What banks are there in Malta? An overview

Each client of Dr Werner & Partner who founds an LTD in Malta sooner or later needs a bank account to guarantee the company’s payment transactions. In so doing it is not, however, absolutely necessary to open an account in Malta. Thus we have some clients who maintain their bank accounts with an international bank outside Malta. However, if the client wishes to open a Maltese bank account, our colleague Mr Darren Borg will lend her support by preparing documentation. She is also happy to help in communicating with the bank.

Below you will find an overview of the banks available in Malta. The descriptions that follow are not intended to constitute an evaluation, but rather reflect our subjective experiences with the banks in question.

General information

Following the recent influx of foreign companies and their demand for foreign skilled employees, Malta has experienced an economic expansion. This brought with it an increase in the demand for local banking services, to support such opportunities that were created within the local financial sector.

In fact, Malta is considered as an International Banking centre and it is esteemed just as other countries within the Mediterranean region. Here in Malta there are more than 20 operating Banks and each one of them can maintain the domestic funding in the market and credits for local and foreign individuals and companies in Malta. There is a clear distinction between the local retail banks that offer a wide range of financial services to corporate and private clients, and the internationally focused, specialised foreign banks that have been set up in Malta and which have almost no interaction with the domestic economy. Below you can find a list of current operating Banks in Malta: Agri Bank, AKBANK, APSbank, BOV Bank of Valetta, BNF Bank, Commonwealth Bank, Credit Europe Bank, credorax, ECCM Bank plc, Ferratum, FCM Bank, FIMBANK, HSBC, IIG Bank (Malta) Ltd, Izola Bank, LOMBARD, medidirect, MerkantiBank, NBG BANK MALTA, novum Bank, Sparkasse Bank Malta plc, Garanti BBVA, YapiKredi.

An Individual willing to setup a company in Malta will find the banking services being offered by local institutions convenient to both his or her personal and business needs. Many local banks offer a convenient broad banking experience through their vast range of products, services and expertise. The products and services being offered for both retail and corporate clients varies from business current accounts, savings account, term deposits, credit line facilities, business overdrafts, debit/credit cards, trade finance, foreign currency accounts, foreign exchange services, direct credit, internet banking, cash letters, cheque books and ATMs. Below one can find some information about major local Banks providing tailor made services to individuals willing to open either a personal or corporate account:

Bank Of Valletta p.l.c

Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta). BOV was formed in 1974 following an agreement between the Government of Malta and the Malta Development Corporation. The Bank’s financial services are offered through a network of 36 branches, 1 satellite branch and 4 agencies in Malta and Gozo, and through a number of subsidiaries. It has also developed a worldwide network of correspondent banks and has 4 representative offices in UK(London), Brussels (Belgium), Italy (Milan) and Libya (Tripoli). Through these networks, the Bank has built the necessary backbone to service its customers in international banking and trade transactions.

The Bank of Valletta Group (the Group) comprises Bank of Valletta p.l.c. (the Bank) and two subsidiary companies namely BOV Asset Management Limited (BOVAM) and BOV Fund Services Limited (BOVFS). The Group also has two equity-accounted investee companies, MAPFRE Middlesea p.l.c. and MAPFRE MSV Life p.l.c. The Group’s principal activities are set out below.

The Group offers banking, financial and investment services and connected activities within the domestic Maltese market. The principal activities of the Bank comprise the following:

  • The receipt and acceptance of customers’ monies for deposit in current, savings and term accounts which may be denominated in Euro and other major currencies,
  • The provision of loans and advances to a wide array of customers, and
  • The provision of investment services, covering a comprehensive suite of investment products and services that meet the customers’ needs throughout their lifecycle, including stockbroking, advisory and discretionary portfolio management services.
  • The Group also provides a number of other services, including, bancassurance, corporate advisory, fund management, fund administration, and other services, such as 24-hour internet banking service, issuance of major credit cards, night safe facilities, automated teller machines, foreign exchange transactions, outward and inward payment transfers.

HSBC Bank Malta p.l.c

HSBC Bank Malta plc was registered in Malta under the name Mid-Med Bank Limited. The bank’s ordinary shares were listed on the Official List of the Malta Stock Exchange in 1993.

The status of the bank was changed to that of a public limited liability company in 1997. In the same year it changed its name to Mid-Med Bank plc. In 1999 the bank changed its name again to HSBC Bank Malta plc. The bank provides a comprehensive range of financial services including Retail Banking and Wealth Management, Commercial Banking and Global Banking and Markets. Through a number of specialised subsidiary companies, the bank is also active in the areas of life assurance and fund management, as per the below:

  • HSBC Life Assurance (Malta) Limited – A company authorised by the Malta Financial Services Authority to carry on the business of insurance in Malta under the Insurance Business Act, 1998. A range of protection and investment life assurance products are distributed mainly through HSBC Bank Malta p.l.c. which is enrolled as a tied insurance intermediary under the Insurance Intermediaries Act 2006.
  • HSBC Global Asset Management (Malta) Limited – A company managing a range of funds which have exposure to both Maltese and international financial markets. It is the distributor for HSBC Global Asset Management’s fund range and also specialises in the provision of tailormade discretionary portfolio management services for institutions and family offices.

BNF Bank p.l.c

BNF Bank plc, formerly known as Banif Bank (Malta) plc, started operations in Malta in 2008 and has been estabalished as a key player in the Maltese banking sector.

BNF Bank plc offers personal and business clients a highly personalised service through their network of twelve retail branches spread across the Maltese Islands and a Corporate and Business Banking Centre along with a local trading room.

JUD Investment Group Ltd, a subsidiary of Al Faisal Holding Group, one of Qatar’s largest private diversified groups, is BNF Bank’s majority shareholder having 92.4% stake in the Bank. The remaining 7.6% of shares are held by four Maltese shareholders: PG Holdings Ltd, Virtu Investments Ltd, Sak Ltd and Mizzi Capital Projects.

They have launched our new brand identity in October 2017 – BNF Bank – a brand that reflects their re-energised vision of increasing market share, taking the Bank across new frontiers, with a desire to build a new future.

Lombard Bank Malta p.l.c

 Lombard Bank was founded in 1955, when Lombard North Central of the UK was active in Malta by accepting deposits through agents.  In 1969 Lombard Bank (Malta) Limited was registered as a wholly-owned subsidiary of Lombard North Central p.l.c.

Today, Lombard Bank Malta p.l.c. is listed on the Malta Stock Exchange and is licensed and regulated by the Malta Financial Services Authority as a credit institution and as an investment service provider.

The Bank is an authorised currency dealer and a financial intermediary on the Malta Stock Exchange, as well as a member of the Depositor Compensation Scheme and the Investor Compensation Scheme.

Lombard Bank focuses on corporate and personal banking while developing a personalised and customised service. It offers the full range of traditional retail and commercial banking activities, including also home loans, deposit accounts, credit and debit cards, trade finance and asset management.

APS Bank p.l.c

 APS Bank is a Maltese bank established since 1910, with majority shareholding held by the Archdiocese of Malta and the Diocese of Gozo.

They offer a complete range of personal banking services including savings accounts, home loans and personal loans. They also provide comprehensive banking services for corporate customers. The Bank also provides Wealth Management Services since it is licensed as an investment services firm and is also registered as a Tied Insurance Intermediary. Such Wealth Management Services provide access to a selected range of products linked to APS Funds SICAV p.l.c. and other 3rd party product providers.

The Bank was incorporated into a private limited liability company in 1970 and granted a commercial banking licence in 1990. Since then, operations have vastly expanded and today the Bank employs over 400 staff working at a modern head office building located in Birkirkara (Swatar) and eleven branches across Malta and Gozo.

APS Bank is well known for its ethical banking tradition and exemplary corporate social responsibility practices supporting Maltese culture, art and various charitable causes.

Medirect Bank (Malta) p.l.c

 MeDirect Bank Malta plc, previously known as Mediterranean Bank is now considered as the third largest Bank in Malta having an equity of around Euro 170 million and is under the supervision of European Central Bank (ECB) and Malta Financial Services Authority (MFSA). The Head office of Medirect is located in Sliema and one can also find another Branch in Victoria Gozo.

Medirect Bank Malta plc mainly focus on savings, investments and wealth management for both retail and corporate clients. MeDirect SA/NV a subsidiary Bank of Medirect Bank Malta plc is situated in Belgium and is offering online investments opportunities and other saving products to retail investors.

All the above-mentioned banks take their compliance mandate very seriously, i.e. they check all directors and shareholders with great care. In this context we do not simply mean a thorough examination of submitted documents, but also comprehensive background checks in the internal banking system.

Conclusion

Anyone contemplating establishing a company in Malta and wishing to engage the services of Dr Werner & Partner for this purpose can be assured that we have in-depth knowledge of the banks available in Malta and can offer our clients active support in selecting the right bank. Help in opening a bank account is one of the core elements of our service package for company establishment in Malta.

Four arguments against establishing a Malta Limited in Malta

At Dr Werner & Partner, we look after clients from all over the world who are seeking tax advice in Malta or are considering establishing a company here. In a growing number of cases, however, we do not advise establishing a company, or at least recommend a different set-up from what was originally envisaged. The reasons for this include the following:

Establishment in Malta is difficult for investors from countries with CFC rules

CFC rules: the investor comes from and is resident in a country in which CFC rules (Controlled Foreign Company or Corporation) apply. Generally speaking, these are rules from which it emerges how a company can and may be established and operated abroad. Once these or similar rules are applied, the outlay for the substance to be created in Malta may in some circumstances be too great.

Income is too low for establishment in Malta

Anticipated turnovers and profits are too low. There are many providers who offer to help establish a company in Malta at more or less competitive prices, completely independently of the annual profits to be expected by the company. In our opinion, it is only worth establishing a company in Malta and creating the associated structures starting from a prospective annual company profit of approx. €250,000 upwards. On the one hand, establishing and operating a company in Malta costs money and time (especially if some substance has to be created as noted under point 1). On the other hand, it should be taken into consideration that, even disregarding all the financial aspects, the mental effort of establishing and operating two corporations as a foreigner in a strange country with different laws should not be underestimated. Even if we relieve our clients of much of the work, the investing client must still invest mental effort. Thus the client should weigh up whether the effort of establishing a structure is really worthwhile to make minor savings of €10,000 to €50,000. Please note: if you are considering moving to Malta, this limit does NOT apply because you would make considerable savings when creating substance.

After establishment in Malta taxes have to be paid on dividends

A classic miscalculation: many clients who remain resident abroad forget or disregard the fact that, in addition to Maltese taxes (which can be very attractive), tax also has to be paid on dividends from Malta in the country of residence. In EU member countries this generally amounts to between 15 and 30% and must of course be included in any calculations. So beware! Thinking that you can receive dividends in an account in Malta or in cash or otherwise WITHOUT the tax authorities in your home country realising it is a) naive (see CRS (Common Reporting Standard https://en.wikipedia.org/wiki/Common_Reporting_Standard), applicable as of 01/01/2016, and b) could make you liable to prosecution or constitute an offence in almost all countries.

Establishing a company in Malta purely for tax reasons does not make sense

A favourable tax burden as the only reason for establishing a company in Malta: any interested party who does not live in Malta and does not wish to move to Malta in the foreseeable future should give sufficient thought to the question of why establishing a company in Malta appears to make sense WITHOUT THE TAXATION ASPECTS. The advantages of establishing a company in Malta solely for tax reasons will be brought down sooner or later under the scrutiny of a foreign tax office. There are, however, adequate valid reasons to establish a company in Malta. These include, for example: Malta’s strategic geographical position, the practical regulation of the finance and gambling sectors, the attractive options for ship registration, the more favourable costs of fringe benefits/social security contributions, the large number of specialised IT personnel, the modern research, business and commercial centres, the secure IT connection, etc.

Please note that in the event of relocation to Malta any further requirement for declaration of income to foreign tax authorities is in any case inapplicable, as you would then be living in the country in which you are establishing the company. Furthermore, relocation to Malta offers considerable personal benefits which we would be happy to explain in a personal conversation.

 

Taxes in Malta – Incentives for companies, individuals and yacht owners

Malta is not only a hotspot for tourists enjoying the sun and the pristine waters of the Mediterranean, it is also becoming a popular location for companies to settle their business there, and for people moving to Malta to save income tax. The government offers several fiscal incentives for businesses and individuals alike.

Corporate tax

Companies in Malta have to pay 35% corporate tax. This is one of the highest rates in the European Union. However, under certain circumstances it is possible to apply for a refund of 6/7 of this corporation tax. In order to be eligible for the refund the company needs to be structured according to strict regulations. The limited company that is registered in Malta needs to be owned by a foreign shareholder or holding company. Only then it is possible to apply for the refund.

VAT on Pleasure yachts

The ship register in Malta is the sixth largest in the world. The reason for that are the low registration costs and a great reputation of Malta as a flag state. People who are interested in purchasing a pleasure yacht will be happy to hear that the VAT on yachts in Malta is not based upon the purchase price, it is rather calculated by the size and the intended use (commercial or private). This will enable yacht owners to save a significant amount of money in VAT when they purchase a yacht in Malta.

Income tax

Another interesting tax incentive is the income tax in Malta. This can be significantly lower than in other European countries, and it is especially attractive for high earners. For example, income between €14,501 and €60,000 is taxed at 25% and income above that at a rate of €35%. Also considering the low contributions to the National Insurance and the relatively low cost of living, Malta has become a popular choice for foreigners to move here and start a career on the islands. The Global Residence Programme and Individual Investor Programme are also two programmes enabling people to benefit from the attractive taxation.

Gaming Academy planned to support iGaming industry in Malta

The iGaming industry in Malta is one of the largest contributors to the GDP and a fast growing sector. The Malta Gaming Authority has increased their revenues by €6 million and the number of issued licenses increased by 19%. As of today, there are 519 licenses issued to remote gaming operators, and the number is expected to grow even more this year. The popularity of Malta as a gaming jurisdiction is increasing the number of gaming companies moving to the islands, which are then in turn increasing the number of available jobs. The high demand for skilled professionals is evident when looking through the job offers of the gaming recruiters and companies.

Malta is a very small nation and only around 420,000 people live on the islands. There are a lot of people from other states of Europe moving to Malta in order to work, but they are not nearly enough to meet the high demand of skilled professionals in the iGaming industry. To tackle this problem the government of Malta has now revealed plans to set up a Gaming Academy to provide training specifically aimed at the needs of the iGaming industry. The aim is to offer training and qualifications to Maltese people in order for them to be able to fill positions in the sector.

It is a good time to start a career in Malta, whether you are Maltese or foreign, there are many opportunities to develop your skills. The companies are eager to keep skilled employees and the salaries and proposed benefits usually reflect that as well. Another advantage of working in Malta is the income taxation structure, as it is relatively low compared to other countries. Also the contributions to the national insurance are among the lowest in Europe. This means that you will have more money in your pocket at the end of the day.

But even though the taxes and jobs are attractive, you will probably also want to be certain that you will feel comfortable in the country. With that in mind, let me say that Malta is a beautiful and safe country. The Maltese are genuinely friendly people who also speak English as their national language, and there are thousands of foreigners living on the island as well. Some are just here for just the summer, others stay for many years to enjoy the sun, the Mediterranean and the nightlife. It is certainly a good time to consider your opportunities in Malta.

3 reasons why Maltese limited companies are not offshore companies

Often clients tell me that a limited company in Malta is an offshore company. I must strongly disagree with that statement. A company in Malta is not an offshore company. This is especially relevant when it comes to external relationships and technical distinctions. An offshore company is fundamentally different, and also treated differently by authorities. In this article, I will explain in more detail three arguments that show that a company in Malta is not an offshore company.

Malta is a fully entitled EU member state

Malta has been a member of the European Union since 2004. It has the same rights and obligations as all other member states. EU member states have to follow the laws of the EU. Countries offering offshore companies are usually trying to do the opposite. As a full member state of the EU, Malta offers all residents of Europe the easy and uncomplicated possibility to become a resident of Malta, or to settle with their company on the island.

The same accounting obligations as any other company

Agencies for company formations are often advertising the fact that there are no accounting obligations in countries such as Belize or St. Vincent. What looks tempting at first glance, may cause problems when the company has to be presented to the local authorities. The situation is different with a Maltese limited company. There are regular accounting duties, just like in any other EU country. This means that every company needs to do their bookkeeping, and they also have to be able to present their accounts.

Tax liability

A limited company in Malta basically pays the same tax as any other European company. Every company has to pay 35% corporation tax in Malta. However, if one of the shareholders is not Maltese, it is possible to get a refund of 6/7ths of the tax burden if the company is structured accordingly. However, the tax liability still exists and it cannot be circumvented.

Playing Poker in Malta

Many people know that Malta is one of the countries that issues remote gaming licences. What many people do not know however, is that Malta is also very popular with poker players and prestigious tournaments are regularly hosted on the islands.

Gambling is legal in Malta, which means that winnings from online gambling can be legally kept and the players do not face any charges, unlike in some other European countries, such as Germany, where playing online poker and casino games are illegal, and players risk having their winnings confiscated and having to pay a fine. Most players are occasional players, but there are some who play poker professionally and they make their living with it. Those players often move to Malta or the UK, as winnings from online poker are not illegal there and can be declared as income. The choice whether to move to Malta or the UK depends on the person and their preferences, and the two countries are very different. Malta offers a sunny climate and a lower cost of living, whereas the UK, especially London, has more to offer with regards to big city life.

The casinos in Malta also regularly host some interesting poker tournaments and players from all over the world come to play on the small island in the Mediterranean. The European Poker Tour takes place from October 21 – 31, 2015 at the Portomaso casino in St. Julians, one of Malta’s largest land based casinos. The Euro VIP Poker Cup is held from the 12 – 15 June and the Battle of Malta from 4 – 9 June at the same place.

Players who move to Malta to play poker online and in land based casinos can also easily visit tournaments in other European cities, as Malta offers great connections, especially to the largest cities in the UK and other major cities in Europe.

If you are interested in more information about moving to Malta, and the attractive income tax structure it offers to people making a living off poker in Malta, you are welcome to contact the office of Dr Werner & Partner. We have helped many players to settle on the islands and enjoy a relaxed lifestyle here.

7 applications for new yacht marinas in Malta

The Prime Minister of Malta, Joseph Muscat, has recently responded to a Parliamentary question, and confirmed that there are 7 applications relating to new yacht marinas in Malta and Gozo.

The proposals are a new yacht pontoon for Sliema, the redevelopment of the dock area at Cospicua, the redevelopment of an unused water polo pitch in Marsascala including mixed use facilities, such as residential and tourist accommodation, commercial spaces and an all-weather yacht marina, as well as boat mooring, yacht berths and a floating pontoon for Ghajnsielem, and the installation of a new marina with improvements to the landside at Sa Maison in Floriana.

Whether or not these applications will be approved and when is not clear. However, these proposals reflect the demand for mooring spaces in Malta, as many of the available marinas are filling up quickly. Malta is now the 6th largest ship register in the world, and the largest in Europe, and more yacht owners and commercial fleets are choosing Malta as a flag country.

Some of the reasons why Malta is such a popular flag country are the favourable taxation and low cost for registration or VAT when a yacht is purchased. The government is offering some attractive incentives for yacht owners to re-flag to Malta, and it is worth comparing the options you have. If you would like more information about the re-flagging process and the advantages you are welcome to contact the legal office of Dr. Werner & Partner in Malta. We are also specialised in the yacht registration and have assisted many clients to purchase their yacht and take advantage of the low costs and VAT.

Comparison of the banks of Malta and Cyprus

Many of our clients are often asking about the banking system in Malta and if it is similar to the one in Cyprus. To answer this question I would like to give more detail about the differences between the Maltese and the Cypriote banking system. Even though both countries are small islands in the Mediterranean they are very different in how they handle their finances.

Cyprus was very successful until the financial crisis in 2008. The country managed to quickly lower their debt and the national debt dropped from 70.9% of the gross domestic product of 2005 to 48.9% just three years later. The island managed to achieve this partly with lower tax rates and illicit money from other countries. Cyprus and Greece have strong economic ties and Cyprus is one of the principal creditors in Greece. One third of the capital resources of Cyprus where in Greece in 2011. When Greece started suffering more and more under the crisis it affected Cyprus negatively as well, and eventually the banks were suffering under a financial crisis. The system collapsed in 2012 and Cyprus lost billions. At this point the government applied for financial aid from the EU. When the ECB stress test was conducted recently it was clear that the banks and Cyprus were still in a very bad state, and they do not have enough capital resources to survive another crisis.

The banking system in Malta is fundamentally different. The banks have their capital mostly from national sources, and not other countries. This is mainly the reason why Malta did not suffer a lot under the crisis. The banks are generally much more conservative and more reluctant conducting risky business practices. This is certainly good news, because if you would like to relocate your company to Malta and open a Maltese business account you can be certain to find a stable banking system. The largest banks are currently HSBC Malta, Banif and the Mediterranean bank. They performed well in the ECB stress test, which means that the banks have enough capital resources in case another financial crisis hits the market. Of course we hope that this will not happen!

Low tax countries in Europe – Why Malta is a good choice

Several countries in Europe offer a relatively low corporate tax when foreign companies decide to settle on the islands. Low tax countries are usually countries that charge an effective corporate tax of lower than 25%. The lower tax rate is not the same in every country, and there are other factors that should influence the decision to move he company to a different country as well.

Some of the most popular low tax countries are Malta, Cyprus and Ireland. Due to freedom of establishment companies in Europe are allowed to settle their company where they wish and to benefit from the taxation of the respective country. However, when doing so it is important not to make mistakes, as mistakes could have repercussions in your home country, and you could be prosecuted for tax evasion. It is important that you consider the economic situation to ensure that the future of your company and that of your employees is secured. The banks and their stability are also playing a major role. With regards to the banks, Malta has a clear advantage over Cyprus, as the conservative banking ethics made the banks stable, and they passed the ECB stress test last year – in contrast to the banks in Cyprus.

Some countries – among them Luxembourg – are also currently under investigation, as it came to light that some companies received a favourable taxation. This practice is against the European laws, that states that all companies should be treated the same. This is the case in Malta and all companies have to pay 35% corporation tax. If the company is structured correctly and it can be proven that company operations are based in Malta and revenues are actively generated, then it is possible to apply for a refund of 6/7 of this corporation tax.

Malta has the lowest effective corporation tax in Europe. Compared to Cyprus, Malta can also provide for excellent connectivity to the European mainland. Many airlines offer multiple flights every day to all major European cities. Compared to Ireland, I would like to point out that the weather in Malta is considerably better. Malta has hot summers and mild winters, and if you love the Mediterranean, this is your place to be.

For more information about Malta as a location for your company, and how to proceed, you are welcome to schedule a personal consultation at our legal office in Malta.

IGaming industry in Malta becoming largest in Europe

It is no secret that the iGaming industry is one of the largest industries in Malta. More and more companies are either moving their casino and betting operations here, or new companies are being established. The EU member state Malta is now becoming the number one state for iGaming businesses, and even the large Betclic Everest group recently fully migrated their business from Gibraltar to Malta.

The iGaming industry is a rapidly changing sector, and new laws in the EU member states are constantly changing the legal situation. Players in this highly dynamic sector need to be able to quickly adapt to changes in technology and regulations. It is imperative to stay ahead of the competition, and player acquisition and retention have become a major focus of the companies. With higher competition it has become more difficult to keep players, and operators will have to be inventive in order to stay on top of the game.

The growing gaming industry has a high demand for qualified workers, and more career opportunities are available in Malta. To meet this demand, Malta’s government is also going to establish the Malta Gaming Academy to offer training for personnel specialised in the iGaming industry.

What makes Malta so attractive as a gaming jurisdiction is the trust players have in websites operating under a Maltese remote gaming licence, and the favourable tax laws for companies in Malta. For example, companies operating from Malta can be eligible for a refund of 6/7 of corporate tax when certain criteria are met and the refund is applied for in due time. Gaming companies can also benefit from the relatively low taxes on gaming revenues.

If you are interested in acquiring a remote gaming licence from Malta you are welcome to contact the office of Dr. Werner & Partner for a personal consultation.