 136 Malta’s Residency Schemes 138 A Residency Programme Based on Opportunity, 154 Efficiency and Robust Due Diligence

Chapter 6: Property and Real Estate Overview 162 Buying Property in Malta 165 Malta’s Top Real Estate Locations 168 Special Designated Areas 171 Commercial Property Investment 174

Chapter 7: Gaming Overview 180 Malta – a Global iGaming Jurisdiction

183

Remote Gaming Licensing and Regulation

187

Esports and Video Gaming 194

MaltaInvest2023

Contents Chapter 8: Shipping and Aviation Overview 200 Ship Registration 202 Aircraft Registration 210 Mobile Assets Protected Cell Companies 213

Chapter 9: Tourism Overview 216 Malta’s Tourism Product 222 Events 227 Cruise 228 Investment Opportunities 231 The Maltese Islands: A MICE Destination of Excellence

232

Chapter 10: Useful Information Local Contacts 238 Diplomatic Missions 244 Double Taxation Agreements 246 Employment Exemptions and Incentives 248 Personal Tax Rates 250

MaltaInvest2023

Malta Invest: Malta’s first international investment guide

elcome to Malta Invest, the firstever comprehensive international investment guide focusing on Malta as a destination. The Maltese Islands have arguably been punching above their weight when it comes to attracting foreign investment to their shores. Considering our size – and let’s face it, the islands are tiny – and lack of natural resources, Malta has, over the past decades, made giant leaps as an investment hub across different sectors, be it high value-added manufacturing, financial services, gaming, aviation, shipping, new technology, and property. The economic pace gathered since the island joined the European Union in 2004, and the Eurozone in 2008, has continued to accelerate over the past decade, turning Malta into a global investment hub and destination of choice. In tandem, the island also managed to attract large thousands of foreigners and expats who continued to cement Malta’s status as a cosmopolitan city-island. The islands, in fact, have proved to be a magnet for high-net-worth individuals and investors, many of whom love the Mediterranean lifestyle to the extent of also choosing to invest in high-end property, be it within a special designated project in a cosmopolitan area or a converted palazzo in one of the historical cities built by the Order of the Knights of St John.

Admittedly, Malta has made some serious mistakes along the way, which led to the island being formally financially greylisted in 2021, but the fast-tracking of major financial and political reforms addressing some of the pertinent issues meant that Malta was moved out of the grey list at the speed of light, in 2022. The fundamental rationale behind Malta Invest is to provide those who are keen to explore what Malta has to offer with valuable feedback by key people who invested in Malta over the years, and with practical information on investment routes and possibilities in Malta that is, to date, scattered across different sites and provided by different entities and agencies – public and private – depending on the sector or area of responsibility. Essentially, the island lacked a comprehensive, one-stop guide across sectors to address this gap. Hence the development of the Malta Invest brand. Malta Invest brings together a wealth of information as a single source across several sectors, and tackles all the fields relevant to businesses as well as to the individual seeking to invest in Malta. We hope that the information being provided via this single point of reference is useful as they explore the wide-ranging opportunities Malta has to offer.

Malta’s International Investment Guide 2023

PUBLISHER

Mdina. Photo: Kurt Paul Baldacchino / Unsplash

Each chapter of Malta Invest contains an extensive overview of one economic sector after another, all ripe with real and tangible potential, and provides information on the assistance, aid, and benefits available to all potential investors. We have also picked the brains of key stakeholders who, in this comprehensive publication, share valuable insights gained from their experience of working in or using Malta as an investment hub and business destination across the varied sectors and fields covered. Industry leaders, major investors, and relevant state entities have all contributed to the work you hold in your hands – and we wholeheartedly thank all stakeholders for collaborating with our business editorial team on this ambitious project. We have also invested heavily to distribute Malta Invest in places that matter. Adopting a sniper approach by teaming up with a global distribution partner, we are proud that Malta Invest is being distributed in strategic places and in major cities – London, Paris, Geneva, Frankfurt, Zurich, Paris, Dubai, Brussels, and Valletta, at leading investment banks, corporate firms, business-oriented hotels, private members’ clubs, embassies, first and business class airline lounges, and private jet centres. We are also grateful that the Ministry for Foreign and European Affairs and Trade was very receptive to this project from the outset and has provided tangible, practical assistance to facilitate further specific distribution to Malta’s diplomatic missions in key destinations – within and outside Europe. We sincerely trust that Malta Invest will prove to be a useful guide to this fast-growing, future-facing island nation. Until we meet again,

Robert Louis Fenech

Content House Group Mallia Buildings, 3, Level 2, Triq in-Negozju, Zone 3, Central Business District, Birkirkara CBD3010, Malta T: +356 2132 0713 E: info@contenthouse.com.mt www.contenthouse.com.mt Malta Invest 2023 is published, produced, and owned by Content House Group Ltd and its relevant subsidiary companies.

EDITOR Robert Louis Fenech HEAD OF SALES & BUSINESS DEVELOPMENT Marie Claire Camilleri CREATIVE DIRECTOR & DESIGN Nicholas Cutajar DIRECTOR OF SALES & OPERATIONS Lindsey Napier HEAD OF DIGITAL & MARKETING Raisa Mazzola

Content House Group Ltd would like to thank all the protagonists, sponsors, partners, advertisers, and all relevant public entities, as well as private companies that have embraced this project and assisted the project team in the collation of information. The publisher would also like to thank all participants and interviewees who accepted to feature in this publication. Moreover, the publisher extends its gratitude to the entire project team who have made this project a success, and to the local and international distributors, as well as to the Ministry for Foreign and European Affairs and Trade for facilitating the circulation of this publication in strategic Malta missions around the world. The publisher cannot be held liable for any information that is published in this publication. Every effort has been made to ensure accuracy of information. The publisher cannot be held responsible for any decision based on the content published in Malta Invest, which is solely aimed as an informative guide. The content appearing in this publication does not necessarily reflect the views of Content House Group Ltd, or of its subsidiary companies, as the publisher. All rights reserved. Reproduction in whole or in part without written permission of the publisher is strictly prohibited. Malta Invest is strategically distributed for free in London, Paris, Frankfurt, Geneva, Zurich, Brussels, Dubai, and Valletta. In the UK, the publication is distributed in select luxury hotels, private members’ clubs, investment banks, leading corporate firms, London embassies, airline gate services, private jet centres, and at the Eurostar Lounge at London St Pancras. In Paris, Frankfurt, Geneva, Zurich, Brussels, and Dubai, Malta Invest is strategically distributed in select embassies, top corporate firms, and F&B airline lounges. In Malta, Malta Invest is distributed to leading businesses, companies, and corporate firms, as well as to prominent business leaders and CEOs, banks, business centres, financial institutions, government agencies, and ministries, as well as embassies and consulates. The Ministry for Foreign and European Affairs and Trade has also facilitated and assisted in the targeted circulation of this publication in strategic Malta missions around the world. Malta Invest is also sold at leading newsagents.

MaltaInvest

Chapter 1

Why Malta?

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 1: Why Malta?

ou will be hard pressed to find more compelling evidence for the adage that “the best things come in small packages” than Malta. With a population of just over half a million living on a tiny group of islands situated 80km south of Sicily and just under 300km off North Africa, Malta is known for punching far above its weight internationally. It is governed by a stable parliamentary democracy, has a robust legal system, and enjoys a strong reputation, while its diversified economy has rendered it resilient to global economic upheaval. Coupled with modern physical and communications infrastructure, and air connectivity to most regional capitals, it should come as no surprise that the country has enjoyed decadeslong renown as a jurisdiction of choice among discerning investors who see Malta as a byword for trust and the perfect platform for international activity. A country of only 316 sq km, Malta’s territorial limitations belie its rich history as a centre of trade and commerce. Today, the island nation continues this tradition as a Mediterranean hub distinguished by its welcoming approach to business, boasting alpha status in a number of important export-based sectors. These include, for example, a large and refined financial sector catering to a diverse, international clientele, with the jurisdiction’s inclusion in the Financial Action Task Force grey list in 2021 proving to be a minor blip. Following its inclusion, all stakeholders sat down together, the regulatory lacunae identified were swiftly rectified, and Malta got off the list in record time. The care taken in nurturing the gaming industry has also paid ample dividends, with the hundreds of companies in the space operating with a Malta Gaming Authority licence, recognised as the global gold standard, being major contributors to the local economy. Malta’s shipping and aviation registers, meanwhile, continue to see remarkable growth, and investment is pouring into the superyacht and aircraft management and servicing sector. Similarly,

Grand Harbour, Valletta. Photo: viewingmalta.com

Overview

pharmaceuticals, aquaculture, ICT, chemical manufacturing, and other predominantly knowledge-based industries show no sign of slowing down, with a recent uptick in merger and acquisition activity laying the ground for more focused expansion in foreign markets. The domestic economy is similarly diversified, with tourism, manufacturing, and real estate the largest but far from only contributors to its rapid growth. The almost complete absence of natural resources means that Malta’s development has been closely tied to the cultivation of its human resources, with significant investments over the years resulting in a highly skilled workforce supported by a statesponsored education system and extensive dialogue between industry and academia. The national language is Maltese, but

Malta’s International Investment Guide 2023

English is an official language of the state and the de facto language of business. Italian is also widely spoken, with increasing knowledge of languages like French, German, and Spanish among the younger generations. Over the last decade, demand for labour to meet the needs of its growing economy outstripped the supply available from the indigenous population, prompting a migratory wave that has seen the resident population increase by 20 per cent, again supported by close cooperation between economic actors and state institutions. This nimble approach to policy making has paid off handsomely for Malta. Successive governments have exhibited remarkable economic nous in carving out and nurturing new productive niches that play to the country’s strengths while meeting the high standards expected of a European Union member state. This innovative yet stringent approach

to economic planning has ensured that each of Malta’s business sectors has demonstrated admirable stability, beyond what one might expect from a small and open economy exposed to the vagaries of shifting global markets. With a history of welcoming investors dating back to the 1950s, private and public Maltese service providers alike are well-attuned to the needs of incoming operations, making setting up in the country a straightforward and transparent affair. Governmental support is available throughout the process via Business First, a specialised unit providing a single point of contact for interactions with various government departments. Although the current domestic corporate tax rate stands at 35 per cent, Malta offers foreign investors an exceedingly competitive EU-authorised imputation tax regime allowing for effective tax rates as low as 5 per cent, backed

MaltaInvest2023

Chapter 1: Why Malta?

up by an extensive list of double taxation agreements with over 70 countries. A diversified and mature financial services sector is meanwhile ever ready to maximise value for investors, and corporate services providers are always on hand to aid in company registration, access to banking facilities, legal advice, recruitment, and everything else required to get a business up and running. Such professional services come at a far lower cost than is the case in other major European cities. The same can be said for technical services, human resources, rental costs, and support services, which remain significantly below the continental standard, without compromising on quality.

Mediterranean lifestyle being a major selling point for those considering relocating. The unique cultural attractions, beautiful Blue Flag beaches, vibrant nightlife, and flourishing culinary landscape that make Malta a top tourist destination are similarly enjoyed by locals and expats alike. Over 300 days of sunshine every year allow for the full enjoyment of all the leisure activities Malta has to offer. So whether you are an entrepreneur or a wealth holder, whether you are approaching retirement or raising a young family, or whether you are looking for new corporate headquarters or a strategic bridge to Europe, Africa, or the Middle East, Malta might be just the place for you.

Despite being recognised as a major European financial centre, Malta retains its island culture, with its relaxed

POLICY MEETS ECONOMY Malta has long used its sovereignty to its advantage by legislating new economic sectors into existence. Many of these have been a runaway success:

Malta boasts the largest merchant shipping fleet in Europe and the largest superyacht register in the world

12,000

3,000

11,000

2,000

10,000

1,000

9,000

900

8,000

800

200

1,000

14,950

2,000

1,019

300 332

400

3.000 12,398

4,000

893

500

314

5,000

11,747

600

785

700

284

7,000 6,000

2019

2020

2021

900 800 700 600 500 400 300 200 100 0

2014

2021

Number of companies

Gross tonnage of merchant fleet (in millions)

Gross Value Added

Superyacht registrations

Number of full-time equivalent employees in iGaming and associated companies

100

1,000

1,030

4,000

86,100,000

5,000

13,000

452

6,000

57,900,000

15,000 14,000

Number of companies / Gross Value Added (in millions)

SHIPPING

iGaming is one of Malta’s largest and most important industries

Number of full-time equivalent employees

iGAMING

Source: Malta Gaming Authority

Source: Transport Malta

Malta’s International Investment Guide 2023

A HISTORICAL MELTING POT Ph

oto :I

lla

/P ex els

AVIATION Malta’s aircraft register has grown by almost 20 per cent every year since the introduction of the Aircraft Registration Act of 2010

Number of registered aircraft

900 800 700 600 500 400

Historical and economic timeline

300

1530 Knights Hospitaller land in Malta

200 100 0

2010

2012

2014

2016

2018 2020 2022 (as of August)

1800 Arrival of the British

FINANCIAL SERVICES

1964 Independence from the UK

5.4%

8.4%

8.8%

1798 Napoleonic takeover

Source: Transport Malta

Financial services is a crucial, ever-growing industry in Malta

The abundance of opportunity Malta offers to prospective investors is difficult to grasp without first understanding the country’s history. First entering written records through Homer’s Odyssey, the many Neolithic temples built over a thousand years before Stonehenge or the Pyramids of Egypt bear witness to the Maltese archipelago’s ancient yet enduring allure. Its strategic location in the heart of the Mediterranean made its large natural harbours irresistible to the dominant maritime power of the time, joining neighbouring Sicily in passing through Carthaginian, Roman, Byzantine, Arab, Norman and Spanish hands over the course of a millennium and a half. A fateful decision by the Spanish Emperor to allow the Knights Hospitaller to take over the islands led to the development of an independent cultural tradition, further diverging from continental norms during 160 years of British rule, punctuated by a brief but legally productive Napoleonic French occupation. Upon achieving Independence, successive Maltese governments chartered a course of active international participation in structures like the United Nations, the Council of Europe, the Commonwealth, and the Organisation for Security and Co-operation in Europe, culminating in full European Union membership in 2004. Today, Malta offers a rich, cosmopolitan culture and a stable open market economy that is well-integrated into global capital flows.

Average share of sectoral GVA in the last decade

1974 The Republic of Malta is born 2004 European Union membership 2007 Entry into the Schengen Area 2008 Adoption of the euro

Annual increase in GVA in the last decade Percentage of workforce employed in the sector

MaltaInvest2023

Chapter 1: Why Malta?

Victoria

Mġarr

Ċirkewwa

OVERALL POPULATION IN MALTA

516,100

as of April 2022 (2011: 417,400)

GENDER POPULATION IN MALTA

52% 48% 28

POPULATION DENSITY

1,649/km

Malta’s International Investment Guide 2023

St Paul’s Bay

St Julian’s Sliema Central Business District

Industrial Areas

Valletta

The Three Cities

Mdina

Smart City

Airport Safi Aviation Park

Freeport

MaltaInvest2023

Chapter 1: Why Malta?

Macroeconomic and Fiscal Structure

alta exercises a prudential fiscal policy, with low budget deficits and even surpluses characterising the last decade of rapid economic development. During this period, the country has seen its GDP more than double to €14.5 billion as at the end of 2021, continually outperforming the European Union and Eurozone averages since 2007. Significantly, Malta was capable of maintaining healthy economic growth even during the Great Financial Crisis, testifying to the local economy’s sound structural foundations. The restrictions imposed on travel and social activities during the Covid-19 pandemic effected a severe downturn in 2020, but economic activity rebounded strongly in 2021 and is posed to grow by 5.2 per cent in 2022, 4.5 per cent in 2023 and 3.7 per cent in 2024, according to the Central Bank of Malta. Government debt stands at around 58 per cent of GDP, and is largely domestic, with over 80 per cent held by local institutions and the Maltese investing public. This solid fiscal context allowed for timely state intervention to mitigate the global inflationary pressures on food and energy prices felt throughout 2022, resulting in the lowest inflation rate in Europe. Meanwhile, unemployment is also the lowest in the EU, while the proportion of employed individuals has continued to rise as female participation in the workforce has increased. These favourable macroeconomic conditions have also been recognised through consistently positive

credit ratings certifying Malta as a safe yet competitive jurisdiction for investment. A net creditor in the global economy, Malta holds €269 billion in foreign assets as compared to €261 billion in foreign liabilities. The overwhelming majority of foreign investment in Malta is direct, at 83.2 per cent of the total, and includes activity by global players in both traditional sectors like high value-added manufacturing as well as in others which have developed more recently, like aviation. Broadly speaking, Malta is a net importer of goods and a net exporter of services. Its top material exports include petroleum products, pharmaceuticals, electronics, and fish, while its main services exports are related to the tourism and travel, remote gaming, financial services, and professional and technical consulting sectors. International economic and social assessments position the country among the top global performers. The United Nations Human Development Index puts Malta in the highest category, while the Social Progress Index, which determines how countries provide basic human needs, well-being, and opportunity for their citizens, lists Malta as a Tier 2 country, indicating a high level of social progress, a ranking shared with highly developed countries like the US, the UK, France, Austria and Singapore.

KEY ECONOMIC INDICATORS STRONG, CONSISTENT GROWTH Real GDP growth rate by volume 2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022*

Malta

4.1

5.5

7.6

9.6

3.4

10.9

6.2

5.9

-8.3

10.4

5.2

EU-27

-0.7

0.0

1.6

2.3

2.0

2.8

2.1

1.8

-5.9

5.4

2.7

Eurozone

-0.9

-0.2

1.4

2.0

1.9

2.6

1.8

1.6

-6.3

5.4

2.7

Source: 2012-2021 Eurostat, 2022 European Commission

* Projected

Malta’s International Investment Guide 2023

STABILITY OF PUBLIC FINANCES

58.7%

60.6%

7,989.3

54.3%

6,960

42%

5,702.8

48.5%

55.9%

5,390

4,855.1

1,000

44.8%

2021

2022

Debt as % of GDP

2,000

5,639.5

3,000 5,678.4

4,000

54.3%

5,739.7

5,000

5,586.2

6,000

61.6%

7,000

65.8%

5,226.6

9,000 8,000

65.9%

Total debt (in millions)

Debt as % of GDP

Total debt

General Government Debt and Debt as a % of GDP

20 10

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: National Statistics Office

A DIVERSIFIED ECONOMY

Projected

A MODERATE NET EXPORTER Current account balance 2014

10.2%

699.4

-373.71

-400

2019 2020 2021

11.23

0 -200

2018

-59.81

6.2%

200 -28.81

15.6%

€ (in millions)

400

2017

269.76

495.52

800

7.7%

2016

1,000 600

4.5%

2015

-600 -800

9.1%

Source: National Statistics Office

CREDIT RATINGS

Sectoral share of Gross Value Added (2021) Professional, Administration, Support Services ICT

Construction

Wholesale, Retail, Accommodation and Food Services

Financial and Insurance Services

Manufacturing

Gaming

Real Estate

Other incl. Public Administration

Source: National Statistics Office

-854.4

-1,000

7.9%

698.29

16.4%

22.4%

2013

831.85

2012

Rating

Outlook Negative Date May 2022

Rating

Outlook Stable Date May 2022

Rating

Outlook Stable Date September 2022

A2 A+ ARating

high

Outlook Stable Date June 2022

MaltaInvest2023

Chapter 1: Why Malta?

Response to the Covid-19 Pandemic Photo: CDC / Pexels

n the first half of 2020, the Maltese economy, like many others, suffered a shock that was unprecedented in its global scale, breadth of impact, and velocity of onset. The worldwide spread of the Covid-19 virus was the catalyst for the sudden closure of entire economic sectors as public health systems buckled under the weight of the pandemic. Although Malta was successful in avoiding the complete lockdowns seen in other parts of Europe, the severe restrictions placed on physical meetings led many businesses to shift their operations online, allowing work to continue remotely. The most dramatic consequence was the closure of air links into and out of the country, severely impacting tourism and the accommodation, food and beverage, and retail sectors that are geared towards large numbers of tourist arrivals. Fluctuating levels of restrictions in response to successive waves of Covid-19 meant that tourism remained muted throughout 2021, with the last measures aimed at preventing the spread of the virus from abroad only being removed in May 2022. The efforts made in previous decades to diversify the economy paid off, however, with industries like gaming, financial services, and real estate proving to be notably resilient, although the growth registered in these areas was not enough to offset the steep drop-off in tourism activity, leading to a contraction in real GDP of 8.3 per cent in 2020. After years of high economic growth and budget surpluses, the Maltese government was well-positioned to respond

strongly and effectively to the crisis, introducing several instruments aimed at maintaining employment and providing liquidity. From the various measures introduced, the most significant was wage support for private sector employees in affected sectors, allowing businesses to retain their staff in anticipation of a quick recovery while preventing major social disruption. Other measures included public guarantees on debt, serving as a lifeline to companies requiring finance to cover working capital costs, and subsidies on rent and utility bills. Similarly, previous years’ growth rates meant that corporate balance sheets were healthy enough to weather the storm, with no major corporate insolvencies being recorded, while banks were able to extend moratoria to those who found it difficult to meet their loan repayment obligations, preventing a build-up of non-performing loans. These factors, along with a worldleading vaccination drive, cushioned the pandemic’s worst impacts and allowed the Maltese economy to rebound in 2021, growing by 10.4 per cent in real terms despite the troubled tourism recovery. Following the lifting of the final restrictions on travel in May 2022, tourists have once again flocked to the islands, with hospitality operators reporting strong results. With the threat of new variants of the virus fast receding, Malta has now turned its attention to the further digitalisation and decarbonisation of the economy to support its continued growth and future-ready transformation.

Malta’s International Investment Guide 2023

Legal System

The judicial system operates on two tiers, with a Court of First Instance and a Court of Appeal. The Constitutional Court handles matters relating to constitutional provisions, and the European Court of Human Rights acts as a forum of last resort when all local avenues for redress are exhausted. Since 2018, Malta has been streamlining the process for the settlement of commercial disputes by setting up a commercial section within the Civil Court, dealing with applications related to matters regulated by the Companies Act, the Competition Act, and any regulations falling under the Consumer Affairs Act and the Malta Competition and Consumer Affairs Authority Act. This has been deemed a success by the business community, which has benefitted from shorter case durations and subject-specific expertise. The competence of this section is currently being extended to maritime, trademarks, intellectual property, and patents, allowing those with commercial interests on the islands to have the peace of mind afforded by a specialised court dedicated to resolving disputes in a timely and effective manner.

Photo: Tingey Injury Law Firm / Unsplash

alta has a mixed European legal system with elements of both Common and Civil Law. The long period of British domination left an imprint in many areas, particularly with regard to company law and the regulation of certain economic sectors, although today, almost two decades after joining the European Union, the regulations and directives issued from Brussels have grafted another layer of legislative influence onto Malta’s hybrid system. For investors, this means that their interests are protected by the highest standards in a system with elements that are familiar to many, and fair for all.

MaltaInvest2023

Chapter 1: Why Malta?

Malta’s International Investment Guide 2023

Access to Finance Photo: Artem Podrez / Pexels

nvestors will find a wide range of banking, insurance, and investment products on offer in Malta, which has a highly diversified financial services sector that is fully integrated into the global financial architecture (see p. 104). The banking sector serves as the backbone of the country’s economy. Banks are well-capitalised, highly solvent, and largely take a traditional approach to financing based on retail deposits, which has served them well in navigating through international turmoil. Services are comparable to those in other leading financial jurisdictions, and internet and telephone banking are advanced. Although the national currency is the euro, the facility to open foreign currency accounts is common. The largest banks are Bank of Valletta (BOV) and HSBC, with a wide network of branches and ATMs, and extensive experience in working with foreign investors. There are around 25 banks currently licensed by the Malta Financial Services

Authority, ranging from mid-sized local banks to branches of foreign institutions to specialised operations, with most charging competitive fees while providing tailor-made banking solutions, including trade and project finance, custodian banking, and specialist wealth management services. Newly arrived investors are advised to consider all the options carefully to find the right fit to their financing needs, but in any case, be ready to provide more documentation than you might be used to, including, for example, identity documents and banking reference letters for each director and beneficial shareholder of a company. Malta’s recent brush with the Financial Action Task Force has led to tighter controls, but don’t let that scare you off – it just means that the jurisdiction, more than ever before, is one that is conducive to legitimate businesses, cementing its reputation as a respected financial centre.

MaltaInvest2023

Chapter 1: Why Malta?

Taxation

Residents’ individual income tax is progressive, with the highest tax bracket being 35 per cent for those with incomes over €60,000 (for more on personal tax rates, see p. 250), notwithstanding the many exemptions and incentives on offer for professionals with skills that are in high demand (see p. 38). Corporate profits are taxed at a nominal 35 per cent rate, and there is no separate corporate tax structure. To avoid double taxation, when these profits are distributed as dividends to shareholders, the recipients are not required to list these dividends as income in their tax return (this is known as the imputation system). However, the real attraction, for shareholders, is the option to reclaim a portion of the income tax paid at company level, which reduces the effective tax rate significantly (see p. 63). Global profits can be taxed in Malta if the company is incorporated in the country. On the other hand, a company incorporated outside Malta but whose business is controlled or managed in Malta is subject to the Maltese regime for all income earned in Malta, all gains realised in Malta, and crucially, all income from abroad to the extent it is remitted to Malta. For a company operating in multiple jurisdictions to be deemed to be controlled from Malta, it requires a sufficient degree of

Grand Harbour, Valletta. Photo: viewingmalta.com

ndoubtedly, one of the biggest attractions Malta offers investors is its advantageous tax regime. There are no transfer pricing rules, no withholding taxes on dividends, interest, royalties, and proceeds from liquidation distributed to non-residents, no separate capital gains tax, and no wealth or inheritance taxes. Stamp duty is levied on the transfer of moveable and immoveable assets, but companies carrying out international activities are exempt.

substance, which can be achieved by having directors’ and shareholders’ meetings in Malta, ensuring that all decisions in relation to the company are taken on Maltese territory, such as at a registered office with employees. Since 2019’s introduction of a Patent Box Regime, refunds can also be claimed on income derived from qualifying intellectual property – a solution particularly attractive to companies operating in the FinTech or blockchain spaces. Maltese tax law also makes special provisions for holding companies, consolidated groups, and investment vehicles, among other formations, and also offers the possibility of relief when tax is incurred abroad (see p. 64), making available a wealth of opportunities for advantageous financial set-ups.

Malta’s International Investment Guide 2023

It is important to note that a review of the corporate tax regime has been floated, but was shelved at the time of going to print. Prospective investors would do well to ask their local service providers for the latest news regarding the new tax rules, but should not let such consideration prevent them from taking the plunge into Malta – the authorities’ declared intention, when reform was on the table, was to maintain the jurisdiction’s competitive edge, whatever shape any new regulations, drafted in collaboration with industry stakeholders, could have.

Consumption Tax Malta levies a tax on consumption in line with most other European Union countries. The Value Added Tax (VAT) is paid in only one country under EU rules, and the standard rate is set at 18 per cent in Malta. Certain economic activities are subject to reduced rates, with accommodation, for example subject to a 7 per cent VAT rate. Medical accessories and domestic help services, among others, fall under the 5 per cent rate, while food, pharmaceuticals, and all exports are charged 0 per cent. Certain sectors may benefit from competitive VAT calculation, including ship and aircraft registrations (see p. 202), so be sure to consult a financial advisor to see whether your investment is eligible.

MaltaInvest2023

Chapter 1: Why Malta?

Access to Talent

ewcomers to the Maltese business landscape soon learn that coincidence plays but a bitpart in the country’s economic success. Yes, the sun shines brightly, the sea is inviting, and the location is strategic, but those qualities are certainly not unique in the Mediterranean. Upon Independence, the Maltese inherited a poor, underdeveloped state, little more than a glorified naval colony with a practically medieval hinterland. The land could not produce enough food to support the population, and people were migrating in droves to the UK, the US, Canada, and Australia in search of greener pastures. The only natural resource: limestone, hardly as lucrative as the oil and gas practically all of Malta’s neighbours are blessed with. Out of necessity, therefore, the Maltese laid the foundations for the country’s development on the one thing they knew to be strong enough to carry an entire state – their backs. People, Malta’s most precious resource, were put at the heart of its economic progress, and the rest, as they say, is history. This living bedrock has been tested time and again over the years, growing, maturing, and adapting to shifting realities through continual investment and a national spirit that prizes education and respects expertise. Every sector of the Maltese economy has been and continues to be carefully cultivated out of the rocky ground by outward- and forward-looking entrepreneurs working hand-in-hand with responsive policy makers, and every industry has been and continues to be anchored in the accomplishments of the Maltese worker. For this reason, the highly educated, loyal, and experienced workforce has always featured prominently in Malta’s spiel to foreign investors, who, after setting up operations in the country and getting to know these much-vaunted people, often find that the pitch, if anything, undersells their tenacity and dedication. Nowadays, the labour situation is the polar opposite of that seen in the 1960s. Malta’s economy has outgrown its native population and now acts as a magnet for talent from all over Europe and further afield, with a full quarter of the workforce

today hailing from abroad. The multicultural constitution of the resident population finds its reflection in an increasingly cosmopolitan economic outlook, creating new synergies and opportunities. The result? A vast talent pool of resident Maltese and foreign workers, access to the European Union’s 200 million-plus workforce, and strongly established links to primarily (but not exclusively) Asian labour markets, allowing investors to rest assured that their capital is in the hands of the most competent labour, wherever it hails from. Employers will find willing and capable partners in JobsPlus, the state employment agency, and Identity Malta, which deals with visas and work permits, and there are a number of schemes and incentives designed to make the recruitment of foreign workers as seamless as possible.

Employing Third-Country Nationals Nationals of countries outside of the EU, EEA, or Switzerland (known as third-country nationals, or TCNs) must apply for a combined work/residence permit (the Single Permit), which can take anywhere from two to four months to be processed. Applications need to be endorsed by a local employer; applicants without a job offer in hand will be rejected. Companies seeking workers from outside the EU must present evidence of their efforts to locate employees from within the EEA. For every application, the employer is required to advertise the job, at least twice, in the appropriate media or with the respective competent authority. However, there are a number of exemptions: All jobs on the Malta Vacancy Exemption List (see p. 248). Applications under the Key Employee Initiative. Applications recommended and endorsed by Malta Enterprise. Applications for service providers and intracorporate transferees, for which the employer needs to submit related contracts highlighting the transfer/provision of service required.

Malta’s International Investment Guide 2023

Applications for Managing Directors, Chief Executive Officers, and General Managers. Applications for: Sportspersons and coaches, upon approval from the Malta Council for Sports. Entertainers, musicians, and crew members on film productions, if reasons are provided for the choice of the TCNs concerned. Applications from self-employed persons or shareholders of companies registered in Malta.

Key Employee Initiative Companies bringing in TCN professionals to fill highly technical or managerial roles may benefit from the Key Employee Initiative, a fast-track scheme to issue a work/residence permit in just five days. The permit is valid for one year and renewable up to a maximum period of three years. To be eligible, applicants must present a signed work contract showing a gross salary of not under €30,000 per annum along with certified copies of the relevant qualifications, warrants, or proof of appropriate work experience. Applicants must also provide a property lease or purchase agreement, along with comprehensive private health insurance. The Key Employee Initiative is also open to innovators involved in start-up projects who have been endorsed by Malta Enterprise.

Photo: Gremlin / iStock.com

MaltaInvest2023

Chapter 1: Why Malta?

Highly Qualified Persons Schemes The expansion of Malta’s knowledge-based industries has led the demand for highly qualified workers to outstrip the resources available in the local labour market. To ensure that the intrinsic limitations of a small island state do not prevent their continued growth, companies operating in the financial services, gaming, aviation, and assisted reproduction sectors can benefit from the Highly Qualified Persons (HQP) Rules. Undertakings in the maritime or servicing of offshore oil and gas industry activities sectors are catered for by a separate scheme, known as the rather more unwieldy Qualifying Employment in Maritime Activities and Offshore Servicing of Oil and Gas Industry Activities (QEMOS) Rules, while those engaged in cutting-edge research can utilise the Qualifying Employment in Innovation and Creativity (QEIC) Rules, with both these schemes having slightly different criteria to the HQP Rules. All three are designed to attract top talent to take up eligible positions by offering a highly attractive tax rate. Professionals registered under the advantageous rules benefit from a flat rate of 15 per cent personal tax on all income derived from their qualifying employment, up to €5 million, with any remuneration beyond that level not subject to any tax. QEMOS and QEIC rules do not include this upper limit.

To be eligible for the HQP, QEMOS or QEIC schemes, applicants: Applicants under HQP rules must show they have the necessary qualifications and at least five years of experience. Applicants under maritime and offshore servicing rules need professional qualifications or acceptable professional experience. Applicants under the innovation and creativity rules need relevant qualifications or three years’ experience in a similar role. Cannot be domiciled in Malta, and must declare no intention to reside permanently in the country. Cannot be a beneficiary of any other special tax scheme in Malta. Have health insurance covering themselves and any dependents. Must provide a local address that the tax authorities consider normal for a comparable family. Have an employment contract that relates to the execution of “genuine and effective” activities befitting the office held. Earn an income from the qualifying employment exceeding a minimum threshold that increases yearly, in line with the official inflation rate. As of 2022, the minimum threshold stood at €88,242 (€65,000 for QEMOS, €52,000 for QEIC). This extends to individuals earning different salaries from wholly owned subsidiaries of the same group, who are still eligible as long as the aggregate salary (excluding fringe benefits) exceeds the threshold. The schemes are open to both EU/EEA and Swiss nationals, as well as third-country nationals, with a slight difference in the term of eligibility; whereas EU/EEA and Swiss nationals can benefit from the schemes for five consecutive years, with the possibility of two extensions bringing this up to 15 years, thirdcountry nationals are limited to a maximum consecutive period of four years, which can also be extended twice, for a maximum of 12 years. QEIC is applicable for four years with a single fiveyear extension. For a full list of positions which can benefit from these incentives, see p. 248.

The Three Cities. Photo: Ryzhkov Sergey / iStock

Malta’s International Investment Guide 2023

Grounds for exclusion The preferential tax status bestowed through the Highly Qualified Persons Scheme is not open to: Individuals with more than 25 per cent direct or indirect ownership of the company. Individuals already in employment in Malta. Individuals claiming any relief, deduction, reduction, credit, or set-off of any kind. Individuals benefitting from “artificial arrangements” as per the EU Anti-Tax Avoidance Directive. Individuals from third countries who directly or indirectly acquire real rights over immovable property in Malta (in such cases HQF tax status is withdrawn with retroactive effect). Anyone benefitting from the advantageous tax rate when they are not entitled to do so are liable to a penalty and the full restitution of the benefits received, along with an additional tax of 7 per cent per month. Eligible maritime and offshore servicing companies Companies in this sector must be one of the following to be able to hire individuals benefitting from the QEMOS rules: Any undertaking holding a Document of Compliance (DOC) issued in terms of the International Safety Management (ISM) Code or a Seafarer Recruitment and Placement Services Licence issued in terms of the Maritime Labour Convention, 2006. Any undertaking engaging the particular individual for work on board any ship, excluding ships operating on regular services, as well as ships whose use or operation requires certification in terms of the Commercial Vessels Regulations and which are berthed or anchored within the territorial waters of Malta or any port in Malta for at least a period of one month over a calendar year. Any undertaking which carries on mainly a trade or business consisting in the servicing of the offshore oil and gas and ancillary services industry.

Photo: Koby Dal / Unsplash

Application Prospective beneficiaries must submit an application to the relevant authority, depending on the sector. The Malta Financial Services Authority, the Malta Gaming Authority, Transport Malta (for aviation), or the Office of the Chief Medical Officer, as the case may be, are responsible for determining eligibility. For HQF and QEMOS, the relevant forms and more information can be found from the website of Malta’s income tax department, the Commissioner for Revenue. The application form and guidelines for QEIC on the other hand are available from Malta Enterprise.

MaltaInvest2023

Chapter 1: Why Malta?

Infrastructure

Malta International Airport. Photo: Tiago Araujo / Pixabay

country is only as good as its infrastructure, so prospective investors will be glad to know that Malta’s compares favourably to that of most developed nations, and is considerably better than some – a fact that might be surprising for those unfamiliar with the country. Despite its tiny size, or perhaps because of it, Malta has invested heavily in its built, digital, and soft infrastructure, with constantly ongoing efforts to upgrade facilities and connections in order to equip businesses with the tools they need to operate efficiently and effectively.

Power Adequate capacity and stable distribution of power are crucial for business in today’s world. Energy in Malta is in the hands of the state-controlled Enemalta, the country’s sole energy provider, whose four generation plants running on LNG and gasoil have a combined capacity of 537.8 MW. Additional electricity is purchased from the European mainland via a 200 MW interconnector to Italy. In line with the country’s growth projections, a second interconnector is currently under development, while significant investment in the distribution network is ongoing to ensure it is ready for the power demands of an increasingly energy-hungry economy. As in much of the rest of Europe, the standard voltage is 230V and the frequency is 50Hz.

Malta’s International Investment Guide 2023

Airport Malta International Airport is the first and last destination for over 95 per cent of all visitors to Malta. As the only air terminal in the country, it is a key contributor to its economic development, a role which it has embraced by constantly investing in improvements to its facilities. Two runways, 3.5km and 2.4km long, connect Malta to over 100 destinations including most regional capitals and major cities, many less than three hours’ away, through over 30 partner airlines. Meanwhile, the 72,000 sq m terminal, inaugurated in 1992, hosts over 15 food and beverage outlets, 10 retail outlets, and a pharmacy. Business travellers can make use of two executive lounges, while a separate exclusive VIP terminal is typically used for diplomatic travel. The airport campus also includes 2,700 parking spaces, dedicated taxi and coach areas, and a state-of-the-art business centre, home to distinguished operations such as Microsoft and VistaJet. Over 18,000 tonnes of cargo pass through the airport annually, it being the main base of Maltese operations for global companies like DHL and Servisair. It also hosts several maintenance facilities, including those operated by Lufthansa Technik, SR Technics, and most recently, Ryanair. The millions of passengers passing through the doors of Malta International Airport can expect the quality of service for which it has won Airports Council International’s Best Airport in Europe title for four years running since 2018. Its efforts to place passenger safety as a top priority were also recognised through the Voice of the Customer certificate in 2021 and 2022. However, in a demonstration of a national trait new arrivals to the islands will quickly come to know and love, the airport is not content to rest on its laurels, with further upgrades in the pipeline. Construction recently got underway for a second business centre and a tenth apron, including a new taxiway and staging area for ground handling operations. These projects, slated for completion in 2026, will prepare the airport for increasing traffic and commercial growth while reducing resource use through water collection and renewable energy production.

Harbours As an island nation with a strong maritime tradition, Malta has long recognised the importance of maintaining its port

facilities’ competitive edge. The Port of Valletta, also known as the Grand Harbour, is the main entry point for people and goods arriving by sea. It extends for around 3.6km inland and is open 24 hours a day, 365 days a year, and hosts a wide array of services including ship repair and building yards, ship chandlery, bunkering facilities, and specialised silos. The main terminal can handle container, RoRo, and conventional cargo. The port also contains the Valletta Cruise Port and provides ferry links to Sicily and Gozo. On the other side of Valletta, towards the cosmopolitan areas of Sliema and Gżira, one finds Marsamxett Harbour, which is largely dedicated to leisure-related activity and boasts several acclaimed yacht marinas. At the south end of the main island there is the Malta Freeport, one of the Mediterranean’s largest transhipment ports. Operated by Yildirim Group, CMA-CGM and CMPort, its two terminals offer 2,462m of operational deep-water quays, 771,000 sq m for container storage, a total of 15,297 container ground slots, and 1,840 reefer slots. The latest class of 24,000 TEU vessels can be accommodated at both terminals thanks to a water depth of 17m. The freeport has received over 2,000 ship calls and handled over 3 million TEU in a single year, with its 20 quayside cranes, 60 gantry cranes, and highly skilled, dedicated personnel completing fast turnarounds for some of the largest shipping companies in the world. Malta’s strategic position is fully exploited with over 120 global port connections, and the port continues to invest heavily in digitalisation, infrastructural development, productivity, and ongoing training for its workforce to stay ahead of the curve and surpass demanding clients’ high expectations.

Roads Since Malta lacks a rail network, practically all internal transport is conducted by car. Hundreds of millions of national and European funds have in recent years been poured into the road network to address a long-standing traffic problem which was only accentuated with the sharp growth in the islands’ population. Despite locals’ incessant complaints about the traffic, journey times of over one hour are exceedingly rare, and are typically the result of accidents at critical junctions. Like many other former British colonies, Malta drives on the left side of the road.

MaltaInvest2023

Chapter 1: Why Malta?

Industrial Space Most industrial space is spread across more than 15 industrial estates managed by a dedicated state agency, INDIS. Each industrial estate has a variety of property solutions which can often be tailored to tenants’ needs, with some estates equipped for particular sectors and industries, such as the Life Sciences Park, home to the most cutting-edge laboratories, and the Safi Aviation Park, although manufacturing of all kinds remains the most common use for such space. INDIS takes a proactive approach to facilitating the setting up of business operations in Malta, working hand in hand with investors to find the solution that best works for them. As is the case with most of the country’s infrastructure, significant investments are being undertaken to increase and improve the stock of industrial space in order to prepare the country for the technological transition of the coming years. These investments include the redevelopment of Kordin Business Centre into a modern start-up facility, the extension of the Life Sciences Park, and the rehabilitation of a former dump to create 85,000 sq m of developable space. Investors interested in exploring the range of properties and potential partnerships on offer should contact INDIS or Malta Enterprise.

Health Malta’s unique history has left an indelible mark on its approach to health. The first recorded public hospital opened its doors as far back as 1372, and the Knights Hospitaller, true to their roots, built one of the largest and most progressive hospitals of their time, the Sacra Infermeria in Valletta (today a major event venue known as the Mediterranean Conference Centre), which was praised by visitors to the islands for the care and insight shown in treating the sick. Under the British, Malta (and the then-still active Sacra Infermeria) twice served as a hub for the sick and wounded, in the Crimean War of the 1850s and the First World War, earning it the nickname of ‘The Nurse of the Mediterranean’. This legacy holds strong today, with Malta boasting one of the best public healthcare systems in the world. Back in 2000, the World Health Organisation ranked it fifth globally, while more recently, in 2018, leading medical journal The Lancet placed it ninth. Away from the scoreboard, suffice it to say that the country’s sometimes laid-back attitude dissipates at the threshold of its heath facilities. The country’s main hospital, Mater Dei, opened in 2007, is one of the largest medical buildings in Europe, serving as an acute, general, and teaching hospital, with a specialised oncology division situated nearby. The Life Sciences Park is also in the vicinity, allowing for the easy flow of the latest R&D into clinical practice. Meanwhile, despite its low

population and double insularity, healthcare provision in Gozo is just as good as in many European capitals, as attested to by Queen Mary University of London’s renowned Barts Medical School’s decision to open a Gozo campus next door to Gozo General Hospital. A thriving ecosystem of private healthcare providers is similarly recognised for its excellence, and the country has in recent years been taking tentative steps to promote itself as a destination for medical tourism. The public health service is free at the point of delivery for anyone working and paying social security. European Union citizens on temporary visits can use the European Health Insurance Card (EHIC) and receive free medical treatment from public hospitals and clinics, although it should be noted that this serves as a complement to healthcare insurance, not a substitute, as it does not cover travelling costs in case of serious conditions, injuries, and deaths. EU nationals staying for over three months should obtain an S1 (formerly E121) form to qualify for free healthcare. Malta has bilateral agreements with the UK and Australia, allowing residents of these countries to qualify for free medical and hospital care for stays up to one month. Other non-EU nationals should obtain travel insurance covering medical costs overseas. Regardless of one’s insurance cover or lack thereof, no one is turned away in case of an emergency, although proof of insurance will be requested once the condition is stabilised. As in the rest of the EU, the emergency freephone to call an ambulance is 112.

Malta’s International Investment Guide 2023

Education Malta has a well-regarded public school system with free education available to locals up to tertiary level. The Catholic Church operates a number of schools, while a relatively small number of private schools can be found, two of which, Verdala and QSI, are geared towards the expat community, offering the International Baccalaureate. The University of Malta and the Malta College of Arts, Science and Technology are the main state-funded post-secondary and tertiary institutions, offering a wide selection of degrees in practically all key subjects. Over the last two decades, a number of private institutions have also established themselves, with many partnering with international (mostly British) universities to offer internationally recognised qualifications, making Malta an attractive destination for those looking to obtain a worldclass education under a clear blue sky.

of ultrafast fixed internet, while the three mobile operators in the liberalised market provide coverage extending to every corner of the country. The European Commission’s Digital Economy and Society Index (DESI) ranks Malta 5th out of all the EU member states, with the country performing above the EU average in all five dimensions of the index. The success of Malta’s IT infrastructure in providing a solid foundation for sectors like software and game development, apart from the previously mentioned iGaming and financial services, among others, has spurred on further investment, with the country now positioning itself to venture into future tech like artificial intelligence (AI) and the Internet of Things (IoT). Malta is connected to the internet by means of several cable links to Sicily, while Gozo, which has its own digital development agenda, is connected to the main island through two fibre optic cables, the second of which was opened in late 2020 in a bid to attract tech investment to the island.

Dialogue between higher education and industry is constant, with government-backed research funds acting as the catalyst for collaborative R&D projects that often make their way to market and have, at times, caught the eye of global players. Here, again, the authorities’ willingness to listen and intervene as and where needed plays a vital role in encouraging fruitful cooperation. Thanks to the country’s investment in developing its educational systems, a necessity when considering that labour remains the only resource it has to offer, Maltese workers are known to be highly skilled, adaptable, and selfmotivated, with a knack for innovative problemsolving.

Information Technology Two of Malta’s most significant drivers of growth in the 21st century, together making up close to a fifth of GDP, are iGaming and financial services. That these two industries were able to develop and achieve the success they did, heavily dependent as they are on fast and stable network connections, is proof enough of the quality of the country’s communications infrastructure, which compares well with that of most major European cities. In fact, Malta is the only EU member state with full coverage Kalkara. Photo: Pixabay

MaltaInvest2023

Chapter 1: Why Malta?

Buoyed by prosperity in stormy seas Minister for Foreign and European Affairs and Trade Ian Borg talks to Sarah Muscat Azzopardi about Malta’s economic resilience amidst stormy global waters, and the part foreign investment has played, and continues to play, in its enduring strength.

ollowing the worldwide economic downturn caused by Covid-19, Malta’s Minister for Foreign and European Affairs and Trade, Ian Borg, uses a boxing analogy in reference to the Russian invasion of its neighbour Ukraine, describing it as “a rapid, one-two knockout blow” to the global economy. Still, despite the harsh realities brought about on a European level by the pandemic and the war in Ukraine, businesses on the island have shown resilience, with record unemployment figures and significant economic growth. “The hard fact is that such heavy blows are bound to disrupt a global economy built on trade, commerce, transportation chains, and movements of capital and people,” the Minister says, yet while this double-blow of the pandemic and the war on Ukraine has hurt Malta too, the country and its government were well-prepared. “On the morrow that our government was sworn in, in 2013, we concentrated our efforts on bringing our ailing economy in order, and we never opted for the bitter medicine of austerity. On the contrary, even when economists were advising us to raise utility bills, income tax, and VAT, we did exactly the opposite. Utility bills were slashed

Photos: Ray Attard

Malta’s International Investment Guide 2023

both for families and for industry, income tax ceilings raised, and VAT stabilised. Furthermore, we saw to it that gas, diesel, and petrol prices were also lowered and stabilised for these last nine years,” he begins, describing the journey. “When all hell broke loose and the grim reaper of the pandemic scythed much stronger economies, we were certainly hurt, but remained vigorous and robust,” Minister Borg maintains, noting that investments continued to flow to the island, wealth continued to be created, and jobs increased to record numbers. Moreover, he continues, “the fact that Prime Minister Robert Abela took the decision to stabilise and freeze the prices of utility services and lower fuel tax rates to their 2014 levels, and to increase financial aid to stricken industries and lowincome groups, shows that we’re doing all we can to inject cash and optimism, both into the economy and into the people’s pockets. We strongly believe in Laffer’s Curve, less taxes, more money for our families, more incentives for business, more job creation, and a healthier economy,” noting that no other EU country has lowered taxes, increased social security benefits, and raised pensions in this way. There is certainly no denying that Malta’s robust economy has gone from strength to strength. Discussing the extent foreign investment has played in this, the Minister argues, “if foreign investment is welcome in the leading economies of the world, including the United States, imagine how much it is needed and welcome here, in the smallest state of the EU.” Crediting foreign investment in the sectors of tourism, pharmaceuticals, financial services, and gaming with helping the development of the island’s economy, he goes on to highlight some of the factors that have led Malta to become an attractive investment destination.

“All investors put their money in projects which they calculate will render them a good return,” Minister Borg says, listing safety and security as the first attractive qualities the island has to offer. “Our financial services are of the top tier and our Courts operate with a sense of justice worthy of the Anglo-Saxon tradition,” he continues, going on to highlight the fact that most Maltese also speak English – another draw for foreign investors.

MaltaInvest2023

Chapter 1: Why Malta?

“The Maltese have, since time immemorial, earned their living dealing and trading with foreigners. In our long history of commercial and business relations, there was never a case where a foreign investor was discriminated against, either by government or by the Law Courts or our institutions,” he adds, noting that investors may be captains of industry, but they are human too. “From my experience, the small size of our country helps these investors feel cosy and at home. This may be just an impression without any solid base, but I feel it intrinsically when talking to foreigners.” Of course, no country or investment destination can be suitable for all types and scales of investment, and in the Minister’s view, Malta’s size makes it all the more adequate for certain types and scales of investment.

“I believe that Malta, like Aphrodite, was born out of the sea. It is the sea that has enabled this bare and barren rock to grow into a fully independent sovereign state, and a proud partner in the European Union,” he says poetically, likening Malta’s story to that of the Netherlands and Venice. “The former was reclaimed from the sea by the industrious Dutchmen and the latter built on stilts in a once forbidding marshy lagoon. Both the Netherlands and Venice are wedded to the sea, and so is Malta. I strongly believe that our future is to respond to the challenge of the sea,” he affirms, drawing on his experience as Minister responsible for Transport, Infrastructure and Capital Projects, prior to his current portfolio. At the time, he worked on expanding the yachts and superyachts sector in Malta, as well as the maritime registry of the country. “I am glad to note that during my tenure, Malta developed into the Mediterranean’s grandest superyacht hub. Furthermore, today, the shipping registry boasts a record number of vessels flying our Maltese ensign,” the Minister says, describing the maritime sector as one that is certainly suited for further investment and scale. “I have a vision of reclaiming land from the sea to increase our size, where investments are made to truly develop the greatest maritime industry on a gigantic scale in the sector of yachts and superyachts,” he smiles. Drawing his attention to Malta’s FATF greylisting, and the increased level of compliance and scrutiny brought about as a result, I ask whether the fact that the island is no longer greylisted can help the local regulatory regime reach a better balance. Acknowledging that the FATF’s decision certainly had its effects, Minister Borg says, “it wasn’t an easy period, but we learnt our lesson and managed to get removed from the grey list in record time – less than a year. We managed to achieve this after a series of reforms that were promised and delivered, and it is now important to look forward to what the future holds. With our booming economy and strong economic growth, attracting foreign direct investment is very active. We are still working to do more in terms of legislative and financial reforms, but the future looks good.” Moreover, for the first time, trade is falling under his Ministry’s remit, and Minister Borg believes it is more important than ever to help exporters and importers in a world recuperating from Covid-19 and ravished by war and its crippling effects on trade, transportation chains, food security, and the unhinging of globalisation. “In the present predicament of a world in crisis, foreign relations and trade go hand-in-hand,” he says, highlighting plans to promote trade and commerce through foreign embassies and representatives.

Malta’s International Investment Guide 2023

“We are planning to meet our major local enterprises geared for export so as to exhort them to lay solid plans for export, and then invite them to be present with us on foreign visits, to negotiate with their opposite numbers. We have chosen particular regions which are potential markets for our local enterprises, including the Gulf, Africa, and even the Far East. I am of the opinion that our exporters can capture good markets there,” the Minister states. Turning to the future of the island, and whether Malta’s economy can continue to sustain its current reality, Minister Borg affirms that, while he doesn’t have a crystal ball, the fact that “we not only survived, but also emerged stronger, despite some scars, during plague and war, I am enough of an optimist to have faith and hope in the resilience of the Maltese people to keep marching on.”

Sharing “high hopes that Malta will continue to grow at the same stupendous rates it has seen in the last years,” the Minister reveals his plans to help the island continue to move in this direction. “My plans are built on two structures: bringing up the question of foreign investment and closer trade relations during my tête-à-tête meetings with my foreign opposite numbers; and seeing to it that there will be trained trade and commercial officers from TradeMalta to assist our embassies,” he says, as well as “emphasising the importance of preparing suggestions and MOUs with various officials of the Foreign Office to attract foreign investments and promote trade and commerce in all our dealings with foreign colleagues.”

MaltaInvest

Chapter 2

Setting Up Your Business in Malta Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 2: Setting Up Your Business In Malta

Malta’s International Investment Guide 2023

Overview

hatever the reason for your interest in Malta may be, you will find a well-developed system of multi-level assistance designed to make your investment journey an easy and profitable one. There are several government agencies dedicated to streamlining the bureaucratic process, while the country’s small size means that many authorities are just a phone call away. Face-to-face meetings are encouraged, where you can present your plans and goals to people whose job it is to help you reach them. Public agencies will lay the groundwork for your investment, but it is private partners that can help you maximise the potential for gains offered by Malta’s legal, corporate, and tax frameworks. The country’s professional advisory service providers are highly skilled, vastly experienced, and are plugged into local, European, and global developments, ensuring that your investment is compliant with present realities, with future-proof elements built in. They are also known for their tenacity on behalf of their clients – you can expect excellent service, and should settle for nothing less.

sources of wealth and business dealings are legitimate. While this certainly gives rise to the occasional grumble, the reinforcement of the country’s anti-money laundering regime is overwhelmingly seen as a boon by both investors and companies.

Establishing a presence in Malta is relatively straightforward, inexpensive, and quick, as long as the extensive documentation required is at hand, including information on key personnel, directors, and ultimate beneficiaries. Anyone investing in Malta must be prepared to submit adequate evidence that their

Whether you come for the unrivalled socio-economic stability, the incentives offered for certain enterprises, the search for a European base, or any other of the myriad reasons investors choose Malta, you can rest assured that you will be treated with the warmth and generosity the islands are known for.

Portomaso. Photo: ewg3D / iStock

MaltaInvest2023

Chapter 2: Setting Up Your Business In Malta

Where to Start

or most prospective investors in Malta, the ideal first port of call is Malta Enterprise, specifically its Business 1st portal, a point of single contact which serves as the gateway to government business information and services. Here, they will find practical information on setting up and managing a business in the country, including details on the necessary registrations, both generic and industry-specific. An investor can therefore not only register a company, apply for a tax number, and indicate whether it will be employing people, but also obtain the requisite permits to operate in regulated sectors, such as tourism or catering – all in one place. The Business 1st team facilitates investors’ introduction to the local business landscape, unlocking invaluable networking opportunities by identifying and initiating contact with the relevant stakeholders. It also provides guidance on incentives offered by Malta Enterprise and other entities.

Depending on the type of investment, Malta Enterprise’s contribution may be anything from minimal to decisive, but in any case, keeping an open channel of communication with the agency is undoubtedly beneficial due to the key role it plays in the country’s economic development and the many schemes and incentives it offers to investors of all kinds. To extract the utmost value from these services, companies and individuals looking to commence operations in Malta should start a dialogue with the entity at the earliest stage possible, and be frank about the goals of their investment, as well as their needs. The team has extensive experience in lending an ear and extending a hand – use it!

Sliema. Photo: ewg3D / iStock

Building a strong relationship with Malta Enterprise is highly recommended. As the country’s economic development agency, it provides wide-ranging assistance purposely designed to maximise the competitive edge of its client companies. Its services include pre-investment fact finding to acquaint potential investors with the realities of operating out of Malta, allocation of industrial space, access to finance, investment credits, and bespoke schemes to assist in a company’s export activities, research and development, and more.

Photo: Inigo Taylor

Malta’s International Investment Guide 2023

Local Insight Meet Helga Ellul Since moving to the island from her native Germany in 1974, Helga Ellul has established herself as one of Malta’s foremost business leaders, and is renowned as the former CEO of Playmobil Malta. She is also a former President of the Malta Chamber of Commerce. What do you consider to be the main advantages Malta brings to the table when it comes to prospective investors? One of the island’s main advantages has always been its size. Being a small country, prospective investors can benefit from easy access to the decision makers right away. As a German national who has been living in Malta for a number of decades, what is the overall sentiment of foreign investors who have chosen Malta for the relocation of their business concern? As such, the overall sentiment is positive. For example, several German companies hailing from the manufacturing sector have been set up here for a long time, know Malta well, and are still here today. However, this is not the case across the board, as there have been several movements in a number of other sectors, such as financial services providers, which brings us to the challenges. Tell us about the challenges. Do you think there are areas that could pose a hurdle to investment? Yes, the first being the banks. It is difficult to set up bank accounts in Malta, which has hindered the work of several companies. There is also a lack of available human resources, as unemployment is very low, and one must look outside of Malta for skilled people. This, I believe, is the biggest disincentive for investors.

No investment destination can be suitable for all kinds of businesses (both in terms of sector and scale). From your experience, which sectors are the most suitable for Malta? And what about the size and scale of business – are there businesses that are simply too big for Malta? Some of the sectors that Malta is most suited to are high-tech, software development, and high-end manufacturing. While the island may not be suitable for very large companies due to the lack of human resources, it is an ideal destination for small to medium-sized businesses hailing from these sectors. Malta is also very suitable for test marketing as it is small but has all the different demographics needed for test markets. Overall, do you think Malta is offering the right infrastructure and incentives to potential foreign investors? The islands’ good communication networks and overall pleasant lifestyle continue to attract foreign investment to Malta. However, the country needs to work on its infrastructure to keep up with the needs of its inhabitants, and seriously work on streamlining the process of employing people from other countries. The island also needs to work on its banking sector, as mentioned above, to maintain its competitiveness as an investment destination.

You relocated to Malta from Germany in 1974, and were for many years the CEO of Playmobil in Malta. You were also a Director of Malta Enterprise and President of the Malta Chamber of Commerce. What are the most striking changes in Malta’s business environment since then? The most impactful change throughout my time on the island, in my view, was Malta’s membership of the European Union in 2004, as well as the country’s adoption of the euro currency.

Malta is very suitable for test marketing as it is small but has all the different demographics needed for test markets.

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Chapter 2: Setting Up Your Business In Malta

Local Insight Meet Stephanie Fabri Dr Stephanie Fabri is an economist and lecturer at the University of Malta, specialising in entrepreneurship, strategic management, and public policy. Having worked in both the private and public sectors, she brings a wealth of knowledge and experience in applying economics to firms, consumers, and communities. What do you consider to be the main factors that have led to Malta becoming an attractive investment destination? For an economy to grow and prosper, policy makers must ensure that the right policies and initiatives are in place to sustain an adequate level of attractiveness and competitiveness. Attracting investment and sustaining competitiveness is no easy feat. Various overlapping factors come into play – institutions, infrastructure, economic stability, state of the markets, talent, innovation, and so on. Looking back at Malta’s recent history, EU accession led to market liberalisation, and as a result, cross-border trade between Malta and other EU and non-EU countries increased. This brought about a need for investment, not only in the islands’ infrastructure but also in their human resources. As trade intensified and investment continued, the economy became attractive to emerging industries such as financial services, gaming, and ICT, among others. As a result, these new activities led to added value in traditional sectors such as professional services, tourism, and manufacturing. What are some of the main advantages and incentives Malta brings to the table for prospective investors? Despite Malta’s small size, geographical location, and other challenges that it encounters, it has always managed to retain a certain degree of attractiveness in the eyes of potential investors. Investors come to Malta for its attractive corporate tax regime, reliable ICT infrastructure, political and economic stability, English-speaking workforce, and also competitive labour costs. EU membership, and Malta’s proximity to North Africa, also play a crucial role in Malta’s attractiveness. In line with this, institutions like Malta Enterprise and TradeMalta have a number of incentives in place that help boost FDI in Malta. Such incentives revolve around access to finance, tax credits, R&D initiatives, and training initiatives, among others. Foreign investors have noted that the level of scrutiny experienced in Malta is perceived to be higher than in competing investment destinations. Can the fact that Malta is now no longer greylisted help the local regulatory regime reach a better balance? Malta thrives on the power of regulated industries and jurisdictional innovation. We need to ensure that our laws and regulatory structures remain competitive and attractive. These need to be reviewed periodically and new economic niches need to be identified.

Malta’s robust economy has gone from strength to strength in recent years. To what extent has foreign investment played a part in this, and can the island do more in this regard? The increasing investment flows, mainly as a result of service-based and regulated activities, have contributed significantly to the islands’ economic success. Malta’s economy is to date one of the fastestgrowing in the European Union, with employment levels exceeding the EU average. Still, as a nation, we can do much more to reach our investment potential. Let’s talk about the challenges. Which areas could pose a hurdle to investment, and how can these challenges be overcome? First, we need to ensure better access to capital, ease of resolving insolvency, and overall ease of setting up a business. Second, more investment in R&D, and not only in service-based industries, but also in particular in traditional industries such as agriculture, fisheries, construction, and manufacturing. Third, enhancing efficiency and effectiveness in the area of transport and logistics. This needs to be a two-pronged approach – focus incentives on curtailing the negative effects that have emerged post-Covid and as a result of the war in Ukraine, and invest in policies aimed at reducing emissions. Fourth, Malta has come out of greylisting in a year following an intensive period of capacity-building in its regulatory institutions. We now need to ensure that the jurisdiction retains the attained level of compliance by all stakeholders. Of course, these are just a few examples. The ecosystem of FDI is complex, with various factors that come into play. One important rule is to ensure that this complex ecosystem is not fragmented across different institutions and policy makers.

Malta thrives on the power of regulated industries and jurisdictional innovation.

Malta’s International Investment Guide 2023

MALTA ENTERPRISE SCHEMES The incentives offered by Malta Enterprise can be pivotal for investors’ decisions to start operating in Malta. Below is a small sample of their offering, which is regularly updated in line with changing economic realities. For the full, current list, visit their website (maltaenterprise.com). Research and Development The aim of this incentive is to assist industrial research and experimental development activities required by industry for the acquisition of knowledge, leading to the development of innovative products and solutions. Start-Up Finance This measure is aimed at small start-up undertakings that demonstrate a viable business concept and exhibit commitment to expand and further develop their economic activity, with support of up to €400,000, or €800,000 if the start-up qualifies as an innovative enterprise. Business START For start-ups at an earlier phase of development, Business START offers seed and growth funding with an initial grant of up to €10,000 to help them develop their business proposal and determine the feasibility of their business idea. Start-ups that present a viable business plan may receive additional support linked to full-time employment which may reach up to €25,000 per quarter, up to a maximum of €200,000. Invest Invest aims to sustain the regional industrial and economic development of Malta by facilitating initial investments through the setting up of new establishments, expansion of existing facilities, and diversification of existing businesses. Support may be awarded through loan guarantees, interest rate subsidies, cash grants, and tax credits.

Business Development This measure facilitates value added projects, including new business initiatives, expansions, and transformation activities, with support awarded in the form of a tax credit or a cash grant. Access to Finance (Soft Loan) This is a financial instrument designed to support undertakings engaged in a manufacturing or service activity to accelerate their plans in establishing new products or entering a new geographic market, addressing environmental concerns, and digitising processes. Beneficiaries may be supported through a soft loan covering part of the funding requirements of up to €1,000,000. Micro Invest Micro Invest encourages undertakings to invest in their business to innovate, expand, and develop their operations through a tax credit equivalent to 45 per cent (65 per cent for Gozo) of eligible expenditure. Allocation for Industrial Land and Space Developable land or space in existing buildings can be offered in state-owned industrial zones throughout the country. EUREKA Instruments EUREKA is an EU initiative supporting the development of rapidly marketable innovative products, processes, and services across all technological sectors through collaborative industrial research or experimental development projects involving partners from Malta and other EUREKA countries.

Priority Areas While each scheme has different eligibility criteria, investments related to Malta’s strategic economic development objectives will be best placed to receive the most generous support. These include: manufacturing management of waste and environmental solutions research and development activities provision of industrial services and solutions to manufacturing operations digitisation of processes software development (including video games and entertainment systems)

health, biotechnology, pharmaceuticals, and life sciences maintenance, repair, and overhaul of aircraft and other electromechanical equipment artisanal works services that by nature are not limited to geographic scope and are scalable internationally projects that may lead to an increase in business performance and innovation

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Chapter 2: Setting Up Your Business In Malta

Licensing and Support

n a bid to reduce red tape for businesses, Malta no longer requires every business to obtain a trade licence. Licensing now operates on a sectorspecific basis via semi-autonomous authorities led by professional staff. These authorities are committed to upholding the standards investors and consumers expect while working together with stakeholders to improve the business environment. Business support is also available through a network of public and private entities. These agencies, associations, and other structures representing the Maltese business community often prove to be invaluable to foreign investors. The wealth of information and assistance they

offer, not to mention the contacts, allow new entrants to kick-start their investment in Malta on the right note. More information on some of these entities can be found in the section devoted to their particular economic activity, and a thorough (but by no means exhaustive) list can be found in Chapter 10, together with their contact information. Before proceeding, particular mention is due to the leading non-sectoral associations: The Malta Chamber, the Malta Chamber of SMEs, the Malta Employers Association, and the Gozo Business Chamber. All four work tirelessly to represent the interests of Malta-based businesses, and are highly active in the publication of research, guidance, and proposals to improve the country’s business

Regulated Activity

Regulatory Authority

Financial services

Malta Financial Services Authority

Blockchain

Malta Digital Innovation Authority

iGaming

Malta Gaming Authority

Accommodation and catering

Malta Tourism Authority

Aviation and maritime

Transport Malta

Education

Malta Further and Higher Education Authority

Pharmaceutical and life sciences

Malta Medicines Authority

Telecommunications

Malta Communications Authority

Malta’s International Investment Guide 2023

Grand Harbour. Photo: Mike Nahlii / Unsplash

landscape. Prospective investors may find the information provided by these entities useful for the development of their plans, and membership of at least one is recommended, serving as a platform for communication and knowledge-sharing between Malta’s most important economic stakeholders.

Meanwhile, incentives specific to Gozo are related to:

Gozo

Employment Companies established in Gozo that hire workers for employment on the island are eligible for a refund on their wages of up to €6,000 over three years. On the other hand, companies based in Malta that offer employees resident in Gozo the facility to work from home can benefit from a salary refund of up to €10,000 over three years, plus a partial refund on any associated technological or capital investment.

Malta’s smaller sister, Gozo, is known as the more tranquil one, with stunning natural features and landscapes that serve as a welcome respite from the hustle and bustle of its larger sibling. The peace and calm it offers is often sought after by expat retirees and digital workers, but it also hosts some of Malta’s leading enterprises, particularly in manufacturing. A recently launched plan to tie Gozo’s development to the twin green and digital revolutions in production opens further possibilities – be sure to ask for the latest incentives issued, as this transformation is just beginning. Incentives for investment in Gozo Many schemes operated by Malta Enterprise and others include advantageous terms for Gozo-based businesses. The Micro Invest scheme, for example, allows Gozitan enterprises to obtain a tax credit for up to 65 per cent of their investment, compared to 45 per cent for Maltese ones – prospective investors are invited to consult Malta Enterprise and the Ministry for Gozo for the latest information.

Transport Manufacturing undertakings in Gozo benefit from reduced costs on inter-island transport, allowing them to compete more effectively.

Companies wishing to set up a back-office service enterprise are eligible for a separate scheme that partially reimburses the salaries of workers employed at the company’s Gozitan back-office operation. The refund ranges from €13,500 to €24,000 over three years, depending on the employee’s salary, and is capped at €65,000. This scheme, run by the Ministry for Gozo, is due to close in November 2023, and recruitment must have taken place by that date.

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Photo: Tyler Calleja Jackson

Chapter 2: Setting Up Your Business In Malta

Local Insight Meet Gordon Cordina Dr Gordon Cordina is a leading economist on the Maltese Islands, with professional experience spanning 25 years covering banking, government policy, academia, and private sector consultancy. He is Executive Director at E-Cubed Consultants Ltd and Chairman of Bank of Valletta, the largest bank in Malta. What are the main advantages Malta brings to the table when it comes to prospective investors? Malta’s attractiveness to investment has so far relied in good part on a low cost base, particularly with respect to human capital and, over the past few decades, taxation. Balanced approaches to regulation, in sectors such as gaming and aviation, is another key consideration. The availability of human capital, nationally and globally, is yet another central consideration, strongly determined by education and training activities, the ease of immigration, and the attractiveness of the country as a lifestyle destination. The reliability and quality of infrastructural services, particularly for digital and physical connectivity, is of significant importance as well. In recent years, Malta has tended to attract investment based on a number of these elements, but renewed efforts to enhance competitiveness are required, mainly because of global developments, including the taxation scenario and AML/AFC requirements, but also due to the fatigue created by a very strong rate of economic growth over a relatively short period of time. Foreign investors have noted that the level of scrutiny experienced in Malta is perceived to be higher than in competing investment destinations. Can the fact that Malta is now no longer greylisted help the local regulatory regime reach a better balance? The enforcement of adequate compliance standards is a basic requirement to attract investment. Getting out of the greylisting situation, rapidly and credibly, was key to our future economic growth. We must build on this success to offer the correct regulatory perspectives to the niches in which Malta will be specialising further. Of course, no country or investment destination can be suitable for all types and scales of investment. What kind of investment do you reckon that Malta is best suited for? At this stage, Malta needs to be more selective of the investment that it aims to attract, basing its appeal less on generic attractiveness factors and focusing more on being ever more relevant to specific niches that would be more consistent with the competitiveness strengths that it can present.

What kind of sectors and operations are most ripe for further investment? Foreign investment in Malta would ideally target export activity. Niches which could be developed include family offices in financial services, litigation services in maritime and aviation, video game production, linking gaming with the tourism vocation, and a number of others. Do you expect Malta’s economy to continue growing at the strong rates seen over the last years? There is a need for compatibility and mutually reinforcing relationships between foreign investment and the quality of life in the country. It will be acceptable for growth to proceed at a more moderate pace, as long as it is sustainable and durable. This is not merely nowadays a question of opinion or policy choice, but also very much mandated by global regulatory frameworks. ESG considerations are becoming the next frontier of regulation, comparable in importance and impact to that which was experienced through AML/AFC regulations over the past decade.

Getting out of the greylisting situation, rapidly and credibly, was key to our future economic growth.

Valletta. Photo: ewg3D / iStock

Malta’s International Investment Guide 2023

Tax Planning

alta’s tax regime has served as a cornerstone of its development over the years, attracting attention from multinational conglomerates, investment funds, and every other kind of company. In fact, many first hear of Malta after asking their financial advisor to suggest onshore tax efficient jurisdictions. The benefits on offer are significant, allowing for what is currently the lowest effective tax rate in the EU, and the system’s focus on one main element – income tax – makes for clear (if not entirely straightforward) tax planning. There are no withholding taxes on dividends, interest, royalties, and proceeds from liquidation distributed to non-residents, no separate capital gains tax, and no wealth or inheritance taxes. Stamp duty is levied on the transfer of moveable and immoveable assets, but companies carrying out international activities are exempt. No transfer pricing rules exist yet, although plans are underway for them to be implemented in accordance with the current global standards related to the arm’s length principle. Meanwhile, Malta’s extensive network of taxation treaties and unilateral tax relief protects investors and entrepreneurs from incurring double taxation, while specialised provisions enhance its attractiveness for companies of all types and sizes.

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Chapter 2: Setting Up Your Business In Malta

The below is meant to serve as an introduction and an overview of the formulation and advantages of Malta’s tax regime. Each element contains other criteria for eligibility and allows investors different routes to deriving benefit, intricacies that are impossible to present to their full extent here. The engagement of a local tax advisor is of course optional, but very strongly recommended.

The Tax Refund System Companies incorporated in Malta and having tax residency in the jurisdiction are subject to the standard corporate tax rate of 35 per cent. However, foreign-owned structures benefit from an attractive refund system that can bring the effective rate down to 5 per cent or even lower, making Malta’s offering one of the most attractive in Europe. Taxable profits (or losses) are calculated after adjusting for depreciation, unrealised losses and profits, and all expenses incurred in the production of income. Companies may also deduct from their taxable income the deemed interest expense on capital invested (Notional Interest Deduction – NID).

Dividend income derived from a participatory holding or income deriving from the disposal of such holding is eligible for a 100 per cent tax refund. Passive interest, royalties, capital gains, and income from a participatory holding which does not qualify for the participation exemption is eligible for a 5/7ths tax refund. If double taxation relief has been claimed, the shareholder is eligible for a 2/3rds tax refund. In all other cases, a 6/7ths tax refund applies. When combined with Malta’s extensive double tax treaty network (see p. 246) and the proper planning and structure, the refund system allows investors to achieve considerable fiscal efficiency by using Malta as a base.

Tax Relief

Once the chargeable income is calculated and the taxes due are paid, dividends can be distributed to shareholders. These can take the form of accounting entries, with retained profits transferred to an account payable to the shareholder, at which point the dividend is considered paid. This two-tier structure can be advantageous if profits are intended to be re-invested without becoming subject to taxation in any other state.

Apart from the network of double tax treaties, Maltese tax law also provides for unilateral relief and a flat rate foreign tax credit (FRFTC), the latter being only available to companies. All forms of tax relief offered in Malta take the form of a tax credit granted for foreign tax levied on income arising in other countries, with the credit amounting to the lower of the Maltese tax on the foreign income and the foreign tax paid. Relief provided under tax treaties and that provided unilaterally result in an effective null tax rate where the foreign taxes are equal to or exceed the 35 per cent Maltese income tax. The same applies for dividends, which become exempt from tax when the foreign withholding tax and other taxes applicable to them reach or exceed 35 per cent.

With all expenses deducted, taxes paid, and dividends distributed, shareholders become entitled to claim a tax refund on the taxes paid by the company. The refund rates in effect depend on the kind of income the company declared.

In the case of the FRFTC, set at 25 per cent, this applies when foreign income is deemed to have already been subject to tax abroad. Companies may therefore add 25 per cent to the net amount received in Malta, and deduct eligible expenses from this aggregate amount to arrive

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 2: Setting Up Your Business In Malta

at their taxable income. Once the tax due in Malta is calculated from this amount, the FRFTC amount can be deducted from the tax charge. This credit is limited to 85 per cent of the Maltese tax due before deducting the credit itself.

Transfer Duties The most significant stamp duty is levied on documents related to the transfer of immoveable property in Malta, standing at 5 per cent (2 per cent in Gozo). This extends to the shares of a company whose main holdings are constituted of immoveable property. In other cases, the transfer of company shares is subject to a 2 per cent duty, although mergers, de-mergers, and other kinds of corporate re-organisation are exempt. A considerable number of other instances of acquisition or disposal of marketable securities are also exempt, including when involving licensed collective investment schemes and companies with over 50 per cent foreign shareholding that carry on more than 90 per cent of their business outside of Malta.

Qualifying Participation Tax Rules Malta operates a special tax regime for income derived from subsidiaries, through which dividend and capital gains may be exempt from tax in Malta as long as certain conditions regarding its equity stocks are met. The system draws a lot of interest from multinational groups looking for an efficient holding structure, as well as from investment portfolios involved in the ownership, management, and administration of equity holdings in other companies. The rules hinge on the nature and extent of the Malta-based company’s holdings in other entities, which determine whether such holdings qualify as participatory. A participating holding is typically an equity shareholding of at least 5 per cent, although other tests may apply, such as its worth, the time it has been held for, and whether the stock is held for the furtherance of its own business rather than for trading purposes – shares in other companies held for the purpose of trading do not qualify. Participatory holdings must also be incorporated or resident in the EU and derive less than half of their income from passive interest, though once again a number of alternative tests may be applied.

Consolidated Group Tax Rules Companies forming part of a group may elect to form a fiscal unit and thereby be treated as a single taxpayer. Intra-group transactions fall outside the scope of Maltese income tax legislation, and losses may be surrendered by one company to another. Another benefit of this setup is that a fiscal unit may offset the refund due to shareholders against the income tax due by the company, allowing it to achieve a tax-efficient result without the need to distribute a dividend and thereafter apply for a tax refund, facilitating cash flow.

Parliament Building, Valletta

Malta’s International Investment Guide 2023

Local Insight Meet Geraldine Spiteri Lucas Dr Geraldine Spiteri Lucas is the CEO and Registrar of the Malta Business Registry. She started her career with a leading Maltese law firm, moving to the Registry of Companies as a legal officer before being promoted to Head of Legal of the Malta Business Registry. When considering an investment destination, one of the first questions asked is how easy or complex the process to open a company within that jurisdiction is. What’s your personal verdict on this subject? To register a new company is quite a straightforward procedure, and if all documents are submitted, the company will be uploaded on our portal on the same day. Having said this, since there are a number of documents that need to be submitted, more often than not, a proposed company will require correction. How important is it for incoming investors to appoint the right corporate services provider to set up the business and handle all the necessary registrations? One needs to point out that in Malta there is no legal obligation to have a corporate services provider (CSP) engaged at pre-inception stage of a company or during the existence of a company, although a majority of companies are incorporated and serviced by a CSP. From our experience, companies that are delivered or serviced by a CSP are dealt with more efficiently, as experienced CSPs are well aware of the company’s obligations at law as well as MBR’s expectations. How can the Malta Business Registry assist and support prospective investors? I am a firm believer that education is the key for success. The MBR should not appear to be an entity where the main element is the issuing and collection of penalties. On the contrary, our goal is for everyone in

The authorities also have a track record of standing shoulder to shoulder with businesses and employees in times of adversity.

this sector to be fully aware of their obligations and ensure that their filings are up-to-date and correct. This is beneficial to both the entity itself and also to other entities and individuals transacting with that entity. The MBR recently took on more of a supervisory role. Can you tell us more about this? We ensure that the vetting and verifications carried out from our side are in the best interest of the business community as well as the Maltese jurisdiction. MBR’s supervisory role ensures that it acts as a gatekeeper of what comes in and out of the Maltese jurisdiction. Our intention is not that of a police state, but rather to offer peace of mind to businesses with an up-to-date and accurate register that they can use when doing business. What does Malta offer to prospective investors? Malta is small but has a lot of potential, and it consistently provides clear guidance and support to the business community in order for it to flourish in a regulated environment. Time and time again, this tiny island nation has showcased its agility and flexibility to adapt promptly to different circumstances. As history shows, it managed to rebrand itself from a fortress-based economy to one based on services that seek to convert human resources into highly skilled human capital that plays an essential role in economic growth. Since the country has no natural resources, Malta has always sought to invest in its people. Regulators as well as the private sector are staffed with professionals who know their job well and can assist investors with the opening of a company and its upkeep, and also help them to explore new niches. The authorities also have a track record of standing shoulder to shoulder with businesses and employees in times of adversity, most recently through the issuance of direct wage support at the heights of the pandemic, crucial in saving over 100,000 jobs. Bold decisions resulted in Malta now experiencing the lowest inflation rate when compared with the rest of the EU, as well as having the lowest unemployment rate. Moreover, a company can easily seek the guidance of entities and authorities in their endeavours. Given our geographical position and the certificate of trust issued by the FATF that Malta is fully compliant with international standards, this certainly makes for an attractive jurisdiction where investors can conduct business with peace of mind.

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Chapter 2: Setting Up Your Business In Malta

Setting Up a Company in Malta

here are a few options available when deciding to incorporate in Malta. For both trading and holding purposes, the private limited liability company is the preferred vehicle for foreign investment, although public companies, partnerships, and sole traderships are also possible. Depending on the type and size of the company, registration generally takes from two to 14 days, can be done remotely, and is relatively inexpensive, starting from €100 and capped at €2,250. While not a highly complicated process in itself, investors typically engage a local services provider, not least because of the requirement for a local address. Companies offering such one-stop-shop corporate services solutions include accountancy, management consultancy, and legal firms of stature. Registration entails submitting the new company’s bylaws, including the authorised and issued share capital, details of the shareholders, directors, and other key persons, and a deposit slip showing the paid-up share capital credited to the company’s (not necessarily local) bank account. The Registry of Companies will then issue a certificate as proof that the company is authorised to commence business, although further operating licences are needed if the company is active in regulated sectors like financial services and pharmaceuticals. No licences or permits are needed for non-regulated business activities.

Shares may be held directly, by nominee, or in trust, and there are no restrictions on the nationality or residency of Maltese company shareholders. Additionally, foreign companies can transfer their domicile to Malta without dissolving and setting up a new entity, reducing the time and costs associated.

Company Name The first step to setting up a Maltese company is choosing a name. This must be in Latin script, must not be offensive, and must not be the same or very similar to the name of an existing company. It should also adequately represent the nature of the enterprise. If it includes particular terms like ‘bank’ or ‘insurance’, evidence of the company’s business intentions must be presented accordingly. The Registrar can reserve a name for up to three months during the incorporation process.

Malta’s International Investment Guide 2023

an increase in share capital, a transfer of shares, and the annual return. The latter must be filed each year within 42 days of the company’s registration date, subject to penalties, and must include the company’s name, address, share capital, and percentage of which is paid up, and the identities of all shareholders, directors, secretaries, and corporate bodies, along with a payment of between €100 and €1,400, depending on the authorised share capital.

Accounting and Audit Requirements

Tigné Point, Sliema. Photo: Soloviova Liudmyla / Shutterstock

Key Personnel A company must appoint at least one director and a secretary. Directors are responsible for the company’s proper administration and management, including compliance with Maltese legislation. The directors appoint a company secretary, who must be a natural person and can also be a director. They may not, however, be the sole director, unless the enterprise is registered as a private exempt company. As the company’s factotum, it is in investors’ best interests to appoint a secretary with expertise on local corporate governance whose guidance the directors can rest on. The secretary’s tasks include taking minutes of board meetings and ensuring the timely submission of statutory documentation, related to, among others, the appointment of new directors, a change in address,

Company accounting in Malta follows the EU Single Accounting Directive, transposed into Maltese law through the introduction of the General Accounting Principles for Small and Medium-Sized Entities (GAPSME). Public companies must however conform to the International Accounting Standards Board’s (IASB) Financial Reporting Standards (IFRS). Private companies may opt to follow the latter (more onerous) requirements if desired. Either way, investors are assured that financial statements are in line with prevailing European and global standards of clarity, accuracy, and usefulness, generally including a balance sheet, a profit and loss account, notes to the accounts, a directors’ report, and an auditor’s report (with certain allowances for small companies). These must give a true and fair view of the company’s assets, liabilities, financial position, and profit and loss, and should be approved by shareholders within 10 months of the end of the financial year. The approved financial statements must be submitted to the Registry up to 42 days after the 10-month period has elapsed. Failure to do so is subject to late penalties.

Other Requirements After getting a Certificate of Registration from the Malta Business Registry, a new company will also need to register for VAT and income tax with the Commissioner of Revenue before commencing its business activities. Similarly, prior to engaging employees, it must obtain an employer identification number from JobsPlus. Altogether, these registrations can be expected to take up to one week, after which the company is fully set up and ready to operate.

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Chapter 2: Setting Up Your Business In Malta

COMPANY TYPES Malta’s Companies Act provides for a number of different set-ups. These include:

Sole Trader

Private Limited Liability Company (Ltd)

Certain professionals may find self-employment to be the best way of operating in Malta. Sole traders will need a Maltese home or office address, a bank account, and a social security number. They must also register with the tax authorities and VAT department. Non-EEA/Switzerland nationals will also need a residence permit. As like any other company, sole traders must obtain the necessary licence if working in regulated sectors, but do not need to sign up to the Registry of Companies.

Whether you are looking for an effective asset-holding structure like a holding company, an operational trading company, a ship-owning company, a vehicle for investment, a captive insurance company, or for any other use, the private limited liability company is likely to be your go-to solution. It should be noted that although the tax code contains special provisions for some types, like holding companies or fiscal units, company registration is effectively uniform all across. Private companies have a distinct legal personality, and their assets and liabilities are separate from those of their owners, with the up to 50 shareholders’ liability being limited to the unpaid capital amounts on the shares they each hold. Private companies can also be of the following types: Small company Maltese company law allows small private companies to submit audited abridged accounts if they do not exceed two of these criteria: (a) a balance sheet total of €4 million, (b) turnover of €8 million, and (c) an average of 50 employees during the accounting period.

Partnership Individual operators who decide to work together can draw up a deed specifying the terms of the partnership. Maltese law allows for limited liability on some (but not all) members of a partnership. A dedicated bank account and tax number are required.

Private exempt company Account audits are not required if a company meets certain criteria. First, the Memorandum of Association must restrict the number of persons holding bonds or any other form of debenture to no more than 50, prohibit body corporates from taking on directorship of the company, and prohibit any arrangement whereby the policy of the company is capable of being determined by anyone other than the directors, members, or debenture holders. Secondly, the company must also satisfy at least two of the following criteria: (a) a balance sheet total of €46,600 or less, (b) an annual turnover of €93,000 or less, and (c) an average of two employees or fewer over the accounting period. Although these companies are exempt from audit requirements, the profit and loss account, abridged balance sheet, and notes must still be delivered to the Registrar. Only those companies registered as private exempt may be single-member companies, where the sole shareholder is also the sole director and company secretary.

Malta’s International Investment Guide 2023

Overseas Company Companies constituted outside of Malta that wish to open a branch in the country need to submit basic information like the company’s constitutive documents (translated, if required, into English) and particulars of the company’s representatives both locally and abroad. Branches are only taxed on income arising in Malta, and have no separate legal personality to that of their foreign head office, which is bound to uphold any contract signed by the legal branch. This option is typically chosen when the presence in Malta is expected to be temporary, as incorporating a private company carries comparable compliance requirements with the additional benefits of a global tax net and easier access to local finance.

Public Limited Liability Company (Plc) Large businesses may be better served by opening a public company. These companies have no limit on the number of shareholders, although they must have at least two upon registration. They are also required to have at least two directors (which may be corporate bodies), and have a higher minimum share capital. While these companies may offer shares or bonds to the public, these issues must take place through the Malta Stock Exchange and be accompanied by a prospectus for potential investors.

Photo: Joseph Buhagiar / Unsplash

MaltaInvest2023

Chapter 2: Setting Up Your Business In Malta

Malta’s International Investment Guide 2023

DOCUMENTATION The most important statutory documents required by the Malta Business Registry to set up a company are the Memorandum and Articles of Association, also referred to as the company’s bylaws. The Memorandum of Association contains basic information about the company: The company’s name. Its registered office in Malta, including a lease agreement. Designation as private or public company. Operating lines in the objects of the company (and main trading activity in the case of a single member company). Details of the company’s shareholders, including copies of identification documents. The amount of authorised share capital, the number and price of shares taken up by each shareholder, and where shares are divided into different classes, the rights attaching to each class. Details of the directors, company secretary, and legal representative. Whether the company will be registered indefinitely or for a specified fixed period of time. In the case of a public company, the Registry will require additional information on the costs payable or chargeable to the company in relation to its formation and any special advantage granted to anyone involved.

Corporate and Fiduciary Shareholders In the case of corporate shareholders, identifying documentation on the natural person who is the ultimate beneficial owner is also required. Should no body corporate hold more than 25 per cent ownership, details on the senior managing official must be provided. Where shares are held through a fiduciary or a trust, the beneficial owner does not need to be identified in the Memorandum of Association. Nonetheless, the Registry will require disclosure of their identity upon incorporation. The efforts made to combat financial crime and money laundering in the run-up to and following Malta’s greylisting have resulted in stringent enforcement of the regulatory framework, requiring utmost compliance with disclosure requirements.

Capital Deposit and Registration Fee A bank deposit slip should be presented as proof of the deposit of capital. For private companies, this must be at least 20 per cent of the minimum share capital of €1,165. For public companies, this goes up to €44,588, with at least 25 per cent being paid up. The Registry’s fee is linked to the company’s authorised share capital. This starts at €245 for companies with a share capital of up to €1,500, and is capped at €2,250 for those with €2.5 million and over. Registration in electronic format qualifies for even lower fees.

As for the Articles of Association, these establish the internal regulations governing the company, including, for example, details on directors’ roles and special shareholder rights. The Companies Act provides a template with model articles, which are implicitly adopted if it is not submitted. Shareholders can always change provisions in these bylaws through a simple majority vote.

MaltaInvest2023

Malta Enterprise: Building the economy of the future Kurt Farrugia, Chief Executive Officer at Malta Enterprise, reflects on the agency’s work over the years, as well as what we can expect to see in the months ahead.

elebrating 55 years in operation in 2022, Malta Enterprise, the country’s economic development agency, has been responsible for facilitating the growth of existing operations and attracting new foreign direct investment to the island’s shores since the liberalisation of Malta’s economy. It has now embarked on a strategy of growth which looks at attracting more innovative companies, leaving in Malta a wealth of knowledge and technology transfer. Malta’s economic future is bright, says its CEO, Kurt Farrugia.

as a prime example, he notes, “many companies, such as Playmobil, Trelleborg, Toly, De La Rue, and Hutchinson have been here for decades, which shows government’s commitment towards business, and the role of Malta in the global supply chain.”

The long-term presence of an investor in the country is a priority for Malta Enterprise, and has resulted in symbiotic relationships being maintained for decades, he explains. Highlighting the island’s manufacturing sector

But it’s not just the country’s manufacturing sector that has led to its continuedly resilient economy, he continues, affirming that Malta’s diverse economy has registered impressive growth year on year, despite shocks brought

“Products from Malta reach the end customers through brands such as Apple and Nokia, practically all the automotive brands, leading designer brands such as Chanel and Dior, as well as Boeing and Airbus,” the CEO continues.

Photos: Bernard Polidano

Chapter 2: Setting Up Your Business In Malta

Malta’s International Investment Guide 2023

about by external factors like Covid-19. “In the post-Covid scenario, we have been pushing for enterprises to take the next leap and transform in favour of more sustainable and digital processes through the introduction of new financial schemes,” Mr Farrugia adds.

Many companies, such as Playmobil, Trelleborg, Toly, De La Rue, and Hutchinson have been here for decades, which shows the government’s commitment towards business, and the role of Malta in the global supply chain.

Looking at economic sectors which have showed resilience and continued growth, Mr Farrugia highlights the pharma sector, referencing a €22 million investment by Torrent Pharmaceuticals and a €48 million investment by Kelix bio; aviation MROs, specifically SRT’s new €42 million state-of-the art MRO hangar and Ryanair’s €20 million maintenance and overhaul facility; as well as the manufacturing sector, which has undergone continual expansion, including a major upgrade to De La Rue’s state-of-the-art manufacturing site, Federated Mills’ new €14.4 million production plant, and Cini Manufacturing’s investment of €9 million in the relocation and construction of a new building.

Turning his attention to new niche sectors which have continued to enrich Malta’s economy, the CEO mentions the medical cannabis sector, through which the island has welcomed five licensed companies, with more in the pipeline; as well as artificial intelligence and tech-based companies, with a particular emphasis on start-ups. “Malta Enterprise has been reaching out to various industrial sectors, such as MedTech, FinTech, and cyber security,” he affirms, highlighting examples like Trust Stamp, City Falcon, Actable AI, and CADChain/Female Switch that have recently set up bases in Malta. “Malta is the right stage for start-up companies. The work of Malta Enterprise in this regard is to facilitate and nourish the local ecosystem, while we continue to attract innovative start-ups to choose Malta as their home and base of operations,” Mr Farrugia maintains.

More recently, in April 2022, it was announced that PlugAndPlay, the Accelerator Programme behind Dropbox and PayPal, among others, would be setting up in Malta. “This is operating from Sliema, offering a sixmonth programme,” the Malta Enterprise CEO continues, referencing its impressive network, consisting of over 30,000 start-ups and over 500 world-leading corporations. As we speak, Mr Farrugia is basking in the afterglow of the successful second edition of Malta’s Start-Up Festival, which took place between 13th and 14th October 2022. “The focus this year was on networking, and the festival offered an experience rather than an audience engaged in panels and workshops all the time,” Mr Farrugia says. Expanding on to the agency’s plans for the months and year ahead, he lists working towards establishing a start-up framework, in particular with reference to various tax incentives; as well as the Malta Start-Up Residence Permit, which the CEO was able to launch at the Start-Up Festival in October.

To this end, in 2021, Malta Enterprise teamed up with the Ministry for Energy, Enterprise and Sustainable Development to launch an interactive platform for Malta’s start-up ecosystem – www.startinmalta.com. “This serves as the national platform for start-ups, grouping all the financial incentives available, and the stakeholders that can assist the start-up. The portal also includes an ecosystem map, with a list of start-ups that are currently present on the island,” the CEO explains. 2021 also saw Malta’s Start-Up Festival take place between 11th and 13th November, within which Malta Enterprise’s work in relation to startups reached its culmination, Mr Farrugia says. Notably, at the StartUp Festival, Kordin Business Incubation Centre (KBIC) celebrated its 20th anniversary, and Shark Tank Malta was launched, with the aim of highlighting the role of private investors in the islands’ ecosystem.

MaltaInvest2023

Chapter 2: Setting Up Your Business In Malta

Business 1st: A one-stop-shop for the business community and aspiring entrepreneurs Marika Tonna, Chief Executive Officer at Business 1st, highlights the broad range of services offered by the entity, which is a joint venture between Malta Enterprise and the Chamber of SMEs.

s the Maltese government’s main point of contact for the business community, the role of Business 1st, CEO Marika Tonna explains, is “to serve as a one-stop-shop providing and facilitating businessrelated government services.”

As a joint venture between Malta Enterprise and the Chamber of SMEs, the CEO explains, “Business 1st demonstrates how Malta Enterprise leads the ecosystem and brings partners on board.” “While not all the regulatory authorities are present at Business 1st, we guide clients as to the licences and permits they require in order to start operating, and we also put them in touch with

Photo: Tyler Calleja Jackson

Acting as a single central contact point through which entrepreneurs can carry out all the required procedures for the setting up, running, and development of a business in Malta, Business 1st also provides the necessary support for businesses to apply for incentives and schemes offered by Malta Enterprise and by the government of Malta. A number of these services, Ms Tonna notes, are offered directly by the relevant departments’ representatives present at Business 1st, including the Malta Tourism Authority (MTA), the Department for Industrial and Employment Relations (DIER), and the Office of the Commissioner for Revenue (CfR).

Malta’s International Investment Guide 2023

If you are looking for guidance from where to start, are interested in expanding your business, or would like further information on incentives, the team at Business 1st can guide you on both Malta Enterprise incentives and those offered by other entities.

the relevant authorities,” she explains, adding that, in the case of businesses setting up within the catering and accommodation sectors, guidance is provided in terms of applying for licences and permits from the Environmental Health Directorate and the MTA. “We also have a number of agreements with other government entities whereby we give clients basic information on the services provided, and then, should they be interested, we put them in touch with the relevant experts. For example, we give basic information on the benefits and how to register for a trademark, and should the client wish to do so, we go on to broker a meeting with the Commerce Department,” the CEO continues. As the country’s single point of contact for both locals and foreign nationals interested in starting and operating a business in Malta, it goes without saying that Business 1st also operates an informative website that enables clients to meet their needs online. Elaborating on this, Ms Tonna explains, “Points of Single Contact (PSCs) are e-government portals that allow service providers to get the information they need and complete administrative procedures online. They are primarily aimed at clients interested in exploring business opportunities or expanding their services to another EU country, setting up a new business abroad, finding out about the rules and formalities that apply, and completing the administrative procedures online.” Referencing the fact that Malta consistently ranks high in the e-services index at EU level, the Business 1st CEO adds, “having placed first again this year in the

eGovernment Benchmark Report by the European Commission, our website is one of many that contributes towards Malta achieving this result.” Expanding on Business 1st’s invaluable work in recent months, Ms Tonna highlights, “during 2021, Business 1st assisted 10,324 clients who visited our offices, and received over 5,264 emails on the info email address. In addition, during the Covid-19 period, our teams handled over 102,760 emails and 99,753 calls relating to Malta Enterprise Covid Assistance.” Turning her attention to what is keeping the team busy, she explains that work is currently underway on the National Business Portal project, which is being coordinated by Malta Enterprise on behalf of government and will factor in an investment of €3 million. The result, she adds, will be an online platform for integrated government services for businesses from 38 different entities, and is expected to be launched by late 2023. Addressing the business community and aspiring entrepreneurs, the CEO affirms, “if you are looking for guidance on where to start, are interested in expanding your business, or would like further information on incentives, the team at Business 1st can guide you on both Malta Enterprise incentives and those offered by other entities. Our team is more than happy to sit with you and discuss your business operations from Malta, guiding you on the entities you would need to refer to and facilitating contacts. If your business requires additional assistance from Malta Enterprise, our helpful team will refer you to a relationship manager at Malta Enterprise, who would be able to walk the journey with you for the years to come.”

MaltaInvest

Chapter 3

Industry

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 3: Industry

Overview

way from the beaches and the cosmopolitan lifestyle, Malta hosts a continuously growing community of producers. With industry generating fewer international headlines, those unfamiliar with the country are sometimes surprised to find that it is home to production plants of some of the world’s leading manufacturers of a wide variety of goods, from microchips and currency to toys and precision engineering products. Many of these are in the network of industrial zones dotted around the islands in strategic locations mere minutes away from the air and seaports, carefully managed by INDIS, a dedicated state agency.

Established multinationals and start-ups alike are drawn by the islands’ central position, relatively low cost base, attractive tax regime, and the many incentives and opportunities for public-private collaboration extended by government, through Malta Enterprise and INDIS. All prospective investors sizing up Malta’s suitability for their plans would benefit from a conversation with Malta Enterprise, but for those involved in high value-added manufacturing, life sciences, and information technology, such discussions may prove particularly fruitful due to their alignment with the country’s strategy for economic development.

Malta’s International Investment Guide 2023

Malta’s highly educated workforce has made it especially attractive for pharmaceutical producers and other companies engaged in life sciences, with investment in this sector increasing continually. Recently enacted legislation regulating cannabis research and production for medical use has meanwhile opened new frontiers for innovators ready to take the plunge into this emerging field. The first movers are already profiting from the country’s forward-looking approach, with the first medicinal cannabis products made in Malta being exported in mid2022. Looking beyond the manufacturing sector, regulatory and policy efforts over the last two decades have seen aircraft-related services and software development, among others, join the economic mix, while service-based sectors like education and film have proven themselves resilient niches. The application of cutting-edge technologies like the Internet of Things and artificial intelligence to manufacturing and logistics processes are among the top priorities for the coming years. Capitalising on graduated investment in disparate sectors having the potential for synergistic development, Malta is sticking to its winning formula, with the only question being who, exactly, will come along for the ride. Photo: iStock

AN EXPORTORIENTED ENGINE DRIVING GROWTH

800 700 600 500 400

115

102

Machinery, mechanical appliances

Air and spacecraft parts

162 Fish

134

274 Printed material

Organic chemicals

410 Pharmaceuticals

136 612

Electronics

100

939

200

Toys, games, sports equipment

300

Fuels

Source: National Statistics Office

900

€ (in millions)

TOP EXPORTED GOODS (2021)

1,000

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Chapter 3: Industry

Local Insight Meet Andy Gatesy In 2021, Toly celebrated 50 years of operations in Malta. Led by Andy Gatesy, it provides a vast range of solutions and services catering to the packaging needs of the beauty and cosmetics industry. Toly is a global group with manufacturing plants in Malta, China, and South Korea, and sales offices across the US, Europe, and Asia. What role does Malta play in this global enterprise? Our holding company, Toly Group International, is based in Malta, and the country serves as our corporate office, with an integrated innovation centre. It is also the site of our largest individual plant – a 20,000 sq m factory rebuilt in 2019. Toly is successful in Malta because our core values are closely linked to the core values of the Maltese nation: People, Passion, Pride, and Creativity. We do not have a lot of natural resources here, so we need to be creative and use human capital to compete. We are now taking our Maltese entrepreneurial spirit and implanting it in the four corners of the Toly world. What support do local authorities offer manufacturers? Being a small island, we are all stakeholders in the success of Malta. The government is open to listen to both the challenges and opportunities for businesses, and will offer support within the framework of the European Union. Malta Enterprise is the main body to support manufacturing businesses like Toly, and through the 50 years that we have operated in Malta, they have supported our journey. We also work very closely with the local educational institutes, the University of Malta and MCAST, giving students the opportunity to collaborate with industry for the benefit of both parties. Transport issues are making life difficult for producers forming part of a global supply chain. How is Toly coping, and what role, if any, does Malta’s location play? We have no customers in Malta and very few suppliers, so all raw materials need to be imported, and once products are manufactured, they need to be exported, making transport critical to our business. There is a good structure for weekly exports to mainland Europe both by trailers and containers, and one advantage Malta has is that it has the second largest freeport in the Mediterranean, with direct routes from Asia. Toly uses this to its advantage, bringing products it manufactures

in Asia through Malta for transhipment to mainland Europe and beyond. We are also able to store shipments locally to give European customers shorter lead times, as well as conducting quality checks if necessary, effectively making Malta a logistics hub for Toly. Toly supplies leading names in the beauty industry. How accessible are such industry leaders for companies operating out of Malta? We have global functions based in Malta, supporting both our customers and sales offices internationally, but we also have local support in the key markets where we have our sales teams. Our hybrid model works well and is instrumental for our future growth, as we look to build upon our position as a global beauty product development platform focusing on strategic customer and supplier partnerships. Toly currently supplies 23 out of the top 30 beauty brands across the world, as well as the new emerging online and influencer brands, and we encourage our customers to visit us in Malta to touch both the Toly and Malta experience. Demand for specialised manufacturing continues to increase as shifting trends create more discerning consumers. What are the key opportunities in the field that investors could find Malta is best-placed to exploit? Historically Malta is an island of traders, so the mindset is open to international trade and business, and the quality of life is second to none. To be a successful manufacturer here you need to focus on added value production, tap into the creative resources of the Maltese nation, and consider the world as your market. Whilst Malta is a small country, take this as a strength, instead of as a weakness, and use the collective resources of all stakeholders. As a wise man once said: “If you want to go fast – go alone. But if you want to go far – go together.”

The Maltese mindset is open to international trade and business, and the quality of life is second to none.

Malta’s International Investment Guide 2023

Manufacturing

anufacturing accounts for one of the largest shares of foreign direct investment in Malta. Bucking the trend, felt across the European Union, of a declining productive sector, the country’s manufacturing industry has continued to register year-onyear growth, even during the pandemic. The authorities’ trademark open-door policy for investors and Malta’s strategic position, backed by a highly developed logistics infrastructure, make the islands an attractive prospect for high value-added export-oriented undertakings. The manufacturing landscape has changed significantly since Malta first attempted to lure textile companies away from the European continent with the promise of cheap land and labour, following its Independence in 1964. Today, the focus is on high-end processes requiring specialised knowledge and advanced technology, a result of the sector’s continual adaptation to global currents. Innovation is highly prized and well-supported, with companies finding willing partners in the University of Malta and the Malta College of Arts, Science and Technology (MCAST), which also bring to the table considerable expertise in making the most out of state and EU funds. A highly qualified and experienced workforce, various training incentives, and a dynamic academic accreditation regulator ensure that factories are manned by the right personnel, with the Maltese often praised for their diligence, drive, and creative approach to problem-solving. Although the country’s sustained economic growth has in recent years put pressure on the labour market, thanks to nearfull employment, this has been counterbalanced by its EU membership, allowing free movement of workers across European borders. Extra-EU labour has also increased over the last years, with waves of migrants arriving from all around the world, particularly from the Balkans, the Indian subcontinent, and the Philippines.

Although rising standards of living and low unemployment have left an impact on Malta’s price competitivity, it remains a low-cost place to do business by European standards, helped in part by generous government incentives and access to state-owned industrial space. Companies that have chosen to set up operations on the islands include industry leaders from the USA, the UK, Germany, France, and Italy, whose high standards are met and exceeded. Native production targets both the domestic and foreign markets, with several companies, particularly in the food and beverage business, enjoying good repute and market share in the region. On the other hand, foreign-controlled manufacturing is almost entirely destined for export. With its location in the centre of the Mediterranean, Malta sits on one of the world’s main shipping routes, offering producers excellent links to ports around the globe and making it an ideal regional hub for distribution to the European, Near Eastern, and North African markets. The logistics infrastructure is highly developed and modernised, with the latest digital technologies allowing for seamless transportation of even the most sensitive of products from the Maltese factory floor to their destination.

Made in Malta Playmobil figure. Photo: Rock’n Roll Monkey / Unsplash

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Chapter 3: Industry

Today, the manufacturing sector is highly diversified, with much of it dedicated to the production of components for, among others, the electronic, engineering, automobile, and chemical industries. Some of the main products and fields of operation of Malta-based manufacturers include: Semiconductors Circuit boards Switchgears Injection moulding and tooling Seals Medical devices Pharmaceuticals Precision engineering

Automotive components Boat components Security printing Toys and games Food and beverages Petrochemicals Various custom-engineered and applicationspecific small-batch products

Photo: stefanamer / iStock

Malta’s International Investment Guide 2023

Local Insight Meet Tony Cai Tony Cai is Chairman of ABA Chemicals, a Shenzhen Stock Exchange-listed (300261.SZ) corporation that in 2017 acquired the Malta-based Amino Chemicals from Dipharma Francis Srl and set up A2W Pharma Ltd, which is specialised in the research, development, and manufacturing of active substances derived from cannabis. In 2022, the company unveiled its new facilities, providing full end-to-end processing from raw material to bottling with chemical and stability testing capabilities. What were the key reasons for the choice of Malta as an operational base? Malta was one of the most obvious choices for ABA to invest in. We had other options around Europe, however, Malta provided an environment that few countries in the Union can claim to provide. For starters, the government and agencies involved in FDI are extremely helpful, very transparent, and committed. We received a lot of assistance with the registration process, and we did not encounter any serious issues with the due diligence process. We also found the authorities to have the right balance in being practical whilst adhering to the strictest EU and international standards. What benefits did ABA Chemicals obtain in acquiring a Maltabased company with 30 years of regulatory experience? ABA Chemicals has seen accelerated growth in the agrochemical sector thanks to reliable and consistent development and the support of major players in the global industry. Our plans to expand into the pharmaceutical sector, and to utilise our growing R&D expertise and facilities, brought about a need to have a strong presence in Europe, allowing for rapid expansion as well as inheriting valuable GMP experience. ABA Chemicals is now integrating the expertise and GMP culture into its own sites, whilst also investing in new facilities, in China, Malta, and beyond. How do you rate the ease of doing business in Malta? The reduced bureaucracy arising from the direct communication channels with authorities and institutions, whilst still complying with EU and international regulations, certainly makes Malta a good place to work in. Most importantly, the strength of the Malta Medicines Authority’s reputation, as well as its mutual recognition with the US FDA, makes our accreditation from Malta much more valuable than it would be in some other EU member states. The commitment by the MMA to maintain a high level of compliance and vigilance over its licensees whilst still managing to keep a very open channel of communication and a helpful approach makes Malta a very stable environment in which a pharmaceutical company can thrive.

What opportunities does the medical cannabis industry offer to established pharma players? Malta made the right move to regulate and allow R&D and manufacturing operations to take place so early. Medical cannabis is a loose term for a sector with huge potential. We see the innovation brought about by the efficacy trials of cannabidiol (CBD) against known central nervous system conditions as only the tip of the iceberg. ABA is committed to invest in this sector and to establish itself as a leading player in the pharmaceutical cannabinoid sector. What is different about investing in Malta when compared to investing in other jurisdictions? Investing in Malta represents a unique opportunity to invest in a European member state whilst still working in a truly international setting. Malta Enterprise provides numerous incentives to companies involved in scientific innovation and research, and rewards companies that invest in fixed assets or employment of additional staff. Malta’s second language is English, and Malta’s authorities are truly recognised worldwide. Its rating is one of the best in the financial world, despite recently going through some challenging times, and its government has proven to be one of the most stable and reliable in the whole Union. Its institutions are extremely welcoming to Chinese investors, and understand the benefits of having good relations with China. Diplomatic relations between the two countries are excellent, and this makes it much easier to invest in Malta in comparison to other countries.

Maltese institutions are extremely welcoming to Chinese investors, and understand the benefits of having good relations with China. 87

MaltaInvest2023

Chapter 3: Industry

Life Sciences and Pharmaceuticals

alta’s centuries-long tradition at the forefront of healthcare practice founded on excellence in education and training has rendered it fertile ground for life sciences undertakings requiring a workforce that is finely attuned to sensitive procedures. Today, the sector is deeply embedded into the country’s economic fabric through the biotechnological, chemical, and especially pharmaceutical industries, which benefit from the short distance to key markets, government support, and open dialogue between industry stakeholders and education providers aimed at developing the potential of the country’s human resources.

Production of Generics Firms engaged in the production of generic pharmaceuticals have proliferated, enticed by the enhanced speed-to-market made possible by Malta’s broad interpretation of the ‘Bolar exemption’. As one of the few European Union countries to fully recognise the research exemption of the Patent Cooperation Treaty and European Patent Convention, Malta allows for the development of generic drugs prior to patent expiry, if they are not commercialised. A generic drug can be manufactured, tested, and approved while the competitor’s patent is still in effect, enabling generic pharmaceutical companies to bring their product to market without delay upon the patent’s expiry. Maltese laws incorporate all obligations arising from the Convention, ensuring that property rights registered in Malta automatically extend to the territories of all other signatories.

Malta Medicines Authority Pharmaceutical manufacturers are licensed and monitored by the Malta Medicines Authority. Highly regarded domestically and internationally, it oversees operators’ compliance with Good Manufacturing Practices (GMP) while processing licences and authorisations for all medicinal products. In this latter role, it is also a global market player, competing with other jurisdictions to attract pharmaceutical companies to register their products in Malta for batch release, testing, and validation. As a European reference state, Maltese registration allows producers to market their products across the EU with a trusted seal of approval. More affordable alternatives exist, but this is one sector where cutting corners is not advised. While some states provide cheaper registration, many of these then charge an export tax on every unit exiting the country, whereas Malta charges no such tax, making it the preferred choice for large companies with a significant amount of exports.

Photo: Drew Hays / Unsplash

Malta’s International Investment Guide 2023

Life Sciences Park Located just outside Mater Dei Hospital (see p. 44), the Life Sciences Park is a state-of-the-art complex designed to facilitate research and development in the sector by allowing companies to commence operations with minimal preparation. As a life sciences hub closely connected to Malta’s main general and teaching hospital, and a short walk away from the University of Malta, it encourages organic synergies between operators and academia. The establishment includes and offers biology and chemistry lab spaces ranging in size from 100 sq m to 300 sq m, meeting rooms, and a secure basement capable of accommodating specialised activities, such as storage of flammable liquids and gases, as well as general and hazardous waste. Another building is dedicated to digital services, from imaging to software applications to data interpretation. Other facilities and services include gene sequencing and analytical services units, production of human proteins from genetically modified plants, cyclotron radionuclide production for PET screening, and clinical testing and reporting of new chemical entities (NCEs) and generics.

Health Education and Tourism Malta’s stellar quality of care is drawing increased interest from international clients looking for health treatments at competitive rates. Private operators receive patients from Europe and North Africa, with the use of English setting it apart from similar health tourism destinations. This field is growing, but contains an as yet small number of private clinics and hospitals. It therefore perhaps presents a tantalising opportunity for investors with experience in the sector. Another area Malta is actively nurturing is medical education targeted at international students. The recent opening of a campus of London University’s Queen Mary Barts and the London School of Medicine and Dentistry follows the lead of the University of Malta’s medical school in providing excellent training to hundreds of students hailing from five continents.

MaltaInvest2023

Photo: Tyler Franta / Unsplash

Chapter 3: Industry

Information Communication Technology

ne way Malta has overcome its size limitations is by investing heavily in information communication technology (ICT). No European country is as well-connected to the internet (see p. 45). Many ICT firms in Malta are of the small and medium variety, creating and managing specialised enterprise solutions for a wide range of industries, including financial services, healthcare, aviation, manufacturing, oil and gas, retail, and more. The design and implementation of tailormade software-based solutions is a crucial part of the 21st century economy, with more sectors and companies making the transition every year. Large IT enterprises also have a significant footprint in Malta. Whether directly or through local partners, practically all the most important players in global tech are active in the Maltese economy. Key to this success are the partnerships between educational and training academies, and industry. The University of Malta’s Faculty of ICT and MCAST’s ICT Institute have expanded significantly in recent years, and many global market leaders provide certification. Training and qualifications in Microsoft, Oracle, Adobe, Cisco, Amazon, Dell, VMWare, Google, and HP services can all be obtained in Malta. The country’s small size and diverse, connected population also make it an ideal test bed for new technologies prior to

their launch in the wider market, while a network of local data centres service companies from Malta and further afield. Additionally, privacy and security legislation is in line with EU practices, reducing bureaucratic and compliance costs. The capability of local companies is attested to by the increasing number of acquisitions by foreign firms keen to integrate the intellectual property and talent of Maltese firms into their portfolios. Investment in new technology is also ramping up, as Malta positions itself as a Mediterranean hub for companies engaged in research and development of artificial intelligence, the Internet of Things, and blockchain, taking advantage of networking opportunities presented by the presence of so many industries to which such solutions may be applied.

Gozo Gozo’s development is being tied to the twin digital and green revolutions, with special support measures and tax incentives available to investors who can contribute to these sectors. It is connected to the main island by two fibre optic cables, the second being launched in 2020 to introduce redundancy and put operators’ minds at ease. The island is promoting itself as a base for innovative entrepreneurs and technology-based companies, with attractive incentives available.

Malta’s International Investment Guide 2023

Local Insight Meet Renaldo Arciola Renaldo Arciola is the co-Founder and CEO of Fonicom, an IT systems integrator and managed systems solution provider with a presence in Malta, India, and The Netherlands. He has over 20 years of experience leading large-scale, cross-border technology projects for global enterprises. What are the benefits of operating in Malta for globally oriented IT enterprises? The benefits are many and varied. Malta offers a very favourable tax regime for IT enterprises, as well as a very well-educated and skilled workforce. There is also a very pro-business environment in Malta, which makes it an ideal location for setting up and expanding IT businesses. Additionally, Malta offers excellent infrastructure and is very well-connected to major markets and city centres around Europe and Africa, as well as being a member of the European Union and the Eurozone. What are your thoughts on the ease of doing business in Malta? Malta is an excellent jurisdiction for doing business. The process of incorporating a company is very straightforward and there are a number of excellent service providers that can offer support in setting up a business. Malta Enterprise is also a great resource for businesses, offering support in the form of grants, incentives, and other forms of assistance. The support from agencies such as Tech.MT and Gaming Malta is also excellent. The only area where it may be a little challenging to do business is in dealing with banks and financial institutions. What benefits can investors in the IT space expect when setting up in Malta? There are a number of synergies that investors setting up in Malta can expect to see. Firstly, Maltese law is favourable to online businesses and the country has a vibrant digital sector. Both the local and international IT sectors are growing rapidly in Malta. As a financial services hub and home to several multinational IT companies, Malta is well-positioned to support growth in the IT sector. The local IT sector is also well-developed, with a strong focus on product innovation and customer service. As a founder of a company with an international presence, what support did you find from local authorities in building operations and exporting services? There was no shortage of support from local authorities to build operations and export services. Government incentives in Malta are very attractive, with a number of tax benefits and subsidies available to businesses. We found the amount of red tape to be low compared to other countries, which made setting up and expanding our operations straightforward.

Fonicom has partnerships with Google, Microsoft, Dell, and Cisco, among a host of others. How accessible are such industry leaders for companies operating out of Malta? Very accessible. The kind of organisations setting up shop in Malta are typically global in their reach, so there are always plenty of opportunities for cross-collaboration. For example, our work with some of our partners involves managing and deploying the latest in cutting-edge technology, which is something that greatly interests the likes of global vendors. There are many synergies to be had, and we frequently find ourselves working with these companies on major projects. Big data and cloud computing are key growth sectors in the global economy. What are the key opportunities in the field that investors could find Malta is best-placed to exploit? Malta is well-positioned to capitalise on opportunities in the field of artificial intelligence, FinTech, RegTech, and esports. Malta has already established itself as a leading jurisdiction for FinTech, and has attracted several major players in the industry. The country is also home to a number of RegTech companies, which are helping to drive innovation in the regulatory space.

There is also a very probusiness environment in Malta, which makes it an ideal location for setting up and expanding IT businesses.

MaltaInvest2023

Chapter 3: Industry

Local Insight Meet Hocine Sidi-Said Kelix bio is a specialty generic business focused on emerging markets backed by the European Bank of Reconstruction and Development, British International Investments (formerly CDC), and Development Partners International. Chief Executive Hocine Sidi-Said, who has long experience at senior level with Pfizer, UCB, Axantia, and others, is overseeing the company’s €750 million investment in a bid to improve access to lifesaving drugs. Kelix was set up to be a ‘ground-breaking’, major pharmaceutical player in emerging markets. What particular segments is the company targeting? Kelix bio really aims to break the monopoly of multinational pharmaceutical companies on specialty generic pharmaceuticals that are in the public domain. More complex therapies, such as biosimilars, both in diabetes and oncology, and cytotoxics and other hospital injectables, often only have a single source of supply, or no localised supplier with the full spectrum of therapies. Our higher purpose is to widen access to these therapies for a broad range of markets that include Africa, Middle East, India, and other emerging market countries. If that means we need to break new ground, then we are happy to do that. Since its foundation in 2020, Kelix has gone on a spending spree, acquiring subsidiaries in India, Egypt, Morocco, and Malta. Where does Malta fit in this ambitious plan? Malta, unlike many of our investments, was actually a pleasant surprise. It was not on our radar prior to initiating the programme, as it was a subsidiary, two levels down, from an Italian generic firm that was looking to refocus on its core activities. We had always wanted to have an asset in a country that enjoys freedom to operate, but being able to combine that with a European jurisdiction was very compelling for Kelix bio. Through Malta, we intend to access many global emerging markets, including North Africa, South Africa, as well as other highly stringent emerging markets in Latin America and Southeast Asia. It remains a southern hemisphere strategy that is supported by Malta’s highquality infrastructure, its regulatory window, the quality of the actual manufacturing asset, and Kelix bio’s product portfolio and offering.

Malta is clearly a businessfriendly destination.

How easy was it to incorporate existing Maltese operations into a global enterprise? Integrating any operation into Kelix bio is always a challenging task, but such integration is considered as part of our evaluation and due diligence work. We have found an excellent partner in the Maltese government, the various agencies, including Malta Enterprise, the industrial estate where we operate, and the regulator, all of which have been supportive with specific initiatives to support our investments and operations in the country. What synergies with the local pharma sector are most beneficial to investors when setting up in Malta? Within Malta there is an ample ecosystem of market participants that lend critical mass to the biopharmaceutical manufacturing activities of Kelix bio – this existing infrastructure provides the efficiencies and network needed for success. What attraction does Malta hold for companies planning to tap into Africa’s growing markets? I would suggest three key metrics. First, the high standards of quality supported by the thorough requirements of any EU regulatory authority. Second, the efficient environment for operations and investment that allow for prices aligned with wider access. And third, the logistical and cultural proximity that Malta shares with patients. What were the key reasons for the choice of Malta as an operational base? Many factors make Malta a compelling location for Kelix bio, but the ones that stand out are the gold standard regulatory environment, the availability of talent, and the fact that Malta’s own public policy priorities align with the biopharmaceutical industry. What are your thoughts on the ease of doing business in Malta? Malta is clearly a business-friendly destination in terms of both private enterprise considerations – such as finding talented individuals to bolster our leadership there – as well as public engagement considerations – with the Maltese government, agencies, and regulator committed to enhancing Malta’s competitiveness in the global biopharmaceutical marketplace by investing time and resources in the development of the sector.

Malta’s International Investment Guide 2023

Areas of Growth

Grand Harbour overlooking the Three Cities. Photo: gkuna/ iStock

alta’s success is built on a widely diversified economy capable of accommodating a wide range of industries, all drawn to the many advantages the country provides. Investors looking for opportunity will find plenty of it in Malta.

The maritime servicing industry dates back centuries but continues to remain on top of trends. Ship building and repair, chandlery, bunkering, and financing are thriving sectors with room for growth, while Malta’s recent emergence as the world’s number one jurisdiction for the registration of superyachts (see p. 200) creates new possibilities for investment. Compared to the maritime tradition, aircraft servicing remains in its infancy in Malta. Operations involved in aircraft maintenance and refitting have found the island to be a welcoming, cost-effective home, with the aviation park on the fringes of Malta International Airport getting busier by the year. Services-based sectors like education and film servicing are also being developed. Students can obtain prestigious degrees from British universities thanks to partnerships with local operators. Distance learning offers numerous benefits for international students, with Malta’s relative affordability proving a key attraction, as are the pleasant climate and excellent lifestyle offering.

As for film, Malta and Gozo have welcomed global superstars working on iconic productions for decades. Fans of the classics will remember Midnight Express (1978) and Popeye (1980), both shot in Malta, though it was arguably Gladiator (2000) that really showed the country’s growing expertise and versatility. Since then, Malta has been used as the setting for everything from romantic dramas (By The Sea, 2015) to terrorist attacks (13 Hours, 2016), a zombie invasion (World War Z, 2013) to a black market island trading in dinosaurs (Jurassic World Dominion, 2022). Of note is the use of several Maltese locations for the acclaimed HBO series Game of Thrones, with many fans of the show undertaking a pilgrimage to the islands to experience the beautiful settings for themselves. Supporting such productions is a generous rebate of up to 40 per cent on a long list of qualifying expenditure, operated by the Malta Film Commission, which also offers tax credits and coproduction arrangements. Meanwhile, local crews used to working on blockbusters with some of the most exacting directors in the business stand ready to provide their exceptional services, no matter the size of the production. What should be clear by now is that the sky is the limit for those who understand how to capitalise on the prospects Malta can offer. It is a unique destination for investment, shaped by history and political and economic leadership to become what it is today: a fast-moving vehicle headed to the future. Hop in.

MaltaInvest2023

Chapter 3: Industry

Shaped by legacy... Shaping the future

Malta Government Investments, a sovereign holding company owned by the government of Malta, is committed to maximising legacy assets and setting the stage for future developments by making the most of Malta’s unique economic, cultural, and geographic position.

he warm welcome foreigners receive in Malta is often cited as a priceless asset that reaps significant dividends. Descriptions of the Maltese as friendly, kind, and generous have Biblical roots, with St Paul’s shipwreck on the island then known as Melita etching these qualities into the historical record as well as the country’s DNA. This positive disposition is glaringly evident to anyone who visits the island, be it for tourism or business purposes, and serves to create an environment that is uniquely suited to international investment.

Photo: viewingmalta.com

Malta’s International Investment Guide 2023

Malta is an English-speaking member of the European Union with strong ties to the United Kingdom and the Commonwealth. Regionally, Malta’s position as a node of economic and cultural exchange is enhanced by its native language, Maltese, a Semitic language retaining many words and structures from the classical Arabic off which it branched a thousand years ago. The country’s international standing as a deal-broker is further exemplified in its being the first in Western Europe to initiate high-level diplomatic relations with China, and, most notably, as the setting of the historic meeting between United States President George H.W. Bush and Soviet Union leader Mikhail Gorbachev, which brought the Cold War to a peaceful end. The geographic position in the middle of the Mediterranean, at the crossroads of north and south, east and west, its distinct historical development, and its commitment to active neutrality, as enshrined in its Constitution, all contribute to making Malta a place where people from all over feel truly at home – crucial for the smooth proceedings and productive outcomes of multilateral discussions. The launch, in early 2022, of a platform for dialogue and collaboration between sovereign investment stakeholders, shows the benefits Malta brings to the table. The Malta-based European, Middle East and North Africa Sovereign Wealth Funds Collaborative Network (EMENA Network), brings together France’s Bpifrance, the Sovereign Fund of Egypt, and Malta Government Investments (MGI) to discuss co-investment opportunities and share investment risk in the region. Other sovereign wealth funds, including Spain’s Compañía Española de Financiación del Desarrollo (Cofides) and Greece’s Growthfund, will become members or endorsers in the coming future. Each signatory’s long experience in the region means that each has developed an acute understanding of the particular opportunities and challenges represented in the Mediterranean. This localised knowledge is necessary to attain economic growth and stability while trying to correct economic disparities and encourage and enhance private sector investment.

MaltaInvest2023

Chapter 3: Industry

The network aims to crowd in sovereign fund-backed capital that will help unlock significant private investment flows to derisk and fund projects or companies in the EMENA area, that has an investment funding gap of $650-850 billion, with a special focus on green technology, sustainable development, SMEs, and innovation. Its ambitions were on display at the signing of the agreement, attended by high-level delegations from Kuwait, Morocco, the United Arab Emirates, and Italy, in addition to financial and advisory institutions. At the heart of Malta’s evolution into a destination conducive to the coordination of multi-investor international action is MGI, the sovereign holding vehicle that owns many of the state’s corporate assets. By capitalising on the good relations Malta has with all players, MGI is leading the country’s transition to a centre of excellence in governance and financial capability. Through its subsidiaries, MGI is active in many of Malta’s economic sectors. Gozo Channel, for example, provides passenger and RoRo cargo transport between Malta’s northernmost tip, Ċirkewwa, and Gozo’s Mġarr Harbour. In 2019 alone, it ferried almost six million passengers between the islands. Other MGI subsidiaries include Malta Air Traffic Services, which provides services to around 70,000 flights crossing the Mediterranean every year, and WasteServ, the country’s waste management solutions provider. One of its most critical holdings is Petromal, which, through the Enemed brand, is the leading choice in the local fuel distribution market, is a major player in the aviation fuel and diesel markets, and plays a key role in the regional oil trade through its bunkering and storage leasing services. MGI is also involved in the storage and transhipment of grain (Kordin Grain Terminal), the financing of films and other audiovisual products (Film Finance Malta), regeneration projects (Grand Harbour Regeneration Corporation), and tech investment (Malta Government Technology Investments). While most of its holdings are owned outright, MGI is a minority partner in Malta Dairy Products, the largest player in Malta’s agricultural sector. Its Benna line, which includes all kinds of milk

products, from traditional cheeselets to modern takes on iconic milkshakes, is such a beloved local staple that a small change in price can make national headlines. This co-investment model is one that MGI is exploring further, actively seeking to set up instruments in the private equity and venture capital space to maximise Malta’s potential.

Malta’s International Investment Guide 2023

Founders and entrepreneurs already benefit from a growing ecosystem of public and private support. Malta Enterprise offers several grants and tax credits to innovative enterprises, or ones involved in national priority areas. Malta Development Bank meanwhile offers loan guarantees, and Malta Investment Management Company Ltd (better known as MIMCOL) has a seed investment scheme for start-ups. Companies can also

avail themselves of subsidised office space, soft loans, and mentorship programmes. What has been missing thus far, however, is reliable financing to take a developed and market-ready idea to the next step – and this is the equity gap that MGI is planning to fill. In line with the government’s policy, MGI has been invited to explore alternative instruments like fund of funds activities that would allow it to invest in a start-up and exit, at a profit, when the time is right. The start-up equity tool will fill a void and complement other national entities’ schemes, with a preference for high valueadded knowledge-based sectors like gaming, video games, FinTech, InsurTech, medical technology, green technology, and initiatives for the blue economy. This direct entry into the equity space by MGI will foster an environment that nourishes innovation and supports disruption. The whole basket of tools the Maltese government is putting at the disposal of entrepreneurs therefore offers founders, Maltese as well as foreign ones, a compelling reason to set up a base in Malta. Malta’s offering in the start-up space is enhanced by the lifestyle opportunities that have proven so attractive to the gaming industry, and the small size of the country and the authorities’ hands-on approach mean that entrepreneurs and investors alike can feel valued – in Malta, no one is ‘just a number’. In fulfilling its mandate, MGI applies a measured, prudent, but unshakeably proactive approach evidenced by its work in safeguarding, modernising, and optimising legacy assets central to the functioning of the country. This approach puts it in good stead to act as a financier in its own right, operating on every level – as the final piece of the puzzle for the local start-up ecosystem, as a partner for companies requiring a capital injection for their plans for expansion, and as a coordinator and participant in regional sovereign investments with peers of a global standing. Writing the story of Malta’s economic success has always been a collaborative effort. As the next chapter of this narrative unfolds, MGI is taking a leading role. All that is left to decide is – are you ready to be a co-author of Malta’s exciting future?

MaltaInvest2023

Chapter 3: Industry Technology

“When we know we can do something completely new and different, we just go for it” Ivan Montik, SOFTSWISS Founder

From an IT outsourcing start-up to the innovative software provider for iGaming projects… today SOFTSWISS is the leading company offering top-notch solutions for online gambling worldwide. Ivan Montik, the Founder of SOFTSWISS, discusses building a strong brand in the dynamic industry.

SOFTSWISS is now expanding its presence in the Maltese market. What opportunities do you see for developing business in the region? I’m really impressed by the rapid development that the Maltese market has been experiencing in the last couple of years. The country has developed from being just an international financial centre into a real technology hub and a very attractive investment spot for many IT companies like ours. SOFTSWISS has been present in Malta since 2017 and we have significantly expanded our business on the island. Initially, our presence was aimed at using the Maltese iGaming licence for operation in other European countries. Now, the role of our Maltese office is different for SOFTSWISS. It’s more of a legal hub which facilitates our expansion into the new markets and strengthens our international presence. Although we have offices in many countries including Poland and Georgia, and our 1,500 employees are geographically distributed over a wide area, I see our Maltese office as the main headquarters of the SOFTSWISS Group in the future. The country hosts a huge number of talented minds and promising

Malta’s International Investment Guide 2023

start-ups. It opens perfect opportunities for social networking and as a result, you get a wide pool of business ideas. As a company which puts innovation at the forefront of our business strategy, we are open for interesting investment projects and co-founding opportunities. Malta is the perfect place for that. You have turned an outsourcing start-up into a company that has become the industry leader. What criteria do you use to decide what products and services to invest in? Our main criteria are innovation and technological know-how. I see SOFTSWISS primarily as a technology company rather than an online entertainment business, and we only choose projects which give scope for imagination in technical design and implementation. We took it as a personal challenge to create the SOFTSWISS Online Casino Platform without having any prior experience in the industry. It resulted in a product which was very complicated in terms of software engineering and required profound understanding of FinTech, experience in high-load system development, and user behaviour analysis, knowledge of marketing tools, etc. We put this puzzle together and the final result did not just meet but exceeded the expectations of the industry. When we know we can do something completely new and different, we just go for it. We also welcome and are eager to invest in start-ups which promote technological innovation, many of those now emerging in Malta. It usually turns out to be rewarding from the financial perspective, too. SOFTSWISS’s mission is to change the entertainment industry through tech innovation. In your opinion, what are the most significant changes that have taken place over the last five years? What did SOFTSWISS contribute to this process? Over the last five years, the industry has become ever more demanding with regard to the overall quality of iGaming software and games, to their performance and the possibilities that they open for effective business management and growth. The products that SOFTSWISS has launched in the last five years have been aimed at meeting those rising demands, but they have also shaped market trends. The Casino Platform has evolved over time to become the most stable and reliable one among competitors. Our Game Aggregator works under incredibly high loads and processes over 8 billion bets per month. The SOFTSWISS Jackpot Aggregator has no analogues on the market. Finally, one of the most significant

I see our Maltese office as the main headquarters of the SOFTSWISS Group in the future.

trends that we launched back in 2013, our cryptocurrency solution, has now reached the minds of the market. Our expertise in the area is in high demand. What’s the next stage in the company’s development? Do you have innovative ideas in your plan that can become trailblazing for the market? Our plan is full of innovative ideas. We will keep enhancing our products with new and unique functionality. Our game studios also have something to present to the industry: the unique game graphics compression algorithm is patent pending and the world’s largest game providers have already shown an interest to use it in their products. Besides, we have scheduled a tremendous upgrade of the whole SOFTSWISS Group for the beginning of 2023, which will send ripples throughout the industry and bring our operation to a whole new level.

SOFTSWISS is an international iGaming company supplying certified software solutions for managing online gambling projects. The expert team, which counts 1,500 employees, is based in Malta, Poland, Georgia, and Belarus. SOFTSWISS holds a number of gaming licences and provides one-stopshop iGaming software solutions. The company has a vast product portfolio, including the Online Casino Platform, the Game Aggregator with thousands of casino games, the Affilka Affiliate Platform, the Sportsbook Platform, and the Jackpot Aggregator. In 2013 SOFTSWISS was the first in the world to introduce a bitcoin-optimised online casino solution. www.softswiss.com order@softswiss.com

MaltaInvest

Chapter 4

Financial Services

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 4: Financial Services

Overview

re you looking for a safe place to park your wealth? A launching pad for international investments? Is your company exploring options for cost-effective reinsurance? Or are you perhaps searching for somewhere to set up an operational base for your FinTech project? Whatever your money needs, you can bet every bit of it that you will find what you need in Malta’s thriving financial services market. Investors can make use of a wide array of products and services suited to every need, guided by a multitude of experienced service providers in a competitive market backed by an accessible regulator, situated in a stable

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Eurozone economy with full access to European markets and close ties to regional as well as global economies. The comprehensive legal framework has provisions for specialised use cases, while attractive tax benefits, incentives for investment, and a moderate cost base mean that, trite as it may sound, the old cliché that “so many people can’t be wrong” does hold water when it comes to Malta’s position as a hub for financial services. Private individuals, wealth managers, and company executives choose Malta for many different reasons. A person selecting Malta as their preferred domicile for luxury assets does not have the same interests as a Fortune 100 multinationall choosing to set up a Maltese insurance subsidiary, and both have little in common with

Malta’s International Investment Guide 2023

Photo: Malta Financial Services Authority

a fledgling enterprise whose innovative AI-based offering promises to disrupt traditional finance, a multi-family office expanding to Europe, or a bank seeking to diversify its operational footprint. The common thread running through the Maltese financial sector’s phenomenal success over the last three decades lies in its commitment to security, progress, and exceptional service. Underpinning the industry’s growth, one finds a regulatory regime that ensures the highest levels of protection without stifling innovation, crafted by receptive authorities keen to facilitate investment by constructing novel legislative frameworks. A wealth management hub with a difference, the country is also a lifestyle destination with several residency options (see p. 136), while costs remain considerably lower than those of other well-established financial hubs, allowing it to stand out as a significant and competitive jurisdiction. That Malta offers a compelling alternative to better-known financial centres is certain. For what, exactly, that could mean for you, read on.

and international partners to maintain its credibility. Customers can further rest assured that their money is safe thanks to a separate and autonomous body, the Arbiter for Financial Services, which mediates, investigates, and adjudicates complaints for customers against financial services providers. Meanwhile, the country’s push to establish itself at the forefront of the blockchain revolution has led to the establishment of the Malta Digital Innovation Authority, the first regulator of its kind in the world, certifying Distributed Ledger Technology platforms and smart contracts while handling the voluntary registration of technology arrangements.

A Credible Reputation Long considered a jurisdiction with compliance requirements that go above and beyond those requested by other countries, Malta’s exit from the FATF grey list in record time cemented its reputation as a top performer. It is now well-positioned to capitalise on its beefed-up compliance framework that marks it as one of the safest places to hold wealth globally. The Malta Financial Services Authority (MFSA), the regulator for the full spectrum of financial services, keeps a watchful eye on licensed enterprises, and works closely with them as well as with law enforcement

Photo: Luigi Muscat Filletti / Unsplash

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Chapter 4: Financial Services

Unparalleled International Access As a European Union member state, Malta allows companies with financial products and services licensed by the MFSA the possibility to “passport” their offerings to all other EU countries. This grants companies access to every national market in the EU with minimal operational and bureaucratic costs, while helping to maintain investor confidence in high regulatory standards. Other elements, more nebulous, often overlooked, but no less salient, provide additional advantages. These include its geographical location, its native Semitic language and official use of English, its Constitutional neutrality, its membership of the Commonwealth and the OECD, and its track record as a fair participant in international affairs and provider of aid to those in need. Known as a friend to all, Malta offers the possibility of open communication unburdened by historical grievances and biased perceptions. By allowing every party to feel comfortable and at ease, a Maltese setting or domicile acts as a lubricant for the relational gears of investment negotiations to turn freely.

A Mature, Forward-Looking Industry The financial services sector’s gross value added has increased by an average of 7.7 per cent every year since 2010, and today accounts for roughly 10 per cent of Malta’s GDP while employing some 5 per cent of its workforce. Its important role in reducing the country’s dependence on tourism was thrown into relief during the Covid-19 pandemic-disrupted 2020, when it continued to grow as several other sectors ground to a halt. The sector also plays an important role by contributing to net exports, leading to a consistent current account surplus. As at mid-2022, there were over 500 investment funds with over €17 billion under administration domiciled in Malta, with Maltese fund administrators additionally managing over 200 funds domiciled abroad with a net asset value of over €5 billion. There are around 25 banks with operations in the country, some 50 financial institutions, and over 40 payment providers, while pension and insurance activities appear to be growing at an even faster rate than other financial services, particularly following Brexit.

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Authorities’ proactive approach to regulation has resulted in legislation that provides for a broad and flexible range of investment and corporate vehicles suited to a broad range of uses. A number of these, like the various protected cell structures, are unique in Europe. In recent years, Malta has made a mark as a hub for innovative financial services and solutions as FinTech and digital-first companies are attracted to its trailblazing regulatory outlook. Among other developments, the country rolled out the world’s first holistic regulatory framework for Virtual Financial Assets and Distributed Ledger Technologies. In terms of investor service providers, the top seven international audit and advisory networks all have a presence in Malta, along with a number of smaller players, while practically all of the islands’ major law firms have specialised departments for financial matters.

Tax Benefits Malta-based operations can benefit from one of the lowest effective tax rates in Europe, thanks to a tax refund system for corporate shareholders (see p. 64). Malta also has over 70 double taxation agreements in place with other countries, including the United States (see p. 246), while nationals of countries not covered by a specific treaty are eligible for unilateral tax relief (see p. 64). More information on the particular provisions relevant to financial services is provided in the following sections, but to best consider how Malta’s tax regime can be of benefit to you, it is advised to consult a tax professional.

Malta’s International Investment Guide 2023

Local Insight Meet Tonio Zarb Tonio Zarb is the President of the Institute of Financial Services Practitioners (IFSP), sits on Finance Malta’s Board of Governors, and has previously served as President of the Malta Institute of Accountants. His 32-year career with KPMG Malta was largely spent leading the firm’s advisory function, eventually serving as Senior Partner between 2012 and 2020. He remains with the firm as a consultant and advisory engagement leader. What attractions does Malta hold for investors in the field of finance? In line with the global evolution in the financial services industry, Malta has evolved into a completely transparent jurisdiction both in terms of beneficial ownership as well as with respect to the clarity of its laws and regulatory framework. The country has a solid legal and regulatory infrastructure in all sectors of the financial services industry, with a competent and accessible regulator. For instance, Malta is the only EU member state with Protected Cell Company legislation in place. These innovative and cost-efficient structures have enabled further growth, particularly in the insurance sector. Malta is a lower cost jurisdiction when compared with most other financial centres, with a favourable fiscal regime complemented by a cadre of highly knowledgeable, multilingual professionals with substantial expertise built over decades. It is also an attractive location for expatriate professionals and executives given its enviable location in southern Europe, its Mediterranean climate and lifestyle, and its unique culture. How has Malta’s financial services infrastructure impacted the island’s economy and contributed to the success story of other local sectors? Financial services and infrastructure directly and indirectly impact most other sectors in Malta. The IFSP, together with the Malta Institute of Taxation and the Malta Institute of Accountants, recently commissioned a survey to quantify the key role Malta’s financial services sector plays in the island’s economy. This report showed that, in 2019, the EFIS sector directly generated 19 per cent of the total value added of the economy, as well as 22,200 jobs – equivalent to 10 per cent of the economy’s total. To other sectors outside of financial services, the EFIS sector also had an estimated impact of €194 million of value added and a further 4,700 jobs. How does Malta’s financial services sector help prospective investors through their investment journey on the island? Malta has a mature, well-established professional financial services community, with a variety of accounting and legal firms, as well as corporate services providers (the latter are also regulated and supervised). These firms help familiarise incoming investors with Maltese laws and infrastructure, and assist them in implementation.

They play a key role in advising potential investors on the best way to steer their individual needs by providing advice on the regulatory framework, assisting with licensing applications, and helping clients navigate the tax system. In addition, foreign-owned firms also often opt to use the outsourcing services of the professional and other specialised financial services providers, such as fund administrators and insurance managers. What types of investment or elements of the global financial system are best suited to Malta’s financial services sector? Malta has had success across a broad range of financial servicesrelated business, from insurance, asset management, and securitisation to other financial services evolving into e-money service providers and FinTech. For instance, Malta continues to be an attractive EU captive domicile for large international groups, particularly in view of the proportionate risk-based regulatory approach, as well as other benefits, such as the Protected Cell Company structures mentioned earlier. What key advice would you offer to prospective investors? Visit the island! Particularly for their first meeting, potential investors should visit Malta for two to three days, both to meet their professional advisors and regulators, according to their needs, and to get the vibe of the island. Often, that is enough for investors and professionals to extend their visit from a few days to a few decades!

Malta is a lower cost jurisdiction when compared with most other financial centres.

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MaltaInvest2023

Chapter 4: Financial Services

Investment Funds

alta’s investment industry is one of the largest within the broader financial services sector, and is growing rapidly, registering the largest percentage increase in assets under management in Europe in 2021. Over 500 investment funds with a total aggregate value of almost €18 billion are licensed in Malta, attracted by the country’s positioning as the home of fund managers and administrators, while providing an environment that is welcoming to smaller funds and start-ups. A key pillar of this attractiveness is the ability to benefit from a wide range of innovative and flexible investment vehicles and services at relatively low cost while remaining fully onshore within a regulated and constantly evolving EU jurisdiction. The country’s success in establishing itself as a preferred jurisdiction for investment funds is due to a number of factors, including: Easy access to European markets. A dynamic and approachable regulator with a high standard of compliance, yet open to innovation. A time-sensitive approach to the processing of licence applications. Highly efficient re-domiciliation procedures for funds from other financial centres. Service provider flexibility, with local fund administrators not generally required. Possibility of adopting a self-managed structure. Protected cell company legislation allowing for the creation of ring-fenced holdings within a legal entity.

Malta’s comprehensive framework provides fund promoters with a wide choice of potential set-ups catering for a broad range of investment strategies to suit the needs of every type of investor. The nature, structure, and operation of each fund will depend on the purpose and objectives of that specific fund, including the classification of the investor, the type and duration of investment, and the level of risk incurred. Before diving into the vast array of options available to anyone wishing to establish a collective investment scheme in Malta, it is important to note that the local industry is not limited to the establishment of collective schemes, but extends also to the outsourcing of fund administration, compliance, regulatory reporting, and entire back and middle office services. Thanks to the wealth of international expertise developed over the last decades, Malta’s asset management and servicing providers are known for their sophistication and commitment, presenting a cost-competitive solution for fund administration.

Photo: Nikola Jovanovic / Unsplash

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Local Insight Meet Manfred Galdes A lawyer by profession, Dr Manfred Galdes is the Managing Partner at professional services provider ARQ. He has held top roles in the area of regulatory and AML compliance in both the private and public sectors, including an eight-year tenure leading the FIAU, Malta’s financial intelligence unit and principal AML supervisory authority. What benefits might businesses and individual investors gain by adopting Malta as their domicile? The maturity of the sector, the ecosystem that has been built over the past 30 years, as well as the re-established trust in our regulatory bodies. What an investor wants is peace of mind, legal certainty, stability, robust regulation, and the ability to rely on affordable professionals of the highest quality. Access to the European passport for financial services and the application of the single EU Rulebook contribute substantially to that legal certainty and peace of mind. Does any particular success story of a company capitalising on Malta’s financial services infrastructure spring to mind? I’ve witnessed so many of these over the past 22 years that I don’t know where to start. Perhaps I can mention the potential acquisition that we’re working on right now, which somehow epitomises the growth potential that the island offers through its licensing regime, sound regulatory infrastructure, and the reassurances that these give to investors. In this case, a payment service provider that obtained authorisation around seven years ago is now attracting the interest of one of the world’s largest operators in the field after registering remarkable year-on-year growth. I’ve seen the same happen in other sectors of our financial services industry, and it all goes to show that the combination of a Maltese licence and the European legislative framework is a hallmark of investor confidence.

The combination of a Malta licence and the European legislative framework is a hallmark of investor confidence.

How is Malta reacting to the reputational threat presented by its brief stint on the FATF grey list? We must use every opportunity that comes our way to make it clear that there is only one way of doing business in Malta, and that is the right way. The compliance standards in place today are among the highest in all of Europe and the supervisory authorities have not shied away from imposing hefty penalties where this was necessary. Entry criteria are steep, the expected level of conduct is beyond high, and prudential supervision leaves no room for complacency, allowing our international partners to remain confident about our integrity and commitment. What are the first steps anyone thinking of investing in Malta should consider? A potential investor will only take this step if there is confidence in the regulatory framework and the level of supervision, awareness of the benefits of passporting rights, and clear growth potential. These factors all need to be considered when a business plan is being drawn up. Queries relating to licence conditions, tax consequences, applicability of certain norms, technical requirements, and resourcing are best addressed through the engagement of local professionals at the earliest stage of the process. Which elements of the global financial system are most likely to find Malta to be a good fit for their needs? Malta has various success stories to relay. When it comes to managed services in industries such as insurance and funds, we have been extremely successful and can compete with the most accomplished jurisdictions. The same can be said for the establishment of payment institutions operating from Malta. What opportunities do you see ahead for Malta’s financial services sector? The overhaul of the country’s compliance infrastructure and the strengthening of all its preventative mechanisms could actually be an unmissable opportunity. With some more effort, we can start to be perceived as a leading country where compliance standards are concerned. There are opportunities in the development of FinTech and RegTech using artificial intelligence and other innovative technologies, as well as in the broader area of compliance support services. Especially when one considers that a single rulebook for financial services has emerged within the EU, which is now being extended to AML/CFT, it is high time to look at the possibility of exporting our high standards overseas.

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Local Insight Meet Christian Gravina Founded in 2017, GCS Malta has established itself as a leading corporate services firm offering a one-stopshop solution for audit, payroll, tax advisory, and more. Founder and CEO Christian Gravina has also sat on the Council of the Malta Institute of Accountants. What are the main elements making Malta such an attractive financial jurisdiction? Without a doubt, Malta’s popularity rests on three legs: the tax system, the location, and EU membership. Companies based in Malta have full access to EU markets, which the country has capitalised on, particularly following Brexit.

Apart from the headline tax optimisation attraction of the full imputation system, what lesser-known tax benefits do foreign investors make most use of? New arrivals to Malta are always pleasantly surprised to find that their shareholdings may be sold without incurring any capital gains tax or stamp duty.

Can you highlight a particular success story of a company that was able to capitalise on Malta’s financial services infrastructure? Since the financial services sector is well-developed, foreign companies tend to find that most of their needs can be met efficiently and cost-effectively. One of our clients, an online platform, has its parent listed in Poland, but uses Malta as its main country of doing business thanks to the wide array of competitive services on offer, including payment institutions and back-office systems.

What does getting off the FATF grey list in record time mean for Malta’s financial services sector? The news that the FATF voted to remove Malta from its grey list of countries is very good, and shows that Malta has upped its game and beefed up enforcement. This will serve to make Malta more attractive since this means that we have strengthened our weak points and managed to come back stronger. We have had clients with a Maltese company address see their foreign banking relationship suspended, so putting this behind us is a big step forward.

Realistically, no country can be suited for every single type of investment. Which elements of the global economy are most likely to find Malta to be a good fit for their needs? I would say the shipping and aviation industries are now a very good example of this. We have various Air Operator Certified-businesses set up in Malta, along with an increasing number of specialised shipping management companies. The success of these sectors in Malta is already well-recognised, with outsized ship and aircraft registers that enjoy an excellent reputation and offer considerable opportunity.

What are the first steps anyone thinking of investing in Malta should consider? I believe that they should be aware of their regulatory obligations, which are often taken for granted. Also, they should make sure that they engage a service provider that can assist them all along the way.

Foreign companies tend to find that most of their needs can be met efficiently and cost-effectively.

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MONEY MATTERS Total net asset value of funds domiciled in Malta

Management of Malta-domiciled funds

€9.5B

€15.1B

€17.7B

19.3%

June 2017

June 2019

June 2021

Number of funds by type of licence

110

44.2% 36.5%

Managed in Malta Self-managed Managed from outside Malta

5 116

Source: MFSA. Data corresponds to June 2021 figures.

Administration of Malta-domiciled funds

11.2%

282 88.8% PIF UCITS

AIF

Non UCITS

Recognised Private CIS

Source: MFSA. Data corresponds to June 2021 figures.

Administered in Malta Administered from outside Malta Maltese fund administrators also service over 200 funds with a NAV of over €5 billion that are not domiciled in Malta. Source: MFSA. Data corresponds to June 2021 figures.

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Legal Structures Fund managers may choose from a number of legal structures serving as vehicles for a variety of fund types. These may be corporate or noncorporate bodies, with each structure having specific characteristics which may make it more suitable for particular investment strategies. Investment companies The most common vehicles utilised for the formation and registration of Collective Investment Schemes (CIS) are investment companies with distinct juridical personality. These come in two forms: investment companies with variable share capital, known as SICAVs (the name is drawn from the tried-and-tested structure popular in Luxembourg); and investment companies with fixed share capital, known as an INVCOs. Differences between SICAVs and INVCOs Whereas INVCOs are limited to mainly investing in securities, SICAV funds may be used to invest in securities and in other movable and immovable property. Therefore, when used by Professional Investment Funds (see p. 118), which are allowed a relatively free hand by the MFSA, SICAVs can prove to be highly flexible vehicles allowing for a wide variety of investment strategies. INVCOs are more restrictive, being prohibited from holding more than 15 per cent of the value of their investments in any company other than an investment company with fixed share capital, from distribution of the company’s capital profits, and from retaining more than 15 per cent of their income. Umbrella and multi-class investment companies Both SICAVs and INVCOs may be constituted as umbrella or multifund companies including different sub-funds. Such umbrella funds can have their share capital divided into the different sub-funds, with their assets and liabilities ring-fenced as patrimony separate from those of other sub-funds within the company. By employing this structure, shareholders in each of the different sub-funds will benefit from varying returns, depending on the performance of each particular sub-fund, irrespective of the performance of another. Additionally, investment companies with multiple classes of shares with different characteristics but no separate patrimony are also provided for. This allows for the creation of highly flexible structures allowing a single entity to pursue a wide variety of investment objectives and business models. For example, a fund can have one sub-fund following a high-risk strategy with two classes having different fee structures, and another sub-fund following a low-risk strategy with various classes having their NAVs calculated with different frequencies. The flexibility afforded is such that different

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Marsamxett Harbour. Photo: Freeartist / iStock

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sub-funds could have different managers following very different strategies. When such umbrella funds’ sub-funds are set up as PIFs, the minimum investment threshold may be applied on a per scheme instead of a per sub-fund basis. This means that an investor may hold less than the minimum in a particular sub-fund as long as their total holding in the scheme is at or above the threshold. Limited partnerships Another secure, flexible, and globally recognised structure attractive to fund promoters is the limited partnership, or partnership en commandite, where the majority of members are passive investors with limited liability – a set-up particularly popular with private equity and venture capital. A limited partnership is considered (and needs to be licensed as) a collective vehicle when the nature of its business is limited to investment in securities and other assets. Partners may be general or limited partners, with the latter’s liability limited to their investment. General partners are bound by certain fiduciary obligations, but do not need to be licensed in their own right unless they are providing management services to the partnership. Often, they delegate specific functions to fund managers and administrators. Importantly, general partners are jointly and severally liable for the debts of the partnership without limitation. In practice, Malta-incorporated limited liability companies typically occupy this role, enhancing the fund’s local substance, although this is not a requirement. Just like corporate structures, limited partnerships may be set up with variable or fixed share capital, which may or may not be divided into shares, and they may also have different classes of shares, issue fractional shares, and can include different sub-funds denominated, if required, into different currencies. Sub-funds may also have their assets and liabilities segregated from those of other sub-funds within the limited partnership. Limited partnerships may also accept noncash contributions from investors. As is the case with other types of companies, the partnership must maintain a registered office in Malta, where it must keep a register of the limited partners. Limited partnerships issuing shares are effectively subject to the same rules as SICAVs, with the main difference being the replacement of a board of directors with at least one general partner. They are also subject to the same tax rules as companies (see p. 64). Where the capital is not divided into shares, the partnership is deemed to be tax transparent, with income and capital gains arising from the fund taxed according to investors’ tax status and residence. For partners who are

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not resident and not domiciled in Malta, only the share of income attributable to Maltese sources is subject to tax, with foreign-source partnership income falling outside the scope of Maltese tax rules. While tax transparency may be desirable in some cases, most of the attractions of the Maltese tax code, like the refund system, are limited to companies. Limited partnerships may therefore elect to be considered as companies, allowing shareholders to benefit from Malta’s advantageous tax regime. Unit trusts A unit trust is defined as the merger of resources of investors which have been entrusted to a third person, who has legal title over them, so that they may benefit from any profits or income arising from the acquisition, holding, management, or disposal of any type of property. The core purpose is the pooling of funds in order to access substantive investment opportunities which would otherwise be out of their reach. A unit trust must have both a trust manager and a trustee, with the former tasked with securing a profit for the beneficiaries and the latter ensuring that the manager is adhering to the trust’s investment objectives and safeguarding its assets. Unit trusts are regulated as collective investment schemes, and can be seen as commercial trusts which allow investors to obtain direct access to wealth creation and profits without having to abide

by the more onerous obligations companies (such as SICAVs) must adhere to. They can also be structured to be tax-transparent, which may be particularly attractive in certain cases, such as when underlying assets held by the unit trust are subject to high withholding taxes in the country of issue. Contractual funds Common contractual funds, or mutual funds, are another form of collective investment scheme licensed and regulated by the MFSA. A mutual fund is set up by a deed of constitution, and can be structured as an open-ended or closed-ended scheme. Importantly, contractual funds do not have a separate legal personality, and therefore require a custodian in whose name the assets are to be held. However, the liability of each unit holder is limited to the value of their investment, and the contractual fund’s assets are deemed to be separate and distinct from the property of its unit holders, manager, or custodian, shielding them from creditors’ claims. Depending on the precise provisions laid down in the deed of constitution, Maltese mutual fund holders may opt to establish a company (typically a SICAV) to act as a special investment vehicle holding assets on behalf of the fund, and may also be constituted as multi-class or multi-fund schemes, with the possibility of denominating different classes of units in different currencies or allocating to each sub-fund its own assets and liabilities. Incorporated Cell Companies Initially designed for the insurance industry (see p. 127), the cell company structure was later extended to the fund sector. As the first EU jurisdiction to introduce Incorporated Cell Companies (ICCs), Malta now has years of experience working with the innovative legal structure, which offers fund promoters several distinct benefits. These can be grouped in two, with the two types of ICCs reflecting the different uses. First, a SICAV ICC enhances the segregation of assets and liabilities provided for in other vehicles through multi-fund set-ups by endowing each incorporated cell (IC) under the umbrella of the ICC with separate legal and juridical personality. Thus, whereas a SICAV with multiple sub-funds is nonetheless a single legal entity, when established as an ICC, each sub-fund can transact in its own name. The strong demand by fund promoters for a flexible structure that may be used as a vehicle to set up investment platforms led to the

Photo: Jaanus Jagomägi / Unsplash

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The Three Cities. Photo: user32212 / Pixabay

development of the second type of ICC, particularly popular among small managers and start-up funds – the Recognised Incorporated Cell Company (RICC). This is a limited liability company providing purely administrative services to incorporated cells within the cluster. The RICC can therefore accommodate a platform model comprising an ICC providing, for example, contractual and start-up support to any number of ICs. This relationship does not mean that ICs are subsidiaries of the RICC, and in fact each IC, having separate legal personality, needs to be duly licensed as a collective investment scheme in its own right. The RICC itself does not require such licence, but is required to obtain a Recognition Certificate from the MFSA.

Types of Funds The Malta Investment Services Act provides for a number of Collective Investment Schemes (CIS). When taken in combination with the variety of legal structures, the result is a vast array of options that can be designed to target any kind of investor. Although regulated to different degrees, all are monitored by the Malta Financial Services Authority, which is responsible for their licensing and ongoing supervision. Collective investment schemes may be open to the general public (retail) or restricted to companies, financial institutions, or qualified investors (non-retail). Retirement schemes (pension funds) are also provided for in the legislation.

Undertakings for the Collective Investment in Transferable Securities (UCITS) UCITS schemes are a form of mutual fund licensed in accordance with the EU’s UCITS Directive. Such schemes benefit from passporting rights within the bloc, and can therefore be freely marketed across Europe and their units distributed cross-border under a harmonised regulatory regime. Their global reputation as a high-quality and well-regulated investment product with significant levels of investor protection has also seen them become the investment vehicle of choice for extra-EU fund managers looking to tap European capital markets, since European investors prefer to invest in EU-domiciled funds regulated by trusted institutions, like the MFSA. UCITS can also be marketed globally, further reducing the regulatory and cost burden, making them popular among fund managers from all over the world. For example, a fund manager opting to set up a UCITS investing in Asian securities in Malta gains access to the entire European market while being simultaneously able to market the fund in Asia itself, without the need to create a new investment vehicle for each country. Externally managed funds require a minimum initial capital of €125,000, rising to €300,000 for self-managed ones (which must have at least one Maltese person involved). Malta-based UCITS schemes can be very tax-efficient, being

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exempt from Maltese income tax as long as more than 85 per cent of their underlying assets are situated outside the country, from any tax on their net asset value, from withholding tax on dividends paid to nonMaltese residents or capital gains tax on sale of units by the same, and from stamp duty on the issue or transfer of units. Alternative Investment Funds (AIF) Investment funds that do not qualify as a UCITS fall under the EU’s Alternative Investment Fund Manager Directive (AIFMD), which lays down provisions such as requirements for leverage limits, fund risk profiles, and portfolio liquidity. These funds must appoint a Maltese custodian and at least one Maltese director, and can be used for all kinds of investment strategies covering all asset classes. They have been used to set up hedge funds, venture capital, private equity funds, and real estate funds. AIFs also benefit from passporting rights, allowing them to be managed and marketed across the EU, either directly or via a local branch. When targeted towards retail investors (Retail AIFs, or RAIFs), the AIFMD imposes additional investment and borrowing provisions. Initial capital requirements are the same as for UCITS. A relatively recent addition to Malta’s portfolio of fund types is the Notified AIF (NAIF). Introduced in 2016, the NAIF regime is designed to fast-track market access by allowing AIF managers to assume full responsibility, thereby exempting such funds from authorisation or approval by the MFSA as well as from ongoing supervision. This means that NAIFs can start operations as little as 10 days from submission of their notification to the regulator. Notified AIFs cannot be self-managed, and can only offer their units to professional or qualifying investors, for a minimum investment of €100,000 (or its currency equivalent). Despite the brief period they have been available for, NAIFs today account for more than one in 10 of all funds registered in Malta, being recognised as a compelling route to market for smaller and emerging fund managers. Professional Investor Funds (PIF) PIFs are investment funds for particular categories of high-net-worth investors bound by a lighter and more flexible regulatory regime. The PIF licence is the fund type most widely adopted in Malta, being used extensively for investment in non-traditional instruments as well as complex asset classes, such as private equity, derivatives, real estate, traded endowment plans, and virtual currencies. These funds may be self-managed, and are particularly suited for funds sold internationally on a private placement basis (they do not benefit from EU passporting rights). Fund managers that may find this set-up especially attractive

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include those with less than €100 million, or €500 million if leveraged, in assets under management, and therefore falling under the AIF de minimis rules, managers based outside the EU, and self-managed funds that fall below the threshold of the AIFMD. Investors in PIFs must invest at least €100,000 in the scheme, and must have a net asset value or net worth of over €750,000, unless they are a senior employee or director of a service provider to the PIF.

Malta’s International Investment Guide 2023

Taxation of Funds Thoughtfully constructed collective investment schemes registered in Malta offer significant opportunities for tax optimisation. Provisions in the legislation allow for a multiplicity of options depending on the legal structure used, the sources of income, and the domicile of the scheme, its underlying assets, and its shareholders. For tax purposes, funds or sub-funds of a locally licensed collective investment scheme are classed as prescribed or non-prescribed

funds. The former must be incorporated in Malta and make a written declaration to the Commissioner of Inland Revenue that at least 85 per cent of the value of their underlying assets are or will be held in Malta. All other set-ups, from Maltese funds having over 15 per cent of their assets situated outside the country to funds registered in an overseas scheme, are non-prescribed. Whereas non-prescribed funds are exempt from all tax except for income generated by immovable property in Malta, prescribed funds are subject to and can benefit from the advantages afforded by Malta’s tax code. The latter are subject to tax at source, or withholding tax, on local bank interest (15 per cent) and investment income arising from certain Maltese securities, such as bonds issued by the Maltese government or local companies (10 per cent), and on local real estate income (see p. 163), but all other income, including income from foreign sources and dividends or capital gains derived from other investment vehicles, is tax exempt. Malta does not levy tax on any scheme’s net asset value, nor is there stamp duty or VAT on share and unit issues or transfers by licensed funds or their investors. Fund management and administration services are also exempt from VAT. The attraction Malta holds as an investment fund jurisdiction is further apparent when considering taxation at the level of fund investors. Nonresidents are exempt from tax on dividends and capital gains from the transfer of units in any fund, while residents are subject to a 15 per cent withholding tax on dividends from any fund’s foreign sourced income, and when fund profits are not taxed at fund level, these are taxed at the same rate. When profits are taxed at fund level (at the standard 35 per cent corporate income tax), however, the full imputation system and the tax refund system (see p. 64) come into play, allowing for an effective tax rate of 5 per cent, which can be further reduced by applying a Notional Interest Deduction. Taken in combination with the country’s extensive list of double taxation agreements (see p. 246) and its unilateral tax relief system (see p. 64), Malta emerges as a uniquely enticing domicile for funds of all kinds.

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Private Wealth

igh-net-worth individuals and families looking for a cost-effective European domicile for their assets quickly find that Malta satisfies all the criteria for a safe and practical wealth management centre. Catering for the most diverse personal and business needs, from succession planning to investment advisory to luxury asset management, Maltese service providers have a proven track record in structuring customised solutions for all levels of wealth, and are also increasingly being turned to by family offices and wealth managers abroad as outsourced partners for back-office services. The most popular investment vehicle is the Professional Investor Fund (see p. 118), while those looking to safeguard their assets, whether stocks, bonds, art, heirlooms, real estate, or anything else, may be more interested in Malta’s trusts and foundations. Some asset management companies have even launched fund platforms open exclusively to family offices and other wealth management providers as an efficient route to enter the market, while the synergies afforded by Malta’s position as a hub of financial services and emerging technologies can be exploited to the full. The multitude of possibilities on offer allow Malta to remain a go-to jurisdiction for those seeking tailor-made arrangements for the management of their wealth.

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Malta is one of few states to offer both trusts and foundations, which are desirable for many reasons. They can be used to manage risk or as a ward against the impacts of political instability, as well as of course for succession and estate planning, and to minimise tax exposure. The structures may also be used for the securitisation of assets, corporate financing, to shield assets from creditors’ claims, and to hold real estate, not to mention charity. Trusts and foundations broadly offer the same features, with a few important differences. The framework allows for a high degree of pliability, with private trust companies and complex configurations involving multiple structures also possible, while trusts can also be converted to a foundation, and vice-versa. As with any wealth and estate planning, the starting point is to understand what the rules are, and then establish how you can use them to your benefit. Here is what you need to know about the differences between the two, although it is important to bear in mind that flexibility is the real name of the game, with much depending on the original terms included. The bottom line, however, is that Maltese foundations are typically suited to a greater variety of goals and purposes.

Malta’s International Investment Guide 2023

Trusts

Foundations No legal personality. No registration required (no fees). Settlor may also be a beneficiary. Settlor renounces ownership and control of assets held in trust. Assets held and managed by trustee, ring-fenced from their personal property. Trustee must act in accordance with terms of the trust. Terms may only be amended if the original terms provide for it. Property may only be added in line with the terms of the trust. Administrator is only bound to divulge information about the trust to the settlor as per the terms of the trust. Trusts may be regulated by the jurisdiction of the settlor’s choice, and foreign trusts are fully recognised. Tax-transparent for non-residents.

A juridical person with separate legal personality. Registered with the Malta Business Registry (fees vary from €350 to €1,747). Administration controls but does not hold foundation property. Founder retains a level of control over the foundation’s administration. Founder may amend foundation deed and add or remove beneficiaries. Founder may be the administrator as well as a beneficiary. Endowments may be added to a foundation at any time. Founder retains full rights to information about the foundation’s performance. Can be set up for the fulfilment of a particular purpose or for the benefit of specified persons. Cannot be established to carry on commercial activities, but can: Hold commercial property or shareholding, franchises, trademarks, ships, and other assets. Be used as a collective investment vehicle or for securitisation transactions. Treated like a company for tax purposes and therefore subject to tax on worldwide income (see p. 63 for the potential benefits), unless opting to be taxed under trust rules (therefore becoming tax-transparent).

Luxury Assets and Residency Options Another element of Malta’s wealth management offering is its highly competitive framework for the registration of ships, such as superyachts, and aircraft. Its location as a strategic port of call, extensive VAT incentives, and excellent marina and airport infrastructure make it an attractive holding jurisdiction for such assets. Turn to the relevant chapter (p. 200) for more information on the country’s dedicated solutions in these areas.

Photo: Chris Leipelt / Unsplash

High-net-worth individuals also find that there are considerable benefits to becoming part of Malta’s growing cosmopolitan community, with several routes available to those wishing to make the country their home away from home. A full rundown of the schemes available and the attractions on offer may be found in the chapter dedicated to residency (see p. 136).

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Banking, FinTech and Virtual Finance

alta has long been a jurisdiction of choice for savvy financial players. Thanks to recent efforts to tighten its compliance framework, together with foresighted regulation of emerging fields and a native proficiency in both finance and tech, the Maltese financial sector today finds itself in pole position as a major stakeholder in the sweeping changes affecting the global industry. From the rise of electronic payment solutions to the sometimes baffling, often rocky, but always fascinating frontiers of crypto, new developments find a warm reception in Malta’s sun-bleached shores. There is much to attract traditional institutions too, whether that is the potential as a launching pad for investment in Africa’s growing economy or from where non-EU finance companies can penetrate the European market, or as a taxefficient jurisdiction in which banks can concentrate their activities in areas like trade and project finance. Many factors contribute to Malta’s continued success in this sector. Although the world of finance is increasingly digital, geography is not unimportant, and the country’s location in the middle of Mediterranean at the crossroads of the affluent parts of Europe and the Middle East, and the rapidly developing Eastern Europe and North and subSaharan Africa make it a convenient springboard for many outfits with an international focus. As a European Union member state, investors can rest assured of the highest standards of legal protection as well as full access to European markets. Many of the attractions noted elsewhere, like a stable political environment and economy, promarket tendencies, and an English-proficient workforce, are just as, if not more, important in the financial sector. These jurisdictional assets

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are coupled with a well-developed financial support infrastructure that is ready to assist every kind of investment. Due to the highly regulated landscape, investors in this sector are encouraged to bring on board Maltese service providers to ensure beneficial and fully compliant set-ups. Such service providers typically offer a holistic service, from actuarial services to audit to merger and acquisition advice. Many foreign investors, impressed by the acumen shown by local companies, go on to use their services in other ventures. Sharp operators were quick to realise and take advantage of the opportunities created by the remarkable economic and population growth experienced in recent years. The number of commercial banks, for example, has ballooned from just four at the turn of the millennium to some 25 today, along with a host of other licensed credit and payments institutions. Even with such a rapid influx of financial players, the sector is nowhere near saturation point, with several niches ripe for investment. These include, among many others, custodian banks, project finance, and FinTech initiatives, the last of which are bolstered with special regulatory frameworks and dedicated institutions.

Malta’s International Investment Guide 2023

Valletta. Photo: Joseph Buhagiar / Unsplash

Banking on Tradition Credit for Malta’s position as a financial hub is due in large part to the sound approaches taken by its banks, which are among the safest and most liquid in Europe, allowing them to weather the financial and debt crises of a decade ago and allowing the country to emerge unscathed, cementing its reputation among the safest jurisdictions. Banking legislation is founded on EU precepts and compliant with the Basel Core Principles, while supervision is conducted by the MFSA (or the European Central Bank in the case of the largest and most structurally important ones). The liberalisation of the banking sector in the late 20th century resulted in an influx of foreign operations setting up a base in Malta. Attracted by the country’s moderate operating costs, EU passporting rights, and the excellent quality of public and private service offered to the industry, around 25 banks and 50 financial institutions are today located in Malta, with many involved in specialist services supporting their parent banks, such as concentration of activities in areas like trade or project

finance, syndicated loans, and investment banking, often holding executive responsibility for specialised areas of their group’s global operations. Banks have always been at the heart of Malta’s economic development, and there is no shortage of opportunities for banks servicing the domestic market, with some market segments remaining under-served by current offerings, particularly smaller corporate clients and those active in areas deemed to be highrisk. Wealth management, investment services, and maritime and aviation finance are other fields prospective investors will find full of opportunity.

Digital Futures Investors looking at Malta today see a hotbed of innovation, with a cluster of operations involved in the cutting edge of contemporary developments in digital financial solutions. The islands are home to a rapidly increasing number of enterprises involved in FinTech, RegTech, InsurTech, PayTech, and Distributed Ledger Technology

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(DLT), better known as blockchain. These digital-first initiatives are drawn to Malta’s supportive stance towards technologies that have the potential of defining the next generation of finance, perhaps best exemplified with it being the first jurisdiction worldwide to set up a dedicated DLT framework. The government is also carefully monitoring the evolution of artificial intelligence, the Internet of Things (which has seen a number of significant applications in the domestic market), and quantum technologies, with the aim of identifying policy, regulatory, and fiscal measures to strengthen its appeal as a hub for foreign investment in these emerging sectors. The country’s value proposition for investors in these fields is further enhanced by the MFSA’s recent launch of a new regulatory sandbox, providing a controlled environment for the testing of innovative technologically-enabled business models, applications, processes, or services. Malta’s experience in developing a global, tech-based industry (see p. 180) and its position as a fast-growing financial centre makes it an attractive base for entrepreneurs seeking a dynamic operational hub in close proximity to contractors and investors. The islands’ lifestyle offerings provide ample networking opportunities, making it easy for connections and collaborations to spring up. Its small population with a large proportion of expats (around 20 per cent), offering a good representation of customers from around the world, also makes it an ideal testing ground for new products and services before their eventual introduction abroad. Meanwhile, established companies seeking economical solutions are often willing partners to new entrants, creating exciting opportunities for companies disrupting segments such as payments, insurance, investment, and compliance. New operations will find a wealth of talent in both tech and finance, while skill gaps can be plugged efficiently through specialised schemes (see p. 38). Service providers are also familiar and well-attuned to the particular needs of finance- and tech-related operations, ensuring that a vibrant and creative cluster of talent and know-how is in place to help companies manage and grow their operations.

Blockchain Malta’s pitch to blockchain entrepreneurs includes one of the world’s few dedicated regulatory frameworks for Distributed Ledger Technology (DLT), Initial Coin Offerings (ICO), and virtual currencies, along with a new regulatory authority – the Malta Digital Innovation Authority (MDIA). Both the legislation and the authority were the first of their kind globally. The MDIA is tasked with certifying DLT platforms and smart contracts while handling the voluntary registration of technology arrangements. It works hand in hand with the MFSA, which licenses and supervises virtual financial assets exchanges, with the aim of bringing order to a previously unregulated market to ensure consumer protection and market integrity. These factors have drawn a number of blockchain and cryptocurrency players to set up operations in Malta, from some of the largest and most well-established in search of the legitimacy and protection afforded by a regulated EU jurisdiction, to start-ups looking for an environment conducive to their growth.

Photo: Jeremy Bezanger / Unsplash

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Local Insight Meet Angelo Dalli Angelo Dalli is an artificial intelligence expert and serial tech entrepreneur combining deep technical ability with commercial acumen. He has founded nine start-ups, been involved in four IPOs/M&As, and invested in over 40 successful companies in the technology, entertainment, and FinTech industries. His most recent endeavour is UMNAI, a deeptech, AI-focused solutions provider. What makes Malta an ideal place to set up a business involved in new financial technology? The strong presence of financial institutions and related operators, such as FinTech companies and neobanks, creates an attractive ecosystem for start-ups in the field. Then there are all the other reasons for investors’ interest in Malta, not specific to the FinTech space. The taxation system, a stable political and economic environment, and the fact that English is the primary business language make Malta an attractive jurisdiction. The financial regulator, the MFSA, also has extensive experience in regulating the sector, allowing for a practical approach towards setting up new businesses and operating current ones. What should investors unfamiliar with the local start-up scene keep in mind when choosing Malta as a base? Malta has an advanced economy and a population with a high standard of education. Although remote work is increasingly making physical location less important, the quality of life and the surroundings, coupled with the stable economy and practical commercial laws, make it attractive as a base. Various incentives are available, and the local angel investor network in Malta, Business Angels Malta, can also help investors navigate the Maltese start-up scene. What developments do you see in the European future-tech market? The European FinTech market, with its strong emphasis on regulation, privacy, and data sovereignty, is poised to be a model for the rest of the world. The upcoming AI Act, which will bring about EU-wide regulation of AI, focuses on technology applications that have a direct impact on citizen’s lives – and financial services are obviously one of those services. The fact that the EU is regulating such activities

and addressing widespread concerns about tech companies that sometimes overreach in their control and use of their own clients’ data is a positive evolution of the European FinTech landscape. I envisage that the end result will be more trusted applications that protect people’s rights to control their own data and the way that it is utilised. What is UMNAI all about, and how important is Malta’s support to its development? UMNAI is focusing on creating a new Hybrid Intelligence framework for financial services operators and financial technology companies that provides AI solutions with trustworthiness, auditability, and transparency in mind. One of the main problems with modern AI is that the basis of its decision making process cannot be fully understood with absolute certainty, making it problematic from a regulatory point of view. With this in mind, UMNAI has invested millions into the creation of a new type of AI technology through our innovation team in Malta. The experience we had with support from Malta Enterprise and relatively easy access to the right decision makers highlights the appeal Malta has for such FinTech businesses. The support received also enabled UMNAI to successfully file over 21 patents in AI in the EU, the US, and Taiwan, with a number already granted. Which elements in the emerging fields of new technology could find Malta to be a good fit for their needs? Malta can be a good fit for activities that depend on small teams of reasonably qualified people, for example, in providing customer support and for developing niche applications. The regulatory sandbox environments available from the MDIA can also help small development teams test and iterate software solutions rapidly, and export them successfully to other jurisdictions.

The support from Malta Enterprise and relatively easy access to the right decision makers highlight the appeal Malta has for FinTech businesses.

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Insurance

alta is home to a significant number of Fortune 100 multinationals’ insurance undertakings, reinsurance companies, intermediaries, and cells, attracted by its robust regulatory framework, competitive operating costs, and innovative structures, particularly Protected and Incorporated Cell Companies. These allow firms, insurance managers, and brokers to write risks through cells within a core company and provide businesses with a cost-effective ring-fencing mechanism as an alternative to setting up a stand-alone insurance company. The Maltese licence allows companies to write business in any other EU country, making insurance a dynamic growth industry within the wider financial services sector, with most companies selling insurance to clients outside of Malta. Authorities’ recognition of the growing importance of insurance-linked securities and catastrophe bonds, and the convergence of reinsurance and capital markets, ensures it will continue to make significant strides in the international insurance market. Insurance companies in Malta provide all types of cover, ranging from personal, health, property, motor, and travel to liability and employee protection, and investors can find a number of insurance management companies handling cover for large corporations and providing reinsurance solutions, ranging from well-known international names to boutique establishments offering

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Photo: Gajus / iStock

operational and managerial support to third parties. The industry boasts a workforce of over 1,200 people, backed by specialised practitioners within audit, advisory, and legal services providers, and public investment is ongoing to keep Malta at the forefront of the global sector through the development of a vibrant InsurTech cluster where insurers and tech companies can utilise Malta’s cell company framework to test and implement blockchain solutions, smart contracts, artificial intelligence, and machine learning. The country’s insurance framework provides for three types of insurance companies. These are the standalone insurance or reinsurance (captive) company, cells within Protected Cell Companies, and cells within Incorporated Cell Companies.

Cell Company Legislation Malta has been at the forefront of the introduction of cell companies in the European Union, and to date remains the only member state providing for the set-up of the innovative structures. The initial Protected Cell Company (PCC) legislation was further developed over time, as Malta brought to market the Incorporated Cell Company (ICC) structure (see p. 114), further diversifying its product offering. Cell companies proffer a number of distinct advantages, being highly cost-effective, quick to set up, and extraordinarily flexible. Effectively, insurance undertakings utilising these structures can have one corporate vehicle with numerous cells, with the assets and liabilities of each cell being segregated from the core company and other cells. In a PCC, the core assets are exposed to the liabilities of the underlying cells, whereas the core assets of an ICC structure are shielded from such claims. In both cases, only one licence is required, allowing the core to take on the responsibility of the management of the overall entity, including compliance, with the attendant cost benefits, thus enabling the transfer of insurance risk to institutional investors and providing corporations with the flexibility to develop new risk financing solutions. They also allow for the sharing of resources between the core and the different

cells, such as human resources, making their economies of scale ideal for a number of uses. These may include start-ups lacking the financial requirements to set up their own insurance business, non-insurance corporations seeking an efficient way to tap into the insurance expertise of the dedicated professionals managing the core, or large insurance groups looking to consolidate various operations while maintaining strict segregation between different parts of their portfolio. Although both PCCs and ICCs can be cost-effective alternatives to setting up a stand-alone captive insurance company, users will find particular advantages in both. PCCs are structured as a single legal entity, whereas each cell in an ICC is a separate registered company with complete autonomy. Thus, while a PCC structure enables the pooling of resources to meet capital and solvency legal requirements, each cell in an ICC needs to meet all such requirements by itself. As financial stakeholders of all kinds become increasingly aware of the advantages offered by cell structures, the sector is poised to continue its rapid expansion – with Malta leading the way.

Reinsurance, CAT Bonds and the ILS Market In recognition of the growing importance of insurance-linked securities (ILS) and the convergence of reinsurance and capital markets, Malta has also enacted legislation providing for the formation of Reinsurance Special Purpose Vehicles (RSPVs) and Securitisation Cell Companies (SCCs). RSPVs can be used by an insurance or reinsurance undertaking to cede risk by funding its potential liabilities through the capital markets, while SCCs involve the establishment of a segregated cell for the purpose. Such set-ups are popular for catastrophe bond issues (CAT) and longevity risk transfer transactions, for example, with the main benefits emerging from their application as cost-effective programme or platform structures if repeat transactions are envisaged.

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Finding Success in Succession with Family Values As Francis J. Vassallo & Associates approaches its 25th anniversary, Founder and Chairman Francis J. Vassallo and his daughter, CEO Adriana Camillieri Vassallo, share how their family business success story thrives upon a culture of relationships – not just among the close-knit team but with their clients too.

peak to any member of the Francis J. Vassallo & Associates (FJVA) team – or indeed, stroll into the company’s offices in Qormi, Malta – and one thing becomes clear: the warm, family-like atmosphere at FJVA is the air the company breathes. Family values run deep here. Set up as a company services provider in 1998 by Francis J. Vassallo and his daughter Adriana Camilleri Vassallo, FJVA has since expanded both its range of solution-based services and its team to more

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than 80 professionals proudly working under the FJVA banner, including Mr Vassallo’s daughter Adriana Camilleri Vassallo – now CEO – and son Steffan Vassallo, who works in the group’s Luxembourg office. As the company marks its 25th anniversary in 2023, it continues to adapt to the change in leadership following the successful transition between father and daughter. Yet while the person at the helm may have changed, the values at the heart of FJVA are as solid as ever.

Malta’s International Investment Guide 2023

Photos: Bernard Polidano

Although our leadership style is different and authentic to us as individuals, our values are the same and our mission statement lived by everyone.

“Our four pillars are efficiency, ethics, relationship management, and mutual growth and success for both clients and staff – a mission statement I am proud that we have never had to revise in our soon to be 25 years of operation,” says Ms Camilleri Vassallo. “One of the challenges of our growth process was maintaining the family environment which is a fundamental part of the FJVA culture. Ours is a culture of relationships, with our clients and between everyone at FJVA. Our culture is aligned in every Partner, every team member, and in all we do.”

“I treat all our staff as if they were my children – and I never realised I had so many children!” adds Mr Vassallo with a laugh, sharing how the family spirit at FJVA extends into work events and personal celebrations. We say ‘grow with us’ and most of our Partners have done exactly that over the years. In fact, one of our Partners just celebrated 20 years with the company. Mr Vassallo shares the words of wisdom that became his cornerstone for half a century: “Before leaving

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Malta to join Chase Manhattan Bank in Milan, my father gave me two pieces of advice. The first was to be nice to the people you meet on the way up, because you will meet them on the way down,” he goes on. “The second was that a man has two assets he can pass onto his children that no government can ever tax: integrity and knowledge. These are the values I have passed down to my children and everyone at FJVA. We instil a culture of ethics and invest heavily in staff training, not just to develop their careers, but also to ingrain these ideas into the company culture.”

need arises. It is an approach borne of his own decades of experience. Born in Mdina, Malta, he graduated in economics in 1970 and made the move to Milan to join the Chase Manhattan Bank (now called JP Morgan Chase following a merger in 2000). His career with Chase saw Mr Vassallo move often, to destinations including New York, the Dominican Republic, London, Spain, and Switzerland. Whilst at Chase, he was approached by the Prime Minister of Malta with the offer of an appointment as Governor of the Central Bank of Malta, to adapt Malta’s financial and banking system in preparation for EU accession.

The inclusive and innovative atmosphere even extended, prepandemic, into opening a childcare centre within the FJVA building – and ensured that, through the Covid-19 crisis, all team members kept their position with no reduction in their salary.

“Once my term of office had ended after four years, I decided to set up my own financial services company,” Mr Vassallo recalls. “At that time, Adriana was working with a Big Four company. We started as a small service provider with a private banking approach, organised as if it were a subsidiary of Chase, with an international way of doing business – and we grew thanks to our positive international reputation.”

At FJVA, Mr Vassallo explains, ‘solution-based services’ means Partners keep in constant touch with clients, offering solutions as the

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Today, the FJVA Group is an independent group of companies run by the Vassallo family and other Partners as a close-knit family business, with experts across various disciplines who offer a high quality, bespoke range of services to multinationals, family offices, and private clients the world over. Plus, FJVA can offer clients one other service aspect drawn from personal experience: the art of transition from one generation to the next. “Although I was officially appointed as FJVA CEO in 2019, I had been acting CEO for two years beforehand and geared towards the position throughout my career,” Ms Camilleri Vassallo explains. “However, the title itself is not important – it is about leading by example, creating equal opportunities, and prioritising purpose over profit. Positive influence, positive impact, always.” She explains that, due to Mr Vassallo’s postings in different countries whilst at Chase, she and her siblings lived in multiple global destinations throughout their formative years. Today, this hands-on international experience affords the next generation CEO the same open-minded, culturally aware business sense of her father – yet her leadership style is very much her own, she admits. “I officially became CEO a few months before the pandemic hit. Thankfully, we had already embarked on a digital transformation project, investing heavily in this area.” Although both admit that the journey towards succession was challenging at times, Mr Vassallo, now as Chairman of the Group, remains a self-professed workaholic, but also fills his time with charitable pursuits. “Our transition process meant learning from each other and growing together,” Ms Camilleri Vassallo highlights. “Although our leadership style is different and authentic to us as individuals, our values are the same and our mission statement lived by everyone.” Sharing that the future holds more internationalisation for FJVA, Mr Vassallo signs off with his hope for his legacy at the family firm. “Malta 25 years ago is not what it is today, and it will keep on changing. I would like my grandchildren to say that the firm has grown whilst retaining the same values it has had from inception.” More information is available at www.fjvassallo.com

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Chapter 5

Residency

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MaltaInvest2023

Chapter 5: Residency

Overview

alta presents a paradox that has bewitched outsiders for millennia. Peripheral, yet fully integrated. Calm, but thriving. Secure, and nonetheless full of excitement. Home to some of the world’s most ancient wonders and most modern industries, and a population whose pride in its deep-rooted traditions is matched only by its progressive outlook. A rich history that has endowed it with a Semitic language, Southern European heritage, and a British Imperial legacy. A European Union member state with a global outlook situated in the heart of the Mediterranean Sea. From the Ancient Roman aristocrats seeking reprieve from the hustle and bustle of Rome to the sons of early modern Europe’s leading families starting life anew as members of the Order of St John, those with wealth and influence have long considered the islands as a second home. Often described as a melting pot of people, ideas, and cultures, there is no denying that Malta’s liminality makes it a place like no other. Today, many of the elements that make Malta such an attractive place to conduct business also make it ideal for those seeking alternative residence for professional or investment purposes, or as a retirement destination, while the Maltese passport is considered among the world’s most valuable. Its ability to weather international economic turmoil can partly be attributed to its stable political climate, with the two major political parties’ congruent approach to socio-economic issues allowing the government of the day plenty of flexibility to take adaptive measures promptly and effectively. Theft and violence are largely restricted to isolated cases and are uncommon to the point that their occurrence, even when petty, generates considerable column inches, taken as an affront to the country’s stellar reputation for safety. In what is becoming an increasingly fraught security environment, it is also pertinent to note that Malta is a pacifist state that has relegated militarism to a historical curiosity, adapted its naval infrastructure to civilian and commercial use, and enshrined neutrality in its Constitution. The climate is mild to hot, with average daytime temperatures ranging from 32°C in August, the hottest month, to 17°C in the coldest one, January. Malta’s heavy emphasis on tourism means that there is no shortage of establishments and services to help you enjoy the sunshine that radiates over the islands for 300 days a year, whether you prefer to chill by the pool of a luxury resort, take over a private villa, or charter

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Sliema. Photo: Karina Movsesyan / iStock

a yacht and spend time out at sea. More active types may prefer to go diving or take part in water sport activities, and the lush countryside provides ample hiking opportunities with stunning vistas. Meanwhile, those interested in cultural activities will be pleased to know that the calendar is packed with high-quality events aimed at both domestic and international audiences, while the young, or young at heart, will find a thriving party scene that has become a fixture on the tour dates of popular as well as underground artists. Such lifestyle activities are also at the heart of Malta’s relational way of doing business, creating myriad networking opportunities for those looking to immerse themselves in the islands’ community. All this takes place against the backdrop of a breathtaking architectural landscape boasting three UNESCO World Heritage Sites and countless other attractions related to the country’s chequered history, which has led to Malta being dubbed an open-air museum. A maturing cosmopolitan culture has also seen an explosion in quality culinary establishments offering a wide range of regional and global

Malta’s International Investment Guide 2023

cuisines, a number of which have been lauded by the Michelin Guide. The health facilities are of the highest standard, as are many of the schools, including two that largely serve the expat community, meeting the needs of young families and retirees alike. New arrivals tend to adapt quickly, thanks to the ubiquitous use of English, recognised as an official language spoken by practically everyone, and to the locals’ friendly and welcoming disposition to outsiders. The large number of foreign nationals who have come to call the islands home has also spurred the development of an ecosystem of legal, real estate, and childcare service providers, to name a few, catering to their often exacting and sophisticated needs. Malta’s position straddling Europe and North Africa, and its growing ties to the Middle East, are supported by excellent air links to most regional capitals and major cities, the majority of which are less than a three-hour flight away, while world-class marinas and growing superyacht and private aircraft servicing industries provide those with such assets everything they might need for unfettered movement by sea or air.

All told, people often find the quality of life available in Malta to be nothing short of superb. A common joke heard in expat circles references the Classical Greek poet Homer’s seminal Odyssey. Ulysses, trying to make his way back home after the Trojan War, finds himself on the island of Calypso, a nymph who entrances him with her land’s magnificent beauty, preventing him from leaving. That land is today better known as Gozo, and the joke goes that the spell Calypso wrought 3,000 years ago is no less powerful today. Malta and Gozo’s allure remains, and many who land in the country for what they expect would be a temporary stay find that roots are quick to grow in its fertile soil. Whether your residency is occasional, seasonal, or permanent, and whether coming as an individual or with a family, you might very well think the same.

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Malta’s Residency Schemes

everal residency schemes are currently available to those wishing to take up legal residence in Malta, all of which grant holders full flexibility in their travel to and from the islands, and confer the right to move freely in the 26 countries of the Schengen Area without any visa requirements for up to 90 days in each 180-day period. Permanent residents can also freely repatriate any capital or income from sale of property or encashment of investment. Beyond that, however, there are important differences related to the eligibility, application requirements, and tax implications (bearing in mind that Malta does not impose any wealth, inheritance, estate, or gift taxes). Before getting into the particulars of each scheme, a note on citizenship is warranted. Setting aside, for a moment, those who acquire it through their contributions, residents gain the right to apply for Maltese citizenship by naturalisation after they have lived in Malta for five years. Applicants must have resided in Malta in the 12 months preceding the application date, and for any four years out of the preceding six. They must also be able to communicate in English (or Maltese, which, while commendable, is not for the faint-hearted). Citizenship is granted by the Minister responsible, who has full discretion to accept or refuse any application.

Maltese Exceptional Investor Naturalisation Foreign individuals and their families who contribute to the country’s economic development are eligible for Malta’s highly-esteemed citizenship-by-residence-and-investment programme. Granting visafree or visa-on-arrival access to 185 countries, the Maltese passport offers unparalleled flexibility, ranking among the top 10 passports globally. As EU citizens, holders also have full access to the rights and protections afforded by Malta’s membership, including the freedom to settle anywhere in the bloc. After undergoing a revamp in 2020, the Maltese Exceptional Investor Naturalisation (MEIN) programme today boasts the world’s strictest due diligence and vetting criteria, Portomaso. Photo: Mike Teixeira / Pexels

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attracting only the most respectable of candidates. If you are attracted by the many benefits Maltese citizenship offers, you are advised to hurry – approvals are capped at 400 a year, and the total maximum number of accepted applicants is set at 1,500 for the entire scheme. It is also important to note that the European Commission initiated an infringement procedure in relation to this scheme in April 2022, to which the Maltese Government has responded by pointing out that citizenship is a wholly national competence and not subject to EU supervision. At publication date, the proceedings are ongoing. MEIN tax implications Beneficiaries of the MEIN programme are subject to the regular Maltese personal tax rates on income arising in Malta. Income arising abroad which is not remitted to Malta falls beyond the purview of the local tax authorities, while capital and capital gains remittances are untaxed. MEIN eligibility criteria Nationality: Applicants can be citizens of any country except those currently subject to international sanctions. It is recommended to refer to the MEIN FAQ on the Community Malta Agency website (komunita. gov.mt) for an up-to-date list of such countries. Capital: No particular capital requirements. Background check: The due diligence process conducted by the Maltese authorities is considered the most stringent in the industry. It involves obtaining police clearance after thorough checks through Interpol, Europol, and other agencies’ databases, followed by an assessment of the documentation provided as evidence for the sources of funds and wealth by anti-money laundering and terrorism financing professionals. Finally, assessors compile all the information collected and draw up a risk matrix developed over years of experience to ensure decisions are taken systematically and transparently. Applicants must also be ready to provide extremely detailed documentation. Passport copies and birth certificates must be apostilled and copies of contracts must be certified, while bank statements and transactions will be requested. Malta touts the scheme as a way to attract talent that can add value to the country, and the due diligence applied ensures the focus is on quality, not quantity.

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MEIN application Application and duration: An application must be submitted through a Licensed Agent. Citizenship is granted for life and is hereditary.

Once these criteria are met, applicants are invited to take an Oath of Allegiance to the Republic of Malta and its fundamental democratic values, followed by the issuing of Maltese passports.

Property: Upon approval, applicants are obliged to either rent or purchase property in Malta. Rent must be a minimum of €16,000 yearly, while a purchased property must have a minimum value of €700,000. Applicants must retain the property for at least five years from the date of issue of the certificate of Maltese citizenship. Residence card fee: The main applicant must pay a non-refundable application fee of €10,000 to obtain initial residence. The fee for each dependent is €1,000. Due diligence fee: The main applicant must pay a non-refundable fee of €15,000 to allow the Maltese regulator to undertake its strict four-tier due diligence process, with each dependent over the age of 18 subject to an additional €10,000 fee. Third parties sponsoring an application must also pay a due diligence fee of €15,000. Application fee: All applicants must pay a non-refundable €1,000 fee on submission of their application.

More information about the Malta Exceptional Investor Naturalisation programme can be found on the website of its operator, Community Malta Agency, a dedicated governmentrun agency (komunita.gov.mt).

Full

Maltese and European Union

citizenship

Upon passing an initial background check, applicants are granted a residence permit (against proof of property lease or purchase). Citizenship is only considered after applicants have resided in the country for a minimum of 12 months. This does not mean that Malta must be an applicant’s primary abode during this period. Instead, a genuine link to the country must be established. To ensure a smooth process, applicants are typically urged to spend an amount of time in Malta, whether on one long trip or multiple shorter ones, and to enrol in social or professional bodies. Once deemed eligible to apply for citizenship, applicants have four months to do the following:

Visa-free/Visaon-arrival travel to

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countries

Citizenship fee: All applicants must pay a €500 fee as part of their application for naturalisation. Exceptional investment: Applicants who have been resident in Malta for three years are required to make a contribution of €600,000 to the National Development and Social Fund (NDSF), or €750,000 for those applying after one year of residency. An additional €50,000 contribution is required for each dependent. Donation: Applicants must make a donation of at least €10,000 to a local philanthropic, cultural, scientific, artistic, sport, or animal welfare association registered with the Commissioner of Voluntary Organisations.

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¥ $

Benefit €£

from an attractive tax regime

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Local Insight Meet Nikhil Patil As CEO of telecoms giant GO since 2018, Nikhil Patil brings to the role nearly two decades of experience in strategy, operations, mergers, and acquisitions, helping the company to diversify its business in both Malta and Cyprus. Why did you choose to become resident in Malta? The question is more: why not Malta? For starters, from a business perspective, it is an impressively well-connected business hub. As a member of the EU, it also has direct access to the Single Market and has well-established capital markets. Then, from a cultural perspective, people are warm, friendly, and welcoming. The climate is also extremely attractive, with more than 3,000 hours of sunshine a year – one of the highest in Europe. How easy was it to settle in Malta and set up in business? Settling in and setting up a business is very easy in Malta. People living locally are all eager to help, the business community is hugely supportive, and the relevant structures are all in place to facilitate the process. What have been your top moments of living and working in the country, so far? It is hard to single out just one moment in all the years I have been in Malta. Certainly, any time that we successfully concluded an IPO or an acquisition has been a milestone moment. I am also particularly proud of the way we responded to the pandemic, ensuring that neither our customers nor our employees were left behind. We did everything in our power to guarantee that our employees were safe and that our customers could stay connected throughout. How have you found doing business in Malta? Malta’s legal framework provides the necessary clarity on how to do business here. Of course, actively engaging as part of the business community and building a good network of people always helps. Also, the fact that you can access international talent relatively easily means that you can serve markets beyond Malta. There is huge scope for growth. What sets Malta apart from other countries or regions, both personally and professionally? From my experience, the overall service culture and ‘can do’ attitude in Malta is hard to beat. The open and embracing culture means that expats feel welcomed, celebrated, and totally at home.

How open and welcoming was Malta’s business community when you first arrived – and how has your relationship with the community developed since? As I said, Malta has a very open culture. Access to the business community is easy and the support system is strong. Malta’s size also facilitates growing those business connections, especially those that are critical in the first few years. There are also many fora that you can join to exchange ideas and experiences, and to grow your network. I feel I have a good relationship with the business community, as well as with Malta’s government. What would you say are the top pros and cons of investing in Malta? Malta’s great culture and awesome connectivity to Europe are top pros for investment. Of course, when you combine the island’s culture with its climate, every working day in Malta feels like a holiday. What better place to work? On the downside, however – and much like in many other countries – prices and wage inflation are also on the rise. If you could go back in time, with the experience you have now: would you choose Malta again, and why? Absolutely. I have lived in many countries, but Malta feels like home to me. The country has developed significantly over the years, evolving beyond recognition and keeping up with developments across the globe. Yet, remarkably, it has also retained its historical charm, character, and warmth.

When you combine the island’s culture with its climate, every working day in Malta feels like a holiday. What better place to work?

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Malta Permanent Residence Programme As the flagship residency-by-investment scheme, the Malta Permanent Residence Programme (MPRP) is a relatively straightforward affair based on property investments and government contributions. Applicants may include up to four generations of their family in their application, which is processed within four to six months from the date of submission, given that it is filled in completely and correctly. MPRP tax implications Residence holders through the MPRP may fall under statutory Maltese tax rules, with eligibility determined by the domicile, ordinary residence, and source of income. Professional financial advice is essential to extract maximum benefit from the potential afforded by this arrangement while ensuring full compliance with the law. MPRP eligibility criteria Nationality: Applicants must be citizens of a country that is not in the EU or EEA, and cannot be Swiss. They also cannot be citizens of countries currently subject to international sanctions. It is recommended to refer to the MPRP FAQ on the Residency Malta website (residencymalta.gov.mt) for an up-to-date list of such countries. Capital: Applicants must present proof of ownership of capital assets of at least €500,000, out of which a minimum of €150,000 must be liquid financial assets like stocks, bonds, funds, and bank deposits (but not cryptocurrency). Income: Proof of sufficient financial resources to maintain themselves and their dependents without recourse to social assistance must be presented. Background check: Applicants must have a clean criminal record, and must not pose any threat to national security, public policy, public health, or public interest. MPRP application Application and duration: An application must be submitted through a Licensed Agent. As the name implies, the MPRP offers permanent residence rights to beneficiaries, as long as the conditions continue to be met, with the permit renewable every five years. Property: Upon approval, applicants are obliged to either rent or purchase property in Malta. Rent must be a minimum of €10,000 in the south of Malta/Gozo or of €12,000 in the rest of Malta. Purchased property must have a minimum value of €300,000 in the south of Malta/Gozo or €350,000 in the rest of Malta. This qualifying property must be held for a minimum period of five years. Renters may switch their lease for a purchased property during this time, but an owner cannot switch to a lease. Application fee and government contribution: Applicants must pay a non-refundable application fee of €40,000. Additionally, a contribution of €28,000 (if purchasing a property) or €58,000 (if renting) must be paid to the government. This covers the main applicant, their spouse, and any non-adult children. Other dependents, including adult children, are subject to an additional contribution of €7,500 each.

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Free movement in Schengen Area

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Valletta, overlooking Manoel Island and Sliema / Gżira. Photo: Karl Paul Baldacchino / Unsplash

Donation: Applicants must make a donation of €2,000 to a local philanthropic, cultural, scientific, artistic, sport, or animal welfare association registered with the Commissioner of Voluntary Organisations.

Tax

planning benefits

Up to

four

generations in a single application

Applicants must also be in possession of a valid travel document, comprehensive health insurance, and, when travelling across Schengen, must take out travel insurance. More information about the Permanent Residence Programme can be found on the website of its operator, Residency Malta (residencymalta.gov. mt), a dedicated government-run agency.

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Chapter 5: Residency

Local Insight Meet Mark Weingard British serial entrepreneur and philanthropist Mark Weingard has been the force behind countless businesses worldwide. A series of unfortunate events led him to found luxury hotel brand Iniala and charitable foundation Inspirasia. Today, he lives in Malta and oversees Inspirasia, Esenzi, and all Iniala projects, including the luxury boutique hotel, Iniala Malta. Why did you choose to become resident in Malta? Although I originally moved to Malta for tax reasons, I quickly fell in love with the country. Soon after, I made the decision to stay – a good decision, in hindsight! How easy was it to settle in Malta and set up in business? I have found that Malta is an easy place to set up a business, as the locals are very supportive of foreign investment. The Maltese people have been extremely open and friendly, not just in business, but throughout the process of settling down on the island. What have been your top moments of living and working in the country, so far? I have already had many great moments living in the country, but one of my favourites has been watching Valletta grow into a beautiful, ambient city. It has been fascinating to see the gradual reformation of the buildings in the city, which still manages to retain the rich, national heritage visible everywhere. It is such a vibrant and exciting capital, with an extraordinary past and, I hope, an extraordinary future. How have you found doing business in Malta? Straightforward, since the Maltese people are incredibly easy to do business with. The local community has an ease and friendliness that is part of a larger, generally welcoming culture, which extends into the business landscape. Of course, there are frustrating moments with bureaucracy, but that is the same in any country. On the whole, I have found Malta to be open and flexible in terms of doing business. It also helps that you can, at any point, speak directly with the decision makers in government and private enterprise.

What sets Malta apart from other countries or regions, both personally and professionally? As Malta is such a small island, it’s easy to meet and build relationships with all the key players in the business community across the country, which is a real advantage. As I said, the government is also accessible and open to new ideas – and it is far simpler to make a change in a country where the population is so hungry for change. How open and welcoming was Malta’s business community when you first arrived – and how has your relationship with the community developed since? The business community has always been open with me, and I’ve found them extremely welcoming. In fact, I have made many of my best friends in Malta through the country’s business world. What would you say are the top pros and cons of investing in Malta? The biggest pro of investing in the island is that, in Malta, you don’t have to shout loud to be heard. That makes it faster and easier to make an impact – which is especially important as an entrepreneur. In terms of cons, the largest one in my experience is that the marketplace is small and has yet to become truly relevant on a global scale. Malta is a great place to start a business but, to grow, you must look outside towards the world beyond. If you could go back in time, with the experience you have now: would you choose Malta again, and why? I am happy I came to Malta! I only wish I had arrived five years earlier, as there would have been even more opportunity to grow, learn, and embrace the local culture.

In Malta, you don’t have to shout loud to be heard. That makes it faster and easier to make an impact – which is especially important as an entrepreneur.

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Malta (Global) Residence Programme

Income: Proof of sufficient financial resources to maintain themselves and their dependents without recourse to social assistance must be presented.

The Malta Residence Programme and Global Residence Programme (M(G)RP) are nominally similar to the MPRP, essentially trading the higher upfront costs associated with the latter for a minimum yearly tax obligation at a discount rate. Malta’s extensive network of double taxation agreements (see p. 246) makes the programme especially attractive to anyone looking to optimise their personal tax structure, with this special treatment extending to the residence-holder’s family too. Applications are processed in around three to six months. There is no minimum stay requirement, but applicants must not spend more than 183 days in any other jurisdiction in any single calendar year. The requirements and benefits of these two programmes are identical, the only difference being that while the Malta Residence Programme is only available to EU/EEA passport holders, the Malta Global Residence Programme is open to citizens of all but a few countries.

Background check: Applicants must have a clean criminal record, and must not pose any threat to national security, public policy, public health, or public interest. M(G)RP application Application and duration: An application must be submitted through a Licensed Agent. An important difference between this scheme and the Permanent Residence Programme is that an M(G)RP permit is issued for one year, with its renewal subject to the presentation of evidence that the minimum tax requirement, along with all the other conditions, has been met. Property: Upon approval, applicants can either rent or purchase property in Malta, which will be their principal place of residence worldwide. Rent must total a minimum of €8,750 annually if located in the south of Malta/Gozo or of €9,600 in the rest of Malta. Purchased property must have a minimum value of €220,000 in the south of Malta/Gozo or of €275,000 in the rest of Malta. Application fee: The application must be accompanied by a fee of €5,500 (if the qualifying property is in the south or in Gozo) or of €6,000 (if it is anywhere else). This covers the main applicant, their spouse, and any dependent children.

M(G)RP tax implications Residence holders through the M(G)RP are granted special tax status, with 0 per cent applied on income from foreign sources not remitted to Malta and a beneficial flat rate of 15 per cent on income earned abroad that is remitted to Malta. M(G)RP eligibility criteria Nationality: Applicants cannot be citizens of countries currently subject to international sanctions. It is recommended to refer to the MPRP FAQ on the Residency Malta website (residencymalta.gov.mt) for an up-to-date list of such countries.

Applicants must also be in possession of a valid travel document, comprehensive health insurance, and, when travelling across Schengen, non-EU nationals must take out travel insurance.

Capital: No particular capital requirements.

More information about the Residence and Global Residence Programmes can be found on the website of Malta’s income tax department, the Commissioner for Revenue (cfr.gov.mt), which is the entity responsible for the schemes.

Minimum tax: M(G)RP beneficiaries must submit an annual tax return showing they have paid at least €15,000 in taxes (i.e. must remit at least €100,000 to Malta every year).

€ 15

per cent

flat rate on all income remitted to Malta

€

Low upfront cost

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Chapter 5: Residency

Malta Retirement Programme Malta has long been considered an ideal place to retire. Malta’s accession to the EU allowed Continentals to discover the joys that were once the preserve of British retirees, a large community of whom continues to call the islands home. Since 2020, the opportunity to enjoy the many benefits the country offers to pensioners has been extended to citizens of all nationalities. The Malta Retirement Programme (MRP) is designed to attract those who are not in employment and who are in receipt of a pension as their regular source of income. The pension may be of any kind, but must constitute periodic payments, not a lump sum. As the adage goes, retired does not mean inactive. Beneficiaries of the MPR may hold a non-executive post on the board of a company resident in Malta, and can also be active in institutions, trusts, foundations, or similar organisations of a public character, engaged in philanthropic, educational, or research and development work in Malta. The scheme carries physical presence requirements, so beneficiaries must reside in Malta for a minimum of 90 days in each calendar year, although this can be averaged out over a five-year period. They must also not reside in any other jurisdiction for over 183 days in any calendar year. The MRP contains provisions for a ‘special carer’, referring to an individual who has been providing ‘substantial and regular’ care to the beneficiary or their dependents for at least two years prior to the application. The two-year requirement may be waived at the discretion of the Commissioner for Revenue, whose office operates the programme, if it is convinced of the necessity (e.g. recent engagement of staff due to a recent illness). Beneficiaries may have more than one household staff who may live with them in the qualifying property. Such staff must register with the local tax authorities and are subject to pay tax in Malta at the standard progressive rates. Unless they are EU citizens, a work permit is also required. MRP tax implications Residence holders through the MRP are granted a special tax status with pension income remitted to Malta taxed at an attractive flat rate of 15 per cent. Income arising in Malta is charged at a flat rate of 35 per cent.

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Photo: Mike Nahlii / Unsplash

Malta’s International Investment Guide 2023

MRP eligibility criteria Capital: No particular capital requirements. Minimum tax: MRP beneficiaries must submit an annual tax return showing they have paid at least €7,500 in taxes for the main beneficiary and another €500 per annum for every dependent.

€

Maximise pension income with a flat per cent tax rate

Income: At least 75 per cent of the individual’s income must derive from a pension, with a maximum 25 per cent coming from other sources. Proof of sufficient financial resources to maintain themselves and their dependents without recourse to social assistance must be presented. Background check: Applicants must have a clean criminal record, and must not pose any threat to national security, public policy, public health, or public interest.

Access to world-class

healthcare

MRP application Application: An application must be submitted through an Authorised Registered Mandatory. Property: Upon approval, applicants must purchase or rent a property in Malta as their principal place of residence. Purchased property must have a minimum value of €275,000 (€220,000 if the property is situated in Gozo or the south of Malta). A rental agreement must meanwhile be for a minimum of €9,600 per year (€8,750 if the property is situated in Gozo or the south of Malta).

Bring household

staff with you

Application fee: The MRP application fee is €2,500. Health insurance: Applicants must have global health insurance and must provide evidence that they can maintain this indefinitely. Applicants must also be in possession of a valid travel document, and, when travelling across Schengen, non-EU nationals must take out travel insurance. More information about the Malta Retirement Programme can be found on the website of Malta’s income tax department, the Commissioner for Revenue (cfr.gov.mt), which is the entity responsible for the scheme.

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Local Insight Meet Marion Gamel Marion Gamel was CEO of Betsson Services and CMO of Betsson Group – a global leader in online gaming, gambling and betting – between 2016 and 2018. Today, she is a certified executive coach (PCC/ICF), a mentor, a business writer, and a public speaker. Why did you choose to become resident in Malta? After coaching one of Betsson’s leaders for about six months and liaising closely with Betsson’s CEO, I was offered the Chief Marketing Officer role and moved to Malta in January 2016. I didn’t choose Malta per se but, after visiting the island, I became convinced that it would be a great place to live, aligned with my tastes and needs. Malta charmed me in three days! How easy was it to settle in Malta and set up in business? I found settling in Malta smooth and easy. As an employee, my employer did a lot of the work for me in terms of paperwork, taxes, permits, registrations, and guiding me through processes. Overall, I had fully settled on the island in under three months, including moving into a lovely townhouse in Sliema! When I set up my coaching business on the island years later, I partnered with an amazing accountant who (again) guided me well, and I was able to work and invoice clients in a matter of weeks. To me, it felt as if Malta had processes in place (as you would expect from any European country) but not to the point of standing in my way of doing business and going about my life. What have been your top moments of living and working in the country, so far? The sunshine all year round. The locals’ kindness and sense of humour. The incredible diversity on the island, with nearly all nationalities represented among friends and colleagues. The unique level of safety the island offers. The closeness to all major European destinations, thanks to a fully functional international airport and a great national airline.

Malta is a heavenly Mediterranean island drenched in sunshine and kindness, where life is sweet and where you can do international business just like you would in New York or London.

How have you found doing business in Malta? Very easy! I have a Mediterranean background (Provence/Italy) so the Maltese culture and way of doing business resonate with me. Yet, Malta is not a country I focus on much in my work. My ‘business’ in Malta happens with small businesses for personal and private matters (workers, medical staff, hospitality staff, house staff, and so on). What sets Malta apart from other countries or regions, both personally and professionally? The immensely high quality of life, mixed with global work opportunities and connections. You are in Europe, yet it feels like you are on holiday the minute you step out of the office. Oh – and the Christmas carols played on speakers in the street in December! How open and welcoming was Malta’s business community when you first arrived – and how has your relationship with the community developed since? Although I don’t do much business with locals in Malta (my work predominantly focuses on other markets), from my limited experience, I find that (in private and in business) the Maltese are kind, open, warm, and lovely to deal with. My advice to someone settling in Malta is to take the time to get to know people and form a relationship with them. Locals are less ‘transactional’ than in other European countries or cities. First you get to know one another and then business happens smoothly. What would you say are the top pros and cons of investing in Malta? Pros: So many! Taxes and regulations (being a Highly Qualified Professional means a considerable tax rebate for five years, which is attractive). Being part of Europe. The weather. Fantastic work-life balance. Great schools and safety for families with children. Cons: Get ready to have to attract talent to the island as it is small and competitive, so you may not find the people you need on the island. This can get pricey for a company and become time-consuming. If you could go back in time, with the experience you have now: would you choose Malta again, and why? I would totally choose Malta again! Malta is a heavenly Mediterranean island drenched in sunshine and kindness, where life is sweet and where you can do international business just like you would in New York or London.

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Chapter 5: Residency

Nomad Residence Permit Introduced in 2021, the Nomad Residence Permit (NRP) allows holders to maintain their employment in another country while legally residing in Malta. Essentially, the NRP is tailored to the needs of digital workers who engage in location-independent remote work. Its headline attraction is that it allows non-EU nationals to live in a European country and take advantage of the Schengen Area’s free travel rules. With a low application fee, conditions that are easy to meet, and processing time of around a month, the Nomad Residence Permit immediately caught the eye of savvy world citizens drawn to Malta’s excellent internet speeds and island lifestyle, with a majority of the applicants so far hailing from the US and post-Brexit UK. Today, the country can boast of a growing digital nomad community with dedicated co-working spaces and frequent fun networking events. NRP tax implications Holders of a Nomad Residence Permit are not subject to income tax in Malta since the presumed nature of their stay is temporary. NRP eligibility criteria Nationality: Applicants must be citizens of a country that is not in the EU or EEA, and cannot be Swiss. They also cannot be citizens of countries currently subject to international sanctions. It is recommended to refer to the NRP FAQ on the Residency Malta website (residencymalta.gov.mt) for an up-to-date list of such countries. Nature of work: NRP applicants cannot work with or for a Maltese company, and cannot offer their services locally. They must show that they fall into one of three categories: (a) They work for an employer registered in a foreign country and have a contract of work; (b) They are a partner or shareholder in and conduct activities for a company registered in a foreign country; or (c) They offer freelance or consulting services under contract to clients whose permanent establishments are in a foreign country. Income: Applicants must be able to prove that they earn a gross monthly income of €2,700. This figure increases by 20 per cent of Malta’s median wage, which stands at about €20,000 per year, for each additional family member included in the application. A good rule of thumb is that each one will add roughly €333 to the minimum gross monthly income required. It is important to note that unmarried couples must present proof that they have been together for at least two years for the partner of the main applicant to be considered eligible as an accompanying family member. Background check: Applicants must have a clean criminal record, and must not pose any threat to national security, public policy, public health, or public interest.

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NRP application Application and duration: NRP applications can be submitted directly by the applicants themselves to Residency Malta, the agency operating the scheme. The permit is valid for up to a year and is renewable for up to three years. Applicants may request a permit for a stay shorter than 12 months, however, they will be issued a visa that is only valid in Malta, nullifying one of the main attractions of the NPR. Property: Applicants must present a valid rental or purchase agreement upon approval of their application. Application fee: Each applicant must pay a non-refundable administrative fee of €300. This only covers the particular individual, so the same fee applies to each dependent. Permit renewal requires the resubmission of this fee. Visa requirements: Successful applicants who do not require a visa can proceed to Malta upon approval, but citizens of over 90 countries do require a visa to enter Europe. These include, among others, China, India, Turkey, Pakistan, Nigeria, Qatar, Saudi Arabia, and Kuwait. Applicants from these countries must obtain a national visa from the state-run Identity Malta agency before travelling to Malta. Applicants must also be in possession of a valid travel document, comprehensive health insurance, and, when travelling across Schengen, must take out travel insurance. More information about the Nomad Residence Programme can be found on the website of its operator, Residency Malta (residencymalta.gov.mt), a dedicated government-run agency.

Access to Schengen Area

Easy-to-meet eligibility criteria

Excellent IT infrastructure and a thriving community

Malta’s International Investment Guide 2023

Local Insight Meet Alessio Bucaioni Alessio Bucaioni channels his extensive international experience into creating business expansion opportunities through WES Trade, which he co-founded in Malta in 2014. WES Trade provides technical and commercial internationalisation services to a diverse range of sectors, including defence, maritime, homeland security, energy, water efficiency, logistical support, engineering, civil construction, the environment, agri-food, airport, transportation, ICT, and cybersecurity. Why did you choose to become resident in Malta? Malta offers many opportunities for business entrepreneurs like me, who develop international business networks and are interested in the internationalisation of up-to-date technologies. As an Italian, Malta was the first choice due to our close geography, culture, and history. Malta also offers high-level business support services and an excellent quality of life. How easy was it to settle in Malta and set up in business? It was all extremely efficient and easy. Maltese legislation is clear and straightforward, with accounting and legal offices to help expats develop their ideas and solidify them. However, it’s important to only open a business in Malta if you are convinced about entering the country’s social and economic environment. You must work hard to build relationships and show that you want to contribute to the economy. Malta gives you a lot, if you give Malta a lot. What have been your top moments of living and working in the country, so far? I have several: I didn’t know much about the country the day I landed in Malta in 2014, so opening WES Trade was a challenge and instant milestone. Then there are WES Trade’s international achievements since, such as being awarded an R&D contract in Sardinia related to our innovative navigation system. Each time WES Trade earns a contract – such as our recent IRRIGOPTIMAL project to support agriculture with artificial intelligence – we strengthen our position in Malta. Malta has also given me the opportunity to enjoy its unique landscape – ideal for relaxing after heavy business negotiations – and to meet special people.

Malta gives you a lot, if you give Malta a lot.

How have you found doing business in Malta? I describe my experience in Malta as cracking a walnut. Opportunities surround you; the government fully supports you in doing business through excellent organisations such as Malta Enterprise or the Malta Council for Science and Technology – but you may not immediately have access if your business approach and attitude aren’t right. Breaking the walnut’s shell to access all that Malta offers is a challenge only overcome with personal conviction. What sets Malta apart from other countries or regions, both personally and professionally? Professionally, you can count on a modern and lean country in terms of procedure. There are national and international initiatives to support local companies and, since Malta is a small country, you can approach decision makers directly. Personally, Malta is a mix of Mediterranean cultures, so you always feel at home. How open and welcoming was Malta’s business community when you first arrived – and how has your relationship with the community developed since? Being Italian was an advantage as most local people speak Italian, so integrating with the community was no problem. However, people are only open to doing business if they trust you. Once the community sees that you are genuine and trustworthy, and that you bring interesting ideas, doing business becomes much easier. After eight years in Malta, I feel Maltese, my network has grown, and some of my best friends are here. What would you say are the top pros and cons of investing in Malta? Pros: The lean and efficient bureaucracy, and governmental support to materialise your investments. Cons: Unfortunately, the size of the country does not allow for the replication of the successful, large-scale projects that are some of Malta’s most recent achievements. If you could go back in time, with the experience you have now: would you choose Malta again, and why? If I could, I would choose to come to Malta earlier in my life. Here I have found all I have searched for!

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Malta Start-Up Residence

Ordinary Residence

Launched in October 2022, the Malta Start-Up Residence Permit programme focuses on attracting innovative start-ups to Malta. Run by Malta Enterprise together with the Residency Malta Agency, the scheme aims to provide founders and key employees who are not EU nationals, as well as their immediate family members, a favourable residency duration. The programme acknowledges the crucial role that entrepreneurs have, as well as the ever-increasing importance that attracting and retaining key talent has for business success.

Individuals may also wish to become resident in Malta to take advantage of its relatively low personal income tax rates (see p. 250), extensive network of double taxation agreements (see p. 246), and the absence of any form of inheritance and wealth taxes. EU, EEA, and Swiss nationals can apply for residency after three months living in the country, when living or working there, or by presenting evidence of their self-sufficiency, without actual means testing. They must also have a Maltese address. For third-country nationals, the requirements are a bit more complex, requiring employment, self-employment, or a shareholding in a Maltese company. In the case of the latter two, residence is conditional on, among others, a significant capital investment, a proven innovative outlook, and an intention to employ local or European employees, or engagement in a Malta Enterpriseapproved project.

Founders and their immediate families can obtain an initial three-year residence permit, renewable for another five years, while core employees can renew it for a further three years. After living in the country for five years, they may apply for a long-term residence permit. The start-up needs to commit to a tangible investment or have paid-up share capital of not less than €25,000. If there are more than four founders, this increases by €10,000 per additional co-founder. The maximum number of co-founders eligible for the programme is six. More information about the Malta Start-Up Residence Permit programme can be found on the website of StartInMalta (startinmalta. com), a website dedicated to facilitating the launch of start-ups in the country.

Residence

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Free movement

Tax Capital gains remitted

Wealth/ Inheritance

Schengen

Global

Income remitted

Progressive rate No tax

No tax

Malta Exceptional Investor Naturalisation

Yes

Visa-free/ visaon-arrival travel to 185 countries

Malta Permanent Residence Programme

Yes

Consult a No tax financial advisor

No tax

Malta Residence Programme

Yes

15% flat rate

No tax

Malta Global Residence Programme

Yes

15% flat rate

No tax

Malta Retirement Programme

Yes

15% flat rate

No tax

Nomad Residence Programme

Yes

Yes, unless obtained for under 12 months

Not covered

Ordinary Residence

Yes

Progressive rate No tax

No tax

Malta’s International Investment Guide 2023

More information on the eligibility criteria can be found at the Expatriates Unit page on the Identity Malta website (identitymalta.com), while detailed tax information can be found at the Tax Residence page on the Commissioner for Revenue website (cfr.gov.mt).

Duration

Renewal

Open to

Photo: Humphrey Muleba / Unsplash

Tax residency is obtained once an individual’s stay in Malta exceeds 183 days. Foreigners who are resident but not domiciled in Malta are not taxed on their worldwide income, but only on income generated in the country and foreign income remitted to Malta. Foreign capital gains are not taxed, even if remitted to Malta. Residents are subject to the same income tax rates as locals, from 0 to 35 per cent depending on the income band. Anyone earning over €35,000 in a year from foreign sources and not remitting it to Malta is subject to a minimum tax of €5,000.

Property requirement

EU/EEA/ Switzerland

Rest of the world

If bought (minimum)

If leased (minimum)

Lifetime

N/A

Yes

€700,000

€16,000

5 years

Unlimited

Yes

€300,000€350,000

€10,000€12,000

1 year

Unlimited

Yes

€220,000€275,000

€8,750-€9,600

1 year

Unlimited

Yes

€220,000€275,000

€8,750-€9,600

Unlimited

N/A

Yes

€220,000€275,000

€8,750-€9,600

1 year (or less)

Up to three years

Yes

Required, but no minimum limit set

Depends on reason for eligibility

Yes

Required, but no minimum limit set

Means test

N/A €500,000 (of which liquid: €150,000) Sufficient without social assistance Sufficient without social assistance Sufficient without social assistance; 75% or more must be pension income Minimum €2,700 monthly income (+€333 per dependent) Depends on reason for eligibility

Estimated cost for individual applicant Minimum annual Upfront cost tax €636,500€786,500

N/A

€70,000€100,000

N/A

€5,500-€6000 €15,000

€2,500

€7,500

€300

N/A

N/A, subject to certain conditions

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A Residency Programme based on opportunity, efficiency and robust due diligence Malta continues to attract numerous individuals who choose to call the sunny archipelago home. Edward Bonello speaks to Charles Mizzi, Chief Executive Officer at Residency Malta Agency, who explains why the Maltese Residency Programme is such an attractive proposition for prospective international residents.

ravel and mass movement post-Covid are experiencing a much-expected increase globally, as the restrictions dropped, people packed their suitcases and reached for their passports. However, another form of mobility is experiencing unprecedented growth – a more long-term form of movement which is seeing families and individuals relocating to new countries, seeking safety and opportunity. “We are experiencing an increase in interest from families and individuals who are seeking to relocate to safer, more affluent jurisdictions,” says Charles Mizzi, Chief Executive Officer at Residency Malta Agency, the government entity responsible for managing and promoting Malta’s residency-by-investment programme. “Global mobility and economic migration have been on the rise for a number of years, and now major stakeholders of the sector report heightened levels of appetite for movement, in the wake of the Covid pandemic. Couple this with geo-political upheavals,

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and you will find entire families willing to find a second residency in a safe and stable jurisdiction that offers peace of mind and a comfortable lifestyle for their future. Families also look for educational opportunities for their children and business opportunities that can support their professional aspirations,” Mr Mizzi explains. Residency-by-investment is a global phenomenon and programmes are offered in around 20 countries across the EU, including Malta. It gives non-EU individuals and families the opportunity to obtain residency in a country of choice, against an investment. Focusing on the unique selling points of Malta’s Residency Programme, Mr Mizzi explains that clients find it to be a straightforward programme, which can accommodate up to four generations in one application, facilitating family relocation and granting permanent residency from day one. “It also offers the possibility to lease a property, giving beneficiaries time to explore Malta before making the commitment to purchase a property in a specific

Malta’s International Investment Guide 2023

location. As the agency responsible, we make it a point to provide a definitive reply to our applicants within six months from submission, hence they can plan out their lives accordingly,” Mr Mizzi says. But there are other factors which make the Maltese Islands an attractive proposition for persons seeking to relocate. “Firstly, Malta is a stable jurisdiction with a strong economy, a negligible crime rate, and a safe environment for families with children. The Maltese are proud of their family values and most of the country’s lifestyle revolves around these values. Furthermore, the fact that one in five of Malta’s population is an expat, means that new residents can expect a multicultural society. A big advantage is that English is spoken widely, since it is a national language, making

communication in all areas of life effortless. Other attractions Malta offers are educational opportunities in top rated institutions, world-class health services, a pro-business culture supported by several government initiatives for start-ups and scale-ups, and connectivity to many countries in the world with daily flights, excellent technology infrastructures, and nationwide 5G services,” Mr Mizzi details. Asked about the due diligence which regulates the programme, Mr Mizzi asserts that a stringent process is the backbone of the programme and reputation. “We make it a point to ensure that individuals and families are ‘fit-andproper’, and truly deserving of Maltese residency. After the initial

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‘know-your-customer’ checks conducted by the licensed agent, the agency checks the application for completeness and correctness, followed by internal due diligence checks and open-source checks. This is immediately followed by thorough examination of source of wealth and source of funds, checks by the national authorities, including exchanges with Interpol and Europol, and relevant EU databases, checks on dependents, donors, benefactors, business associates, and litigation cases, among others,” Mr Mizzi notes. This process includes engaging the services of global due diligence companies that carry out additional checks on the ground in the applicant’s country of domicile, to ensure a complete examination. However, this is not where it ends. “We also have in place ongoing monitoring and automatic flagging of entities on sanctioned lists. Finally, we also implement compliance checks to ensure beneficiaries are still eligible for the programme,” Mr Mizzi elaborates. But what does Malta achieve from this? “Apart from an increase in the government’s sovereign wealth via foreign investments that goes directly to the Consolidated Fund, additional funds go to the National Development and Social Fund that divests monies to community projects that have a significant impact on local society, in areas such as philanthropy, education, sports, social housing, health, and others,” Mr Mizzi expounds.

either be employed with an employer registered outside Malta, be a shareholder or partner of a company registered outside Malta, or offer freelance or consultancy services to clients abroad,” Mr Mizzi notes. Looking firmly ahead, Mr Mizzi declares the organisation’s aim to maintain its position as a leading residency agency. “Everything we do is based on excellent value programmes, highquality customer care, and a strong reputation based on the conduct of robust due diligence. Our plans include diversification of our portfolio and penetration into new potential markets. We are pleased with what we have managed to achieve so far, not only in terms of results for the government but also with how we run the programme,” Mr Mizzi says. “We remain committed to providing an excellent service to licensed agents as well as applicants, via robust and reputable programmes based on transparency and integrity,” Mr Mizzi concludes. More information about Malta’s residency programmes can be found on www.residencymalta.gov.mt

Not to mention the cultural wealth such individuals bring with them, adding value to Malta’s melting pot, increasing talent and the country’s skill base. Mr Mizzi also makes reference to the Nomad Residence Permit, which was created for non-EU digital nomads who are able to work remotely independent of location. “Malta was quick to jump on this opportunity to attract a mediumlong term kind of ‘tourist’, joining other countries around the world that started offering this kind of residency. Currently we’re attracting more than two applications a day and our typical remote worker hails from the United Kingdom or the United States. The permit is valid for one year, but can be renewed twice, for a total stay of three years. Applicants need to earn a minimum of €32,400 a year and must

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We are experiencing an increase in interest from families and individuals who are seeking to relocate to safer, more affluent jurisdictions.

MaltaInvest2023

Chapter 5: Residency Property

Dhalia Real Estate Services – first agency licensed as a further education institution

halia Real Estate is the first real estate agency in Malta licensed by the Malta Further and Higher Education Authority (MFHEA) as a further education institution. Our training centre provides anyone wishing to acquire a real estate licence and join the real estate industry the opportunity to do so with our qualified courses and experienced tutors. Following the recent change in the law concerning the accreditation of real estate professionals, all those seeking to work in real estate must hold a certificate and qualify for a special licence, which is valid for five years. Our training centre is up to date with all real estate industry knowledge and skills required for certification, including work experience and guidance from our managers.

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However, acquiring your certificate through us also provides trainees with other great benefits. Get certified from home with flexible sessions Trainees have the option to carry out their training remotely, with different sessions during the week, making our course flexible and easily accessible from the safety and comfort of one’s own home. We understand the needs of our trainees and the current times, so flexibility is one of our top priorities! Training is on the house Courses cost money, but at Dhalia, we want you to save. Training is in-house, meaning that our courses are being offered free of charge. We want to invest in your success.

Malta’s International Investment Guide 2023

Learn from our experienced tutors Our course provides training from several experienced tutors – these include lawyers, notaries, and our marketing manager, all with years of experience working with real estate. These tutors add to the quality of our course and provide a holistic look at the workings of the real estate industry. Guidance from experienced managers and consultants Apart from our theoretical education course, at Dhalia we also place importance on education by experience. Once the course is complete, beginners are paired with experienced property consultants and managers. We aim to prepare new recruits for everything they may encounter in the working world as a property specialist. Licensed from a well-known, reputable, and respected agency At Dhalia, we pride ourselves on the work we have done to become one of the most successful real estate agencies on the island, as well as being the first licensed agency to provide this certification. We aim to offer high-quality services in everything we do, including our training. By getting your certification with us, you can be assured that what you are taught is supported by years of arduous work, commitment, and experience.

The benefits of our training centre are not to be missed – this is a terrific opportunity to get your certification through a reputable agency, which has your success in mind. We provide the expertise and dedication to help make our trainees successful in all aspects of their work in the real estate industry. Dhalia is made up of professionals who have built a reputation based on trust. Our role is to help people find property in Malta and Gozo, and act as a guide and educator to ensure our clients are as satisfied with their new property as they are with our service. Since 1982, Dhalia has followed this philosophy and it has allowed us to grow and become Malta’s largest privately owned real estate agency. Today, our branch office network stretches across Malta and Gozo, facilitating contact with our customer base and ensuring our property consultants are always within easy reach. Apply now to get the full training experience.

Dhalia Real Estate Services is licensed by MFHEA as a Further Education Institution (Licence: 2021-001). For more information, contact Ingrid Sciberras, HR Executive, on hr@dhalia.com; M: 9949 5187; T: 2149 0681.

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Chapter 6: Property and Real Estate

Overview

onventional wisdom states that risk and reward are opposites when it comes to investment, but Malta, it seems, never received that memo. Long considered the safest of investments, Maltese real estate has proven to also be most profitable, with the strong performance seen in the years preceding and following Malta’s accession to the European Union only eclipsed by the remarkable returns the sector delivered during the country’s economic boom throughout the 2010s. As a rule, property has tended to double in price every 10 years or so, with periods of fast appreciation balanced by periods of moderation. Actual decreases in prices are exceedingly rare, minor, and short-lived. Notably, although property markets in neighbouring Mediterranean countries suffered tremendously during the years of crisis following the 2008 financial crash, Maltese real estate prices held their own. That period showed the value of the sector’s relative

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isolation from world markets, with restrictions on purchases by foreigners – outside specially designated areas – keeping it sheltered from the fallout of the Great Recession. Home ownership in Malta is culturally ingrained, and accordingly, extremely high. Some 80 per cent of Maltese own their own home, while around half of the rest live in rent-controlled properties. As both the resident population and tourism numbers exploded over the last 10 years, so did the value of Malta’s real estate, with the long and short letting markets in particular growing rapidly as retail investors enthusiastically climbed onto the speeding bandwagon – which shows no sign of slowing down. The surge of educated foreigners working in the iGaming, tech, and financial services industries also precipitated a marked improvement in building and finishing standards, and many developments that came on the market in the last few years are of excellent quality, with all the latest amenities. The various relocation, residency, and retirement programmes (see p. 138) have

Malta’s International Investment Guide 2023

HOUSE PRICE INDEX 250

Price index

200 150

100

100 50

per cent

increase between 2014 and 2022

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

RESIDENTIAL PROPERTY SALES VOLUME

RENTAL PRICES

16,000

Rental prices increased by per cent

14,000 12,000 8,000 6,000 4,000 2,000 0

14,386

10,000

10,400

Properties sold

The Three Cities. Photo: ewg3D / iStock

Source: Central Bank of Malta, Grant Thornton, Dhalia

2014

2021

per cent

increase in properties sold since 2014

over the nine-year period to 2022 Source: Grant Thornton, Dhalia

Source: National Statistics Office

meanwhile contributed to increased investment in luxury properties, of which there is now a varied offering. Since the wealth of so many Maltese is tied up in real estate, investors can rest assured that the government will always provide ample support to the sector when its stability is threatened by external shocks. During the Covid-19 pandemic, for example, stamp duty was slashed and incentives increased, leading to record sales by both volume and value – despite global economic turmoil. Malta does not levy any municipal or estate taxes. The only property-related taxes are those tied to the buying, selling, and rental of real estate. Generally, buyers must pay stamp duty of 5 per cent of the property price, while sellers are subject to a sales tax of 8 per cent (also known as capital gains or final withholding tax). However, there are a number of exemptions and

conditionally reduced rates. For example, if the property is used as a primary residence for at least three years, the seller is exempt from sales tax, while selling a property which has been held for under five years allows the seller to benefit from a reduced rate of 5 per cent, as long as certain conditions are met. The sales tax on Gozitan property is currently reduced to just 2 per cent, although it is not yet clear whether this provisional rate will be extended to the coming years. The government has also recently introduced incentives targeting the buying and selling of traditional properties, waiving the taxes due on the first €750,000 of the price of acquisition and refunding the VAT paid on the first €300,000 of refurbishment works (the incentives tied to traditional properties do not apply to transfers of property to persons who require an AIP permit). Rental income is subject to a flat 15 per cent withholding tax.

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Local Insight Meet Alan Grima Alan Grima is CEO at Dhalia, one of the largest privately-owned real estate agencies in Malta and Gozo. With a background in IT and software development, he joined Dhalia as CIO in 2008, before taking a seat on the Board of Directors and being appointed CEO in 2016. Why should foreign investors choose Malta to invest in real estate? When choosing a country to invest in real estate, foreign investors are looking for stability and security. They also want a jurisdiction which has a robust legal framework and an efficient property registration system. Malta ticks all these boxes. The Maltese real estate market offers several attractive opportunities for foreign investors. Malta’s strategic location in the Mediterranean basin, its political stability, and its membership in the European Union make it an attractive destination for investment. In this regard, the Maltese Islands are a highly attractive destination for foreign investors looking to relocate or to invest in a home away from home. What sort of return on investment has the property market generated over the past decade? Over the past decade, property investments in Malta have proven to be profitable and secured a consistent return on investment. The islands’ real estate market has continued to grow, presenting investors with the opportunity to diversify their portfolios and benefit from long-term capital growth. The ROI on property investments depends on various factors, but a recent independent study which analysed the returns on 249 property investments in Malta between 2008 and 2018 suggests that a return of 8 per cent per year can be achieved on average for apartment and villa investments.

Real estate investors are looking for stability and security in a jurisdiction which has a robust legal framework and an efficient property registration system. Malta ticks all these boxes.

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Are there any large-scale real estate projects that investors should look out for in 2023? Over the past few years, Malta has seen the emergence of various property developments which have sought to provide accommodation in a more chic and sophisticated way. The popularity of such projects is attributable to the fact that these developments are creating something entirely new within the local market. These include Mercury Towers in St Julian’s, The Shoreline in Smart City, and Tigné Point Residences, among others. What type of property acquisitions are more suitable for foreign investors who do not reside in Malta? The right type of property acquisitions for foreign investors who do not reside in Malta will depend on various factors, such as what they plan to use the property for, their long-term plans, and whether they are looking to rent or sell the property. Residential property acquisitions by non-residents are subject to several conditions and, therefore, the type of property that is more suitable for non-resident foreign investors depends on those conditions. If you were a foreign investor, what kind of property and typical location would you seek to acquire in Malta? Foreign investors who are looking to acquire property in Malta have various options available to them. They can either choose freehold or leasehold properties, which vary in price and location. For example, for foreign investors who are looking for a business opportunity in Malta, there are various commercial properties available including office spaces, industrial warehouses, and retail outlets. Malta has many towns and villages to choose from where one can find properties at different prices. However, the location of an investment will depend on the investor’s personal preferences and lifestyle. What’s your personal projection on the local property market for the next three to five years? The property market in Malta has been doing well in recent years and the projections for the property market in Malta are very positive. It is our view that the local property market is expected to remain strong over the next three to five years.

Malta’s International Investment Guide 2023

Buying Property in Malta

he property buying process in Malta is rather straightforward. Once a deal has been struck, the buyer, seller, and estate agent will go to a notary to draw up a Promise of Sale Agreement (konvenju). This is a legal and binding document that sets out the price, any conditions related to the sale, and the date of the final transfer, usually set for two to six months later. The buyer will need to pay a deposit of around 10 per cent to the notary, to be held in escrow. It is important to note that if the buyer withdraws from the agreement for any reason that is not accounted for in the conditions of the Promise of Sale, the deposit will be withheld. The notary will then carry out the ‘searches’. This is a thorough investigation of the history and legal title of the property by going through previous contracts and relevant documents to verify its ownership and boundaries, and to determine whether there are any legal issues or guarantees related to it. Planning permissions and the building regulation certificates will also be verified. When the notary is satisfied that everything is in order, a meeting is set up to finalise the contract, at which point the balance of the sale price is paid and the ownership of the property is transferred to the buyer. Notary tariffs are established by law and so are all the taxes, stamp duty, and other relevant charges due by purchasers and sellers. Legal fees and stamp duty are payable by the purchaser, while agency fees are payable by the seller.

Energy Performance Certificates One of the legal requirements for a transfer of property is that there must be a valid Energy Performance Certificate (EPC), which resembles a household electrical appliance energy label. The EPC has scale bars showing the energy rating of the building and its carbon emissions, with zero being the most energy efficient and the other extreme being the least efficient. This is typically obtained by the seller, and is valid for 10 years. Acquisition of Immovable Property Permit In view of the limited supply of property, there are certain restrictions on the purchase of Maltese real estate by foreigners to ensure a level playing field. Maltese and European Union citizens who have resided in Malta for at least five continuous years can purchase any amount of property they like, but those who have not been resident for at least that period of time need to obtain an Acquisition of Immovable Property (AIP) permit before being able to buy a second residential property. No such permit is required when buying one for commercial use. Prospective buyers from outside the EU are subject to further restrictions. They need an AIP permit to buy any property except that situated in Special Designated Areas (SDAs, see p. 171), and can only acquire commercial real estate for touristic or industrial use, or for uses that contribute to the development of the Maltese economy. A reliable property consultant can provide further guidance.

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Gżira Seafront. Photo: Traveling / iStock

Who can buy property in Malta?

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Maltese and EU citizens with 5 years Maltese and EU citizens without 5 continuous residence years continuous residence

Non-EU citizens

Primary residence

No restrictions

Prior authorisation required

Secondary residence or any other immovable property

No restrictions

Prior authorisation required

Property in SDA

No restrictions

Immovable property for business activities

No restrictions

Permit only granted for tourist or industrial development, or uses that contribute to the development of the Maltese economy

Photo: Inigo Taylor

Malta’s International Investment Guide 2023

Local Insight Meet Jeremy Cassar Jeremy Cassar has been Managing Director and CEO of ERA Real Estate Malta since late 2021, opening its first office in Gozo in 2022. ERA Real Estate is owned by parent company Anywhere Real Estate Inc, a leading real estate brokerage with many brands around the world. Why should foreign investors choose Malta to invest in real estate? There are many valid reasons why one should look into investing in property in Malta. For starters, its year-round sunny weather and the history on display throughout the country make it very attractive. Then there is the vast variety of property options we offer, from apartments to townhouses and villas. Investors looking at Malta quickly realise that investing in property here is a sound way to go – we saw that our market outperformed other markets around the world, and while other countries even experienced negative effects on their property market figures, we actually excelled. Another advantage is that it provides an easy route to EU citizenship or residency.

What’s your personal projection on the local property market for the next three to five years? Over the last few years, the property market has seen remarkable growth in a very short period of time, which obviously draws attention to our infrastructure, and which now needs to be worked on in order to cater for further growth in our industry. Taking all this into consideration, I think that things will calm down a little over the next year or two, but we will see a further increase in years to come, as Malta still has to develop further and reach its full potential.

What has the ROI on property investments in Malta been like over the past decade? The ROI on property investment in Malta has been around 4 to 6 per cent throughout. How easy is it for foreigners to invest in buy-to-let properties in Malta – can they easily find a company to manage their investment in Malta? We have a fairly easy process when it comes to buying property. Today, real estate has become a strong industry to invest in, and one can easily find companies which work solely on taking care of anyone looking to buy-to-let, offering different kinds of services according to the clients’ demands. There has been an increasing trend for foreign investors to acquire property in Gozo – why is Gozo proving to be popular with investors? Gozo is known for its tranquillity and charm, but besides this, the main reason is that property prices are lower than those in Malta. One can get much more when comparing value and price.

Try to close on a farmhouse or house of character with a decent outdoor area… they will certainly benefit from very good capital appreciation.

What type of property should foreign investors look at in Gozo? I would definitely try to close on a farmhouse or house of character with a decent outdoor area, as these are becoming very hard to come by nowadays, and will certainly benefit from very good capital appreciation in due course.

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Malta’s Top Real Estate Locations

alta is a small place, so anywhere one may choose to live is never too far away from anywhere else. However, that does not mean that everywhere is the same – far from it, in fact. Towns and villages have their own characteristics which are reflected in the type of properties located in them, and the kind of people they attract. The first and perhaps most important step for foreigners looking to get acquainted with Malta’s real estate market is to explore the different locations to find the area most suited for them. An agent worth their salt can be vital in this phase by providing localised insights that a casual observer might miss. Valletta, as the nation’s capital and a UNESCO World Heritage Site, presents an excellent investment opportunity. It has undergone a remarkable transformation over the last decade as money has flowed into boutique hotels and guesthouses, upmarket residential, retail and office space, and food and beverage outlets, but there is a lot left to transform – and profits to be had – as it continues to develop its potential as a truly world-class destination. Sliema and St Julian’s make up Malta’s most cosmopolitan area. As hubs of the iGaming, financial services, tourism, and entertainment industries, they hold tremendous appeal for locals and foreigners alike. With the highest density of restaurants offering international cuisines, quality swimming spots, and high-end retail, property here goes at a premium.

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Gżira, San Ġwann, and Swieqi form a suburban ring around the above-mentioned towns, home to the international workforce of the industries located there. Gżira is recently coming into its own as a gastronomic and business destination, while Swieqi has more upmarket residential options. St Paul’s Bay and Mellieħa are the northernmost areas of Malta. They are major tourist destinations, with many of the country’s largest hotels situated here. The St Paul’s Bay environs include the resort areas of Qawra and Buġibba, while Mellieħa Bay is Malta’s largest sandy beach. Home to many expats, these towns offer properties across all price points. Marsaxlokk and Marsaskala are the prime tourism areas at the other end of the island. Marsaskala is more residential, though it has great restaurants, bars, and multiple beautiful beaches. A stunning nature park separates it from the more picturesque Marsaxlokk, with its waterside restaurants, a famous fish market, and traditional fishing boats. Compared to northern locations, property here offers great value for money, with high rental potential. The Three Cities, each known by two names – Birgu (Vittoriosa), Isla (Senglea), and Bormla (Cospicua) – are

Malta’s International Investment Guide 2023

similar to Valletta , not only by dint of their history and architecture, but also because they have witnessed a great surge of investment over the last years. World-class yacht marinas and some of the islands’ best gastronomic offerings can be found in their winding streets, which are today home to a sizeable community of expats residing in beautifully converted, characterfilled properties.

and rural surroundings, with stunning countryside and coastal vistas, make them popular with expats looking for a peaceful slice of Mediterranean life, and offer tantalising prospects for rental investment. Gozo is the smaller, quieter island, and property there can be had at a lower price than in Malta – although the difference is not as marked as it once was. In fact, it was the region that saw most property change hands in 2021, with investors eager to bite into what is fast becoming one of the country’s hottest real estate markets. A lot of development is centred in the capital, Rabat (also known as Victoria), which is the main urban hub with a wealth of entertainment and gastronomic options, and the main coastal resorts of Marsalforn and Xlendi. Many foreigners, however, prefer to invest in one of the smaller villages, where peace and quiet are still the order of the day. As an added bonus, security is often included in the deal; a friendly conversation with a neighbour is all it takes to ensure that nobody will come close to your property without your knowing about it in short order.

Birkirkara, Santa Venera, and Qormi rarely make it to tourist itineraries, but are very popular central locations for all kinds of workers, close to the Central Business District, Valletta, Mater Dei Hospital, and the main thoroughfare that runs through the country. Qormi, in particular, also offers a taste of the traditional Maltese way of life. Similarly, Mosta, Naxxar, and the Three Villages of Lija, Balzan, and Attard are part of the residential heartland of Malta, with their closer proximity to the open spaces of the north attracting more professional workers, and fetching higher prices. Investors looking for bargain properties with high upside potential should look at Ħamrun and Marsa, with the latter in particular being a depressed inner harbour area that the government is planning to regenerate in the coming years. Investors with long-term vision might find great potential for profit here. The towns and villages along Malta’s western coast – Mġarr, Rabat, Dingli, Siġġiewi, Qrendi, and Żurrieq – are those that best evoke the charm of times gone by. Their traditional elements

Spinola Bay, St Julian’s. Photo: a_lis / iStock

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Chapter 6: Property and Real Estate

Local Insight Meet Benjamin Tabone Grech Benjamin Tabone Grech is an architect and real estate entrepreneur in Malta. After practising as an architect in London and Berlin, he returned to Malta and re-joined the family business, and was later appointed CEO until summer 2022. Why should foreign investors choose Malta to invest in real estate? Malta is and has always been a special place; the real estate landscape has seen profound changes and growth over the years, and is recently proving further that it has solid foundations within specific market segments. Good returns and steady capital appreciation make Malta a solid place to invest. What has the ROI on property investments been like in Malta over the past decade? On average, ROI has hovered around 5 per cent, but when an asset is higher in value, this can drop close to 3. Smaller properties within a UCA (Urban Conservation Area) being managed on a short rental basis are proving to generate fantastic ROIs. How easy is it for foreigners to invest in buy-to-let properties in Malta – can they easily find a company to manage their investment in Malta? There are many companies that offer such services, and as with any business in any country, the relationship with the team who manage it is of utmost importance. Transparency is key, and tests of reliability should always be implemented.

in Malta. When unconverted, you may strike a deal on the initial purchase price, but if the conversion project is not managed well with an experienced architect and contractor, the cost to convert may be higher than anticipated. Buying converted is most investors’ preferred choice but it needs to be understood that there will be a premium to it. If you were a foreigner and had to invest in a property in Malta in 2023, what would you go for? I would focus on typical Maltese properties, small in size and value, in any village, always within the UCAs.

What’s your personal projection on the local property market for the next three to five years? I believe that going forward, we shall see a stronger divide between new build mass market properties and the typical Maltese property. We have, with no doubt, a large supply of new builds on, and coming to, the market, where questions about current prices being sustained are being put forward. The dwindling supply of townhouses, terraced houses, and houses of character that are converted will retain a premium.

Although it is a niche market, there has been a trend, over the years, for foreign investors to acquire converted or unconverted historical houses in Valletta, the Three Cities, Mdina, Għargħur, Lija, Balzan, and other towns and villages across Malta – do you agree that such acquisitions will yield a very healthy return on investment? A box full of surprises – both pleasant and unpleasant. It is true that these properties are authentic and are what it really means to buy

Good returns and steady capital appreciation make Malta a solid place to invest.

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Special Designated Areas

any of Malta’s most prestigious addresses are found in Special Designated Areas (SDAs). These luxurious developments provide a superior standard of living with the stylish finishing of each property complemented by landscaped gardens, beautiful communal areas, and worldclass amenities, often including dedicated swimming pools, fitness clubs, parking, and security.

Madliena Village Hidden away in the rolling hills of Malta’s verdant north, Madliena Village is a gated community enjoying panoramic views from its traditionally designed balconies. Its location makes it perfect for those who prize peace and quiet, yet it is only a few minutes’ drive away from major commercial and entertainment districts.

There is no limit and no prior authorisation required for citizens of any country to purchase any number of properties in SDAs, making them particularly attractive to non-EU nationals (see p. 166). Additionally, owners of SDA properties may rent them out without restriction, allowing them to generate cash flow on their investment (subject to 15 per cent tax).

St Angelo Mansions This residential waterfront development lies at the centre of the Grand Harbour against the backdrop of Birgu’s Fort St Angelo, the site of a storied defence during the Great Siege of Malta. This, together with the spectacular views of Valletta, make it a favourite among investors who put a premium on history. The area includes a marina with superyacht amenities and several renowned restaurants.

Portomaso Situated in the heart of St Julian’s, Portomaso is one of Malta’s most coveted addresses, featuring a yacht marina, excellent restaurants, and several high-end retail outlets. The complex includes Portomaso Tower, Malta’s tallest building until 2020, the Hilton Hotel, TwentyTwo, Malta’s most exclusive nightclub, and the Portomaso Casino.

Pendergardens Offering a mix of apartments as well as villas, Pendergardens is an oasis of tranquillity amidst the bustle of St Julian’s. Built around a landscaped piazza, the development also includes a communal pool and a supermarket.

Tas-Sellum Residence Tas-Sellum is flanked by 17,000 sq m of landscaped grounds and gardens, and offers glorious sea and country views. It is an ideal summer residence for those who love to get their feet wet – whether at neighbouring Mellieħa Bay, Malta’s largest sandy beach, or in the complex’s three large swimming pools.

Tigné Point and Fort Cambridge Zone These two developments are situated on the Tigné Peninsula in Sliema, with stunning sea views to one side and Valletta to the other. As the beating heart of Malta’s most cosmopolitan locality, the area has some of the island’s best shops, restaurants, and bars, while crystal-clear waters are located a stone’s throw away.

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Mercury Towers, St Julian’s

Smart City The Smart City complex just outside Kalkara is a mixed-use development with offices home to several tech businesses and leisure facilities, along with restaurants and bars. The Shoreline, its residential component, is in the works, and will feature over 400 homes, communal swimming pools, and a shopping mall. Fort Chambray Built inside the imposing walls of a historic fort on the outskirts of Għajnsielem, Gozo, this development takes the meaning of ‘gated community’ to the next level. After undergoing a sensitive restoration, Fort Chambray is now a low-density complex offering gorgeous views and total privacy. Mercury Towers Malta’s tallest building rises out of the 19th century Mercury House in St Julian’s. The innovative tower was designed by the world-famous Zaha Hadid Architects, with a mid-way change in orientation that will surely become an iconic landmark. A smaller tower will house a hotel. Although construction is still underway, investors have already snapped up most residences, an indication of Malta’s continued growth as a safe destination for capital.

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Kempinski Residences Kempinski Residences include villas and apartments in luxurious surroundings outside San Lawrenz, Gozo. Both private and serviced units are available. Quad Business Towers These four towers dominating the central landscape offer professional and commercial office space situated amid a spacious, landscaped outdoor area. The piazzas provide access to retail outlets and restaurants, while an on-site supermarket, a fitness and wellness centre, and childcare amenities make life easy for tenants at The Quad. Other SDAs The above is not an exhaustive list of the options available to investors in SDAs. There is also Ta’ Monita, in the southern coastal town of Marsaskala, Southridge in Mellieħa, Manoel Island in Gżira, and Vista Point, in Marsalforn, Gozo. Several other projects designated as SDAs are currently in the pipeline.

MaltaInvest2023

Chapter 6: Property and Real Estate

Sliema

Commercial Property Investment

s Malta continues its forward march through the 21st century, there has been a notable increase in mixed-use developments that combine residential, touristic, and commercial functions. Demand for office and retail space has risen in line with residents’, visitors’, and businesses’ expectations, and there are several large projects at varied stages of construction that promise to build on the country’s economic success by raising the standard of its real estate offering. Those in SDAs, like Smart City and Quad Business Towers, are ripe for foreign investment. The rest of the commercial property market might be more difficult to penetrate, especially in view of the work-from-home phenomenon and a glut of hospitality-related developments. The market, of course, remains open to innovative ideas and the introduction of new concepts, but in this sector, finding the right local partner whose vision is in alignment with your own is simply essential.

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Photo: Marc Casolani

Malta’s International Investment Guide 2023

Local Insight Meet Ian Casolani Ian Casolani is CEO of Belair Real Estate, one of the leading players in the local real estate industry. He is a Founder and Director of the International Property Fund, a professional investor fund licensed by the Malta Financial Services Authority, and a Council Member of the Malta Chamber of Commerce. Why should foreign investors choose Malta to invest in real estate? For decades, Malta has continued to prove itself as an ideal place for expats to invest in real estate. Besides the obvious advantages – language, climate, and safety – the fact that the local property market is a mature market, and the rate of domestic property ownership is so high, means that the market is not volatile. In fact, for decades, despite uncertainty in other parts of the world, the market has remained stable and always enjoyed steady growth, which offers security and peace of mind to any international client investing in Malta. What has the ROI on property investments been like in Malta over the past decade? The appreciation in property prices across the various sectors has varied between 3 per cent and as high as 11 per cent annually over the past decade, which would equate to an average growth of 7 to 8 per cent per annum. When it comes to the rental ROI that one can expect on their property investment, this varies across the board, depending on the type and size of the property, its location and purpose. If one does their work well and buys intelligently, a residential property can yield an ROI of circa 5 per cent per annum, whereas the ROI on a good commercial investment can go as high as 8 to 10 per cent. How easy is it for foreigners to invest in buy-to-let investments in Malta – can they easily find a company to manage their investment in Malta? International investors can easily tap into buy-to-let investments in Malta, however for a third-country national (non-EU), there could be restrictions if the property is outside an SDA (Special Designated Area). An investment is deemed attractive based on its rental probability and its return on investment, guided by its location and added value, which in turn will guarantee a higher growth in value over other properties. If an international investor is not based in Malta, there are a number of property managers or property management companies that can oversee the regular maintenance and upkeep of the property, as well as the rental management of the property. The success and return on the investment are often determined by the seriousness and ability of this management service provider, so it is important that an investor looks into this before committing.

What are SDAs and why are they so popular with foreign investors? When a property falls within a Special Designated Area, or SDA, it allows an international client (non-EU), whether resident or not, to acquire a property or multiple properties within the area, without the requirement of an AIP (Acquisition of Immovable Property) permit. Furthermore, an international investor can rent this property out freely without the need of any special permits or exemptions, other than the general registrations required, such as an MTA licence if used as tourist accommodation. This means that the process for an international investor is much simpler when investing in an SDA. Any international investors from the EU are free to invest in any type of property without any restrictions whatsoever. What’s your personal projection on the local property market for the next three to five years? The Maltese property market has always seemed to be isolated from the rest of the Western world and often seems to have its own dynamic. In fact, over the years, through wars, recessions, and a pandemic, it has continued to grow and offer steady returns, despite overseas property markets taking a hit. Having said that, I believe that it is not a time for any investor to be too bullish or aggressive, and more than ever one should do their homework carefully (especially the less experienced investors) before making any move. Certain segments of the market are experiencing oversupply and at the same time, others, especially those with outdoor space, are being snapped up so long as they are realistically priced. I believe this trend will continue in the coming few years. I expect that buyers and investors will also pay more attention to quality, design, and added value than they might have done in the past five to eight years.

Wars, recessions, and a pandemic – Malta’s real estate market has continued to grow and offer steady returns, despite overseas property markets taking a hit. 175

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Chapter 7

Gaming

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 7: Gaming

Overview

alta’s reputation as a hub for iGaming can nowadays be said to precede it. Home to over one in 10 of all global operators, including many of the biggest names, the jurisdiction is advanced, experienced, and respected. As the first European Union state to enact comprehensive legislation on remote gaming, it has enjoyed the fruits of its foresight as the champion of a sector that has experienced continuous, explosive growth, and today consists of over 300 companies engaged in every aspect of the industry, serviced by hundreds of others providing all kinds of support.

The dedicated legal framework allows companies to operate with the peace of mind that only solid regulatory ground can provide, while the corporate tax regime (see p. 64), of course, is a major attraction for investors in this space.

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However, it would be reductive to pin the success of Malta’s positioning as a centre for gaming to one or two factors alone. Rather, it is the result of a happy marriage of many elements, including the authorities’ welcoming and flexible approach, the sterling reputation of its regulator, the depth of insight of its service providers, and the widespread use of English, to name a few. As a global nexus for the industry, the opportunities for synergy are endless, giving rise to a bustling market of innovation. Just as importantly, for a sector that embraces it as a mark of identity, Malta exudes fun. The 300 days of annual sunshine, the multitude of cultural, sport, and entertainment activities, and the warm embrace of the resident population make it a uniquely inviting place to live and work, for entry-level staff, CEOs, and everyone in between. The island lifestyle and everything that comes with it is cited as a key reason for

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operators’ decision to set up or expand their footprint in Malta, conscious as they are that the talent they want to attract cannot be bought by money alone, but by the entire value proposition of working on exciting projects in a fast-growing industry against the backdrop of a magnetic location backed by world-class technology infrastructure.

Photo: gremlin / iStock

Almost two decades after Malta planted its flag on the then-nascent field of iGaming, the sector is increasingly gaining global recognition, with countries in every continent replicating the country’s trailblazing blueprint and opening up their markets to remote gaming – with Malta-based companies in pole position to leverage their experience and pounce on the golden opportunities these developments present. In a move that will come as no surprise to long-time observers of its economic development, Malta has not been content to sit on its laurels, and has in recent years actively promoted itself as a place where other segments of the broader gaming sector can feel like they belong. The video game development and esports industries are now in the country’s crosshairs, and the strategy is already yielding results, with some of the biggest names in both of these rapidly growing fields recognising its potential and putting Malta firmly on the map as a true home of gaming.

Tipico Tower, St Julian’s

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A HUB WITH HUNDREDS OF OPERATORS SERVING TENS OF MILLIONS OF PLAYERS NUMBER OF COMPANIES HOLDING AN MGA iGAMING LICENCE 400 350

Number of companies

300 250

Additional companies falling under Corporate Group Licence

200 150

165

332

141

314

284

100 0

2019

2020

2021

Source: MGA

NUMBER OF EMPLOYEES WITHIN GAMING

representing

5.4%

of the total workforce

14,950

Photo: Evgeniy Shkolenko / iStock

Total employment in gaming sector

9,919

Employees working directly with online gaming companies on licensed activities

ACTIVE PLAYER ACCOUNTS 40,000,000 35,000,000 30,000,000

Source: MGA. Data corresponds to December 2021 figures.

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35,459,498

of whom are foreign

36,196,001

70%

5,000,000

26,911,119

15,000,000 10,000,000

22,647,155

25,000,000 20,000,000

2015

2018

2020

2021

0 Source: MGA

Malta’s International Investment Guide 2023

Malta – a Global iGaming Jurisdiction

alta’s emergence as the epicentre of iGaming is testament to its economic and political acumen, and can perhaps be said to serve as its prime example. A rocky archipelago with little by way of natural resources, the country’s economy has always needed a deft hand to guide its development. The prescience shown by policy makers and economic stakeholders at the turn of the millennium in drafting ground-breaking legislation dedicated to an industry that was then still in its infancy encapsulates the considered approach to economic planning that has become the hallmark of Malta – an economy led by brains, not brawn.

Upon its accession to the EU in 2004, Malta became the first member state to have online gaming regulations in place. Full access to the Single Market granted Maltese companies the ability to advertise and provide their products and services anywhere in the bloc, while freedom of movement made the prospect of building multinational teams far more viable, vastly increasing its appeal. Since then, Maltese public authorities have been on a mission to create the right environment for gaming operators to feel safe and protected by extending constant support to the sector, which benefits from preferential tax rates for key employees (see p. 40), specialised education, and constant investment in the country’s digital infrastructure.

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The consistent increase in the number of operators holding a Maltese licence and of those choosing to set up shop in Malta – including many of the biggest names – attests to the country’s proven track record as both a jurisdiction of choice and a dynamic economic hub for iGaming and its ancillary services. The licensing process is stringent yet efficient, and the Maltese licence is held in high regard internationally. The regulatory regime is technology-neutral and game-neutral, with a rigorous consumer focus, making it simple and straightforward to run a successful global business. Its responsiveness to sectoral developments, whether legal or technological, and to emerging challenges and opportunities, such as enhanced efforts to combat money laundering and the emergence of cryptocurrency, makes for a stable and attractive environment in which the industry can flourish. As an iGaming hub, Malta is home to a booming ecosystem of operators and support services, including lawyers and accountants specialised in the field, developers, designers, affiliates, customer care outsourcing, search engine optimisation agencies, data centres, and everything else required to set up and grow a remote gaming business. The workforce is highly skilled and multilingual, and includes a large number of expats from all around Europe and beyond who are drawn to the islands’ good weather, natural and cultural attractions, and pleasant Mediterranean lifestyle. The nature of the industry means that reliable internet connectivity with high-speed data transfer is crucial. This technological backbone is amply supplied by three main private telecommunications operators, and is an integral part of Malta’s world-class digital infrastructure (see p. 45), which successfully supports hundreds of operators with a global scope. Change can come fast in a space as constantly in flux as iGaming. Today’s frontrunners are not guaranteed to be so tomorrow. Growing protectionist tendencies in some European countries have challenged operators’ regulatory dexterity, while the opening of North American, Latin American, and Asian countries to remote gaming offers tremendous potential for lucrative opportunities. The race for market share is heating up. An uptick in merger and acquisition activity in recent years is now being augmented with partnerships between US land-based gambling enterprises and European remote gaming companies, as the former seek the experience and expertise only mature operators can provide.

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Malta was able to capitalise on its first mover advantage within the EU, and is today seen as a hub of gaming excellence like no other. Future growth will occur under a different set of conditions, but the approach it has taken, working in harmony with operators, consumers, and other jurisdictions, will be no less important. Thanks to this approach, Malta, like no other, knows what is needed for remote gaming to thrive. Malta, like no other, understands iGaming.

The Regulator To say that the Malta Gaming Authority is the most respected remote gaming authority in the world is hardly an overstatement. It is at the forefront of the support Malta extends to the sector by maintaining open communication with all stakeholders, adapting to changing priorities, and ensuring that the jurisdiction remains ahead of the curve. In fact, the Malta Gaming Authority (MGA) licence is widely

Photo: nadia / iStock

Malta’s International Investment Guide 2023

viewed as the industry standard by which all others all measured. The blue-ribbon standards licensees are obliged to uphold in order to obtain and retain the MGA’s stamp of approval mark them as honest and reliable companies in the eyes of consumers, partners, and authorities alike. As the body responsible for the governance and supervision of all gambling activities in and from Malta, the MGA oversees the provision of fair, responsible, safe, and secure gaming services, with particular emphasis on the prevention of crime, fraud, and money laundering, and the protection of minors and vulnerable persons. It is also tasked with advising the government on new developments and risks, and submitting legislative proposals to address changes in the sector, in accordance with its high-level functions of sustaining Malta’s position as a centre of iGaming excellence and raising

global standards to make gaming fairer and safer, thereby protecting consumers’ interests. Maintaining good relations with operators is central to its tasks, and in fact the MGA is widely regarded as a partner as well as a regulator. It keeps its ear to the ground, and is sensitive to the needs of industry, understanding that the high quality it expects is best achieved when all stakeholders buy into the need for it. Its flexibility and empathy for its licence-holders were on display during the Covid-19 pandemic, when it deferred payments due from operators of sports betting activities in view of their cancellation. The example that perhaps best illustrates the balancing act between its commitment to exacting standards and its support for operators was the extension of the deadline for the submission of licensees’ audited accounts, in recognition of the difficulties created by the pandemic; the unaudited accounts, however, still needed to be filed on time. The cultivation of its golden reputation has not been free of misstep. Operators with links to organised crime have been uncovered, exposing vulnerabilities in its compliance framework. Although these rogue outfits represent a vanishingly small proportion of Malta-based operators, the negative light shed on the industry was registered as a significant threat, leading the authority to beef up its supervisory and enforcement mechanisms to ensure no gaps remain for illegitimate enterprises to exploit. These efforts paid off – despite the unprecedented scrutiny all elements of Malta’s economy were subject to during Moneyval and FATF screenings, before, during, and after the country’s greylisting, the gaming sector emerged unscathed, cementing the good standing of regulator and licensees alike. The MGA is in a constant process of renewal as it strives to increase the efficiency and effectiveness of its monitoring obligations while meeting the needs of its licensees. As it looks to the future, it is taking note of the opportunities offered in the fields of automation and machine learning, ensuring that the supervisory process keeps up with the sector’s rapid development.

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Local Insight Meet Jesper Svensson Nasdaq Stockholm-listed Betsson serves millions of customers every year, winning accolades for its playercentric approach along the way. Jesper Svensson joined the company as the Managing Director of its flagship brand in 2013, eventually being appointed as CEO of Betsson Operations. Betsson was among the first iGaming operators to set up shop in Malta. Today, it is one of the world’s, and Malta’s, largest and most successful gaming companies. What drew you here, and what keeps you here today? Malta has been at the forefront of regulation when it comes to iGaming. In 2004, Malta became the very first EU jurisdiction to embrace regulation and licensing, and as a result of that, many operators looked at Malta as a potential base for some of their operations. At Betsson we embraced the opportunity presented by Malta some 20 years ago and opened our very first office here back in 2004. Since those early days, Malta’s whole business infrastructure has developed exponentially. More importantly, we have seen some of our vendors set up shop in Malta in order to service the industry, making it easier for us to run our business. All of this means that we now have thousands of professionals who directly or indirectly work with the gaming industry, vastly increasing Malta’s talent pool and providing even more opportunities. On top of that, there is, of course, everything else that Malta has to offer – its rich history, diverse culture, amazing weather, fun entertainment venues, the Mediterranean lifestyle, and the Maltese people themselves – hospitable, hardworking, and welcoming. Today, we consider Malta as our operational headquarters, with two offices on the island – one in Ta’ Xbiex and one in St Julian’s, employing close to 1,200 talented Betssonites. Our people represent approximately 60 different nationalities. In Malta, the largest proportion of them (around 30 per cent) are Maltese. What support has Betsson found from local authorities? We have always felt the support of local authorities in myriad ways. We also feel a strong connection and support from the Malta Gaming

We still believe that Malta is the hub and centre of excellence for online gaming.

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Authority, and I feel that it has always had a two-way communication which is beneficial to understand each other’s position and perspectives. I must also mention the valuable work that Gaming Malta is doing in promoting the island as a centre of excellence in the digital and remote gaming sector globally, while the educational initiatives, the student placement programme, as well as the Basecamp workspace, further nourish local talent. Can you highlight some major milestones and successes in Betsson’s evolution? Betsson traces its origins back to 1963 when it all started with a single slot machine in a restaurant in Sweden. In the mid-90s, we started exploring the world of online gaming through the company Net Entertainment, even though the internet was still in its early days. We started working with the Betsson brand in 2003 and acquired it fully in 2005. Net Entertainment and the Cherry Group have since been separately listed and eventually bought for billions of euro, creating fantastic shareholder value. Over the years, we have acquired more brands and developed our own. We currently have a portfolio of more than 20 brands running mostly on our own technology platform. In terms of regulations, we started off our online gaming offer on one licence from Malta. In the following years, the topic of regulation of online gaming started to gain momentum on a wider European level and some countries started looking into introducing their own licenses. This trend is ongoing, and today we are licensed in 19 jurisdictions around the world. What does the future hold for Betsson? We are lucky to work in a sector that is expanding and in the digital space, where there are countless exciting options that are worth exploring. We have historically concentrated on Europe, but we are now looking for prospects beyond. Indeed, our growth strategy includes geographic expansion, and we intend to enter regulated or regulating markets where there are favourable circumstances and significant potential for growth. Lately, this has caused us to concentrate on Latin America. Malta will remain strategic for us, of course, but because of the nature of our business, together with some of the limitations when trying to hire for specialised roles, we need to have presence in other countries too. Currently we have offices in 14 countries, with the latest one being Bogota, Colombia. That does not mean that we are planning to leave Malta – we still believe that Malta is the hub and centre of excellence for online gaming.

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Remote Gaming Licensing and Regulation Licensing A reform of the regulatory framework in 2018 simplified the licensing regime, making it easier than ever for companies to be active in multiple market segments. The new regime has done away with the previous need to obtain a licence for each game, in favour of a system with two main licences – one for B2C activities, and another for B2B activities. Once licensed, a company only needs to get approval to offer different game types. Another feature of the reform is the introduction of corporate group licences, which allow multiple companies to be covered by one group licence, thereby reducing bureaucracy. For example, a B2B provider that only supplies its products and services to other entities within a B2C-licensed corporate group has no need to obtain a separate licence. Gaming licence applications go through four internal streams of processes before being accepted. First, the applicant’s fitness and propriety are evaluated by assessing all the information related to the entities and persons involved, including directors, key personnel, ultimate beneficiary owners, and, where deemed necessary, financiers. Second, in parallel to the due diligence vetting, an in-depth financial analysis of the applicant’s business plan is conducted, including an analysis of the financial soundness of the applicant and the viability of the business proposition. The business plan is expected to have a detailed forecast of the proposed operation, inclusive of marketing and target market strategies, HR plan, and financial forecasts.

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Spinola Bay, St Julian’s. Photo: iStock

Once this review is completed, the third validation process begins, being a desk-based review of the applicant’s statutory and operational documents to ensure that the applicant is equipped to conduct the proposed operations in a compliant manner. This process includes assessing incorporation documents, operational policies and procedures, internal controls, game specification documents, and the technical documentation of the gaming and control systems. Inconsistent and low-quality applications are rejected. Finally, a system review is also undertaken. For this, the applicant is required to implement the operation onto a technical environment in preparation to go live, and to appoint an MGAapproved service provider to carry out the review, which will audit and verify the live environment against the proposed application. It is only when these four main pillars of the licensing process are complete to the MGA’s satisfaction that a licence is issued. As you can see, the licensing process is thorough, and relatively onerous. The MGA does not hand out licences to anyone who knocks on its door, or, to borrow a Maltese saying, like pastizzi – a reference to the cheap, popular street

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food that can be found all around the country. But then, that is why the MGA licence is a reliable seal of honesty and good repute which is trusted the world over. Malta has no interest in catering to amateur or shady outfits, and, mindful of its good name, which it jealously guards, the MGA does its best to make sure that its licensees’ patrons and partners alike can rest assured that they are dealing with credible, trustworthy operators.

Compliance Once a licence is issued, the MGA continues to monitor operators’ activities to ensure that they are compliant with all the stringent criteria they are required to uphold. An initial audit is held within the first years of operation, and subsequent audits are planned via a risk-based approach. Compliance-related actions include, for example, the monitoring of accounts held with credit, financial, and payment institutions to ascertain that player funds are kept segregated and are sufficient to cover player dues. The MGA also keeps an eye on commercial communications, which must adhere to socially responsible standards, including, among others,

Malta’s International Investment Guide 2023

Local Insight Meet Kenneth Brincat After one year at the helm, Kenneth Brincat gives us an insight about his role as CEO of the Malta Digital Innovation Authority. The MDIA is the first regulator of its kind in the world, certifying Distributed Ledger Technology (DLT) platforms and smart contracts while handling the voluntary registration of technology arrangements. What value does the Malta Digital Innovation Authority (MDIA) offer investors in this sector? Malta was the first jurisdiction in the world to establish a legal framework aimed at crypto assets and the underlying technologies. The approach Malta took was an innovative one – it is widely recognised that due diligence on the service providers and the services themselves is necessary in order to safeguard users and investors. However, Malta recognised that when it comes to innovative technology, there are additional risks that, as a jurisdiction, one would want to safeguard against. When failure of technology can result in major losses, be it of assets or otherwise, there lies a moral obligation to safeguard users through due diligence of the underlying technology. The role of the MDIA lies in regulating with respect to technology safety. Indirectly, this safeguards investors, who can be assured that the technology is sound. The assurance being provided means that the technology at hand is doing what it is meant to do, and investors therefore have peace of mind that their money is being put into a serious product. Having such regulation in place also sends a clear message that Malta is serious about this sector, and that it intends on addressing matters related to it in the best possible way. We strongly believe that regulation can be used to enable, rather than hinder, technological innovation. This is backed up by the MDIA’s open-door policy, through which it is always available for dialogue on how to better enhance the local ecosystem, especially when collaborating with other entities. What benefits can prospective investors in the innovation space expect when setting up in Malta? Adopting such an approach has made Malta an attractive jurisdiction with multiple advantages. Most importantly, it shows that the country embraces a stance through which regulation helps in the attainment of the benefits that new technology offers. Investors find peace of mind in knowing that their investments are supported by a legal framework, especially since, by their very nature, it is difficult for the user to have an informed opinion on the security and safety of innovative technological services and products. Providing tools that enable such an informed opinion empowers users and gives investors further assurances when backing innovative technologies.

The authority also offers a sandbox environment for earlystage developments in the field. What does this mean and how do investors and entrepreneurs benefit from it? The Technology Assurance Sandbox is a facility designed to support the development of innovative digital products and services. The approach provides particular value to start-ups and smaller players, allowing them to have official recognition of their use of appropriate care and adoption of international standards when developing their solutions. We are now seeing the adoption of such technologyoriented sandboxes as a regulatory tool by the EU, as well as an enabling tool in the private sector, by, for example, Meta. What are the main new trends and phenomena in innovative development that are best suited to Malta? Many innovative technologies developed over the past few decades have enabled the scaling up of existing processes. For instance, while fraud detection in financial services was, until recently, largely a manual process aided by automated tools, recent advances in AI have enabled more thorough and fine-grained analysis that would have required too many resources using traditional approaches. Given the size of Malta, innovative technologies can be scaled up to a national level, while connecting the different applications for a harmonised approach. This can be seen, for instance, in the National AI Strategy, which specifies six projects that are aimed at adopting AI into everyday life with a focus on leaving a positive impact on society. The projects range from traffic management to education to health, with a common goal of collecting and collating data which would otherwise be difficult to analyse manually. AI techniques will enable the analysis of this data to improve and enhance the quality of our everyday lives.

We strongly believe that regulation can be used to enable, rather than hinder, technological innovation.

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prohibitions on any communication that portrays gaming as socially attractive, a life priority, or a solution to one’s social, educational, professional, or personal problems.

of suspicious betting to the authority and active data-sharing agreements with bodies covering most major sports, from football to cricket to billiards.

The risks of gambling, of course, go beyond the money staked. The MGA takes responsible gaming seriously, carrying out routine audits of licensees’ dedication to player protection to ensure that systems are in place to quickly identify and help those at risk of harm. Licensees are obliged to offer players a suite of responsible gaming tools granting them increased control over the amount of time or money spent on gambling.

In the fight against money laundering and the financing of terrorism, the MGA takes a leading role by vetting each operator’s designated Money Laundering Reporting Officer (MLRO) and working closely with the Financial Intelligence Analysis Unit, Malta’s financial crime watchdog, and the Malta Business Registry.

The MGA meanwhile takes a proactive approach to the threats posed by match-fixing and malicious sports betting, with a specific mechanism that requires licensed operators to report instances

Through these commitments arising from the regulatory structures, aimed at protecting players as well as wider society, the MGA also safeguards the Maltese gaming licence, to the benefit of operators and state alike.

GAME TYPES

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TYPE 1 Games of chance played against the house that have an outcome determined by a random generator. This includes casino-type games, such as roulette, blackjack, baccarat, poker played against the house, lotteries, secondary lotteries, and virtual sports games.

TYPE 2 Games of chance played against the house that have an outcome which is not generated randomly, but is determined by the result of a competition, such as a sports event, and whereby the operators manage their own risk by managing the odds offered to the player.

TYPE 3 Games of chance not played against the house where the operator is not exposed to gaming risk, but generates revenue by taking a commission or other charge based on the stakes or the prize. These include player versus player games such as poker, bingo, betting exchange, and other commission-based games.

TYPE 4 Controlled skill games, such as fantasy sports competitions.

Photo: George Scintilla

Malta’s International Investment Guide 2023

Local Insight Meet Trevor De Giorgio Trevor De Giorgio is the Head of Compliance at Play’n GO. He previously served as Chief Legal and Compliance Officer at Greentube. In 2019, he won the Global Regulatory Award as Chief Compliance Officer of the Year. Malta has managed to retain its attractiveness as an iGaming jurisdiction despite growing competition and regulatory challenges. What’s behind its continuing success? Malta has maintained its position as a top tier gaming regulator for a number of reasons. First off, the Malta Gaming Authority continues to work on further strengthening the reputation of the authority itself and also the regulatory structure in place. The changes made in various other sectors following Malta’s greylisting by the FATF have also been positive for both the regulator and the country. That being said, we cannot afford to let our guard down, and the role of the MGA as a gatekeeper vis-à-vis reputation is key and vital in growing stronger. Licensees on their part also have an important role to play. Operating within the parameters of their Malta and international licences is key towards strengthening the industry. How is doing gaming business in Malta today different to how it was in previous years? The industry in Malta has definitely matured over these past 20 years. Lest we forget, this industry has just celebrated the 20th year of existence on our shores. It’s safe to say that it has gone from strength to strength, despite some hiccups along the way. The industry is resilient, as is the jurisdiction, and hence we have seen years of continuous growth. Maturity is definitely the key word here, however, what has also changed, in my view, is the need to have a strong compliance culture in order to approach the new regulatory landscape all stakeholders face, particularly in Europe, where the lack of a common approach has led to piecemeal regulation, to the detriment of licensees and other stakeholders. Such bureaucracy allows unlicensed operators with little or no scruples for the safety of the consumer to thrive in certain environments. More needs to be done here to protect the industry. There have been numerous other changes in the industry, technologywise, games-wise, and even from the regulatory aspect – however, to me, the main takeaway is that this industry has matured. What support has Play’n GO found from local authorities? Local authorities in Malta have provided invaluable support. The Malta Gaming Authority on its part has always strived to offer the most wellbalanced regulatory structure in place. By this I mean that the MGA has always sought to balance the interests of the customer, the industry, and also the jurisdiction when regulating the sector. Having a regulator that is industry-sensitive helps in developing a stronger market.

Can you highlight some major milestones and successes in Play’n GO’s evolution? Going right back to the origin of the company in the early 2000s, I continue to be struck by the vision that our CEO and the foundation team had – that casino games would be played on mobile phones. This was before the smartphone existed, of course. Play’n GO also invested heavily in our technology a number of years ago that now allows us to scale to meet the needs of our business and that of our customers. We can now effectively handle any volume of players, and are also able to launch games without any downtime at all. Our games are built to be fun and entertaining first and foremost, and that ethos is probably THE success story of the business. What does the future hold for Play’n GO in Malta? Malta has been, and continues to be, a vital place for the iGaming industry to do business. The licensing regime run by the MGA is of significant importance to us and to our customers, so it is essential for the business to continue to call Malta our home. We are continuing to invest in our Maltese operations and have key staff from all areas of the business located here – we don’t see that changing anytime soon.

Having a regulator that is industry-sensitive helps in developing a stronger market.

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Photo: Alan Carville

Chapter 7: Gaming

Local Insight Meet Ivan Filletti In his role as the Gaming Malta Foundation’s Chief Executive, Ivan Filletti engages with stakeholders and provides business support to ensure that Malta is the most attractive environment for the gaming industry to thrive. What is it about Malta that makes it such an iGaming powerhouse? Malta has created welcoming infrastructure that makes it easy for a gaming organisation to come and set up here, and basically be a stage for its global ambitions. Our strength lies in our ecosystem: from the talent that is here, the companies, whether they are engaged in B2C or B2B activities, to all the additional services that are provided to the gaming sector, from legal to finance to tech. Companies interested in doing business in Malta will find a very welcoming government that safeguards and promotes the iGaming sector – which is not found in many other jurisdictions. Moreover, the Malta Gaming Authority is a tough but fair regulator, and highly esteemed within the sector. Then there are structures like the Gaming Malta Foundation. Our job is not just to promote Malta as a home of gaming excellence, but to actively take part in building it. It can be described as a centre, or a hub, but what we really are is a home. How so? We’re a home because we want people to feel comfortable here. We want the investors to feel comfortable here. We want the CEOs and support staff to feel comfortable here. One aspect that really struck me, when borders were shut at the beginning of the pandemic, was the number of iGaming employees stuck outside Malta who wrote to us, pleading, “Bring us back home!” These were not Maltese people, but they felt that Malta was really their home. When investors look into setting up operations in a country, they don’t just consider what’s in it for them. They want to know whether they will find talent, and whether their talent will be happy there. Will their talent’s

You can describe Malta as a centre, or a hub, but what we really are is a home.

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families be happy there? So what Malta offers is the full ecosystem, that goes beyond the purely business element. Gaming Malta has been very active in expanding the sector towards esports and even video game development. Can you tell us more about this development? We believe that, having built this ecosystem for iGaming, there’s nothing stopping us from building the same for the video game industry. The first strategic block is talent, and together with [video game developer] Unity Technologies, we created a programme at University and MCAST, which will see around 400 graduates academically certified by Unity. We have also built a 700 sq m incubator space, a top-notch facility for high potential ventures called Basecamp, and we are working very closely with Malta Enterprise to create special incentives and initiatives for this industry. The S-Tier ESL Pro League is also being held in Malta, bringing in professional esports athletes from around the world. We’ve been able to leverage our position as a European jurisdiction and a top tourism destination, putting Malta on the map at the very highest level of the sport. One of Europe’s top immersive tech companies, Draw and Code, recently relocated their research and development facility to Malta. One of their top investors is Entain, one of the largest iGaming groups. You can join the dots. There are video game studios like Exient, PlayMagic, 4A, working with the top publishers in the industry, and some great local success stories like Flying Squirrel and Anvil Studios. Amazing Geeks, owned by Voodoo, is based in Base Camp. Most recently, Keywords, one of the most important technical and creative services suppliers to the industry, announced that it will be establishing a presence in Malta. So there’s a lot happening right now – things are moving fast. What opportunities should investors look out for? We are building up a very strong ecosystem between esports, video gaming, and iGaming. What we are seeing is convergence of technology. People in these different industries talk to each other, especially when it comes to immersive tech. The use of Virtual Reality (VR), Augmented Reality (AR), developments in the metaverse – that’s what we’re building. We are steadfast in our commitment to having the right elements to build a platform for success, and we are open for business.

Malta’s International Investment Guide 2023

Fees It costs €5,000 to apply for a licence, whether B2C or B2B, and €1,000 to request approval of a new game type. Once approved, the annual licence fees are: B2C Fixed Annual Licence Fee Fixed annual fee – €25,000 For operators solely providing Type 4 gaming services – €10,000

B2B – Critical Gaming Supply Fixed Annual Licence Fee B2B operators supplying and managing material aspects of Type 1-3 games Having annual revenue under €5,000,000 – €25,000 Having annual revenue between €5,000,001 and €10,000,000 – €30,000 Having annual revenue above €10,000,000 – €35,000 B2B operators supplying and managing material aspects of Type 4 games Fixed annual fee – €10,000 B2B operators supplying and managing software Having revenue under €1,000,000 – €3,000 Having revenue over €1,000,000 – €5,000

B2C licensees are also subject to a compliance contribution worked out as a percentage of their gaming revenue, which can be summed up as the totality of wagers less the total withdrawable winnings (the actual calculation, found in Directive 4/2018, is a bit more complex, reflecting operational realities). The exact percentage varies by game type and revenue band, with the details available on the Malta Gaming Authority website (mga.org.mt). Here, it suffices to present the applicable minimum and maximum contributions:

COMPLIANCE CONTRIBUTIONS 600,000 550,000 500,000 450,000

300,000 250,000

€500,000

€5,000

€25,000

€500,000

50,000

€600,000

100,000

€25,000

150,000

€375,000

200,000

B2C Type 1

B2C Type 2

B2C Type 3

B2C Type 4

Photo: Black Pearl Footage / Shutterstock

350,000

€15,000

Euro (€)

400,000

Gaming Types

Minimum

Maximum

1. Minimum compliance contribution for new operators will not apply until the first financial year end of operations following licence acquisition. 2. Qualifying start-ups can benefit from a 12-month moratorium on compliance contributions. Source: MGA

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Chapter 7: Gaming

Esports and Video Gaming

he success of the homegrown iGaming industry has left Malta with the particular idiosyncrasy of being perhaps the only country in the world where any mention of ‘gaming’ is first understood to be a reference to remote gambling. Now, slowly, that is changing, with the last few years seeing a broadening of the country’s previously necessarily narrow – and highly fruitful – focus, as authorities and economic stakeholders alike realised that many of the elements that make Malta such an attractive destination for iGaming are just as relevant in the wider gaming space. Nurturing a new economic niche, of course, is not as easy as doing a cut-and-paste of a winning formula. While Malta was able to make iGaming its own, championing the industry locally and internationally while working together with private enterprise to chisel a novel regulatory framework to the mutual benefit of state and sector, the video game industry required no such assistance. Worth an estimated €250 billion, and growing rapidly, it was then a matter of finding the right opportunities, the right gaps, into which little Malta could fit like a glove. Leveraging, as always, its EU membership, attractive tax regime, central location, and pleasant environment, but now adding to the mix a living ecosystem of highly skilled technical services and the know-how derived from its iGaming experience, its search for industries with high growth potential led it to court esports companies, recognising the value such businesses have to offer in Malta and across the globe. In just a few short years, the country has already become home to one of the largest, oldest, and most reputable online gaming leagues, with each edition seeing hundreds of the world’s top pro gamers descend on Malta to duke it out while livestreaming their progress to millions of avid fans. Pro gaming teams coming from other continents, such as those

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Photo: Tima Miroshnichenko / Pexels

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based in Australia, South Korea, or the US, often make the most of the opportunity to visit other parts of Europe, highlighting the role Malta’s location plays, even in such digital-first activities. Meanwhile, a number of companies involved in various facets of video game production have set up shop in Malta, as the country strategically positions itself as an attractive jurisdiction for the small players that create the building blocks for some of the world’s most popular games. While consumers typically only see the publisher’s name on the cover of a game, industry players know that the credits hold the keys to the identity of the real makers of ground-breaking productions – and it is to that multitude of small-scale development teams that create the backgrounds, models, and music that determine how a game looks and feels, that Malta is promoting itself to – with marked success. As the digital revolution continues apace, Malta is well-placed to act as the jurisdiction of choice to all facets of the gaming market. These new sectors will continue to grow and innovate, and as the technologies underpinning iGaming, esports, and video game development evolve and converge – already happening, for example, in the artificial intelligence and virtual reality fields – there is no telling where the road will lead. Gaming Malta Foundation Central to this sideways move into new gaming fields is Gaming Malta, an independent non-profit foundation set up by the government and the Malta Gaming Authority. Tasked with the remit of promoting Malta as a centre of excellence in the digital and remote gaming sector globally, it is also responsible for liaising with the local relevant authorities to improve Malta’s attractiveness as a jurisdiction and enhance the ecosystem surrounding the gaming industry. The foundation is most video game development companies’ and esports operators’ first point of contact and closest supporter in Malta, and it has been instrumental in promoting the country and strengthening its position in the gaming industry – work which quickly bore fruit. Investors in the gaming space will likely come across it at trade expos and conference. If you do, be sure to stop by and have a chat.

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Chapter 8

Shipping and Aviation

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 8: Shipping and Aviation

Overview

lbeit severely limited in natural resources, Malta has made the most of its sovereignty over its seas and skies by savvily developing secure regulatory frameworks for shipping and aviation over the last decades. Registration of vessels and aircraft plays a central role in the strategic plans to continue growing these sectors, with the Mediterranean country today known as a jurisdiction of choice for those seeking to domicile their most valuable assets with peace of mind. Innovative corporate structures and airtight protection for financiers combine with tax-mitigation opportunities, costeffective fees, and experienced service providers to make Malta’s offering exceedingly attractive. All this has led to rapid growth in the number of ships and aircraft registered with Transport Malta, the state agency responsible for the sector. Malta’s ship registry is the largest in Europe and the sixth largest in the world, with over 9,000

vessels representing more than 6 per cent of the world’s merchant fleet flying the Maltese flag – a number that grows by the day. Since 2020, Malta has also been the world’s number one jurisdiction for superyachts, with over 1,000 registered in the country as of July 2022, driven by ever-increasing numbers of new registrations. As for the 9H Register, it is the world’s fastest growing civil aircraft registry, expanding by over 700 per cent over the last decade. Since the Aircraft Registration Act came into force in 2010, commercial airlines, charter outfits, and individual owners have been welcomed with open arms by local authorities and stakeholders, allowing the 92 aircraft registered in Malta at the end of that year to balloon to almost 700 in mid-2022. Let us take a look at the factors that have made Malta such an alluring prospect for those looking for a safe haven for their mobile assets.

INTERNATIONAL REACH, EUROPEAN STANDARDS

TOTAL TONNAGE OF MALTAREGISTERED VESSELS

Malta has the sixth largest ship registry in the world, and the largest in Europe

90,000,000 80,000,000

2. Liberia

50,000,000

3. Marshall Islands

40,000,000 30,000,000

4. Hong Kong

20,000,000

5. Singapore

10,000,000

6. Malta

86,100,000

1. Panama

49,000,000

70,000,000 60,000,000

2012

2021

Source: Ministry for Transport

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An increase of per cent

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Photo: Supplied by INDIS

INCREASE IN SUPERYACHT REGISTRATION

SIZE OF AIRCRAFT REGISTRY

1,200

900

1,000

800

700

100

per cent increase since 2015 Source: Transport Malta

2020: Malta becomes the world’s largest register of superyachts

500 400 300 200 100

690

2015 2016 2017 2018 2019 2020 2021

600

1,030

850

806

751

687

200

600

400

500

600

2010

2022

Over

5,500

Source: Ministry for Transport

750 per cent increase

workers directly employed in the aviation sector 201

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Chapter 8: Shipping and Aviation

Ship Registration

ong coveted by naval powers for its large and well-protected harbours, Malta’s historical development is inextricably tied to its position in the central Mediterranean, at the crossroads of east and west, north and south. The claim that Malta is the centre of the world is most often made sardonically by locals, but like any good joke, it does hold a grain of truth. This unique position is one of Malta’s most prized resources, and it has been instrumentalised to its fullest extent, with successive governments investing heavily in the modernisation of maritime facilities (see p. 43) and the regular updating of the relevant legislative frameworks, in close cooperation with the International Maritime Organisation. The return on this investment has been stupendous. Today, Malta’s merchant ship registry is the largest in Europe by deadweight tonnage, and sixth in the world. Little wonder, then, that the Maltese eight-pointed flag is seen across the seven seas. Enjoying the highest seal of approval from the Paris and Tokyo MOU White Lists, and most recently (since July 2022), the United States Coast Guard’s QUALSHIP21 initiative, the Maltese flag presents a reputable, accessible, and competitive option for anyone wishing to register a vessel. Malta accepts the registration of all kinds of marine vessels, from private and commercial yachts to cruise liners, super tankers, oil rigs, and barges, including ones under construction. The process is efficient, with no hidden costs or inspection fees, and there are no restrictions on the nationality of the master, officers, crew, shareholders, and directors. Vessels may be registered in the name of European Union citizens or legally constituted corporate bodies of any nationality. Inspection requirements vary by the ship’s age, and those that have been in service for 25 years or more are typically not accepted, although this restriction may be waived in certain circumstances. Vessels carrying the Maltese flag can navigate and trade anywhere in the world, and are supported by a specialised team of technical officers available 24/7, as well as a reputable and experienced network of legal and

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corporate services providers. Malta also offers incentives for professionals engaged in this sector through the Highly Qualified Persons Programme (see p. 40).

Registration Fees and Taxation Registering a ship in Malta allows it to benefit from an attractive tonnage tax regime carrying a seal of approval from the European Commission. Maltese tonnage tax rules do away with traditional methods of taxations in favour of a highly competitive tax on a vessel’s net tonnage (NT), with newer ships (under 10 years) eligible for discounts. Under the rules, revenue from shipping activities is exempt from Maltese income tax. Profits made from the sale of such ships, or the sale of stock in companies owning them, are also untaxed, as are dividends paid to shareholders from shipping-related profits. The rules are even more attractive when recalling Malta’s wide network of double taxation agreements (see p. 246). Central to the regime’s functioning is the requirement to maintain separate ring-fenced accounts for activities which are tax exempt and those which are not. In cases where there is no income except that derived from shippingrelated activities, the organisation can submit a simplified tax declaration instead of a regular income tax return. Ships registered in Malta engaged in commercial activities are generally subject to extensive VAT exemptions. Commercial yachts, for example, are exempt from VAT on supplies and maintenance, and are not obliged to charge VAT on charter revenue. Before diving into the criteria for eligibility under Malta’s tonnage tax rules, a quick note for those who cannot or do not intend to register their vessels under the scheme. In such cases, profits will be taxed at the standard corporate rate of 35 per cent, and shareholders receiving dividends arising from this taxed income are therefore entitled to claim a refund, limiting their tax exposure (see p. 64).

Malta’s International Investment Guide 2023

Eligibility for Malta Tax Tonnage Rules Shipping companies may register under tonnage tax rules when at least 60 per cent of their fleet is flying an EU/EEA flag. New registrants are allowed considerable leeway, having this requirement reduced to 25 per cent, although this must gradually increase. Eligibility for non-EEA ships depends on having their commercial and strategic management taking place in an EU/EEA country. Not eligible Fishing and fish factory ships Fixed offshore installations Non-ocean-going tug boats and dredgers Floating hotels, restaurants and casinos Floating casinos Non-propelled barges Ships primarily used for sport and recreation

Photo: william william / Unsplash

Eligible under tonnage tax rules General cargo Bulk carriers Car carriers Passenger vessels Cable and pipe laying vessels Research vessels Towage ships and dredgers with a majority of their activity on the open sea Other types of support vessels

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Chapter 8: Shipping and Aviation

Local Insight Meet Geraldine Spiteri As the Manager of boutique advisory group Acumum’s marine and aviation departments, Dr Geraldine Spiteri specialises in providing corporate and legal support for the management of high-value assets. What does Malta have to offer to potential players and investors in the aviation and shipping sectors? Malta is a jurisdiction having a respected international registry with a focused strategy, a sound legal framework, and a broad network of service providers. Malta’s accession to the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol has bolstered the value of registration in Malta for both aircraft owners and financiers. As an EU member, Malta has implemented EASA’s standards in aviation, while providing attractive fiscal incentives, competitive registration fees and operational costs, minimum depreciation periods for aircraft, recognition of fractional ownership, and registration of aircraft while under construction.

What benefits, for example in litigation, can ship owners registering their vessels in Malta expect? Mortgage registration on ships offers financiers security and peace of mind. The introduction of the arrest of sea vessels (and aircraft) empowers potential creditors to seize assets in debt. Registration denotes title: the Merchant Shipping Register does not register a ship or yacht unless the registrant is the owner or acting on the owner’s behalf, making transfers traceable. The public register grants publicity and legal certainty in ownership, while banks and financiers can check any existing claims prior to extending credit. The 24x7 availability of the registry also permits registration to the minute, and mortgages are ranked according to their entry into the ship’s register.

The Maltese maritime register boasts vast experience in ship registration – and, more recently, in yachts. Its operations are backed by a robust regulatory framework that is well-respected in major ports worldwide. Malta’s compliance with international conventions, its excellent geographic location, and the range of services it offers make it a one-stop-shop for vessel owners wishing to register their ship or yacht under a reputable flag, smoothing the process of entering the territorial waters of another state.

What about the aviation sector – why is it attractive to foreigners? Aircraft registration in Malta has many benefits. Besides being a public registry, it recognises fractional ownership and allows registration of private or commercial aircraft, as well as those out of operation or under construction. It also permits registration of special types of powers of attorney, offers research and development schemes for aviation companies, local aviation services, competitive social security rates, and airside facilities in compliance with aviation standards.

Beyond its regulatory framework and international compliance, Malta has become a flag of choice due to the absence of limitations on the nationality of owners or crew, the possibility to register a vessel under construction, the registration of mortgages, and the depth of Malta’s maritime industry understanding. The tonnage tax system also allows special companies – set up to hold and operate qualifying vessels – to pay tonnage tax instead of corporate tax.

How have recent international developments, like Brexit, affected Malta’s attraction as an aircraft registry? Malta is English-speaking with a regulatory system based on English law, making it an attractive investment destination for UK nationals looking to create a business base in the EU. Since English is also prevalent internationally in business and transport sectors, an English-speaking jurisdiction is considered an advantage by third-country nationals when seeking to do business within the EU, particularly alongside an aircraft registry with experience, adherence to international conventions, and respect from other jurisdictions.

Malta is English-speaking with a regulatory system based on English law, making it an attractive investment destination for UK nationals looking to create a business base in the EU.

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Financing Shipping organisations and financiers of ships registered under the Maltese flag enjoy a secure environment with reliable levels of protection comparable to those found in the English Merchant Shipping Act. Constituting an executive title, mortgages are enforceable upon default, with no need for a prior Court judgement, and further mortgages, transfers, and deletion of vessels are only conditional on the mortgagee’s permission. Financiers can also rest assured that registered mortgages take priority over special privileges or liens which were not previously recorded on the appurtenances or accessories of a vessel, while also being attached to proceeds from insurance and indemnities for mishaps. Since vessels are considered separate and distinct assets within the estate of their owner, any arrest or enforcement by mortgagees can proceed irrespective of any other insolvency proceedings. It is also possible to register a mortgage under a trust for the benefit of anyone to whom an obligation is due.

Yacht and Superyacht Registration If you are looking for the perfect place to register your yacht or superyacht, you will be happy to know that your search has come to an end. Malta’s unparalleled quality and reputation in the sector has seen it become the goto flag of confidence for yacht owners, and it can today boast a superyacht register that is second to none, with its reliability as a base of operations enjoying a stamp of approval as the world’s largest register of yachts larger than 24m. The country’s heavy investment in state-of-the-art marinas and the presence of onshore service providers of the highest standard are coupled by a legislative framework that is specially adapted to the distinctive requirements of the yacht and superyacht industry, making registration of such vessels under the Maltese flag such an attractive proposition that the idyllic azure waters of the Mediterranean become an afterthought – almost! Yachts can be registered for both private and commercial use, and can avail of all the benefits afforded to other ships, including low registration costs and taxes, and free global navigation. On top of these, recent changes to the VAT treatment of pleasure yacht leasing mean that owners can set up attractive operational lease models with cash flow advantages and overall VAT optimisation. These changes lead to varying VAT rates based on where the vessel is used, with no VAT applicable on its enjoyment in non-EU or international waters unless the lessee is using it for commercial purposes.

SHIP REGISTRATION CHECKLIST Ships are provisionally registered under the Maltese flag for six months, during which time all the necessary paperwork must be filed. This includes: Registration application filled out by the owner or an authorised representative Change in name of the vessel, if desired Qualification to own a Malta-registered ship (through a document of incorporation or the appointment of a resident agent) International Tonnage Certificate (if applicable) Declaration of ownership Evidence of seaworthiness Declaration of Maritime Labour Compliance (DMLC) – Part 1 Minimum Safe Manning Certificate (if needed) Initial registration fees and annual tonnage tax payment Ship radio station licence Bill of sale where there was previous ownership Registry certificate cancellation (if the vessel was previously registered elsewhere) Last updated Continuous Synopsis Record for ships applying the International Convention for the Safety of Life at Sea (SOLAS) Survey and a copy of International Tonnage Certificate Certificate issued by an approved surveyor Evidence that vessel has been marked following the law

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Chapter 8: Shipping and Aviation

Registration and Tonnage Tax Fees Ai. Fee on registration and annual fee for non-tonnage tax ships Ship

Fee on Registration

Annual Fee Basic Fee

Ships less than 24 metres length overall (a) Fishing vessel

€70

€25

€36

(b) Commercial yacht

€115

€150

€250

€115

€25

€175

All other ships of less than 24 metres length overall (d) Less than 50 gross tonnage

€115

€25

€400

(e) Of 50 gross tonnage or more

€115

€150

€400

(f) Pleasure yacht

25 cents per net tonnage subject to minimum of €187.50

€255

40 cents per net tonnage subject to a minimum of €400

(g) Commercial yacht which does not fall under category (h)

Rates as appear in para B

€625 for year of registration €1,095 thereafter

Rates as appear in para B

Ships of 24 metres length overall or more

(h) Non-propelled barge, bareboat charter registered in a foreign registry, laid up or Rates as appear in para under construction excluding ships in category (f) B subject to reduction as (i) Commercial vessel and fishing vessel less than 2500 gross tonnage, and do not appear in para C fall under categories (f), (g), and (h) above

€150 €255

Rates as appear in para B subject to reduction as appear in para C

All other ships of 24 metres length overall or more and do not fall under categories (f), (g), (h), or (i) above (j) Ship less than 300 gross tonnage

Rates as appear in para B subject to reduction as appear in para C

(k) Ship of 300 gross tonnage or more

€370 for year of registration €840 thereafter €625 for year of registration €1,095 thereafter

Rates as appear in para B subject to reduction or increase as appear in para C

Aii. Fee on registration and annual fee for tonnage tax ships Ship

Fee on Registration

Annual Fee Basic Fee

Tonnage Tax

Ships less than 24 metres length overall (a) Commercial yacht

€115

€150

€100

€250

(b) Less than 50 gross tonnage

€115

€25

€350

€400

€115

€150

€350

€400

Ships less than 24 metres length overall (d) Commercial yacht

(e) Ship less than 300 gross tonnage

(f) Ship of 300 gross tonnage or more

Rates as appear in para B

Rates as appear in para B subject to reduction as appear in para C

€625 for year of registration €1,095 thereafter €370 for year of registration €840 thereafter €625 for year of registration €1,095 thereafter

Rates as appear in para B Rates as appear in para B

Rates as appear in para B subject to reduction or increase as appear in para C

Subject to the provisions of article 7(4) of the Merchant Shipping Act, when there is a change in the particulars or category of a registered ship and the new applicable fee or tonnage tax payable on registration or annually is higher than that already payable, the provisions of article 19(7) of this Act in respect of laid up vessels shall mutatis mutandis apply. Source: Transport Malta. All information is correct as at September 2022.

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Local Insight Meet Kevin J. Borg Kevin J. Borg is CEO of the Malta Maritime Forum (MMF), channelling his extensive business knowledge and experience into the role. As Director General of The Malta Chamber of Commerce until 2020, he also worked closely with maritime shipping, yachting, bunkering, ship repair, and registration companies. Malta has seen exponential growth in its maritime sector – what would you say are the main achievements in this sector? The maritime industry plays a vital role in ensuring an uninterrupted supply of fuel, food, and medical supplies, so the MMF strives to fly the flag of the industry with the public and stakeholders, including government. Despite the challenges, the pandemic didn’t stop the industry, thanks to the determination and foresight of Malta’s maritime leaders and the dedication and bravery of sea-faring personnel. Today Malta has one of the largest shipping registers in the world and the largest superyacht registry in the world – what has led to this growth, and what does Malta have to offer in these fields? As an EU member state, Malta offers legal certainty, policy stability, and peace of mind to ship owners and investors alike, placing the island in a strong position post-Brexit, whereby many superyachts switched to the Malta flag to fly an EU flag. Malta’s regulator/registrar operates efficiently with minimum administrative burdens and provides a user-friendly client experience, while the jurisdiction has a wide array of professionals offering registration and other ancillary services. The MMF facilitates excellent cooperation and dialogue between public and private sector operations. Internationally, Malta boasts a strong reputation as a maritime jurisdiction – suffice it to say that it has been included

The government acts as an industry facilitator, ensuring a dynamic regulatory framework finetuned to new realities – often before competing jurisdictions.

on The Paris MoU Committee’s White List topmost category for 16 consecutive years. Beyond registration per se, what does Malta have to offer potential foreign investors in the maritime and shipping sector? Malta offers excellent ancillary services in ship repair, yachting centres, bunker operators, professional services providers, educational institutes, and expert legal advisors in marine litigation, among others. All these stakeholders, represented by the MMF, provide an excellent ecosystem that comes together as Maritime Malta. Malta’s stakeholders work seamlessly and efficiently as one team – much better than other Mediterranean ports, in fact. How supportive is the government to the maritime sector? The government acts as an industry facilitator, ensuring a dynamic regulatory framework finetuned to new realities – often before competing jurisdictions. It also matches private sector investment in infrastructure, so that Malta meets the industry’s needs and the requirements of new and ever-stringent international obligations, such as those on climate change and decarbonisation. The €50 million shore-to-ship power project currently being undertaken by Infrastructure Malta in the Grand Harbour, for example, complements other proactive carbon-emission-reducing initiatives from the private sector. Why should foreign companies consider investing in the Maltese maritime industry? Maritime business is international in scope, since most industry operators conduct their business in international waters, subject to multilateral legislation or conventions. Operators in the industry compete in a global village. A large chunk of major investment in maritime is therefore foreign direct investment. International operators are attracted by Malta’s geographical location at the halfway mark between the Straits of Gibraltar and the Suez Canal, drawing a substantial flow of marine traffic. Calls into or around Malta require minimal deviation, so onshore marine services can potentially enjoy a critical mass required to justify substantial investment in marine commercial projects. Then there is the collaborative regulatory environment, dynamic legal framework, and synergies with stakeholders in ancillary services. Finally, Malta is an EU member state with economic and political stability, business-friendly regulators, and stable industrial relations.

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Chapter 8: Shipping and Aviation

Local Insight Meet John Mahon John Mahon is CEO at Lufthansa Technik Malta Ltd. With over 30 years’ experience working in aviation, his career has particularly focused on aircraft overhaul, taking on both engineering and managerial positions in Shannon Aerospace and at Aircraft Maintenance Engineering Corporation (AMECO) in Beijing, in a joint venture with Air China. Why did Lufthansa Technik choose Malta for its investment? We entered the joint venture with Air Malta nearly 20 years ago, but the business, the company, and the country have developed significantly since. Access to an English-speaking labour market in a stable political environment were major factors, as well as the geographical location, which gives easy access to the markets of mainland Europe, North Africa, and the Middle East. Over the years you have expanded your operations in Malta – could you take us through your journey here? We started in 2003 with just one line of maintenance on narrow body aircraft, quickly adding a second. Any further growth required new real estate, so in 2007 we reached an agreement to build our state-ofthe-art, 64,000 sq m hangar. This new facility supported our strategy of establishing a wide body aircraft maintenance base in Europe. We meanwhile gained approval to maintain the Airbus A330 and A340 aircraft types, and began operations on these in 2008. Our next major milestone came in 2013, when a new extension to our facility allowed us to maintain three wide body aircraft simultaneously, as well as two narrow bodies. We established a sixth for an additional narrow body aircraft in 2015, and in 2018 we decided that LTM would become the Lufthansa Technik European Base Maintenance centre for the new A350 aircraft type.

LTM will celebrate our 20-year anniversary next year. We are committed to the long-term; with a great company and a strong brand, we are well-placed in the market for the future. We are determined to maintain our position as the best, most stable, aviation company on the island. What kind of assistance has Malta (and Malta Enterprise) offered you over your period of operation in Malta? We have a great working relationship with Malta Enterprise. We have direct access to thedecision makers and are always received with an understanding ear and willingness to find solutions. I could not ask for better. Your operations require a highly skilled technical workforce. How has your experience in finding the necessary labour been so far, and how receptive have you found Maltese educational/governmental partners in this regard? This has become an increasingly topical issue as the sector has grown, and one that we believe requires most attention. Sustaining the aviation success story in Malta is reliant on attracting new people to the island and to the industry. Tackling this issue needs a joint approach and cannot be an industry-only solution: we require and value the expertise and support of the various government entities and have already met with these partners to map out a strategy.

The LTM success story evolves continuously. We look forward to the coming years, secure in the knowledge that our company has great growth potential. In what ways has the business environment for aviation investment changed since Lufthansa Technik established a presence in Malta? The aviation sector in Malta is completely different today. Before, you could count the number of aviation-related companies in Malta on one hand; now, we have announcements of new entrants on a monthly basis. Expansion in the sector puts huge pressure on all players, increasing competition for skilled labour – a topic that impacts us heavily. Overheating the sector by growing it too quickly, without an established pipeline to satisfy the labour requirements to service the sector, may lead to sustainability risks.

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We have direct access to the decision makers and are always received with an understanding ear and willingness to find solutions. I could not ask for better.

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B. The rates per net tonnage payable on registration, annual register fee, and annual tonnage tax when referred to in paragraph A.i and A.ii Ship of Net Tonnage (NT) Exceeding 0

Not Exceeding 6,250

6,250

8,000

10,000

15,000

20,000

30,000

50,000

Exceeding 50,000

Annual Fee on Registration

€1,562.50

€2,500

€1,562.50 plus 25 cents for every NT in excess of 6,250 NT €2,000 plus 7 cents for every NT in excess of 8,000 NT €2,140 plus 7 cents for every NT in excess of 10,000 NT €2,490 plus 7 cents for every NT in excess of 15,000 NT €2,840 plus 7 cents for every NT in excess of 20,000 NT €3,540 plus 7 cents for every NT in excess of 30,000 NT €4,940 plus 7 cents for every NT in excess of 50,000 NT

€2,500 plus 40 cents for every NT in excess of 6,250 NT €3,200 plus 19 cents for every NT in excess of 8,000 NT €3,580 plus 14 cents for every NT in excess of 10,000 NT €4,280 plus 12 cents for every NT in excess of 15,000 NT €4,880 plus 9 cents for every NT in excess of 20,000 NT €5,780 plus 7 cents for every NT in excess of 30,000 NT €7,180 plus 5 cents for every NT in excess of 50,000 NT

€500

Tonnage Tax €2,500

€2,500 plus 40 cents for every NT in excess of 6,250 NT €640 plus 1 cent for every NT €3,200 plus 19 cents for every in excess of 8,000 NT NT in excess of 8,000 NT €660 plus 1 cent for every NT €3,580 plus 14 cents for every in excess of 10,000 NT NT in excess of 10,000 NT €710 plus 1 cent for every NT €4,280 plus 12 cents for every in excess of 15,000 NT NT in excess of 15,000 NT €760 plus 1 cent for every NT €4,880 plus 9 cents for every in excess of 20,000 NT NT in excess of 20,000 NT €860 plus 1 cent for every NT €5,780 plus 7 cents for every in excess of 30,000 NT NT in excess of 30,000 NT €1,060 plus 1 cent for every €7,180 plus 5 cents for every NT in excess of 50,000 NT NT in excess of 50,000 NT

€500 plus 8 cents for every NT in excess of 6,250 NT

C. Reduction or increase on the rates per net tonnage on registration, register fee and tonnage tax, when referred to in paragraph A.i or A.ii Age of Ship Equal to or Exceeding

Less than

Reduction on Fee on Reduction or Increase on Register fee Registration % and Tonnage Tax %

Years 0

-30

-15

+10

+25

+50

Equal to or exceeding 30

+5 Subject to minimum increase (compounded for both register fee and tonnage tax as applicable) of €1,500

Annual fees for any one year paid after the anniversary of registration for that year shall be increased by 10 per cent. Pre-registration inspections are subject to a charge. The unit of currency is the euro.

Photo: Andrew Neel / Pexels

Source: Transport Malta. All information is correct as at September 2022.

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Chapter 8: Shipping and Aviation

Aircraft Registration

any of the elements that help make the Maltese flag ubiquitous in waters around the world carry just as much weight if you are looking for a jurisdiction to domicile your aircraft. The language and location are amply covered in other sections, so we’ll dive right into the unique benefits offered to anyone who chooses to register private or commercial aircraft in Malta.

Today, Malta is home to global aviation entities of the highest repute, thanks to its trademark regulatory acumen and the opportunities afforded by EU membership. Aircraft registered in the country is allowed to freely circulate across Europe, with the attendant tax implications for commercial operations. Local amenities are well-developed, with world-class expertise in repair, maintenance, and training (see p. 43), and a slew of services including insurance, brokerage, surveying, and back-office set-ups at your fingertips. As Malta’s reputation as an aviation hub grows, investors in the aircraft servicing industry may smell an opportunity. The first thing to know is that aircraft registered in Malta can be based and operated anywhere in the world, and as long as certain criteria are met, there are no restrictions on the nationality of shareholders and directors of Maltese aviation companies. This exceptional flexibility is coupled with the most stringent safety standards and regulations, under the watchful eye of the European Aviation Safety Agency, while the country’s ratification of the Cape Town Convention assures creditors that their interests are secure and allows for lower borrowing costs. As is the case with ships, aircraft can be registered as a security for debt, and such mortgages are not affected by the aircraft owner’s insolvency. Malta’s attractive corporate taxation regime, whereby shareholders may benefit from an effective tax rate of 5 per cent or even less (see p. 64), is even more compelling for aviation stakeholders, with ownership, lease, and operational (including charter) income on the international transport of

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goods and passengers being exempt from Maltese tax, unless such income is remitted to Malta. There is no withholding tax on lease and interest payments to non-residents, while aircraft are not subject to stamp duty and no duty is charged when importing civil aircraft into Malta. Fleet operators will be especially pleased to know that Malta’s extensive network of double taxation treaties (see p. 246) eliminates complex accounting processes, with income from the international operation of aircraft only taxable in the country where the effective management of the company is situated. Additionally, employees only incur income tax in their respective country of employment – an attractive payrollsimplifying prospect for commercial airlines with a multinational workforce – while companies with private jets do not need to include their use by employees as a taxable fringe

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benefit. Professionals engaged in the aviation sector may also be eligible for advantageous tax rates under the Highly Qualified Persons Programme (see p. 40).

WHO CAN REGISTER AN AIRCRAFT IN MALTA?

Aircraft registered in Malta can take advantage of a number of specialised incentives, including an accelerated depreciation rate, with airframes, engines, and overhaul subject to a sixyear minimum, and interiors and furnishing just four. Fractional ownership of aircraft is also possible, allowing co-owners, financed by separate creditors, to specify their individual stake, and aircraft under construction or not in service are also accepted on the register.

Commercial Aircraft

The Safi Aviation Park, opened in 2012 and operated by the state industrial parks company INDIS, offers secure airside facilities in full compliance with applicable standards, and hosts many of the leading entities operating in the Maltese aviation sector. Local authorities’ supportive stance towards foreign investment is also reflected in the active support provided by the Civil Aviation Authority within Transport Malta, which stands ready to contribute to a smooth registration process with its practical understanding of the sector. Photo: Supplied by Malta Enterprise

Maltese, EU, EEA, or Swiss citizens who have a place of residence or business in these jurisdictions may register commercial aircraft, ownership of which can be shared with others. Undertakings formed and having their registered office, central administration, and principal place of business within Malta, the EU, the EEA, or Switzerland which are at least 50 per cent owned by the governments of these countries or by persons referred to above, whether directly or indirectly through one or more intermediate undertakings. All operators of aircraft engaged in commercial air transport require an Air Operator Certificate (AOC) and an Operating Licence granted by Malta’s Civil Aviation Directorate.

Private Aircraft Citizens of or undertakings established in an OECD country and any other country approved by the Minister (“International Registrant”), provided that they have the legal capacity to own or operate an aircraft, appoint a local resident agent to represent the owner for matters concerning the registrations, and comply with the applicable regulations. Aircraft can be registered in any one of the following capacities: By an owner operating an aircraft. By an owner of an aircraft under construction or currently inoperational. By an operator of an aircraft under a temporary title. By a buyer of an aircraft under a conditional sale or title reservation. By a trustee for the benefit of beneficiaries.

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Local Insight Meet Wayne Pisani At Grant Thornton, Wayne Pisani heads the tax, regulatory, and compliance practice, and leads the financial services tax and regulatory team, working with clients across several industries and sectors. Previously President of the Institute of Financial Services Practitioners and a Member of the Board of Governors of FinanceMalta between 2018 and 2021, he is currently a Member of the Malta Financial Services Advisory Council. What steps did Malta take to cultivate the shipping and aviation sectors? The shipping and aviation sectors have enjoyed significant growth as Malta is a reputable jurisdiction in both industries and is an effectively regulated, stable EU member state. As the regulator for both industries, Transport Malta has ensured that registration procedures for both vessels and aircraft are clear and smooth-running. Registration costs are also relatively inexpensive. The Maltese legal framework favours owners, charterers, and financiers of Maltese ships or yachts, offering bespoke legal bodies an effective, efficient fiscal and compliance environment that caters for most industry stakeholders. From an aviation perspective, Malta offers the ideal legislative environment, with unrivalled flexibility, particularly for international operators. Registration of an aircraft in Malta allows it to be based and operated from anywhere, and it may even be registered while under construction. Why is Malta so attractive in these areas to foreign investors and players? Apart from its strategic position and the use of English, foreign investors benefit from a framework that provides fiscal incentives from entities such as Malta Enterprise to facilitate set-up of local enterprises. Meanwhile, aviation industry entities have access to designated

Malta provides a platform for business with regional and international ambitions.

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areas as industrial spaces, access to finance such as soft loans, loan subsidies and/or loan guarantees, investment aid in the form of a tax credit, and business development and continuity incentives. The Maltese framework does not impose any restrictions on the sale or mortgaging of vessels registered in Malta or on the transfer of shares of a Maltese company owning a vessel, while vessels carrying the Maltese flag benefit from preferential treatment in certain ports. Beyond registration, what synergies emerge from Malta’s role as a hub of maritime services? Viewing maritime and aviation industries within the country’s economic framework, Malta provides a platform for business with regional and international ambitions. Language, legislative frameworks, fiscal and economic policy, talent, facilities, location, bilateral and multilateral agreements, approachable and understanding regulatory bodies, and support initiatives are all ingredients for success. These elements are common to other industry sectors with a close affinity with the aviation and maritime industry, including financial services, tourism, logistics, maintenance facilities, bunkering, and refuelling. In 2020, Malta became the world’s largest superyacht registry – do you see potential for further growth in this area? The progress achieved in yachting, particularly through establishing such a robust framework, is commendable – however, Malta has much more to offer the industry. If local authorities, backed by local market participants, maintain a consistent approach, we foresee continued growth in the market. Why should foreign players consider Malta as a destination in these areas? Malta’s strategic location at the heart of the Mediterranean, its climate, flourishing economy, and welcoming people make the island the ideal place for leisure or business. Malta’s regulatory and fiscal framework, as well as support incentives available to investors, also make it an attractive destination for those wishing to relocate.

Malta’s International Investment Guide 2023

Mobile Assets Protected Cell Companies

uilding on the resounding success of cell company structures in the areas of insurance and securitisation (see p. 127), in 2020 Malta enacted legislation allowing the innovative set-up to be used for vessels and aircraft. Companies involved in shipping and aviation can now create cells to segregate and protect cellular assets while retaining their status as a single legal person. Each individual cell needs to be registered with the Registry of Companies and have its own distinct name, while the core company must be designated as a Mobile Assets Protected Cell Company (MAPCC).

As is the case with their use in other sectors, cell companies allow for the hard-bound ring-fencing of each cell’s assets and liabilities, resulting in absolute protection from creditors of other cells within the same MAPCC – while benefitting from the cost efficiencies arising from their operation as a single legal person. Such efficiencies include the speed of setting up and closing down individual cells as opposed to entire companies, as well as the sharing of a single operative licence and board of directors for the whole cell structure. There are also no restrictions on the identity and no need for licensing of owners of assets held in cells, since this would be covered by the core company’s authorisation.

The MAPCC can issue shares and pay out dividends with respect to any of its cells, without taking into account the financial position of any other cell within the company or of the company’s core (non-cellular) assets. Directors must maintain a clear, constant, and identifiable distinction between all the differentlydesignated assets, and such companies are obliged to inform any third parties they transact with of their cell set-up.

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Chapter 9

Tourism

Malta’s International Investment Guide 2023

MaltaInvest2023

Chapter 9: Tourism

Overview

ver since it claimed Independence, Malta has gained an international reputation as a major destination for those seeking fun in the Mediterranean sun. Tourists flock to the archipelago in their millions to experience its azure waters, great weather, and unique history, and it is no exaggeration to say that Malta is a tourist wonderland, a fact wellrecognised by the ever-increasing number of worldrenowned brands establishing a presence on the islands. Efforts to recast the country from a summeronly sun destination to one capable of attracting

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tourists all year round have proven successful, with significant public and private investment driving this rapid transformation. Upmarket lifestyle projects like Portomaso and Tigné Point have elevated the pitch of the overall product, turning Sliema and St Julian’s into a cosmopolitan seaside destination, even as many of the towns and cities boasting major cultural, heritage, and historical attributes underwent significant regeneration, most especially Valletta, the Cottonera (or the Three Cities) area, Mdina, and Gozo’s Cittadella. This has opened

Malta’s International Investment Guide 2023

many opportunities for the private sector, with hospitality offerings expanding through the renovation of old buildings and palazzos into boutique hotels. Major international brands also see the value of having a presence in Malta, with brands like Marriott and Hyatt adding to Hilton, Westin, Relais et Châteaux, and InterContinental’s five-star footprint, and contributing to making Malta seen and available on major hotel and reservations platforms.

Valletta Waterfront. Photo: Clive Vella / viewingmalta.com

These developments are not restricted to the main tourism hubs. As package tourism declined and arrivals kept rising, spurred on by the search for authentic travel experiences and the short-let revolution set in motion by Airbnb, investors have looked beyond the main tourist zones, with increasing investment in boutique offerings in towns and villages across the country. Other sectors moved in tandem in conducting upgrades and expansions. As the number of tourists increased, so did quality options for dining out, from restaurants offering unique gastronomic

experiences, a considerable number of which have been recognised as being worthy of recognition by the Michelin Guide, to more leisurely offerings in lidos and wine bars. Similarly, significant investment in the retail scene by locals and foreigners alike has brought upmarket fashion as well as high street brands to the market, enhancing Malta’s reputation as a fun, allseasons destination. Key to this shift has been the creation of the right environment and infrastructure to lure low-cost carriers like EasyJet, Ryanair, and Wizz Air, which have improved connectivity considerably over the past 15 years by experimenting with new routes that have paved the way for a significant increase in tourist arrivals, reaching a record 2.75 million in 2019. Today, Malta offers tourists, and tourism entrepreneurs, a hybrid proposition as a destination with rich history and cultural value to one side, and a cosmopolitan city-like experience to the other, blessed with warm weather, sunshine almost all year round, and near certainty of safe returns and high yields.

Café del Mar, Qawra

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Photo: Joseph Mercieca

Malta’s International Investment Guide 2023

Local Insight Meet Clint Camilleri Gozo Minister Clint Camilleri, an architect by profession, was first appointed to the role in 2020, with his position reconfirmed in the March 2022 General Election. In recent years, Gozo has seen significant growth in the tourism industry. How important is the tourism sector for Gozitans and for the island as a whole? As a peripheral island in the Mediterranean, a significant element of our economy depends on tourism. Before Covid-19, Gozo was increasingly sought-after by international and domestic visitors, which inspired SMEs to establish themselves locally. This cultivated a stronger economic cycle and engaged hundreds of employees. Tourism endows a greater economic contribution to Gozo’s GDP than it does on a national level. Unlike Malta, Gozo’s accommodation sector depends on both the domestic and international markets. During 2021, Gozo enjoyed a 3 per cent increase in visitors compared to 2019 – the last pre-Covid year. Most visitors came from the domestic market, allowing many Gozitan operators in the tourism industry to remain competitive and sustainable. We must, however, continue to target international visitors, as some business operators have a near-total dependence on the foreign tourist, such as the diving sector. The number of foreign investors putting their money into hotels, boutique accommodations, restaurants, and other niche markets in the hospitality industry has been increasing. What does Gozo offer such investors? Each destination has its own characteristics, unique selling points, and brand. These components, together with the government’s policies and strategies, dictate the areas and type of investment opportunities. Our objective remains to strengthen our unique selling points and continue to unleash the potential in different niche tourism segments. Gozo is usually seen as a summer destination since the Mediterranean has a warm climate and fascinating coastlines. Seasonality challenges have been curbed by promoting our history, culture, adventurous tourism, and events – however, with the pandemic this challenge has re-emerged. We must ensure that seasonality challenges remain as minimal as possible in order to sustain investments made, which after all are contributors to the product offered. Innovation, creativity, and ideas are what enable economies to evolve.

What investment opportunities is Gozo best suited to? Visitors are increasingly searching for experiential holidays that define the authenticity of the destination. By merging ‘what to do’ with ‘what to see’, destinations can develop an inspirational tourism product. This is where niche development comes into play. Our Visit Gozo brand conducts continuous promotional campaigns to provide visibility and inspire visitors to Gozo. There are many investment opportunities within the tourism sector, but it also boils down to who can be more innovative, creative, and competitive, while offering a quality product, keeping in mind the demographics that Gozo attracts. As a Ministry, we offer support schemes for tourism and other operators, including support for employment on the island and for back-office set-ups, that are exclusively operational on a regional level. What is your vision for how Gozo can continue to balance investment while staying true to what makes it so special? What is your hope for the future of the Gozitan project? Gozo has long been on the periphery of business activity, but we as a government are committed to continue establishing a dynamic Gozo within its own dimension. Striking the perfect balance can be challenging, as changes are inevitable, but balance is a must. We are currently working on several projects that look to improve Gozo’s infrastructure and connectivity – we have introduced fast ferries between Gozo and Valletta, a second fibre optic cable, and announced plans for the development of a Gozo Regional Airfield. Meanwhile, the Gozo Aquatic Centre will be the largest project ever implemented with regards to sports infrastructure in Gozo, opening a new avenue for sports tourism. Further projects are also in the pipeline through the Gozo Regional Development Authority strategy, which is being developed through broad public consultation exercises.

By merging ‘what to do’ with ‘what to see’, destinations can develop an inspirational tourism product.

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Chapter 9: Tourism

MALTA’S TOURISM FIGURES AT A GLANCE A FAST-GROWING DESTINATION… 3,000,000

1,474,365

659,513

2,771,888

2,598,690

2,273,837

1,965,928

500,000

1,791,422

1,000,000

1,689,809

1,582,153

1,500,000

969,246

2,500,000 2,000,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Jan-Aug

The average tourist spends

7 nights in Malta

Number of arrivals

SERVED BY EVER MORE CONNECTIONS 120 100 80 60

100

2009

2017

2019

Number of air connections Source: Malta International Airport, Central Bank of Malta

per cent

of arrivals in any given year are returning visitors

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Golden Bay. Photo: viewingmalta.com

Around

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A FAVOURITE OF TOURISTS FROM ALL OVER… 700,000 600,000

48,954

37,976

33,251

511,025

Hungary

Austria

Other

49,807 Australia

Switzerland

50,525

Ireland

USA

53,089

59,528 Netherlands

70,886

104,228 Poland

Belgium

116,295 Spain

239,140 France

124,411

392,955

Italy

100,000

649,624

200,000

United Kingdom

300,000

Scandinavia

400,000

Germany

211,546

500,000

Arrivals by country Data refers to 2019 figures. Source: National Statistics Office

IN ALL SEASONS...

AND OF ALL AGES 45

25 20 15 5

33%

35 30

28%

25%

14%

Percentage of arrivals

25-44

45-64

65+

0-24

Average age of tourists coming to Malta

Winter

Data refers to 2019 figures. Source: National Statistics Office

Spring Summer Autumn Source: National Statistics Office

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Malta’s Tourism Product

here is no shortage of things to see and do in Malta and Gozo. Many visitors find they are itching to come back after discovering they have barely scratched the surface of everything the islands have to offer on their first stay. The sun and sand are a major selling point, with beaches coming in all shapes and sizes – some have amenities for water sports and restaurants, and are fully accessible, while others are tucked away in pristine settings. Twelve of them have Blue Flag status. A veritable cultural treasure trove, the feeling that every step is steeped in living, breathing history is inescapable. Valletta, the Three Cities, Mdina, and Gozo’s Cittadella are often described as open-air museums, best explored with a knowledgeable guide who can interpret the centuries-old tales sung by the very stone. Once described as a floating fortress, Malta also holds innumerable wonders for fans of military history. It is nothing less than a showcase of the development of siege warfare over the latter half of the last millennium, from the Great Siege by the Ottoman Empire in 1565 to the blockade of Napoleon’s forces between 1798 and 1800, and culminating in the horror of World War II. The blitz rained upon Malta saw it take the dubious honour of being the most heavily bombed place on Earth, with the population’s steadfast stoicism being rewarded with the George Cross that graces the Maltese flag to this day. No visit to Malta is complete without a stop at the Neolithic temples that are found across the islands. Older than Stonehenge and the Pyramids of Egypt, the Maltese megaliths are the second-oldest freestanding structures created by human hands on the planet, and are collectively recognised as UNESCO World Heritage

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Sites. Precisely calibrated to the movement of the skies, with particular openings designed to capture the solstices, exactly how the islands’ ancient inhabitants were able to transport the huge stones and construct the complex structures remains a puzzle that fascinates researchers and captures the imagination of all who lay eyes on them. The village feasts dedicated to the patron saint of each parish, running all summer long, also draw a lot of interest. From the street decorations to the pageantry, the festa is the culmination of community life, a captivating mix of sacred and profane elements that delights all who witness the spectacle. No feast is complete without an exquisite fireworks show (or two, three, or more), events that draw large crowds as the town square is turned over to pedestrian use and food, drinks, and good times with friends become the order of the day.

Malta’s International Investment Guide 2023

Ġnejna Bay. Photo: Ferenc Horvath / Unsplash

There is much else besides – well-preserved Roman remains, sumptuous churches, awe-inspiring cliffs, and mysterious ‘cart ruts’, as well as enough rock climbing and diving sites to satisfy the most adventurous of explorers. Suffice it to say that a quarter of arrivals in any year are return visitors, evidence of the bewitching attraction the islands have for so many people. Rather than a limitation, the country’s small size is often singled out as a plus point for tourists, allowing them to visit every nook and cranny without the need to change their accommodation. This also means that each day can be made use of to the full. A day might start with a visit to the Silent City of Mdina in the morning, followed by a swim at Golden Bay in the afternoon. After a shower and a change of clothes at a Valletta hotel, next on the menu might be a fresh fish dinner at Marsaxlokk, closing off with a night out in Paceville – hitting the north, south, east, and west of the country without a second thought.

Everything Malta has to offer is at arm’s reach, making it easy to craft a tailor-made itinerary that tickles all the senses. Gozo can be enjoyed on a day trip or as a destination in its own right. In the mild winter and spring, the more rural island blooms with colour, and it is a favoured destination for those who prefer to go through their day at a slower pace. The loss of its famous landmark, the Azure Window, did little to dull its shine, with a similar geographic feature at Wied il-Mielaħ taking its place on many sightseers’ agendas. Gozo is often considered the quirkier, more esoteric of the two main islands, and is the preferred choice for organisers of wellness, yoga, and meditation retreats promoted internationally. It can be easily reached by a regular ferry service from the main connection with Ċirkewwa in Malta’s north or through a fast ferry service operating from Valletta, with plans for an airfield capable of welcoming small aircraft under consideration at the time of publication.

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Complementing Malta and Gozo’s many inherent attractions is a mature industry well-attuned to shifting trends in tourists’ expectations. Popular international hotel groups like Hilton, Westin, Radisson, and InterContinental have long recognised Malta’s potential. The luxury boutique association Relais et Châteaux is fittingly represented in Mdina, while The Phoenicia Malta in Valletta is a member of the exclusive Leading Hotels of the World brand, and Kempinski operates a hideaway resort in Gozo. Corinthia, whose award-winning hotels are landmarks in capitals across Europe, Africa, and, shortly also in the Middle East, is a homegrown success story. More recent entrants to the market include Marriott, Accor, and Hyatt, all three of which opened their doors to guests in Malta in 2020. That year also saw the first Michelin Guide reviewers recognise the excellence of some of Malta’s restaurants. The country’s gastronomic scene is considered to rival that of most European capitals, with a large variety of quality local and international cuisine available, but had previously lacked the cachet afforded by a Michelin Star. Since then, the list has grown, as chefs look to raise their game to achieve the coveted reward. All this, of course, suits visitors just fine, who can now add haute cuisine to the long list of things to try in Malta. Multinational food and beverage franchises have also taken note of Malta’s growth – Starbucks recently joined Costa in servicing the growing demand for international-style coffee shops. The ever-popular McDonald’s, Burger King, and KFC all have multiple outlets, while Domino’s Pizza is now engaged in lively competition with Pizza Hut. Wherever a tourist stays, and whatever they choose to do, the famous hospitality of the Maltese is regularly noted as a highlight of their trip. Despite the ever-increasing numbers, the native population is welcoming and friendly to a fault. Locals are neither pushy in their attempts to sell nor blasé about the presence of so many tourists. Most are happy to see their home be the object of such wonder, and are always ready to assist any lost wanderer or strike up a conversation. Supporting all this with 24/7 operations is Malta International Airport. With the exception of a small minority arriving by sea – whether by ferry from Sicily, on a cruise ship, or on a private vessel – every visitor to Malta passes through the sole airport’s gates. Luckily, it happens to be an excellent one, winning numerous awards and routinely achieving stellar feedback. Its air connections once numbered over 100, though the Covid-19 pandemic briefly

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Mdina. Photo: Clain-Andrei Stan / Fotolia

slashed this by half. Concerning as this was, connectivity has jumped back strongly. During the summer of 2022, there were only six fewer country destinations than there were in 2019, servicing a remarkable rebound in the number of tourists choosing to visit Malta. It is difficult to overstate the importance of air connectivity to Malta’s tourism sector. Simply put, each connection results in increasing numbers of visitors. The advent of low-cost airlines coincided with entry into the Schengen Area, leading to a sharp rise in tourist arrivals. If there is a limit to Malta’s ability to attract interest from holidaymakers, it has yet to be discovered. The only limitation thus far has been the availability of convenient and affordable flights. For this reason, Malta works closely with many of the top airlines to ensure that these vital connections continue to increase. These efforts, together with Malta’s attractive aircraft registration regime (see p. 200), have resulted in companies like Ryanair and Wizz Air setting up Maltese subsidiaries operating dozens of weekly flights into and out of the country, with these two airlines alone planning to have over 200 aircraft based in the country by 2023. Malta has also capitalised on the evolution of destination marketing, with the rise of social media and influencer marketing proving a boon to a country where Instagram-able scenes await behind every corner.

MaltaInvest2023

Photo: George Scintilla

Chapter 9: Tourism

Local Insight Meet Alan Borg Alan Borg was appointed CEO at Malta International Airport (MIA) in January 2015. Since then, he has led the dynamic airport team with a strategy that places service excellence and the guest experience at its core. In the last two decades, Malta has seen significant growth in the number of visiting tourists, leading to unprecedented investment in the hospitality industry to upgrade and rejuvenate our overall product, particularly in Valletta. What has this journey been like? I believe the regeneration of our capital was a success story throughand-through, largely because the investment undertaken – particularly in the five-year run-up to Valletta’s role as Capital of Culture in 2018 – prioritised the regeneration of cultural heritage and leisure activities. Over the past two decades, boutique hotels have opened, offering a more authentic experience, and there is a much more varied and highquality restaurant offering. St James Cavalier reopened as an artistic space, and alongside the complete renovation of City Gate, Teatru Rjal was given a new lease of life, MUŻA opened its door as a national art museum, and the old abattoir was transformed into the Valletta Design Cluster. These improvements, together with ongoing investment into existing accommodation, have transformed Valletta into a proper European hub of cultural and leisure activities. It’s an ideal city break destination, both in summer and the off-peak season. MIA has consistently won industry awards for its quality of service. How does this relate to Malta’s overall proposition to tourists, and how does it add value to investments in Malta’s tourism sector? As the point of entry for most tourists visiting our islands, we have always felt it our duty to make great first and last impressions on our guests through the delivery of excellent service. We call passengers

Our airport is an essential link in the chain of experiences that can make-or-break a stay in Malta.

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‘guests’ to further foster a hospitality mindset, as we firmly believe that our airport is an essential link in the chain of experiences that can make or break a stay in Malta. In the past five years alone, we completed significant improvements that have upgraded the check-in, security, retail, food and beverage, and VIP experiences, as well as introduced a service to facilitate journeys for travellers who are on the autism spectrum. These improvements have contributed to a more seamless and enjoyable experience at MIA, one that meets our guests’ expectations. We have not only invested in the infrastructure and new technologies to stay on top of ever-changing travel trends, but have prioritised training our team – particularly our frontliners – to ensure that they are equipped with the right skills to respond efficiently and, when needed, empathically, in different scenarios. Connectivity is crucial to tourism and Malta boasts wellestablished links with most European countries and, increasingly, with the Middle East. What do investors gain from such air links? We have always seen a clear correlation between the number of connections offered and the number of passengers travelling through our airport. Besides supporting tourist flows, solid air connections are crucial to facilitate other key economic activities as they bridge distances – particularly in the case of island nations like Malta – between entrepreneurs, businesses, and governments. According to the Airports Council International’s Airport Industry Connectivity Report 2019, a 10 per cent increase in direct air connectivity translates to a 0.5 per cent increase in GDP per capita. Before Covid-19, together with the Malta Tourism Authority, we focused strongly on improving connectivity in off-peak months to ensure solid, year-round flight availability for business travellers, as well as to stimulate more evenly spread tourist inflows across the year. The pandemic of course brought great disruptions to our connectivity. But, looking ahead, we will continue to explore new route development opportunities together with the existing and potential partner airlines that continue to put the Maltese Islands on the map.

Malta’s International Investment Guide 2023

Events

alta’s central location and excellent air connectivity make it an ideal venue for events of all kinds. State-of-the-art conference halls have long been hosting international meetings and conferences (see p. 232) with the assistance of a multitude of innovative suppliers and event planners taking care of any operation, no matter its complexity – and it does not get more complex than the dazzling shows put up at iGaming expos, where the latest tech meets event innovation to create stunning displays of creativity. Many expos also include an off-site calendar of events showcasing Malta’s range of entertainment options, including club nights, cultural tours, and boat parties. Meanwhile, the Maltese population’s love for a good night out has helped Malta establish itself as a major music

Photo: Mediterranean Conference Centre

hub, with festivals attracting party-goers from far and wide. Isle of MTV, held just outside Valletta since 2007, has seen some of the world’s biggest stars perform in Malta. The scene has grown rapidly as promoters from the UK, Italy, and elsewhere recognise the country’s potential as a festival destination with a difference, while local festivals like Earth Garden and the Farsons Beer Festival have come to attract as many foreigners as they do Maltese. The islands’ event potential goes beyond expos and parties, however. Wine, food, and film festivals are also regular fixtures in the calendar, while events like the Valletta Baroque Festival, Notte Bianca, and the Malta Jazz Festival have earned international recognition as exhibitions of excellence.

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Cruise

ince the opening of the Valletta Cruise Port in 2002, Malta has established itself as a regular fixture on cruise liner itineraries. Practically all major companies operating in the Mediterranean feature Malta as a port of call in many of their offers. The government has also been at the forefront in providing shore-to-ship electricity, anticipating European regulations to reduce emissions from docked vessels by equipping local facilities with the infrastructure required for long-term success. Although lacking dedicated harbour facilities, Gozo is also gaining a positive profile as a destination off the beaten track, with the number of cruise liners berthing off the island registering a marked increase.

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Grand Harbour. Photo: viewingmalta.com

Malta’s International Investment Guide 2023

Local Insight Meet Carlo Micallef Carlo Micallef is CEO at the Malta Tourism Authority (MTA), bringing to the role more than 25 years of experience in destination marketing, leisure, travel, and tourism. He has also served as Chairman of the Institute of Tourism Studies (ITS) since 2017. The number of tourists visiting Malta has grown rapidly over the last years. Can you tell us more about this development? Malta has seen growth since we introduced low-cost carriers. We had a record year in 2019 with 2.75 million visitors, and we were looking at 3 million in 2020. But then, of course, business came to a standstill.

Michelin Guide. Initially there were around three restaurants that made the Michelin Star grade, while several others received high marks. Michelin inspires and guides visitors, in line with our strategy to promote Malta as a quality destination with a great history, climate, and hospitality, as well as a great gastronomic offering.

More importantly, we diversified our source markets, becoming less reliant on the core markets of the UK, Germany, Italy, and France. This meant we saw growth, in 2019, from secondary markets such as Eastern Europe – particularly Poland, with at least around 100,000 visitors. That same year we received around 85,000 visitors from Spain, 50,000 from the US, 25,000 from Canada, and more than 40,000 from Australia.

From an investment perspective, over the years we have seen big global names investing in Malta – both in the hotel industry as well as in the entertainment and catering sectors. What does Malta have to offer such foreign investors? These investors saw the opportunity to move their money into a place where tourism was achieving record results. The Visit Malta brand has grown and is now more on the international radar than ever. With success, a destination gets noticed and attracts big names. We have taken a holistic approach – alongside other government schemes through Malta Enterprise and the taxation system – which has worked to encourage big brands to consider Malta and Gozo, and invest in our islands.

Our strategy also focused on encouraging higher-spending tourists to visit all-year-round, rather than just over the summer. Leading up to 2018, this was an added incentive for investors to invest in boutique properties in Valletta and other towns and villages, spurred by Valletta’s role as that year’s Capital of Culture. These properties raise the profile of the destination, each adding its own style and story to create a unique experience of the island for visitors. What role do gastronomic offerings play in Malta’s tourism strategy? Malta’s gastronomic offering has improved considerably over the years. Although everyone locally already recognised the great experiences and value that our restaurants and catering establishments offered, we lacked the international recognition of a known brand with which some people benchmark their expectations. In 2017-18, we began talks with Michelin to visit and inspect restaurants in Malta, signing a marketing deal with them to produce a map and other initiatives as part of their

Our strategy is to promote Malta as a quality destination with a great history, climate, and hospitality, as well as a great gastronomic offering.

There was concern that there would be a different scenario post-Covid but tourism is exceeding expectations, with good results this summer. We are limited by a lack of people to cater to high demand, with most flights now arriving in Malta at capacity. Nevertheless, the tourism industry in Malta is performing well once again and I foresee that this trend will continue, with big brands continuing to believe in the island and more investments in the pipeline. One area where I believe there is scope for more investment is in family attractions and activities, such as theme parks, which people can visit while on holiday to enhance their experience. Malta boasts well-established links with most European countries and, increasingly, with the Middle East. What do investors exploring Malta’s opportunities gain from these connections? Since Malta is an island, most visitors must fly here, so flight connectivity is key. Before, one could only fly to around four airports in Italy but today it has increased to 17 airports there, with many more airlines. People don’t want to drive long distances to other airports to come to Malta; they want convenience. Those investing in Malta may wish to fly here for urgent business meetings or use the island as a base to reach other destinations in Europe, the Middle East, the US, or elsewhere. At one point, Malta was touted as better connected to Europe than London Heathrow. Connectivity is crucial for tourism, business, and investment in Malta, and we must continue to invest in that.

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Chapter 9: Tourism

Local Insight Meet Tony Zahra As President of the Malta Hotels and Restaurants Association (MHRA), leading entrepreneur Tony Zahra’s goal is to unite, represent, and lead the island’s hospitality industry forward. Over the years, Malta has witnessed a boom in the tourism industry, accompanied by significant investment by local and foreign investors in the hotels, catering, and entertainment sectors. Why has Malta attracted such global big-name investors to these sectors? Malta as an investment destination has quite unique competitive advantages when it comes to attracting inward investment. These advantages include the obvious, such as the climate and the Mediterranean lifestyle, which many coming from northern regions appreciate tremendously. But perhaps what is unique to Malta is the widespread use of English. Indeed, English, in conjunction with Maltese, is an official language, while our Commercial Code is much like its English counterpart, making commercial legislation relatable. Our laws are also written in English and Maltese, so a non-Maltese-speaking person can read the law without the need of translators. Of course – at least until now – Malta’s favourable rate of taxation for foreign investors also sets the island apart, among other advantages. I believe these are some of the main advantages as to why Malta is chosen as a superb destination for inward investment. Is there room for more foreign investors to come into this industry, or are we reaching saturation levels? The MHRA commissioned a country carrying capacity study, which was prepared by Deloitte and has recently been completed. This report identifies areas where we have bottlenecks, which will need attention if we are to sustainably increase the number of tourist arrivals. In any case, there are always opportunities. There are always some stakeholders wishing to exit for whatever reason they might have, such as reaching retirement age. For greenfield investment, I recommend that the carrying capacity report – which MHRA published in September 2022 – is referred to prior to investment.

From your direct experience as an investor – and also as the President of MHRA – is there significant interest by foreigners to invest in Malta in these sectors? There has always been interest from foreign investors in our industry, especially in the hotel industry. Indeed, in the last few years we have seen substantial foreign investment in boutique hotels in Valletta, the Three Cities, and other places, as well as an immense inward investment in catering. This includes, especially, investment coming from Italy in the restaurant sector. What synergies might benefit investors in entertainment, MICE, and other niches when investing in Malta? The lifestyle in Malta must be one of the main investment advantages. Going forward, however, there are still tax benefits when investing in Malta, and we have one of the most business-friendly administrations in the Mediterranean. We also have a local workforce that has very high intellect and can provide an excellent basis for one to grow. There has been a noticeable increase in high-quality offerings in Malta, including Michelin Guide recognition for a number of eateries and a proliferation of high-end boutique hotels. What value does this add for international investors? The destination has been growing in the right direction for a number of years. The fact that Michelin has come to Malta is proof that the island takes its marketing seriously and is offering direction as to where the authorities see the future. By bringing in Michelin and other international names in the hospitality industry, it’s clear the government wants to bring in more of the quality brands that will attract higher-spending tourists. It is this tourist that will bring more revenue without impacting the environment and surroundings, given that these tourists will collectively spend more.

The destination has been growing in the right direction for a number of years.

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Investment Opportunities Ċittadella, Rabat, Gozo. Photo: viewingmalta.com

he last 10 to 15 years have seen a significant increase in foreign investment tied to the hospitality industry, including the purchase and renovation of palazzos and unconverted properties in Valletta, the Cottonera area, and Gozo. Such properties were successfully converted into upmarket hotels, boutique hotels, guest houses, B&B properties, and short-let units. Although the pandemic has somewhat disrupted the momentum in terms of the flow of foreign investment in this sector, interest and investment have picked up again over the past six to 12 months. Other tourism-related industries that continue to attract a healthy flow of foreign investment are restaurants, wine bars, and places of entertainment. Investors looking to carve out a slice of Malta’s lucrative industry would do well to keep its strategic priorities in mind. Mass summer tourism is well catered for, but there are plenty of opportunities – and support – for those whose vision aligns with the national tourism strategy. The drive to attract higher spending tourists all year round creates a welcoming environment for high-quality investment, especially for internationally renowned brands with a pull factor of their own. Similarly, initiatives to increase arrivals in the shoulder months of the year will be well-received, in line with efforts to mitigate the inherently seasonal nature of tourism in a seaside destination. It helps to understand why it is that people come to Malta. Looking at the three years prior to the pandemic, around 60 to 70 per

cent of tourists said they visited for the sea and culture – hardly surprising, since these two elements play a big role in any decision to travel to the islands. Business reasons and special occasions like music events and weddings are the main motivators for 8 per cent of travellers, while scuba diving and wellness account for another 5 per cent each. Finally, just under 4 per cent come to Malta to study English at one of the many schools centred around Sliema, St Julian’s, and St Paul’s Bay. A phenomenon that started in the run-up to Valletta’s tenure as European Capital of Culture in 2018, and which continues to unfold, is the capital city’s emergence as a destination in its own right. Just 10 years ago, practically no visitor would (or indeed could) have said that they would spend their entire stay exploring the grid-like streets of the golden-hued fortress. Following an unprecedented investment drive in the capital, a short decade later, it is undoubtedly one of Malta’s top attractions, featuring some of the best accommodation and gastronomic experiences, while its retail offering is updating itself to match, albeit more slowly. Potential investors must tread carefully, handling the city ‘built by gentlemen, for gentlemen’ with the sensitivity required when handling a crown jewel. As a UNESCO World Heritage Site, and the pride and joy of so many Maltese, any investment in Valletta will be scrutinised to ensure that it complements the regenerating fabric of the city – conditions perfectly suited to sophisticated investors whose dreams can be backed up by the expertise and resources necessary for their realisation.

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The Maltese Islands: A MICE destination of excellence Despite being one of the smallest members of the Eurozone, the Maltese Islands are a favourite destination among FTSE100 companies and international organisations that have repeatedly hosted their events here. Here’s why.

ersatile and dynamic, the Maltese Islands are centrally located at the heart of the Mediterranean, with excellent flight connectivity and within less than three hours from main European gateways. Moreover, the Maltese Islands are included in several cruise liner itineraries with scheduled ferry services direct from several Mediterranean ports. There is also a catamaran service connecting Malta to Sicily – especially ideal if clients choose to combine their programme with a quick trip to Sicily. Having venues and hotels for every budget, an array of inherent attractions, and a unique cuisine, combined with 300 days of sunshine are a sure recipe for successful meetings. Meanwhile, consisting of only 316 sq km, the Maltese Islands offer short distances with the ability to get around in a convenient and efficient manner. The islands’ size means that nowhere is more than 45 minutes away.

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A closer look: What makes Malta special

Photos: Malta Tourism Authority

First off, the history and culture of the islands is unique. Boasting 5,000 years of history, the Maltese Islands have been under several rulers, including the Phoenicians, the Arabs, the French, and the British. On 21st September 1964, Malta was granted Independence, and became a Republic on 13th December 1974, 10 years later. Malta’s Megalithic Temples are known to be the oldest free-standing stone structures in the world, older than the UK’s Stonehenge and the pyramids of Egypt. Despite being a small island nation, Malta has three inscribed UNESCO World Heritage Sites – these are the city of Valletta, which served as European Capital of Culture in 2018, the Megalithic Temples, and the Ħal Saflieni Hypogeum.

Looking at the islands’ history, it is also important to highlight the legacy of the Knights of St John in Malta, from the year 1530 up until 1798. The Three Cities, Fort St Angelo, and later on Valletta, the baroque fortified capital city they built after the Great Siege of 1565, are amongst the legacies of the Order. In Valletta, one can notice prominent 16th century buildings that were built by the Knights, otherwise known as Auberges. The Order of St John also gave the islands the famous eight-pointed Maltese cross. Meanwhile, with more than 360 churches and chapels scattered across Malta and Gozo, these religious sites form an integral part of the country’s history, landscape, and skyline – they are at the heart of Maltese social and cultural life.

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Moreover, a trip to Malta isn’t complete without a visit to Malta’s two sister islands, Gozo and Comino. The more rural island, Gozo, is a perfect change of pace for those looking for a more relaxed stay in a quaint setting. The island also comes complete with historical sites, forts, and amazing panoramas, as well as one of the archipelago’s best-preserved prehistoric temples, Ġgantija. Meanwhile, situated between Malta and Gozo, Comino is home to the most spectacular diving, snorkelling, and boating experiences. If luxury is what you’re after, Malta delivers the ultimate recipe, with 17 five-star hotels and new luxury boutique properties. It provides visitors the opportunity to experience the finer things for less, as luxury accommodations in Malta are typically less expensive than similar hotels around Europe. Malta also offers travellers a diverse culinary experience, from the traditional plate of eclectic Mediterranean food to never-ending vineyards delivering the finest wine. The islands are also on the Michelin map – as of 2022, there are five one-star restaurants and another four establishments awarded Bib Gourmands. Other highlights of the Maltese Islands include a year-long calendar of events and festivals that provides diverse options of unique, culturally immersive experiences; as well as a lively and cheerful nightlife scene that caters for everything from clubbing to classical orchestras. In recent years, Malta has also become one of Europe’s most popular film and television locations, having been home to a number of blockbusters including Gladiator, Popeye, and The Count of Monte Cristo. Most famously, the city of Mdina was home to the filming of HBO’s Game of Thrones.

Communicate with ease The country’s official languages are Maltese and English, with English considered the official business language. Other European and international languages are spoken fluently. Interestingly, the Maltese language is a combination of Arabic, Italian, and English influences, and its alphabet includes 30 letters. Many Maltese words and phrases can have double meanings, depending on the context and how they are pronounced. For example, the Maltese phrase Jien naf, which means “I know”, also means “I don’t know”. This is where the difference in tone of voice comes in, which is one of the most important aspects to learn in the Maltese language.

A stellar MICE infrastructure Malta’s five-star and four-star hotels range from large-scale international chains to boutique establishments. Most of these are clustered within walking distance, enabling event organisers to split up large groups over different properties.

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Malta has 17 five-star hotels with more than 7,000 beds and 44 four-star properties with just over 15,000 beds. Top international brands on the islands include Hilton, Hyatt, InterContinental, Corinthia (which is actually a Maltese brand), Westin, Kempinski, Relais et Châteaux, Leading Hotels of the World (Phoenicia), Radisson Blu, and Marriott.

The Maltese Islands are the perfect destination for incentive travel due to their compact size and diverse range of activities available. These include wellness activities, themed beach dinners, quad bike and jeep tours, speedboats, gullets or catamaran rental, film location tours, wine tasting, farm to fork and olive grove tours, sailing regattas, and more.

Most of the five-star hotels have their own in-house conference facilities and dedicated MICE staff. The islands also offer a selection of different modern and historical venues to suit different needs.

The Malta Tourism Authority: Here to help

The five convention centres in Malta are Hilton Malta Conference Centre (HMCC), InterContinental Arena Conference Centre (IACC), and Oracle Conference Centre, all of which have their own accommodation facilities available; as well as the Malta Fairs and Conventions Centre (MFCC), which is the island’s largest indoor venue with 8,500 sq m of space, and the Mediterranean Conference Centre (MCC) in Valletta, which is Malta’s flagship venue. The latter has played host to all major international summits and events including the Commonwealth Heads of Government Meeting presided over by HM The Queen, the Valletta Summit on Migration attended by European and African leaders, and the start of the Maltese Presidency of the Council of the European Union. Originally built as a hospital in the 16th century by the Knights of St John, the MCC was converted into a multi-functional conference centre in 1979.

The VisitMalta Incentives and Meetings team is situated in Smart City, Malta. Additionally, the Malta Tourism Authority has MICE-dedicated professionals in MTA offices in the United Kingdom, Germany, Italy, and France. Other MTA offices or representatives can also be found in every corner of the globe. The VisitMalta Incentives and Meetings team is on hand to help with information about the destination and providing impartial advice; information about suppliers such as hotels, DMCs, and conference centres; bidding support; audio-visual tools: images, videos, destination presentation; promotional giveaways, corporate gifts, collateral; and monetary support where eligible. Additionally, the team also has various schemes in place which are aimed at facilitating business. For more information, get in touch on info.conventions@visitmalta.com

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Useful Information

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MaltaInvest2023

Chapter 10: Useful Information

Local Contacts Investors will find Malta to be a bustling hub of activity with assistance and support available to those who ask for it. Whether exploring new opportunities, looking for partners, or information on incentives, establishing a local network is essential for success in Malta. Fortunately, contacts are just a phone call or an email away.

Communications

Employment

Malta Communications Authority (MCA)

Department for Industrial and Employment Relations (DIER)

Regulator of all communications services including TV, internet, mobile telephony, and radio, as well as eCommerce. +356 2133 6840

customercare@mca.org.mt

mca.org.mt

Government entity tasked with supporting good industrial relations and monitoring the legal application of employment contracts. +356 2122 4245/6

info.dier@gov.mt

dier.gov.mt

Education

JobsPlus The national employment agency issuing work permits.

University of Malta The leading higher education institution in Malta with faculties in a wide variety of subjects. +356 2340 2340

info@um.edu.mt

um.edu.mt

+356 2125 5153

jobsplus@gov.mt

jobsplus.gov.mt

Identity Malta Agency Issuer of visas, identity cards, passports, and other services.

Malta College of Arts, Science and Technology (MCAST)

+356 2590 4000

enquiries@identitymalta.com

identitymalta.com

The top vocational and training college with hundreds of courses leading up to Master’s level. +356 2398 7100

information@mcast.edu.mt

mcast.edu.mt

Malta Financial Services Authority (MFSA)

Malta Further and Higher Education Authority (MFHEA) Accrediting authority of Maltese education institutions providing quality assurance and recognition of local and international qualifications. +356 2598 1489 mfhea.mt

Financial Services

info@mfhea.mt

Regulator of financial services in Malta. +356 2144 1155 mfsa.mt

FinanceMalta A public-private partnership set up to promote Malta as an international financial centre. +356 2122 4525 financemalta.org

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Malta Stock Exchange Provides access to capital finance to large companies and SMEs alike through its Main and Prospects markets. +356 2124 4051

borza@borzamalta.com.mt

borzamalta.com.mt

General Investment Malta Enterprise Malta’s economic development agency providing grants, incentives, and other assistance to businesses looking to establish themselves in the country.

Institute of Financial Services Practitioners

+356 2542 0000

Association of professionals working across the entire range of financial services.

maltaenterprise.com

+356 9946 7041 / 9934 3240 / 9934 2991 info@ifsp.org.mt

ifsp.org.mt

Malta Institute of Accountants The voice of the accountancy profession in Malta. +356 2258 1900

info@miamalta.org

miamalta.org

Malta Enterprise Gozo Office +356 2156 4700 gozo.office@maltaenterprise.com info@investingozo.com

Malta Enterprise UK Office +44 20 7292 4800

Malta Institute of Taxation Organisation of tax practitioners promoting good practice and knowledge through seminars and courses. +356 2131 4653

info@maltaenterprise.com

info@maintax.org

maintax.org

peter.meli@maltaenterprise.com

Malta Enterprise Dubai Office +971 4331 1015

kauchhur.sangeeta@gov.mt

Malta Enterprise China Office +86 158 0072 3284 jennifer.shenmay@maltaenterprise.com

Gaming

Business 1st One-stop-shop for business set-up.

Malta Gaming Authority (MGA) Regulator of all gambling services in Malta. +356 2546 9000

info.mga@mga.org.mt

Promoter of Malta as a centre of excellence for the broad gaming industry. info@gamingmalta.org

gamingmalta.org

+356 2542 0000

connect@startinmalta.com

startinmalta.com

Start in Malta Gozo Office +356 2156 4700

iGEN Association of iGaming companies based in Malta.

igenorg.eu

businessfirst.com.mt

Initiative to improve Malta’s start-up ecosystem.

Gaming Malta Foundation

+356 7967 6868

info@businessfirst.com.mt

Start In Malta

mga.org.mt

+356 2247 3000

+356 2542 2020

info@igenorg.eu

Malta Business Registry Entity responsible for registration and administrative oversight of commercial partnerships and legal entities, and for maintaining the Registry of Companies. +356 2258 2300

info.mbr@mbr.mt

mbr.mt

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Malta Government Investments Government holding company and development partner. +356 2149 7970

info.mgis@mgis.com.mt

mgis.com.mt

Industry INDIS State entity managing industrial space in Malta and Gozo. +356 2226 4400

Malta Investment Management Company (MIMCOL)

info@indismalta.com

indismalta.com

Government entity dedicated to creating, assisting, and promoting economic development. +356 2149 7970

info.mimcol@mimcol.com

mimcol.com.mt

Malta Film Commission

Malta Development Bank Provider of financing facilities to support productive and viable start-ups, SMEs, and infrastructural projects. +356 2226 1700

Investment Partner

info@mdb.org.mt

Government entity facilitating film production in Malta through tax credits, co-production grants, and other incentives. +356 2180 9135

info@mfc.com.mt

maltafilmcommission.com

mdb.org.mt

Life Sciences Gozo

Medicines Authority (MA)

Gozo Regional Authority Agency promoting economic development in Gozo. +356 2215 6331/3

info@grda.mt

grda.mt

Association of businesses in Gozo. info@gozobusinesschamber.org

gozobusinesschamber.org

Gozo Tourism Association Association of tourism operators working in Gozo. +356 2156 5171 / 2756 5171 / 2755 1999 info@islandofgozo.org / ceogta@islandofgozo.org islandofgozo.org

+356 2343 9000

info.medicinesauthority@gov.mt

medicinesauthority.gov.mt

Life Sciences Park

Gozo Business Chamber +356 2155 0305

Regulator of the pharmaceutical industry in Malta.

A life sciences hub providing laboratories and other facilities for research and development activities. +356 2247 7600

info@maltalifesciencespark.com

maltalifesciencespark.com

Property Planning Authority (PA) Regulator of planning, zoning, and building permits. +356 2290 0000

customercare@pa.org.mt

pa.org.mt

Environment and Resources Authority (ERA) Regulator of Malta’s natural resources and all practices relating to their management. +356 2292 3500

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era.org.mt

info.era@era.org.mt

Malta’s International Investment Guide 2023

Malta Developers Association Association of property developers and professionals working in the construction industry. +356 7949 2095

info@mda.com.mt

mda.com.mt

Tech Malta Digital Innovation Authority (MDIA) Authority promoting and supporting Malta’s emergence as a hub of innovative technologies. +356 2182 8800

info@mdia.gov.mt

mdia.org.mt

Residency

Tech.MT

Community Malta Agency

Public-private entity tasked with supporting the development of digital services in Malta.

Agency managing Maltese citizenship. +356 2122 5232

info@komunita.gov.mt

komunita.gov.mt

Residency Malta Agency Agency managing Maltese residency.

+356 2226 2100

techmt.contact@tech.mt

tech.mt

Malta Council for Science and Technology Advisor, promoter, and supporter of Malta’s research and development efforts.

+356 2203 4000

+356 2360 2200

customercare.residencymalta@gov.mt

mcst.gov.mt

info.mcst@gov.mt

residencymalta.gov.mt

Tourism

Taxation

Malta Tourism Authority (MTA)

Commissioner for Revenue Malta’s centralised tax office responsible for income tax, social security, and VAT. +356 2568 5120/3/8

servizz@gov.mt

cfr.gov.mt

Department responsible for the control of the import and export of goods.

customs.gov.mt

+356 2291 5000

info@visitmalta.com

mta.com.mt / visitmalta.com

Festivals Malta Agency

Customs House

+356 2123 6795

Regulator of hospitality, catering, and other tourism-related services.

malta.customs@gov.mt

National body entrusted as caretaker of Malta’s calendar of cultural festivities. +356 2334 7301

info.fm@festivals.mt

festivals.mt

Valletta Cultural Agency Agency set up to enable Valletta’s continuing development as a major cultural destination. +356 2124 2018

info@vca.gov.mt

vca.gov.mt

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Foundation for Tourism Zone Development

Valletta Gateway Terminal

Co-ordinator of facilities, projects, and initiatives in zones dedicated to tourism.

Operator of commercial services in Malta’s Grand Harbour with facilities for RoRo, trailers, containers, conventional cargo, and vehicles.

+356 2137 6082

ftzd@gov.mt

+356 2205 7000

tourism.gov.mt/en/ftzd

info@vgt.com.mt

vgt.com.mt

Malta International Airport Main point of entry and exit to and from Malta, serving millions of passengers every year. +356 2124 9600

maltairport.com

Malta Freeport Terminals Malta’s transhipment port serving as a versatile platform for the world’s major shipping lines. +356 2225 1000

Valletta Cruise Port Port of call set against the stunning backdrop of Malta’s unique Grand Harbour. +356 2567 3000

info@vallettacruiseport.com

vallettacruiseport.com

Promoter of Malta and Gozo as a M.I.C.E. destination. info@conventionsmalta.com

conventionsmalta.com

Malta Hotels and Restaurants Association Association of operators involved in the hospitality sector. +356 2131 8133

maltafreeport.com.mt

Trade Association The Malta Chamber

Conventions Malta +356 2291 5000

marketing@maltafreeport.com.mt

mhra@mhra.org.mt

mhra.org.mt

The independent voice of the private sector in Malta, representing the biggest companies on the islands. +356 2203 2304

info@maltachamber.org.mt

maltachamber.org.mt

Malta Chamber of Small and Medium Enterprises Association representing small and medium businesses operating in Malta. +356 2123 2881

admin@smechamber.mt

smechamber.mt

Malta Employers Association

Trade Commerce Department Department responsible for the issuing of trade licences for certain regulated sectors and operator of Malta’s intellectual property portal. +356 2122 6688

Public-private partnership supporting trade links and providing assistance to export-oriented companies based in Malta.

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admin@maltaemployers.com

maltaemployers.com

Transport

TradeMalta

trademalta.org

+356 2123 7585 / 2122 2992

commerce@gov.mt

commerce.gov.mt

+356 2247 2400

Union of employers promoting sustainable economic development.

info@trademalta.org

Transport Malta (TM) Government body overseeing all transport in Malta. +356 2122 2203 transport.gov.mt

info.tm@transport.gov.mt

Malta’s International Investment Guide 2023

TM Civil Aviation Directorate +356 2555 5412

civil.aviation@transport.gov.mt

TM Merchant Shipping Directorate +356 2125 0360

mershipmalta.tm@transport.gov.mt

TM Maritime Gozo Office +356 2155 8856/7

Yachting Malta Public-private partnership promoting Malta’s development as a hub for yachting events and services. +356 9982 3780

ceo@yachtingmalta.org

yachtingmalta.org

Malta Maritime Forum Association bringing together all stakeholders in Malta’s maritime industry. +356 2559 4188

admin@mmf.org.mt

mmf.org.mt

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Diplomatic Missions Malta enjoys good diplomatic relations with many countries, and its ambassadors and consuls play an important role in nurturing trade opportunities. Prospective foreign investors may find their local diplomat to be a trusted advisor, partner, and liaison capable of opening the right doors and making the right connections to make their Maltese venture a smooth success.

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Country or Entity

City

Representation

Telephone

Algeria

Algiers

Consulate

+213 023092262

maltaconsulate.algiers@gov.mt

Australia

Canberra

High Commission

+61 2 6290 1724

highcommission.canberra@gov.mt

Melbourne

Consulate

+61 3 9670 8427

maltaconsulate.melbourne@gov.mt

Austria

Vienna

Embassy

+43 1 5865010

maltaembassy.vienna@gov.mt

Belgium

Brussels

Embassy

+32 2 238 26 08/343 01 95 maltaembassy.brussels@gov.mt

Brazil

Brasilia

Embassy

Canada

Toronto

Consulate

+1 416 207 0922/89

maltaconsulate.toronto@gov.mt

China

Beijing

Embassy

+86 10 6532 3114

maltaembassy.beijing@gov.mt

Shanghai

Consulate

+86 21 6265 0166

maltaconsulate.shanghai@gov.mt

Council of Europe

Strasbourg

Permanent Representation +33 388247610

malta-coe.strasbourg@gov.mt

Egypt

Cairo

Embassy

maltaembassy.cairo@gov.mt

European Union

Brussels

Permanent Representation +32 2 238 2700

maltarep@gov.mt

France

Paris

Embassy

+33 1 56 59 75 90

maltaembassy.paris@gov.mt

Germany

Berlin

Embassy

+49 30 263 911 0

maltaembassy.berlin@gov.mt

Ghana

Accra

High Commission

+233 547044295

maltahighcommission.accra@gov.mt

Greece

Athens

Embassy

+30 2107 7851 38

maltaembassy.athens@gov.mt

India

New Delhi

High Commission

+91 11 4767 4900

maltahighcommission.newdelhi@ gov.mt

Ireland

Dublin

Embassy

+353 1676 2340

maltaembassy.dublin@gov.mt

Israel

Tel Aviv

Embassy

+972 3629 5914/5/6

maltaembassy.telaviv@gov.mt

Italy

Rome

Embassy

+39 06 6879990

maltaembassy.rome@gov.mt

Japan

Tokyo

Embassy

+81 3 5404 3450/1

maltaembassy.tokyo@gov.mt

Kuwait

Kuwait City

Embassy

+965 253 880 45/6

maltaembassy.kuwaitcity@gov.mt

maltaembassy.brasilia@gov.mt

+202 2461 9961/2

Malta’s International Investment Guide 2023

Country or Entity

City

Representation

Telephone

Libya

Tripoli

Embassy

+218 21 3638522

maltaembassy.tripoli@gov.mt

Morocco

Casablanca

Consulate

+212 520275820/4

maltaconsulate.casablanca@gov.mt

Netherlands

The Hague

Embassy

+31 70 356 12 52

maltaembassy.thehague@gov.mt

Palestine

Ramallah

Representative Office

+970 2 2413210/1

info.ramallah@gov.mt

Poland

Warsaw

Embassy

+48 22 646 46 39

maltaembassy.warsaw@gov.mt

Portugal

Lisbon

Embassy

+351 213 405 470

maltaembassy.lisbon@gov.mt

Qatar

Doha

Embassy

+974 4029 1342

maltaembassy.doha@gov.mt

Russia

Moscow

Embassy

+7 499 230 25 24

maltaembassy.moscow@gov.mt

St Petersburg

Consulate

+7 812 449 47 80

maltaconsul.stpetersburg@gov.mt

Nizhny Novgorod

Consulate

+7 908 721 4880

maltaconsul.nizhnynovgorod@gov.mt

Saudi Arabia

Riyadh

Embassy

+ 966 11 463 2345/461 5315 maltaembassy.riyadh@gov.mt

Spain

Madrid

Embassy

+34 91 391 3061

maltaembassy.madrid@gov.mt

Tunisia

Tunis

Embassy

+216 71965811/3652

maltaembassy.tunis@gov.mt

Turkey

Ankara

Embassy

+90 312 447 8051

maltaembassy.ankara@gov.mt

United Arab Emirates

Abu Dhabi

Embassy

+971 2 444 8646

maltaembassy.abudhabi@gov.mt

United Kingdom

London

High Commission

+44 207 292 4800

maltahighcommission.london@gov.mt

United Nations

Geneva

Permanent Representation +41 22 901 05 80

malta-un.geneva@gov.mt

New York

Permenent Mission

+1 212 725 2345

malta-un.newyork@gov.mt

Embassy

+1 202 530 9750/1/2

maltaembassy.washington@gov.mt

United States of America Washington D.C.

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Double Taxation Agreements Malta has as an extensive network of double taxation agreements currently in force. Residents of Malta can benefit from the following minimum rates of tax on dividends, interest, and royalties. Dividends Country

Albania

246

Rate for minor shareholding %

Rate for major shareholding %

Percentage required to qualify for major shareholding % 25

Interest Rates %

Royalties Rates %

5 0

Andorra

Armenia

Australia

N/A

Austria

N/A

Azerbaijan

N/A

8 0

Bahrain

N/A

Barbados

Belgium

N/A

Botswana

8.5

5/7.5

Bulgaria

N/A

Canada

N/A

China

Croatia

N/A

Cyprus

N/A

Czech Rep.

N/A

Denmark

Egypt

N/A

Estonia

Finland

France

Georgia

Germany

Greece

Guernsey

N/A

Hong Kong

3 10

Hungary

Iceland

India

N/A

Ireland

Isle of Man

Israel

Italy

N/A

Jersey

Jordan

N/A

Korea

Malta’s International Investment Guide 2023

Dividends

Interest Rates %

Royalties Rates %

Rate for minor shareholding %

Rate for major shareholding %

Percentage required to qualify for major shareholding % 10

Kuwait

N/A

Libya

Country

Kosovo

Liechtenstein

N/A

Lithuania

Luxembourg

Malaysia

N/A

Mauritius

N/A

0 10

Mexico

N/A

5/10

Moldova

N/A

Monaco

Montenegro

5/10

Morocco

6.5

10 10

Netherlands

Norway

Pakistan

Poland

Portugal

Qatar

N/A

Romania

N/A

Russia

15/5

N/A

15/5

San Marino

Saudi Arabia

N/A

5/7

Serbia

5/10

Singapore

N/A

7/10

10 5

Slovakia

N/A

Slovenia

South Africa

Spain

Sweden

Switzerland

Syria

N/A

Tunisia

N/A

Turkey

UAE

UK Ukraine Uruguay USA Vietnam

15 15 15 15

5 5 5 5

N/A 20 25 10 50

10 10 10 10 10

10 10 5/10 10 5/10

This schedule is only intended to give a general outline of the maximum rates of tax applicable to dividends, interest, and royalty payments under Malta’s tax treaties. It is advisable to consult the relevant tax treaty for more detailed information. Source: Commissioner for Revenue

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Chapter 10: Useful Information

Employment Exemptions and Incentives Malta has been able to overcome the limits of its small size by making it easy for employers to attract talent from all over the world (see p. 38). Through the Vacancy Exemption and Highly Qualified Persons programmes, businesses can tap into the global workforce and find the right skills needed for their success.

Malta Vacancy Exemption List

Eligible Highly Qualified Persons

Recruitment for the following occupations is exempt from the need to open vacancies locally before submitting an application for a prospective third-country national employee. This list may be updated from time to time, so it is recommended to refer to the relevant section on the JobsPlus website.

Highly Qualified Person tax status is available to individuals taking up eligible senior positions or executive jobs in companies operating in specific sectors.

Health-related Professionals Personal Care Workers, home-based for aged or disabled persons Chemists Doctors (General Practice, Specialised Medical) Nurses Veterinarians Technical and Building Professionals Architects and Civil Engineers Engineers (electronics) Geologists Geophysicists Engineers in aviation maintenance IT, Finance, Gaming, and Education Professionals Accountants Auditors Tax Professionals University and Higher Education Teachers/Lecturers Computer Network Professionals Computer Programmers IT Consultants Engineers (computer hardware and software) Systems Analysts Gaming Developers Games Presenters Product Owners Site Developers Search Marketers Tech Developers 248

Companies in financial services, gaming, or holding an Air Operator Certificate: Actuarial Professional Aviation Continuing Airworthiness Manager Aviation Flight Operations Manager Aviation Ground Operations Manager Aviation Training Manager Chief Executive Officer Chief Financial Officer Chief Commercial Officer Chief Insurance Technical Officer Chief Investment Officer Chief Operations Officer (including Aviation Accountable Manager) Chief Risk Officer (including Fraud and Investigations Officer) Chief Technology Officer Chief Underwriting Officer Head of Investor Relations Head of Marketing (including Head of Distribution Channels) Head of Research and Development (including Search Engine Optimisation and Systems Architecture) Portfolio Manager Senior Analyst (including Structuring Professional) Senior Trader/Trader Odds Compiler Specialist Companies with an aerodrome licence: Chief Executive Officer

Malta’s International Investment Guide 2023

Companies in the assisted reproductive technology sector: Embryologist Responsible Person Lead Quality Manager Companies in the maritime sector: Maritime Activities Chief Executive Officer Chief Operations Officer Managing Director Chief Financial Officer General Manager Crewing Manager Technical Manager Technical Ship Superintendent Designated Person Ashore Master Chief Mate Second Officer Chief Engineer Second Engineer Chef

Companies engaged in innovative and creative endeavours: Industrial Research roles Experimental Development roles Product Development roles Product or Process Innovation roles Roles involving the systematic, logical, scientific, inquisitive, investigative manipulation of data Roles involving mathematical synthesis and modelling Senior management roles with direct responsibility for a team carrying out the above tasks

Companies engaged in offshore, oil and gas and ancillary services industry activities: Chief Executive Officer Chief Operating Officer Head of Training Academy (which Academy must be certified by an international accreditation institution)

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Chapter 10: Useful Information

Personal Tax Rates Malta operates a graduated progressive income tax regime with a top personal tax rate of 35 per cent for incomes above €60,000. There are three different scales of taxation based on whether the individual is single, married, or a parent. More on that below, but first, it is important to note what types of income are subject to tax, and for who. Individuals resident and domiciled in Malta are subject to personal tax on their worldwide income, while those who are domiciled but not ordinarily resident in Malta are only subject to tax on income arising in Malta and that remitted from abroad. The latter are therefore exempt from Maltese tax on income earned abroad which is not received in Malta, and on capital gains arising outside the country, whether or not it is remitted to Malta. However, persons married to an individual resident and domiciled in Malta are subject to taxation on their worldwide income, as if they themselves were resident in the country.

Tax Rates for 2022 Income tax due is calculated by multiplying one’s income by the prevailing rate and then subtracting the relevant amount. Chargeable Income (€) From

Rate

Subtract (€)

Single Rates 0

9,100

9,101

14,500

15%

1,365

14,501

19,500

25%

2,815

19,501

60,000

25%

2,725

60,001

and over

35%

8,725

Married Rates 0

12,700

12,701

21,200

15%

1,905

21,201

28,700

25%

4,025

28,701

60,000

25%

3,905

60,001

and over

35%

9,905

Parent Rates

250

10,500

10,501

15,800

15%

1,575

15,801

21,200

25%

3,155

21,201

60,000

25%

3,050

60,001

and over

35%

9,050

Malta Invest

2023