Posted on 11 May 2020

Brexit Solutions in Malta

After 47 years of EU membership, the United Kingdom formally left the European Union (EU) on 31st January 2020 and the transition period begun on 1st February 2020, during which EU law continues to apply to the UK. This is due to end on 31 December 2020.The British government insists that the transition period will not be extended. If there will be one, it must be agreed upon before 1 July 2020.


What can we expect to change?

At first, not much. During the 11-month transition period, theUK will largely stick to EU rules. That means that UK stays for now in the EU’s customs union and single market, meaning the same trade rules and free movement of goods and services. Freedom of movement for people stays the same and the EU’s top court still has jurisdiction.

But there will be no more British voices in the European Parliament and no British ministers at EU meetings where big decisions are made.

Impacts on UK entities and people

Put simply, if you are British, you are no longer considered an EU citizen. UK citizens will be able to visit the EU for up to 90 days at a time, or to work in the EU, but they will need a visa waiver. UK nationals should register as a resident in the country where they reside. Different EU countries have their own rules on how to apply for permanent residence.

UK financial services licensed firms should position themselves carefully for possible Brexit scenario, moving subsidiaries, staff and assets to reliable EU jurisdictions.

Britain’s financial services sector hopes to maintain a close relationship with EU, but won’t enjoy the same level of freedom in the EU market and is fearing the end of the so called “Passporting” regime that allows banks and financial services businesses licensed in the UK to passport their services in in any EU member state. That is important as UK is the largest exporter of financial services, exporting over £20 billion of services in the EU in 2014.
 

The Maltese solution

Located in the centre of the Mediterranean between Europe and North Africa, Malta is the European Union’s smallest member state. It has emerged as one of the most remarkable success stories in the Eurozone. Recognised for its probusiness attitude, state-of-the-art infrastructure and modest costs of doing business, it has become the go-to country for growth-minded entrepreneurs and multinational companies.
 

Residence and citizenship

Malta is an attractive destination to live and offer different solutions to reside and enjoy freedom of movement in the EU, such as the Highly Qualified Persons Rules, residence programmes and Citizenship by Investment.
 

Corporate and ancillary services

Malta is an established and renowned financial centre due to its extensive network of double taxation agreements and because it adopted all EU financial services regulations when it became a member state of the European Union. The Malta Financial Services Authority (MFSA) was established in 2002 and it is the single regulatory body for financial services in the country.

This is just one of the reasons why Malta is increasingly being chosen as Business Hub for many services like Funds, offering many types of Collective Investment Schemes (PIF, AIF, NAIF), regulated companies (Investment Companies, Payment Service Providers, Electronic Money Institution), as well as Trusts and Foundations, which are powerful tools to be used for a variety of purposes including estate planning, asset control and protection, preservation of family wealth, protection of minors and persons with special needs and making provision for charities.

Companies registered in Malta are subject to tax on their worldwide income less permitted deductions at the corporate income tax rate which at present stands at 35%.

Upon receipt of a dividend, shareholders of a Malta company may claim a refund of all or part of the Malta tax paid at the level of the company on such income.
 

Last but not least, Malta is a centre of excellence for yachting, shipping, and aviation, making the island an established and reputable International Register. The yachting register is now one of the largest in the world, ranking first in Europe and sixth worldwide in terms of registered tonnage.
 

Key takeaways

Malta is an ideal destination for UK licensed business and UK citizens looking to continue enjoying freedom of movement and services within the European Union. It is a forwardthinking, cost effective, English speaking country (with all official documents in English) with a large pool of highly qualified human capital.

Contact

Chris Casapinta

Country Executive Malta; Italy

+356 22 05 1000

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