E&S offers a wide range of jurisdictions within which we can assist our clients in setting up their businesses. Thus, if you are looking at setting up a company with the most effective tax structure and a straight forward registration including full in-house maintenance, E&S is a one stop shop.
Below you will find a brief comparison amongst a few jurisdictions in which E&S may open a company in a very short period of time with full registrations and the obligations that are connected thereto.
Setting up roots in Malta is one of the most straight-forward registrations within the EU jurisdictions. All is takes upon receipt of all documentation by the Registry is 2 to 3 working days.
As opposed to Gibraltar, the Registry in Malta allows for the reservation of a name for up to three months in ones’ favour and such is usually verified within 24 hours.
From a company formation point of view, Malta allows single-member companies as well as companies with numerous shareholders, simply one director and a company secretary as its officers. Dr Vella reiterated that locally we do not put any restrictions on the nationality of the officers appointed and neither do we forbid any nationality from acting as such.
In the same manner as Gibraltar, Malta does not allow the registration of bearer shares, but it does allow a variety of classes that its shareholders may opt for to vary their rights in the company.
It would be safe to say that most set up in Malta are to make use of our tax effective system. A Malta company’s taxable income includes gains or profits derived from a trade or business, dividends, premiums, interest or discounts, rent, royalties and other profits arising from property and from certain capital gains.
Our island offers the shareholders multiple refund scenarios for which they might be eligible. Therefore, although a Maltese company is subject to a flat rate of income tax of 35% on the company’s profits, refunds are possible. The most fetched for option is for those shareholders that are non-domiciled and not resident in Malta who may claim back 6/7ths as tax refund. At E&S our team of experts can delve into these claims of refund in further detail and in line with your business.
In addition, Malta has no withholding tax on dividends and therefore operates under a full imputation system to the extent that no further tax is payable on dividends irrespective of where the shareholder is tax resident.
Maltese companies are renewed on a yearly basis by means of the annual return and registration fee. Should such annual returns not be filed in due time penalties will apply.
Furthermore, a Maltese company needs to be VAT registered once it commences its economic activities. The VAT returns must be filed on a quarterly basis, and penalties as well as interest on the VAT amount to be paid, where applicable, may be incurred.
Proper accounting records need to be maintained. A copy needs to be filed with the Registrar of the annual accounts, accompanied by an auditor’s report as well as a director’s report. Furthermore, groups of companies are to submit Consolidated statements.
An independent auditor is required to hold office from each Annual General Meeting to the next. They are required to report to the shareholders for all the financial statements shown during the company’s general meeting.
The above are an indication of some of the obligations that must be adhered to once a company is set up in the country.
In Gibraltar a company name is not reserved in the clients’ favour but rather pre-approved by the Gibraltar Registry. The Registry also requests a meaning of any abbreviation to a name prior to such approval.
When setting up an entity in Gibraltar the standard incorporation time is 4 to 5 days. A minimum of one director and one shareholder (corporate or individual) are required to be appointed. The director and the shareholder may be the same person. The identity of both are required to be filed at the Gibraltar Companies Registrar although these may be Corporate Directors and/or Nominee Shareholders.
An issue that affects Gibraltar companies is that they are not designated to accommodate bearer shares.
Taxation of companies is based on residency. If an entity is managed or controlled in Gibraltar, it is considered resident and is therefore taxed on its income. Such source income to be taxed must be in Gibraltar.
For corporate taxation the standard rate is 10% levied on all resident companies. Having said this Dr Vella confirms that a Gibraltar company, which does not trade from or within Gibraltar, will carry the status of “Non-Resident Controlled”, and all income generated outside Gibraltar will not incur any incorporation tax.
Other matters that are to be considered would be as follows:
- Taxation is abolished on dividends paid by one Gibraltar company to another Gibraltar company;
- Taxation is abolished on dividends and interest paid by a Gibraltar company to a non-resident recipient;
- The requirement to withhold tax on dividends is abolished in terms of Section 39 of the Gibraltar Income Tax Ordinance;
- Stamp duty on all transactions other than those relating to property situated in Gibraltar are abolished.
Gibraltar companies are renewed on a yearly basis. Failure to submit such renewal on time may incur late filing penalties, government penalties, interest charges are may be applicable. Should the company not be renewed, the Registrar should be informed without undue delay.
Additionally, there is also the obligation to submit yearly in original the Annual Accounts and Tax Return. Failure to do so in treated as a criminal office in Gibraltar and Government late penalties levied by the Authorities. In some cases, Directors may be prosecuted for non-compliance.
There are certain restrictions imposed on company names in Estonia. The name must be unique and may not be similar to other already registered trademarks. The court maintaining the register makes the decision regarding the suitability of a company name. Such court must also indicate the company’s form of business such as OÜ or “osaühing”.
The company may be registered online through the company registration portal. The state fee and share capital may be paid through such portal. The state fee depends on the form of business. Registration may also be carried out through a notary. The registration process takes 1 – 7 days depending on the type of company you register.
A private limited company is required to have at least 1 shareholder and 1 director. The appointment of a company secretary is not mandatory, as opposed to a company set up in Malta. At least half of the management board of the company must be resident in Estonia, or any other EEA member, otherwise a local representative will have to be appointed with a local address.
No corporate income tax exists on retained and reinvested profits by Estonian resident companies and permanent establishments of foreign entities. 20% tax exists however, for all distributed profits which include:
- Corporate profits distributed in the tax period
- Expenses and payments unrelated to business
- Capital reductions
- Share buy-backs
Corporate income tax rate on regular profit distributions was also lowered from 20% to 14% in cases where dividends were paid to legal persons.
The rate of VAT in Estonia is 20%. There exists however a reduced rate of 9%, in relation to, for instance, books, accommodation services and medicine, and 0% VAT rate for such things as exported goods as well as services related to water and air transport and the carriage of goods.
VAT registration in Estonia is not required if the annual taxable turnover is less than 40,000 euro. The taxable annual turnover does not include the transfer and sale of non- current assets. Registration application would need to be submitted within 3 days of the 40,000-euro turnover threshold being reached. The threshold for obligatory registration for a taxable person with limited liability in case of acquisition of goods is 10,000 euro. No threshold exists with regards to the acquisition of services.
The taxable period is that of 1 calendar month and VAT is required to be calculated and paid to the tax authority by the 20th day of the month following the taxable period.
Should a company be VAT registered or have taxable costs: accounts, tax returns, VAT returns, Income and social tax returns VAT Information Exchange System declarations must be filed monthly. For companies that do not have a VAT ID or taxable costs, the above are not required.
An annual report must be filed annually and must consist of the annual accounts and the management report. Such report must be submitted by latest 6 months after the end of the fiscal year through the public e—accounting system. If the annual report is filed late, penalties may be inflicted.
A unique name for the company may be reserved with the CORE and the name of such private limited company must end in the suffix Ltd (Limited) or Teo (Teoranta). There is a minimum requirement of 1 company secretary and 1 director who must be separate persons. Although there is no requirement for a company director to be resident in Ireland there is a requirement for at least one of the company directors to be a EEA Resident.
All directors will need an Irish PPS (Social Security Number) if they own more than 15% shares in that company or if they are not resident within the country. This in order to become Income Tax registered. The process to acquire the PPS number may currently take a number of months due to a backlog of applications. However, income tax registration takes around 2 weeks.
A company is required to have a physical presence within the country to be able to register. A registered office address is not sufficient.
In total company registration may take around 3-7 days.
The corporate tax rate in Ireland is currently 12.5%.
A tax rate of 25% applies to passive income such as investment and rental income, net profits from foreign trades and other income from certain land dealings.
A company’s liability to Irish corporation tax depends on its tax residence. Irish tax resident companies which are controlled or incorporated there are liable to corporation tax on their worldwide income and capital gains.
Profits arising from the disposal of capital assets are subject to capital gains tax. With effect from 6 December 2012, the standard rate of capital gains tax is 33%. VAT
Once a company has been incorporated, it is required to register for Corporation tax within 28 days. Unless the company does not plan on trading immediately, in which case, it must notify the revenue commissioners.
Value Added Tax is a consumption tax and is charged on goods and services supplied in the course of business. Such ranges from 0% to 23% depending on the product/ service. The usual timeframe for VAT registration is around 6-10 weeks.
All Irish companies must submit and file an annual return every year together with abridged accounts to the Company Registration Office (CRO). Accounts will be due from the second annual return rather instead of from the very beginning. Audited accounts by an Irish auditor must be filed once the turnover exceeds 8.8 million euro.
Every Irish company that has a turnover of 8.8million euro or more must prepare and also file audited accounts. A Corporation Tax return must be made every year. In addition, if the company is VAT registered, VAT returns must be made every 2 months with the Irish VAT office.
Irish companies are required to hold an AGM within 18 months after they are incorporated and subsequently must hold one yearly in Ireland. This may be dispensed with should a resolution be signed to that effect.
Non-compliance with local legislation is treated as a criminal offence. Penalties may be incurred and Directors may be prosecuted. Such may also result in a loss of audit exemption as well as strike off proceedings.
Based on the above if you are considering setting up a company in any of the above jurisdictions and maybe also others not mentioned above E&S will provide you correct guidance that allows for a smooth running business and optimum tax efficiency.
Dr. Deborah Vella
Deborah graduated as Doctor of Laws in 2015, admitted to the bar in 2017 and has been working with E&S Group for the past six years within the Corporate and Legal Department. Her main areas of practice are corporate and commercial law. Deborah also takes particular interest in gaming, employment, residency matters and intellectual property issues. In the professional field, she is subscribed as a member of the Malta Chambers of Advocates and the Malta Institute of Taxation where she has read the Professional Certificate of Taxation. In 2017, she took a managerial role within E&S Group heading the corporate team. Her responsibilities were managing and supervising the corporate team, as well as assisting with legal expertise and client relationships together with the Board of Directors. In the first quarter of 2019 Deborah continued to exercise her abilities and corporate expertise by heading also the Corporate Legal Team.
In light of the above, the Directors have promoted Deborah to be the Client Relationship and Business Development Manager (CRM) of E&S Group. Whilst she will continue to be of support towards the corporate and legal team within the firm, her main focus will shift to being the interface with top tier clients and ensuring that such are serviced in the best possible way. Deborah will nonetheless continue to oversee and supervise all that is related to gaming, employment and IP. As the company’s CRM she will also be engaged in a business development role which involves the planning and executing of offline business development and marketing for the Group.
Deborah is fluent in English and Maltese with a proficient understanding of Italian.
Deborah specializes in corporate, commercial, restructuring, gaming, tax, IP and private client matters.
Phone:+356 2010 3020