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Doing business in Malta

An investment guide

This document provides an overview of Maltas capabilities in supporting foreign organisations, entities and individuals wishing to do business, or invest, in Malta in the financial services sector. It also provides details of the countrys key competitive factors. Although care has been taken to ensure that all information contained in the document is accurate, these notes are not intended to be exhaustive in nature, neither to be a definitive nor comprehensive analysis of the subjects. Therefore, they should not be acted upon without prior consultation and without obtaining appropriate professional advice.The document has been prepared by FinanceMalta, a non-profit-making, public-private partnership which was formally set up as a foundation with the scope of promoting Malta as a financial services centre of repute.

The document has been prepared by FinanceMalta, a non-profit-making, public-private partnership which was formally set up as a foundation with the scope of promoting Malta as a financial services centre of repute. FinanceMalta also deals with the coordination of activities and the dissemination of information promoting Malta as location for direct inward investment in the financial services sector. For details, see www.financemalta.org.

Scope

This document provides an overview of Maltas capabilities in supporting foreign organisations, entities and individuals wishing to do business, or invest, in Malta in the financial services sector. It also provides details of the countrys key competitive factors.

The document has been prepared by FinanceMalta, a non-profit-making, public-private partnership which was formally set up as a foundation with the scope of promoting Malta as a financial services centre of repute. FinanceMalta also deals LAwith the coordination of activities and the dissemination of information promoting Malta as location for direct inward investment in the financial services sector. For details, see www.financemalta.org.

Although care has been taken to ensure that all information contained in the document is accurate, these notes are not intended to be exhaustive in nature, neither to be a definitive nor comprehensive analysis of the subjects. Therefore, they should not be acted upon without prior consultation and without obtaining appropriate professional advice.

FinanceMalta: Chairmans welcome

Today, Malta is internationally recognised as a brand denoting excellence in financial services. It offers an attractive cost- and tax-efficient base for financial services operators looking for an EU-compliant, yet flexible domicile.

FinanceMalta has come on the scene at a critical time, just as Malta is entering the Eurozone. The Maltese financial services sector has grown rapidly over the last few years and is now a major force in the economy. Malta has some significant strengths to offer the industry: a well-trained, motivated workforce; a low-cost environment; and an efficient tax regime, backed up by over forty double taxation agreements. To these, we can add a world-class ICT infrastructure, English as an official language, an enviable climate and our strategic location.

Importantly, we offer a single, supervisory body, the Malta Financial Services Authority, which ensures full compliance with EU regulations but, at the same time, is able to act with speed, flexibility and the minimum of bureaucracy.

FinanceMaltas main aim is to promote the Islands financial services brand, both within, as well as outside, our shores. We bring together, and harness, the resources of the industry, the regulator and government, to ensure that Malta maintains a modern and effective legal, regulatory and fiscal framework in which our financial services can continue to grow and prosper.

Malta: Our Culture is getting things done

The Maltese economy is a very open one in which foreign direct investment in many of its sectors is vital to its continued growth. The overriding climate is therefore one of encouraging and assisting inward investment particularly in key and targeted sectors such as financial services and related industries.

There are numerous reasons to consider using Malta as a base for international operations. These include its strategic location at the centre of the Mediterranean, an educated and skilled English-speaking labour force, a stable political situation, a modern legal and tax framework, an accessible and flexible regulator, a strong industrial relations record, a can do attitude, excellent communications infrastructure, a convenient European time zone, and a culture within the industry of hard-working professionals.

Malta is still a reasonably-priced location where the cost of living and labour are relatively low and the quality of life high by European standards. Maltas business laws and practices are standard and the work and business ethic is excellent. A member of the European Union since 1 May, 2004, Malta is strategically placed for international business at the crossroads between Europe, North Africa and the Middle East.

These factors, combined with a strong international tax treaty network and other tax-efficiencies, make Malta a unique, attractive proposition as an onshore, EU domicile for financial services.

Why Malta?

Place

• The ideal cosmopolitan location for efficient international business contacts. Lying at a strategic crossroads between Europe and Africa, Malta is a meeting point of cultures and languages at the heart of the Mediterranean.
• Malta has excellent flight connections. The national carrier Air Malta operates regular flights to numerous European cities and a number of North African destinations. There are also a large number of international carriers operating to and from Malta.
• Sophisticated ITC infrastructure well connected to the international backbone. High broadband penetration and a competitive market with the latest technologies like VoIP.
• Malta has friendly relationships with Mediterranean rim countries and with the countries representing the major investment markets worldwide. Through the bilateral agreements between Malta and the EU with third countries, and through Maltas traditional economic links, the country strengthens its position as a business location and financial centre in the wider Mediterranean region.
• Malta has high standards of living as well as comparatively low daily running costs, both for business and personnel. It offers a refreshing change from other busy, chaotic and high-cost, business centres. It offers a diverse range of shopping, cultural and leisure activities and provides well-equipped public and private hospital and clinics.
• High quality homes and apartments to satisfy the most demanding requirements. It offers excellent office space at reasonable rents.
• Maltese standard time is one hour ahead of Greenwich Mean Time (GMT) and six hours ahead of US Eastern Standard Time (EST). Business runs smoothly with the international community.
• Major transshipment hub in the region. Malta Freeport is one of the most efficient and successful Freeport operations in the Mediterranean. Almost all goods being shipped through the port or being re-packaged for onward shipment do so tax-free.

• English is an official language. English, a joint official language with Maltese, is universally spoken and written and is the language of legislation, education and business. Many Maltese are also fluent in Italian, and also speak German and French. Major world languages are easily sourced.
• The high education and training level of the Maltese labour force is a key competitive factor. The Maltese have a very high regard for education and some 60 per cent of students remain in education to tertiary level following academic or vocational courses. Malta University is the oldest in the Commonwealth outside Britain, and enjoys an excellent reputation worldwide. Around 25% of students at the University are enrolled in courses of direct relevance to careers in the financial services sector.
• Maltas comparatively low ancillary labour costs, an excellent work ethic and a highly-motivated workforce make it a very cost-effective location. Salaries are an average of one-third to half the level of those found in the EU of 12 countries. There is a large pool of professionals, and law, management, communications and medicine are the dominant courses read at university.

Government

• Malta has a long-established and strong democratic tradition. It is a European Union member in which the rule of law is respected in civil society and where the power is smoothly transferred following, regular, fair and open elections. No one group or class dominates society or the economy.
• Liberal economic policies and commitment to open and competitive business environment. Malta is one of the EUs most open economies as it is a traditional trading nation that has been reliant on import and export.
• The Maltese Government has a long-standing commitment to encouraging foreign investors to establish operations in Malta and has always adopted policies that favour an open economy and direct investment.

Regulation & Tax

• Malta has a strong, yet flexible, single regulatory body in the Malta Financial Services Authority (MFSA). The MFSA is responsible for all licensed financial services activity on the Islands. The MFSA is structured in line with world best practice. Malta is a leading force in the development of regulatory policy and is fully involved with OECD, the EU and the Commonwealth in policy development.
• Tax-efficient environment. Businesses set up in Malta benefit from a tax efficient environment - a full imputation system and double taxation treaties with over 40 countries.
• Malta is a highly-developed financial centre. Financial services and financial intermediation and related sectors currently account for 12 per cent of GPD; a figure set to double in the next decade. It offers excellent possibilities for low-cost financing of investment transactions and international activities. All domestic and foreign transactions are handled quickly and reliably by Maltese and foreign banks employing the latest technology.

FinanceMalta Chairman Joseph Zammit Tabona with Malta's Minister of Finance, the Economy and Investment Tonio Fenech (right)

Favourable Regulatory Environment

Malta is a jurisdiction with a regulatory environment that is serious, yet accessible and flexible in its approach.

Malta has received international recognition for its stable and comprehensive regulatory framework in line with EU practice. When the country joined the European Union in 2004, it was one of the first six countries in the world to reach an advanced accord on fiscal matters with the OECD.

A process of reform in the early 1990s created a sound legislative and regulatory framework convergent with EU economic practices. Legislation passed in 1994 had already created a strong, regulatory framework to stimulate financial services and international business. The Islands offer excellent services and a state-of-the-art communications infrastructure.

Maltas preparations for accession ensured the countrys financial services frameworks were impacted minimally upon entry to the EU. Malta adheres strictly to EU anti-money laundering, insider dealing and professional secrecy laws. Its frameworks are aimed at attracting only international businesses of repute. Malta is seeing an average of around 200 new company registrations a month (figure as at Oct. 2007), with the number of funds licensed in Malta topping the 250 mark.

In line with EU regulations, all banks are supervised by a single regulator, the Malta Financial Services Authority, which was set up in 2002. The single regulator means companies benefit from streamlined procedures and reduced bureaucracy, leading to lower fees and compliance costs and consistent interpretation of the rules. In fact, a recent Ernst & Young survey (May, 2007) of some 58 foreign-owned companies operating in Malta, found that 95 per cent rated Maltas clear and stable legislative environment the main reason for its attractiveness as a location for their FDI.

While adhering robustly to international best practice and standards, the countrys approach to regulation remains flexible and versatile. Demanding in its compliance requirements, the MFSA nonetheless offers a pro-business approach. ThisLA enables Malta to offer non-standard yet robust, valid solutions.

The advantages of EU membership further enhanced Maltas attractiveness as a competitive, stable jurisdiction for financial services. Malta is set to join the Eurozone, thereby changing its local currency to the euro, on 1st January, 2008. This move will bring further stability and ease of doing business across frontiers.

Today, business operates confidently in the knowledge that Malta has an extensive network of double taxation treaties and applies EU regulations. Firms operating in Malta may also benefit from a number of business promotional incentives and other advantages including the EUs single passport regime and the ability to offer EU-wide accepted products.

• Legislative framework in line with EU directives
• Single, consistent regulator the Malta Financial Services Authority
• Tight supervision: anti-money laundering, insider dealing, &professional secrecy laws
• Accessible, pro-business regulator: flexible & custom approach
• Government commitment to sector since early 1990s
• Stability of the Eurozone: Malta adopts the euro 1st January, 2008

As an EU member, Malta implemented the EU tariff system as part of its adoption of the body of EU law. It therefore falls under the EUs customs union which calls for free trade and the absence of customs duties and quotas on trade among EU members. Malta has adopted the various preferential and non-preferential trading agreements that the EU has with third countries.

Malta is a member of the United Nations, of the Council of Europe, and of the Commonwealth. It is a founder member of the WTO and maintains friendly relations with all countries through a policy on non-alignment

The Malta Financial Services Authority (MFSA') is the single regulator for the financial services industry. Its area of responsibility spans the banking and investment services sectors, insurance activities, trust services and the financial markets. In addition, the MFSA manages Maltas Registry of Companies and the Consumer Complaints division. The Authority also houses the International Tax Unit.

The Malta Financial Services Authority is an autonomous public institution set up by law with the objective of supervising financial services, monitoring business practices in the supply of financial products and promoting fair competition and consumer choice in the sector. It also acts as policy advisor to Government in the field of financial services.

The MFSAs style of regulation is a robust one, ensuring that standards are met and that the quality of financial services is not compromised. Within these parameters it approaches its role pragmatically and is fully appreciative of the industrys need for speed, flexibility and minimal bureaucracy. This approach is a major plus for Malta as a financial services domicile.

In line with its objectives the MFSA takes a pro-active role in industry training and human resource development, consumer education and protection and the longer term development of the financial services sector.

www.mfsa.com.mt

The Central Bank of Malta was established in 1968, and has contributed to the country's financial and economic development, particularly by pursuing policies designed to foster exchange rate and price stability and a sound financial system. The Bank's ability to perform this role was considerably strengthened in 2002 through legislative amendments that gave it full financial and operational independence, including exclusive responsibility for monetary policy, while making it more publicly accountable. At the same time, responsibilities for bank supervision were passed on to the Malta Financial Services Authority.

With Maltas accession to the European Union in May 2004, the Bank automatically became a member of the European System of Central Banks (ESCB). Since then, besides participating actively in the work of the ESCB and cooperating closely with the European Central Bank, the Central Bank of Malta has been strengthening both its human resources and its operational infrastructure in preparation for Maltas adoption of the EUs single currency, the euro (scheduled for 1st January, 2008), and its own membership of the Eurosystem. In preparation, the Maltese lira entered the EUs exchange rate mechanism (ERM II) in May 2005.

As a result of the considerable transformation the Bank has undergone in recent years, it is now better equipped to fulfill both its domestic and its ESCB-related obligations, as well as to promote the further international integration of Malta's financial system.

www.centralbankmalta.com

The Malta Stock Exchange (Exchange) operates as a regulated market for listed securities admitted to the Official List. Trading of securities takes place on the MATS (the Malta Automated Trading System). The Exchange also currently operates a Central Securities Depository (CSD) offering clearing, settlement, registrar and other ancillary securities administration and corporate action services. The CSD caters for securities portfolio accounts opened in the name of retail investors as well as institutional clients and financial intermediaries. Both the Exchange and the CSD have entered into the European Code of Conduct for Clearing and Settlement for a strong European capital market thereby affording investors the option to trade, clear and settle any European security - whether it is a domestic or a foreign security - within a consistent, coherent and efficient European framework.

www.borzamalta.com.mt

The activities of insurance companies are governed by the Insurance Business Act and relevant legislation. Following Malta's accession to the EU, legislation was passed allowing EU insurance companies to exercise their activities in Malta (subject to certain regulatory requirements).

(Annex: Insurance Business Act)

(Annex: Insurance Brokers & Other Intermediaries Act).

Malta has created a sophisticated ICT infrastructure that global capital and business require.

The Islands today are fast becoming a knowledge economy satellite in the Mediterranean, unique for their connectivity, level of IT expertise and range and quality of ICT services.

Maltas ICT sophistication is evident in such projects as SmartCity Malta. This $300m initiative, the first overseas expansion of SmartCity Dubai, gives a fillip to the Islands as a knowledge-economy cluster. The Islands ICT infrastructure has played a key role in the growth of sectors such as financial services, specialist software development and i-Gaming.

Maltas excellent communications infrastructure is also attracting leading IT centres of excellence and training. CISCO, Microsoft and Oracle are among the global brands to have opted for Malta as a regional training base. Their presence confirms Maltas leading position as an ICT hub in the region and also encourages greater numbers of Maltese to take up an ICT career, thereby enhancing the human capital skills of the Islands.

Malta has consistently high rankings among EU countries in most major indicators of ICT infrastructure and service provision. The latest EU report (2007) in conjunction with CapGemini placed Malta second only to Austria in its sophistication and level of provision of eGoverment services.

The Maltese government has invested heavily over the past decade to provide the ICT backbone the private sector requires. Malta also has a liberalised communications sector which is boosting competition among providers and driving down costs. The regulator, the Malta Communications Authority (MCA), has a robust and steadying influence on the market. The arrival of numerous Voice over IP players in the market and the coming on stream of new services from the former state telco and the cable operator have leveraged up to a 77 per cent reduction in recent years on some international, voice tariffs. The MCA ensures a fair and level playing field, especially in burgeoning sectors such as Voice over IP (VoIP) and mobile services.

Traditional infrastructure is equally important, and electricity and water supplies, despite the Islands lack of resources, are stable and efficient. The infrastructure copes with tourist arrivals of one million or so each year; a figure 2.5 times the resident population.

Given the climate, geographic location and the demands of tourism, the Islands have an adequate, regular supply of potable water from reverse osmosis with some areas still served by ground-water aquifers. In fact, the Islands have pioneered reverse osmosis from sea water, and, while this might constitute a more expensive method of production, it has proved reliable.

• eGovernment services rank 2nd in EU of 27.
• Above EU average broadband access: 66% internet connections broadband
• International connectivity excellent: 2 satellite stations; 2 submarine fibre optic cables & more planned
• SmartCity Malta - $300 investment in knowledge economy park
• Fully-liberalised communications market: 3 competitive mobile operators
• Competitive choice of suppliers/services
• ICT regional centre of excellence Microsoft, Oracle & CISCO training centres
• Robust water & electricity supplies resource planning covers also 1million tourists a year
• Postal & courier services excellent mostly a 3-day delivery to UK, regular mail.

There has been huge public and private sector investment in ICT over the past 15 years or so. Today, Malta boasts a truly modern infrastructure with one of the highest broadband access rates in EU; around 66 per cent of all connections are broadband enabled. Mobile phone usage stands at 84.9 per cent of the population.As the infrastructure has opened up to market forces, access rates have increased and tariffs have lowered.

Since the early 1990s, government policy has emphasised the development of IT in Malta and has encouraged extensive investment in Maltas telecommunications infrastructure, making it one of the best in Europe.

At the end of March 2007, the World Economic Forum (WEF) ranked the Maltese Government as the second most successful administration in the world in promoting the use of information and communications technologies. The European Commission ranked Malta second in its latest assessment of the sophistication of eGovernment Services. Similarly theEconomist Intelligence Unit placed Malta as 24th on its most recent eReadiness Index.Malta's sizeworks in its favourin this respect by making it easier for government to implement the required policies and strategies within a short timeframe.

Various governmental agencies, ministries and bodies act in concert to promote the climate for ICT investment and initiatives. The main champion is the Ministry for Industry, Investment and Information Technology (www.miti.gov.mt) which is responsible for ICT and e-Government strategy and planning across the whole of government, including the public sector, as well as for Information Society matters.

Other players include the Malta Information Technology & Training Services (MITTS) Ltd (www.mitts.gov.mt); a company fully owned by Government that acts as its principal IT agency.

SmartCity Malta

A major catalyst for ICT in Malta is the development of SmartCity Malta; the first overseas expansion of the successful Dubai SmartCity concept. Coming in at $300m, SmartCity Malta, which will be located at Ricasoli on the fringes of Grand Harbour, is the largest ICT investment project on the Islands to date.

SmartCity Malta is a project that meets the aspirations of Malta to be the region's ICT Centre of Excellence and is aimed at bringing clusters of knowledge-economy businesses to the Islands and furthering Maltas global client base.

SmartCity is estimated to create around 4 per cent growth in the Maltese job market and have a direct and material impact on local GDP.

During the last fifteen years Telecommunication in Malta has gone through a period of rapid change brought about by privatisation and deregulation. The telecommunications sector in Malta is a totally open market and is regulated by the Malta Communications Authority (MCA) whose role it is to award licenses and oversee the operation of a fair and free marketplace.

Major benefits to the consumer as a result of these changes include a drastic drop in charges and a far higher investment in the latest technology by the market players a wider range of services, including VoIP and advanced broadband services, which thereby increase competition and choice.

Malta has a fully-digitalised, national telephone network. In Malta, virtually all homes are linked to the fixed-line telephone network while the cable network passes through 98% of all properties with 67% of all businesses and household actually using such service.

Mobile penetration rates stand at 86.6 per cent of the population.

Voice over Internet Protocol (VoIP) traffic is making significant inroads into the total voice telephony market and registered a 15.5 per cent year-on-year growth from March 2006 to March 2007. There are around a dozen VoIP providers on the Islands. Consumers therefore have considerable choice. Internationally-available VoIP services are also likely contributing to the downward trend in international voice telephony traffic.

International Connectivity & bandwidth

Internationally, Malta is connected through two satellites stations (one to the Atlantic Ocean region and the other to the Indian Ocean region) and two submarine fibre-optic links to mainland Europe with private sector operators planning more in the near future.

Currently, Malta is served by:

• Vodafone: Capacity of 2.5 Gbps, STM-4 (622Mbps). Initially 40 Mbps for voice and 90 Mbps for data.
• GO (formerly state incumbent Maltacom): Capacity of 2.5 Gbps, STM-4 (622 Mbps) (voice, international private leased circuits over SDH, data)
• Additional gateways via satellite links and digital microwave link
• And additional satellite circuits can be implemented12

Domestic Connectivity

• Extensive, fully digitised optic fibre network coverage across Malta and Gozo
• Core network is built around Ericsson AXE switches running state of the art software (currently being further upgraded to the latest soft switches)
• Network Operations Centre provides central management and control of the entire network
• High levels of network reliability achieved through SDH protection and heavy interlinking
• Fibre to the kerb or building is common
• Private International Leased Circuits Available

Maltas internet access rate stands at 23.6 per cent of the population with a broadband access rate of 66.1 per cent of total subscriptions, according to latest data from the Malta Communications Authority (March 2007). This places Malta above average within the EU.

Digital Subscriber Line (DSL) and cable internet access rates have been converging in recent years, with cable increasing its share of the market. Taking MCAs latest data (March 2007), the DSL/cable market split ratio stood at 55%-to-45% DSL-to-cable subscriptions.

There is growing awareness of always-on internet and consumer confidence in internet services is high. Some 81 per cent of consumers surveyed by the MCA at the end of July 2007 said they were satisfied with their broadband internet service.

The ISP sector in Malta is highly competitive and offers many services including:

• Hosting and virtual hosting
• Server housing and maintenance
• Brokerage and trading services
• e-Payment gateways
• e-Commerce integration
• Multi-currency credit card transaction processing
• On-line cable internet application design and development
• ASP services and web design

Malta ranks second among the 27 EU member states in its provision of eGovernment services through its IT infrastructure, according to a European Commission/CapGemini (September, 2007). The report benchmarked 20 different eGovernment services and gives Malta a position just after Austria for its online sophistication (96%) and for the availability of its eGovernment services (95%).

Malta is very sophisticated when it comes to the government proactively performing actions to enhance service delivery quality and user friendliness. The country scores above the EU average, with six out of nine relevant services reaching the highest level of sophistication.

Malta exceeds the EU average by some 25 percentage points for the following indicators: personal data security; administrative burden; channel choice and access; and accessibility standards.

The EU/CapGemini report stressed that Malta stood out as one of the countries that had most embraced eGovernment and online service delivery and to levels which are more advanced than those found in many of the original EU member states.

Postal services on the Islands are provided by Maltapost Plc, the former state provider, now privatised. Letter delivery is efficient and reliable with a three-day service to most mainland European cities. Maltapost operates an Expedited Malta Service (EMS Datapost) with guaranteed delivery times. All the main, international courier services are represented on the Islands.

Malta has no natural, domestic energy sources and depends totally on oil imports. Oil is the only type of energy used for electricity generation in Malta.

All electrical energy required is generated in Malta by Enemalta Corporation. At present, EneMalta operates two power stations, which supply all the electrical power needs of the islands of Malta and Gozo. These stations with a total combined nominal installed capacity of 571MW are interconnected together.

Enemalta is the national provider of oil, gas and petroleum and offers a broad range of services to both the industrial, commercial and domestic sectors in the energy field primarily the generation and distribution of electricity. Enemalta plays a significant role in the economic development of the country, contributing towards the growth of both the industrial and commercial sectors by strengthening the Islands infrastructural base.

On account of the size of the market and lack of any interconnection with other countries, there is currently no competition in the Maltese electricity market.

Maltas Water Services Corporation produces and distributes potable water in the Maltese Islands. It is responsible for the whole water cycle from its production to its safe disposal. Some thirty-one million cubic meters of good quality water are produced annually to cater for the needs of Malta's 400, 000 inhabitants as well as around the one million tourists who visit each year. Just over half the water is produced at the Corporation's three reverse osmosis plants with the remainder coming from groundwater sources such as boreholes and pumping stations.

Excellent Quality of Life

Malta offers professionals an attractive lifestyle at the heart of the Mediterranean. The Maltese Islands are a sought-after location for those seeking to gain a better work-life balance or a place in which to combine investment opportunities with a more convivial lifestyle in a warmer climate.

Malta resembles a city culture; its compact size facilitates professional networking and provides ease of access to the islands many cultural venues. By virtue of its history, Malta is European in outlook and an English-speaking nation, but it offers also the experience of a unique, Mediterranean culture of its own.

Its proximity to Europe at just two to three hours flying time from major European cities makes Malta ideal for those wishing to have a base on the Islands yet maintain regular overseas links. Maltas size also means that inland communications are excellent and commuting time is negligible compared with many urban areas in Europe.

For millennia, Maltas strategic location has attracted a mix of nationalities. Today, the Islands are cosmopolitan with a flow of professionals arriving not only from countries with traditional ties to Malta, such as the UK, Australia and Canada, but also from across other parts of the world.

The living standards in Malta are good and compare well with those of continental Europe. Annual living costs in Malta are substantially lower than the United Kingdom, Spain, Ireland, France, Italy and Cyprus. Malta ranked 13th out of 193 countries in the most recent quality of life index compiled by International Living (2006).It compared particularly well on aspects such as health, personal risk and safety, climate and personal freedoms. Purchasing power in Malta is on a par with that of Portugal, at 73.8% of the EU average (Feb. 2007 data).

The Human Development Index for Malta is 0.875, which ranks Malta 32nd out of 177 countries. Malta comes out on top of the human development index in respect of life expectancy which averages 78.6 years.

Education is excellent and Malta offers a schooling system to tertiary level which is closely aligned with the qualifications and teaching practices of the British system. Private educational institutions teach in the English language. Malta boasts the oldest university in the Commonwealth outside the UK. The continental Baccalaureate is also offered at some institutions.

The Islands offer facilities for a wide range of sports and leisure pursuits from those traditionally associated with a Mediterranean climate to sea- and land-based adventure sports. Malta is on the international circuit for touring arts groups and also has an active, local programme of entertainment in English.

• English an official language
• Safe, secure living environment: Malta 13th of 193 countries on quality of life index.
• Mediterranean climate: average 300 days of sunshine a year.
• An open, friendly culture
• Cosmopolitan city living in the Mediterranean
• Lower cost living expenses
• Excellent communications: regular scheduled national airline flights & low-cost carriers
• Negligible domestic commuting
• Education first class: tertiary level high standard; international baccalaureate as well
• Health care ranks highly internationally

Malta has a mild climate characterised by hot summers and mild winters, typical of a Mediterranean, maritime location. The hottest summer month is August which has an average maximum temperature of 31C (87F). The coldest winter month is February, with an average minimum temperature of 9C (49F). The average annual rainfall is 520 millimetres (21 inches). There are about 300 days of sunshine each year.

Malta is considered very safe for foreigners and locals. Children can play outside in safety, and all areas are safe to walk or drive around at night. There are no health risks attached to travel to Malta, and water and food are safe for consumption. No indigenous terrorist or extremist groups are known to be active in Malta.

The geographic size of the Islands, some 45km long (North-South) and 13km wide (EastWest), inevitably mean that commuting distances and times are low compared to those experienced in other EU countries with similarly urban areas. Roads have been improved substantially in recent years with the major arterial and adjoining roads to the key commercial and residential regions either already rebuilt or undergoing improvement.

The Islands history is intrinsically linked to the provision of medical services. The Hospitaller Order of the Knights of St John introduced pioneering medical practices during their near 300-year stay and the Islands were known as the nurse of the Mediterranean during the 20th century world conflicts. Malta therefore has a special relationship with the medical profession.

Today, this legacy lives on in Maltas excellent public health facilities with some six, acute care hospitals (short stay) and a range of general and specialist private facilities. The Maltese enjoy high standards of health care, resulting in a longer life expectancy and continuous recognition by the World Health Organisation which has described Maltas healthcare as one of the best and most cost-effective health systems in the world.

Public health facilities are available free of charge to all local nationals, expatriates working in Malta and to tourists coming from countries which have reciprocal health arrangements with Malta.

The local hospitals are equipped to deal with any emergency and are staffed by medical personnel trained both locally and overseas. In certain circumstances, when very specialist treatment is required that would not be cost effective to perform in Malta, the health services will normally finance the required overseas medical treatment. Also, local hospitals have regular visiting specialists from overseas that come to Malta to perform operations not normally available from local medical specialists.

At the end of 2007, Malta sees the phased opening of a purpose-built, world-class, acute hospital, the Mater Dei Hospital. Conceived also as a teaching hospital for the wider Mediterranean region, Mater Dei is deemed a world-class establishment.

The Islands also offer a wide range of spa and alternative health and fitness courses and facilities, many of which are located in the main five-star hotels.

Malta has a free, state school system with optional private education. Both day and boarding facilities exist and school fees are very reasonable. Lessons in private schools are taught in English, and the curriculum is very closely aligned to the British system with students sitting for Ordinary and Advanced level examinations to qualify for entrance into the Malta University and universities overseas.

Standards of education are high with English being the language of instruction for most subjects at all levels of the education system. Malta can boast the oldest University in the Commonwealth outside Britain, providing education for more than 10, 000 students in all the major disciplines, with 750 overseas students (2007-8 figures) coming from around 80 countries. Law, medicine, business and education are the disciplines most highly favoured. For the current academic year, 2007/8, around 25 per cent of students enrolled at the University are reading courses of direct relevance to the financial services sector (laws, ICT, economics, accountancy and management). The vocational and technical education systems offer courses in applied electronics, design, IT and others.

Other favourable aspects of Maltas education system:

• internationally-accredited, local schools attract students from Western Europe on account of their lower rates.
• the education system is based on the UK system.
• the American School in Malta ranks among the best in the world and fees charged are among the lowest in Europe

The Islands offer a wide range of cultural and leisure pursuits and entertainment. In contrast to many island destinations in the region, Malta is an all-year-round tourism location. The summer months see traditional sun and sea activities and a varied, largely open-air, programme of cultural events. The mid-season and winter months provide the right climate for outdoor pursuits like diving, sailing, walking and cycling and also offer a rich, theatre and concert programme of classical and contemporary music.

The Maltese have a colourful, cultural calendar of traditional events. Maltese traditions are ever present in the lives of both the older and younger generations. Local events, in particular the annual, parish festa and carnival in February, are important for their role in keeping communities alive and in forging strong civic pride.

A number of national and international festivals, ranging from opera, baroque music, jazz and contemporary dance and music to the visual and performing arts, take place annually. The summer months see an active local programme which also includes renowned, international performers on tour. Much of the traditional, cultural entertainment takes place in Valletta; a converted fortress, St James Cavalier, is the focus of many cultural events including theatre performances, readings and art exhibitions. There are venues also across the Islands, especially in the main tourist areas.

The Islands play host to a variety of international sporting events and championships including international yacht races, football tournaments, the Small Nations Games and marathons.

With a government keenly pro-business and an economy among the most open in the world, Malta offers investors an ideal location in which to establish operations.

Malta has long been an open trading nation on account of its maritime history and dependency on international trade as an economic driver. The countrys EU accession in 2004 further enhanced Maltas openness in trade bringing greater accessibility to EU markets, particularly for investment funds seeking a suitable EU domicile and to benefit from the EUs single passport in financial services.

Maltas entry into the Eurozone on 1st January, 2008 will strengthen further its attractiveness to international investors and secure the country greater domestic, economic stability over the longer term. Maltas economy has performed well in terms of aligning itself with the convergence criteria required for its adoption of the euro. The country has been commended by the EU and IMF for its consistent and prudent economic, structural reforms in recent years.Maltas real GDP growth rate is stable at 3.2 per cent (end 2006). The inflation rate stands at around 2.77 per cent and remains below the EU reference value.

The country has attracted significant investment in the financial services sector in the past decade, as it had the foresight to restructure in line with EU law well before its accession. Today, the financial services sector, taken together with related and support services, account for some 12 per cent of GDP; the sector is predicted to double its contribution to GDP over the coming decade.

Malta is among 37 countries from around the world that were described as "frontrunners" in terms of high foreign direct investment potential according to the World Investment Report 2007, released by the United Nations Conference on Trade and Development in October 2007.

In a recent Ernst & Young survey of top executives of some 58 foreign-owned firms operating in Malta, two-thirds said they were considering expanding their activities in Malta, while a similar number stated that they had carried out expansion plans in the last three years.

In fact, Malta has always encouraged foreign investment and its importance as a source of economic growth is reflected in the ratio of the FDI stock to GDP, which stood at about 73% in 2005, and is among the highest in the EU.Its ability to attract FDI in financial services is evident in the exponential growth of hedge funds based on the Island which now number some 250. The value of their assets under management has grown sevenfold to 7.5 billion in the three years since Maltas EU accession.

The Islands give international firms excellent services and a state-of-the-art communications infrastructure. In addition, Malta offers the sector the benefits of an exemplary regulatory environment, a network of double taxation agreements and a declared government commitment to encourage and develop financial services.

• Long history of open, free-market economy historic trading nation & culture of enterprise
• Malta a front runner in terms of attractiveness for FDI (UNCTAD report, 2007)
• Financial Services & related sectors a key growth area: set to contribute 25% GDP in next decade
• Malta in euro zone from 1st January, 2008: economic stability & ease of access to Euro zone markets
• EU and IMF commend Maltas recent economic & structural reforms
• GDP growth and inflation in line with EU reference indices
• Top-tier base for international firms: infrastructure, double taxation treaties, EU access
• Government pro-business: FinanceMalta, Malta Enterprise key agencies promoting inward investment

Malta has a diversified free-market economy which is dominated by financial services, tourism and manufacturing. Malta is in fact the fifth most open EU economy with an average trade-to-GDP ratio of around 80% in recent years.

Gross Domestic Product (GDP) stands at around 4.9 billion. During the 1990s, Malta enjoyed one of the highest growth rates in Europe with an annual average of some 6%. Despite the global downturn at the turn of the century, growth remained positive and Malta went on to pick up a 2-3% growth rate in recent years. Inflation has remained around the 3% in recent years, and stands below the EU reference value. Gross Domestic Product per capita in purchasing power stands lies just above that of Portugal, at 73.8 per cent of the EU average.

Maltas accession into the EU in 2004 marked the total dismantling of protective import levies on industrial products, increasing the outward orientation of the economy even further. Maltas response to the challenge of globalisation has been to promote higher, value-added and niche manufacturing and services activities.

While aligning the economy with the EU customs union and economic principles, the Maltese government committed itself also to the privatisation of various state-owned entities, key among which were the incumbent telecommunications operator, Malta International Airport and the postal service. Other state entities, such as Air Malta, have undergone significant restructuring in recent years.

Malta is set to join the euro area on 1st January, 2008. The European Commission stated in May 2007 that Malta had achieved a high degree of sustainable economic convergence with the euro area Member States and that it fulfilled the necessary conditions to adopt the euro. The euro, although it might prove inflationary in the short-term, should benefit the Maltese economy in the longer-term, especially through improved price stability and the encouragement of foreign trade and investment through the removal of exchange rate risk.

In September 2007, the International Monetary Fund commended the Maltese authorities for the substantial fiscal consolidation that had been achieved, and for the implementation of broad-based structural economic reforms. It welcomed in particular a continued improvement in the financial sector stability, with strengthened banking performance, comfortable levels of regulatory capital, and declines in non-performing loans. The IMF highlighted some pressures on the countrys economic performance, notably from wage inflation, the erosion of certain export sectors, exposure to the real estate market and high public sector consumption.

The financial services sector has become an increasingly important source of employment and foreign exchange earnings and today is one of the fastest growing in the Maltese economy. The Maltese financial services sector directly contributes around 6% of GDP. Taken together with other related services such as professional and support services, the sectors total contribution to GDP is around 12%. Financial services are expected to contribute 25 per cent of Maltas GDP in the coming decade.

Financial services activities on the Islands cover a wide range of operations, including:

• Investment services
• insurance companies, including captives
• banks
• intra group financing operations,
• holding intellectual property,
• holding overseas immovable property,
• investment portfolios,
• back-office operations and call centres.

The gross value added in financial intermediation rose to Euros 208 million at the end of 2006. This translates into a gross value added contribution of Euros 39, 729 per employee working in the sector, and a 37% rise in productivity over the previous two years. Gross value added in business services (which includes legal and accountancy services) also rose by 5.2% to Euro125 million.

The country is increasingly attracting the captive insurance operations of large EU and non-EU corporates. These units, run by licensed insurance management firms, are able to sell other insurance products around the EU.

Malta is gaining international repute as an advantageous and respected regional financial centre. The Islands give international firms an ideal base, coupled with excellent services and a state-of-the-art communications infrastructure. In addition the Islands offer the sector the benefits of a reputable, regulatory environment, a network of double taxation agreements and a declared government commitment to encourage and develop financial services.

The business environment for the establishment and operation of financial services is favourable. In line with EU regulations, all banks are supervised by a single regulator, the Malta Financial Services Authority. The country has an A rating from Standard & Poors. New banks and financial institutions are being established in Malta, attracting investments from around the globe. A good number of other banks and financial institutions operate in various segments of the local and overseas markets. Commercial banks offer all forms of banking services.

Other areas of financial services, such as the investment and fund management industry, are also growing rapidly as the Islands offer a high quality location for the delivery of these services.

Since joining the European Union Malta has grown into a strong insurance domicile for companies who need to write business across the EU through the single passport for insurance business. Over the last two years, 20 new captive and other insurance companies have set up operations in Malta to do business in the single market. In addition 12 insurance management companies, including global leaders, have set up offices in Malta to services this growing industry.

The Reactions Magazine Survey 2007 ranks Malta ahead of all the other European captive domiciles in cost-efficiency, tailored regulation and PCC legislation, and second only to Dublin in accessibility.

Maltas key advantages for captives are the following:

• Direct writing across the EU, without need to appoint a fronting company;
• Protected Cell Company legislation;
• IFRS reporting standards, making make it easier and less costly to consolidate accounts;
• The possibility to extend captive insurance licences to do third party business;
• Continuation of companies legislation, that allows captives to re-domicile to Malta from other jurisdictions;
• Maltas legislation allows all insurance companies (not just captives) to subcontract their management to locally authorised insurance managers.

As Malta does not have significant natural resources, the manufacturing, financial services and tourism industries are the Island's principal industries. The tourism industry alone accounted for roughly Lm172.7 million (Jan June 2007).The hotels and restaurants sector is a key service industry with a contribution to gross value added ranging between 6% and 7% in recent years.Industrial output is predominantly made up of electronic products, while exports of pharmaceuticals are also growing rapidly.

The resurgence in GDP growth in 2005 to 2.2 per cent was the result of an increase in infrastructure investment financed by EU funds, private start-ups in the pharmaceutical, aviation, ICT and financial services sectors, as well as a number of expansions by long-established foreign-owned firms.

The IT industry represents an area of huge potential to the Islands economy. Encouraged by government initiatives and the state-of-the-art communications infrastructure, Malta offers one of the most progressive environments in the world for IT and e-Business activities.

As an open economy with a long-established history of trade, Malta has always encouraged and welcomed foreign investment, both in existing companies on the Islands and in the set up of new entities. Malta Enterprise and FinanceMalta are the prime agencies promoting and facilitating inward investment; the former in a wide range of businesses; and the latter focusing on financial services.

Malta is among 37 countries from around the world that were described as "frontrunners" in terms of high foreign direct investment potential. According to the World Investment Report 2007, released by the United Nations Conference on Trade and Development in October 2007, Malta has climbed up from the 10th to the sixth position between 2005 and 2006 when it comes to inward performance. Malta occupied the 23rd position in 2004. According to the report, Malta's foreign direct investment inflows jumped from $403 million in 2004 to $1, 757 million last year. The report found that global foreign direct investment growth in 2006 was the largest since 2000. It pointed out that global foreign direct investment inflows soared in 2006, for the third consecutive year.

The importance of foreign investment as a source of economic growth is reflected in the ratio of the FDI stock to GDP, which stood at about 73% in 2005, among the highest in the EU and the second highest among the new Member States that joined the EU in 2004.FDI in 2006 stood at 25 times the level of a decade before35. This position is expected to be maintained as foreign investors continue to respond favourably to the stable macroeconomic environment, the ongoing structural reforms and Maltas enhanced position as a financial and ICT hub in the Mediterranean.

Overall, Malta offers a strong infrastructure for attracting FDI, and is capable of supporting considerable international economic activity. Malta's accessibility, comparatively low operational costs, advanced telecommunication systems and well trained professionals serve to further enhance the Island's attraction as an international business centre.

There are no restrictions concerning either the maximum allowable percentage of EU participation, or the minimum level of foreign investment in an enterprise in Malta.

Restrictions to foreign investment continue to apply in some areas of the real estate business.

There is a raft of incentives for which companies may apply. These are generally aimed at specific sectors, predominantly ICT and other industries Malta is keen to promote. These fall under the Business Promotion Act and Business Promotion Regulations which are due to be announced during 2008. Malta Enterprise is the government agency responsible for their administration. See: www.maltaenterprise.com for further details.

Banking, insurance and securities activities are subject to special laws that regulate the terms of conducting their business operations, authorising the operators on the market and establishing the capital limits for carrying out these types of activities. For details, see: Favourable Regulatory Environment.

There are no exchange control restrictions.

Maltese competition regulations are harmonised with similar European Union rules. Collusive behaviour or anti-competitive agreements between competitors are forbidden, but mergers and acquisitions are authorised provided that free competition is not affected.

The Trademark Act provides for the registration of service marks, name marks and shape marks. It also provides for trademark licensing, the protection of well-known marks, collective and certification marks.

The procedure to register a trademark in Malta starts with the filing of the trademark application at the Office of the Comptroller of Industrial Property. In the case of overseas applicants, the trademark application is to be accompanied by a notarised and apostilled power of attorney. A trademark is registered for a ten-year period (renewable for further ten-year terms). The Trademark Act vests the owner of a trademark registration with the right to the exclusive use of the mark.

The registration of Patents is governed by the Patents Act. Malta has a separate register for patents and trademarks. The owner of a patent has the right to prevent third parties from making, offering, putting for sale and licensing the product incorporating the subject matter of the patent. In order to be registered on the Maltese Patent Register, a patent must be:

• Novel: If the invention was not previously available to the public;

• Involving an Inventive Step: Not obvious to a person skilled in the art covered by the invention;

• Industrially applicable: Can be used in any kind of industry including handicraft, fishery and agriculture.

Inventions like mathematical methods, aesthetic creations, presentations of information, methods for the treatment of the human body or animal body, inventions against public order and schemes for performing mental acts are not patentable.

The duration of a patent is 20 years from the date when the application for the patent is filed. Patent applications are filed at the Office of the Comptroller of Industrial Property, which is a division of the Department of Trade. The application for the grant of a patent is filed in duplicate, in the English language. The application must include the details of the inventor, a request for the grant of the patent and a description of the invention.

Copyright is governed by the Copyright Act. The definition of works covered by copyright has been extended so as to include the latest developments in computer technology. The general rule is that copyright vests in the author of the work unless the author has been commissioned to carry out the work. In the latter case the copyright vests in the person commissioning the work. The Copyright Act also envisages exceptions to the exclusive use of copyright works.

See Malta Enterprise (http://www.maltaenterprise.com/page.asp?p=8193&l=1)

Since the liberalisation of interest rates and the creation of money and capital markets in the 1990s, and the more recent removal of capital controls, long-term interest rates in Malta have become a more meaningful indicator of financial market perceptions with regard to domestic economic conditions and inflation expectations.

In recent years, long-term yield spreads vis--vis the euro area have also fluctuated at relatively moderate levels and decreased further since 2005, which testifies to the low residual country risk priced in by markets

Average long-term interest rates in Malta have been below the reference value since EU accession. Convergence towards the euro area levels continues and the domestic long-term interest rate, at 4.3% in March 2007, remains below the EU reference value of 6.4%. Commercial bank interest rate spreads have also been converging (source: Central Bank of Malta).

The Maltese lira has participated in the Exchange Rate Mechanism ERM II since 2 May 2005 and Malta is set to adopt the euro on 1st January, 2008. In the two years leading up to Malta joining the euro zone, the Maltese Lira has remained stable vis--vis the central rate and has not experienced severe tensions.

Malta is an established trading nation on account of its strategic, maritime location. This has been further enhanced in recent years with the establishment of Malta Freeport. Since its inception in 1988, Malta Freeport has experienced remarkable growth and is now a major, maritime transshipment and logistics centre in the Mediterranean region. Almost all goods being transshipped through the port or being re-packaged for onward shipment do so tax-free.

In general, Malta does not impose restrictions on the import of goods from other countries or groups of countries. Goods imported from non-European Union countries may be subject to import duties in addition to VAT (when applicable). An export licence is required for specified goods. In brief, leading export markets are France, the US, Singapore, the UK and Germany and major exports are machinery and transport equipment, and other manufactures.

Imports

Leading trading partners for imports are the other 26 EU countries, which account for roughly 70% of total imports. Imports from the USA amount to 3%, while imports from Asia account for 13% of total imports. Imports of consumer goods account for approximately 25% of total imports whereas industrial supplies account for 45% of total imports and capital and other goods for 17% of total imports.

Exports

Leading trading partners for exports are again the other 26 EU countries, which account for over 50% of total exports. Exports to the US account for 12% of total exports, and exports to Asia 23% of total exports. 62% of total exports consist of machinery, 5% of clothing, 4% of printed goods, and 6.6% of semi-manufactured goods.

As a benchmark, operational costs in Malta are generally a half to two-thirds of those prevailing in the UK. This applies to salaries as well as general business costs such as office space, service and utilities. Costs for visiting clientele are low as hospitality, hotels and ancillary services are highly competitive.

Malta is starting to develop industrial clusters focused on its state-of-the-art infrastructure. The key development coming on stream within two years is SmartCity Malta, which foresees a knowledge economy cluster operating in a purpose-built media and business park. SmartCity Malta, in a prime coastal location, is expected to become one of the premier business centres in the region. Given its services, desirable location and exceptionally high quality office spaces, it will offer an extremely attractive proposition to firms seeking a prestigious EU domicile.

The Islands have seen a surge in high quality office space in recent years as a result of the growth of its services sector. Private consortia are investing in lifestyle developments which offer a combination of commercial, retail, leisure and private residential spaces. These are generally located in key, urban areas and afford a pleasant working environment, often adjacent to the coast or with sea views.

At the top end of the market, commercial space in prestige developments comes in at around 300 - 420 per sq.m. a year. Mid-market, smart office blocks in the central Malta areas of Sliema, Gzira and TaXbiex are around 58 - 116 per sq.m. a year.

Industrial rentals are exceptionally good value for money. Malta Enterprise, the government agency assisting incoming firms, can provide industrial property to prospective investors at highly competitive rates. Maltas average industrial property rate of 10/m2 compares favourably relative to the secondary rental markets in Italy, Austria, France, Luxembourg, Ireland and the UK. Malta has among the lowest of all prime industrial property in EU markets. Malta has 10 industrial zones offering industrial property at these competitive rates.

Smaller, government-backed parks include Mosta Technopark in the centre of the island. Designed with technology firms in mind, it houses technology investors from Malta, Italy, France, Germany and the UK. In addition, Malta Enterprise operates a Business Incubation Centre (KBIC)for start-ups which offers a portfolio of subsidized services to its clients.

Operational Costs Comprehensive Data

Malta Enterprise provides a single document detailing the broad range of operational costs ranging from commercial office rent and electricity and communications costs to average labour costs by sector. It is revised around every six months. For the latest overview, (March, 2007), download here.

Government Stability & Responsiveness

Malta represents a unique haven for investors in the region with its offer of a stable socio-economic environment and accessible, pro-business government.

Since the early 1990s, successive governments have followed a keen can-do approach to enterprise and investment. As a result, Malta has witnessed substantial changes in its public structures and regulatory frameworks over the past decade. Many public entities have been reengineered to enable them to foster a climate that encourages business and contributes to a more equitable and open society for Maltas citizens.

Maltas size works in its favour: change can be felt quickly; access to government is easily facilitated, even to the highest levels; and private sector bodies are consulted readily and routinely in the formulation of policy.

At the start of the 1990s, Malta applied for EU membership; a move which not only confirmed the Islands social, political and cultural ties and future, but also triggered a series of domestic, structural changes to prepare Malta for eventual EU accession (May, 2004).

Key changes were seen in the way the public sector communicated with its various publics. Ministries, departments and other state entities underwent a series of change management exercises to promote better working practices and a culture of customer service. The public sector now largely operates under Service Level Agreements, both internally and with externals.

Simultaneously, government invested heavily in the Islands telecommunications infrastructure, building the backbone and catalyst for what is now todays growing knowledge economy and a platform for growth in the financial services sector. During this period too, government embarked on a programme of privatisation, and major entities now fully- or part-privatised include the former state telecoms provider, the airport, and the postal service.

The past decade has seen also the setting up of bodies charged with disseminating information and promoting key sectors, particularly trade, FDI and financial services. Relevant entities include Malta Enterprise - FDI and trade promotion; and FinanceMalta support to and promotion of Maltas financial services sector.

Today, the Islands are reaping the benefits of the past decade of change and the country is being acknowledged by high rankings in various international indices measuring its pro-business environment. Malta ranks second among the 27 EU member states in its provision of eGovernment services through its IT infrastructure, according to a European Commission/CapGemini (September, 2007). The report benchmarked 20 different eGovernment services and gives Malta a position just after Austria.

Malta's economy is 67.8 percent free, making it the 42nd freest economy of 161 countries worldwide, according to the Index of Economic Freedom, 2007 compiled by the Heritage Trust, a branch of the Wall Street Journal. The Trust ranks Malta 23rd out of 41 countries in the European region, with an overall score slightly higher than the regional average. Malta scores highly in property rights, trade freedom, monetary freedom, business freedom, and financial freedom.

There are no domestic or foreign policy issues which threaten Malta's stability or integrity. The International Living index ranks Maltas indices as 100 per cent for freedom, and risk and safety.

• Consistently pro-business government policies
• European Union member
• Non-aligned, neutral state
• Good relations in Euro-Med region - N. Africa & Middle East
• Social & Economic stability: no domestic or foreign interference
• Independent judiciary: administrative & fiscal legislation modeled on British law

Malta is a small, developed, democratic Mediterranean island nation having gained independence from Britain in 1964. Malta is a sovereign state and a member of the United Nations, the European Union and the Commonwealth. Malta pursues a policy of neutrality and is not a member of any military alliance. Successive Maltese governments have consistently pursued a policy based on the encouragement of peace, stability and economic growth, particularly in the Mediterranean region.

In 1974, Malta adopted a Republican-style parliamentary democracy with a legislature consisting of one House. The head of state is the President, who is appointed by the House of Representatives and whose role is mainly ceremonial. The House of Representatives, consisting of 65 members, is elected by universal suffrage every five years, although there are no fixed terms.

Executive power rests with the Prime Minister and the Cabinet. The Prime Minister is usually the leader of the party commanding the greatest measure of support in the House. Ministers are nominated to the Cabinet by the Prime Minister from among the elected members. Various local administrative matters are delegated by specific legislation to local councils.

There are two main political parties in Malta: the centre-right Nationalist Party (PN), which forms the current Government (as of end 2007), and the Labour Party (MLP). There are also a number of other smaller parties.

The legal structure is based on the civil law pattern of continental Europe, but most administrative and fiscal legislation is based on British laws. Legislation is published in both the Maltese and English languages. The Judiciary enjoys complete independence from the executive and legislative bodies. In 1987, Malta recognised the right of individual petition to the European Courts of Justice and in the same year adopted the European Convention on Human Rights as part of Maltas domestic legislation. From 1st May 2004, the country also adopted all the Directives applicable (aquis communautaire) within the European Union.

In May 2004, Malta joined the EU. Malta is a member of the United Nations (UN) and other organisations. Malta's contribution to the United Nations has been substantial. It has provided the United Nations with one of its Presidents of the General Assembly and has also been the driving force behind an ambitious UN directive, namely the Law of the Sea, the Constitution of the Oceans.

Besides being a member of the UN, Malta is a member of the OSCE, the World Bank, the International Monetary Fund, the World Trade Organisation, the World Health Organisation, the International Labour Organisation, the Mediterranean Pact, and the United Nations Educational, Scientific and Cultural Organisation and the OECD. Malta is a neutral state and pursues a policy of non alignment.

On accession to the European Union in May 2004, Malta had many EU-convergent regulations already in place, particularly in the financial services sector. All new legislation conforms to that of the EU. The country's judiciary is independent and not tainted by political influence.

As an EU member, Malta implemented the EU tariff system as part of its adoption of the body of EU law. Malta therefore falls under the EUs customs union which calls for free trade and the absence of customs duties and quotas on trade among EU members. Malta has adopted the various preferential and non-preferential trading agreements that the EU has with third countries.

Malta is an efficient proposition for investors seeking an EU-compliant yet flexible, tax-efficient domicile for business entities or funds.

Business may be conducted in Malta through the various forms of organisation common in most countries. What makes Maltas proposition so attractive to overseas investors is its supportive, sophisticated legal structure, its strong institutional framework and the tax efficiency of different types of corporate vehicle.

Malta also excels in the speed and efficiency with which investors can set up a company. Once the Registrar of Companies has all necessary documentation and information in hand, the process may take as little as 24 hours.

Funds considering setting up in Malta will find a full range of professional support services including assistance with: structuring of the Fund (design, set-up and implementation); selection of functionaries; implementation of respective network; the setting up the fund manager and respective internal structures; licensing process and related due diligence; liaison with the MFSA and other governmental agencies; operational compliance and finance support; preparation of statutory compliance reporting; back office, accounting and financial statements; company formation and secretarial; tax planning issues related to the fund structure; and Investor tax planning

• All forms of business set-up available many offer tax-efficient structures
• Speed & efficiency: registration can take as little as 24 hrs from submission of documents
• Sophisticated, supportive legal framework

The principal legislation covering companies and partnerships is the Companies Act (1995) which is modeled on the UK Companies Act and European law. The Companies Act defines the types of corporate entities that may be incorporated and the manner in which their affairs must be conducted. Every company registered in Malta must have a registered office in Malta.

The laws and regulations for setting up and administering such entities are the same for foreign investors and international business activities as they are for local organisations.

Companies and other forms of partnerships are required to submit a valid memorandum and articles of association or deed of association normally subscribed by at least two persons. Under certain conditions, it is also possible to register single member companies. Companies and partnerships are registered with the Registry of Companies which is based at the Malta Financial Services Authority. A certificate of registration is then issued by the Registrar of Companies. If documentation is in place, registration can take as little as 24 hours to complete.

A company formed and incorporated or registered under the laws of an approved foreign country, which is similar in nature to a company as known under the laws of Malta, may request the Registrar of Companies to be registered as continued in Malta, provided the laws of the foreign country so permit, and provided the company is authorised to do so by its constitutive documents.

All forms of business must also register with the Inland Revenue and Value Added Tax departments. Moreover persons and legal entities wishing to trade in Malta need a trade licence. Regulated entities need to apply for their licence with the regulatory agency responsible for their sector. In the case of unregulated business the trade licence is issued by the Trade Licensing Department.

The Limited Liability Company is the most popular form of business entity in Malta. The Companies LAAct distinguishes between a public limited company and a private limited company. The vast majority of companies in Malta are registered as private companies.

A private company is a company that restricts the rights to transfer shares, limits the number of its members to fifty and prohibits any invitation to the public to subscribe for any shares or debentures of the company. No body corporate may have any interest in a private exempt company. The objects of a private exempt company must specify its main trading activity. A private exempt company may also be a single member company. The name of a limited liability company must end with the word 'limited' or with the abbreviation 'ltd'.

A public company is defined as a company that is not a private company as defined by the Companies Act. The name of a public limited company must end with the words public limited company' or the abbreviation plc'.

A Partnership En Nom Collectif is a legal entity that has its obligations guaranteed by the unlimited and joint and several liability of all the partners. A Partnership En Commandite or Limited Liability Partnership has its obligations guaranteed by the unlimited and joint and several liability of its general partners, and by the liability, limited to the amount of their contribution, of one or more limited partners.

Partnerships En Commandite with capital divided into shares are treated like limited liability companies for income tax purposes.

All forms of corporate entities described above have a legal personality that is distinct from that of their members.

A Limited Liability Company (a company) is formed by means of subscription to capital divided into shares. The liability of the shareholders is limited to the amount, if any, unpaid on the shares held.

A company may be incorporated either as a public company or as a private company. A company is a private company if its statute limits the number of its shareholders to 50, provides for restrictions on the transfer of shares and prohibits any invitation to the public to subscribe for shares or debentures.

A private company may further qualify as an exempt company if it restricts the number of debenture holders to 50 and prohibits the holding of any of its shares or debentures by another company that is not itself an exempt company. A private and exempt company enjoys certain privileges as to the details of its published financial statements and has the right to give loans to its directors. A company must have at least two shareholders but a private and exempt

company may be formed as a single member company.

The minimum share capital required to set up a private company is Lm500 (Euro 1, 165) with 20% paid up and subscribed to by at least two persons except in the case of single member companies, with restricted objects. In the case of a public company the minimum share capital requirements is Lm20, 000, with 25% paid up and subscribed for by at least two persons.

Company directors are responsible for the preparation of the annual financial statements. The financial statements must be drawn up in accordance with the provisions of the Companies Act and must comply with International Financial Reporting Standards.

The financial statements of a limited liability company must be audited by an independent auditor. Among other things, the auditor must state whether a true and fair view is given of the state of affairs as at the end of the financial year, the profit or loss for the year and the cash flows for the financial year. Companies are required to submit a copy of the annual audited financial statements to the Registrar of Companies for publication. Certain private exempt companies are only required to submit abridged accounts to the Registrar of Companies.

Under Maltese law, Collective Investment Schemes may be set up as SICAVs (Socit d'Investissement Capital Variable) which is a type of open-ended investment vehicle.

The amount of capital in a SICAV varies according to the number of investors. Each individual shareholder is entitled to voting rights and has the right to attend the annual general meetings. A SICAV is formed under the Companies Act (1995), but as a partnership limited by shares (Societe en Commandite Limitee par Actions), and is used by mutual funds.

Alternatively Collective Investment Schemes may take the form of a limited liability company with fixed share capital, limited liability partnership or investment trust. Such Schemes may also be set up by private contract.

Malta-domiciled funds are, as a general rule, exempt from Maltese income and capital gains tax. Capital gains made by non-Maltese investors when redeeming or transferring their units in a Collective Investment Scheme are not subject to any withholding tax and are automatically exempt from tax. Schemes are not subject to any duty on the issue of shares. Similarly, share transfers are not subject to any duty.

All bodies corporate constituted or incorporated outside Malta may establish a place of business in Malta. Overseas companies establishing a place of business in Malta should, within one month of the establishment of the place of business, deliver to the Registrar a number of documents. The documents to be submitted to the Registrar include an authentic copy of the charter of the company, a list of the officers of the company, and the names and addresses of one or more individuals resident in Malta authorised to represent the overseas company in Malta.

Branches carrying out operations in or from Malta are subject to tax in the same manner as a limited liability company.

A co-operative is an autonomous association of persons united voluntarily to meet their economic, social and cultural needs and aspirations, including employment, through a jointly-owned and democratically-controlled enterprise, in accordance with co-operative principles.

Co-operatives are open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. All members have equal voting rights (one member, one vote). Members contribute equitably to and democratically control the capital of their co-operative. Members allocate surpluses for any or all of the following purposes; development, reserves fund and to support social activities.

Co-operatives are autonomous, self-help organisations. They provide education and training for their members, elected representatives, managers and employees. They serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

Full information on cooperatives in Malta is available from the Cooperatives Board: http://www.gov.mt/frame.asp?l=2&url=http://www.coopsboard.org/en/about/qsc.shtml

Trade may also be carried out by sole traders and by a group of traders forming a civil partnership. A civil partnership does not have to be registered. A public deed constituting the civil partnership is only required when real estate is contributed to the partnership.

Trading as a sole trader or under a civil partnership involves less statutory requirements than trading under a Company or Commercial Partnership name. However, sole traders and civil partners have unlimited liability and are personally bound by the undertakings of their enterprise. Partners in a civil partnership are jointly and severally bound to fulfill all the obligations of the civil partnership. Limited civil partnerships are not permitted.

The principal Maltese law on trusts is the Trusts and Trustees Act which opened the Trust concept to residents and non-residents. The Trusts and Trustees Act and the Civil Code (as recently amended) recognises Constructive Trusts, Discretionary Trusts, Fixed Interests Trusts and Purpose Trusts.

A trust is deemed to exist whenever a person (i.e. the trustee) holds as owner or has vested in him property under an obligation to deal with that property for the benefit of other persons called the beneficiaries (whether or not yet ascertained or in existence), or for a charitable purpose which is not for the benefit only of the trustee, or for both such aforesaid benefit and purpose.

In normal circumstances, trusts are considered transparent for tax purposes. Income attributable to a trust is not charged to tax in the hands of the trustee if it is distributed to a beneficiary. In addition, if all the beneficiaries of a trust are non resident in Malta and when all income attributable to a trust does not arise in Malta, there is no tax impact under Maltese tax law. Other laws and regulations may have an impact on the taxation treatment of trusts and trustees. Malta is a signatory to a number of Double Tax Treaties that may apply in some circumstances.

Joint ventures are usually formed using the company structures described above.

Amalgamation of two or more companies may be effected by:

(a) merger by acquisition; or

(b) merger by formation of a new company.

Merger by acquisition is effected when a company acquires the assets and liabilities of one or more other companies in exchange of shares in itself, i.e. the acquiring company issues to the shareholders of the companies being acquired shares in itself and possibly delivers a cash payment not exceeding ten per cent of the nominal value of the shares so issued.

Merger by formation of a new company is effected when two or more companies contribute to a company set up ad hoc all their assets and liabilities, in exchange for shares in the new company, issued to the shareholders of the merging companies, and possibly a cash payment not exceeding ten per cent of the nominal value of the shares so issued.

Income Tax in Malta is charged on income from all sources and capital gains on the transfer of immovable property, securities and certain intangible assets. Companies are taxed at a flat rate of 35%. 35% is also the maximum rate for individuals. Other taxes include VAT, stamp duty and customs and excise duty.

One of the key advantages of the Maltese income tax system is the full imputation system that applies to the taxation of dividends. The full imputation system has formed part of Maltese law since 1948 when income tax legislation was first enacted, and Malta is the only EU member state with a full imputation system of taxation in force. As with all imputation systems, shareholders are entitled to a credit for the company tax paid on distributed profits and will qualify for a refund when the credit exceeds their tax liability.

In terms of domestic legislation, no tax is imposed on dividends, interest and royalties paid to a non-resident, as long as the recipient is the beneficial owner of the income and does not carry on a trade or business in Malta through a permanent establishment. In addition, no Maltese tax is imposed on gains realised from transfers of corporate securities by a non-resident, again, as long as the recipient is the beneficial owner of the gains, and the securities are not held in a company whose assets consist principally of immovable property in Malta.

Malta grants relief from double taxation under the credit method on source-by-source and country-by-country bases. The Maltese tax regime governing double taxation relief includes not only treaty relief but also unilateral relief and the flat rate foreign tax credit, and thereby ensures that income arising from overseas is not subject to double taxation, even if there is no double taxation agreement in existence. Malta has a a wide double tax treaty network.

The combination of Maltas tax system and its extensive double tax treaty network means that, with proper planning and structuring, investors can achieve considerable fiscal efficiency using Malta as a base

• Only EU member state with full imputation system
• Extensive network of double taxation treaties, plus benefits even when no bilateral treaty in force
• Refundable tax credit scheme on revenues as dividends to shareholders, resident & non-resident
• Ideal tax residency status for individuals

A person who is ordinarily resident and domiciled in Malta is subject to tax on his world-wide income and capital gains. A person who is resident but not domiciled in Malta is taxed on income and capital gains arising in Malta and on foreign income (but not foreign capital gains) received in Malta. Non-resident individuals are subject to tax on income and capital gains arising in Malta.

There is no ad hoc legislation on capital gains. An income tax on certain capital gains was incorporated into the Income Tax Act in 1992. Gains derived on the sale of securities (as defined in the Act), real estate, goodwill, trademarks and beneficial interest in a trust will be added to the other income and generally taxed at the normal rates of tax. Any capital losses incurred can be carried forward indefinitely and can only be set off against future capital gains.

The Income Tax Act imposes a final tax on property transfers. This is charged at 12% of the transfer value, but in the case of a transfer of property acquired by inheritance or donation the tax is charged after deducting the value of the property at the time of acquisition. The tax on property transfers is charge in lieu of the tax on the income or capital gains derived from the transfer. In a number of situations the seller may opt out of the final tax system and pay tax on the profits under the normal rules. This is possible particularly if the property is transferred within 5 years from acquisition or if it is situated in a special designated area.

There is no separate corporation tax, and the companies' liability to tax arises under the same charge that imposes a tax on individuals. Companies incorporated in Malta are considered to be ordinarily resident and domiciled in Malta and are consequently subject to tax on their world-wide income and capital gains. Companies incorporated outside Malta are considered residents of Malta if their management and control is exercised in Malta, but as they are not domiciled in Malta they are subject to tax on income arising in Malta and on foreign income (but not capital gains) that they receive in Malta. Companies that are not incorporated nor managed and controlled in Malta are subject to income tax only on income and capital gains arising in Malta.

In terms of the full imputation systems, shareholders receive full credit for any tax paid by the company on distributed profits. This means that profits taxed at a corporate level are not subject to further tax in the shareholder's hands, and, depending upon the rate of tax applicable to the recipient of dividends, may trigger off the entitlement to a tax refund in the hands of the recipient. As a result, shareholders of a Maltese company should, upon a distribution of profits, be eligible to claim refunds of the Malta tax paid at the corporate level.

Permanent residents are persons who satisfy certain high net worth requirements, are not citizens of Malta and satisfy further criteria. They are taxed at a flat rate of 15%. The minimum tax liability for these residents, after double tax relief, is Lm 1, 800 for each year of assessment.

An individual born in Malta who, after emigrating, returns as a resident of Malta may opt to be taxed at the rate applicable to a permanent resident if certain conditions are met, including a specified period of residence outside Malta, specified income remitted to Malta, and other conditions applicable to permanent residents. If taxed as a permanent resident, a returned migrant is taxed on all his or her income, except employment income and income from a trade, business, profession or vocation, with a minimum tax liability amount of Lm1, 000 after any applicable double tax relief.

Investment income includes bank interest, capital gains arising on the disposal of shares or units in a collective investment scheme or on the surrender or maturity of units and such like instruments relating to linked long term business of insurance, and certain other income. Resident individuals may opt to pay a 15% final withholding tax on investment income. No withholding tax is charged on the payment of investment income to non-residents.

The income of a married couple is treated as the income of a single person and is to be declared in one tax return. However, the tax is calculated either on the total income at the married couples' rates or, if the married couple so elects, and subject to certain conditions, on the income of each spouse separately at the single persons' rates.

Employees, pensioners and students engaged in part-time work may benefit from a special rate of tax. Income derived from part time employment, up to Lm3, 000, is taxed at a flat rate of 15%, which is withheld at source by the employer. Employees who carry on a part time self employment may also benefit from this reduced rate of tax. Recipients need not declare such income in their personal income tax return. Any part-time income earned in excess of Lm3, 000 has to be declared in the income tax return and charged at the normal rates of tax.

Malta operates a self-assessment system. Taxpayers are required to declare their income and calculate their tax, taking into account payments paid in advance under the FSS and the PT and any other tax credits. The tax payable must be settled at the time that the self assessment is filed. For individuals, the self assessment must be filed by the 30 June. Simple declarations may be filed in lieu of the self assessment by employees and pensioners. For companies, the tax return date is nine months after the financial year end, but not earlier than the 31 March of each year.

Revenue assessments may be raised when a return is not filed or where the Commissioner of Inland Revenue disagrees with the self-assessment. Penalties may be levied for omissions and incorrect declarations of income while interest of 1% per month is charged for late payment of tax. Revenue assessments are subject to objection and appeal.

In addition to the considerable benefits of the full imputation system and the extensive network of double taxation treaties, Malta offers businesses other key benefits under its tax legislation, including the following aspects:

• As an EU member state, entities have access to the Parent-Subsidiary, Interest & Royalties, and Mergers Directives.
• Participation exemptions.
• An exemption from tax on income derived by collective investment schemes
• Advance rulings issued by the Maltese Commissioner of Inland Revenue on international transactions that guarantee the tax position for a minimum of five years and may be renewed for a further five year period.
• An absence of thin capitalisation rules and no anti-controlled foreign corporation legislation
• No capital duty on share issues and exemption from duty on transfers of shares in, by or to companies having the majority of their business interests outside Malta
• The possibility for companies to denominate their share capital and their accounts in any convertible currency with the chosen currency then being used for payment of tax and tax refunds (where applicable) thus minimising exchange risks.
• The possibility of migrating companies to and from Malta
• Relative ease of incorporation for non-regulated entities
• Low registration and maintenance costs
• A taxation scheme for groups of companies allowing offset of losses between group companies.

The forms of relief available under Maltese laws are:

(a) Double taxation relief

(b) Commonwealth income tax relief

(c) Unilateral relief

(d) Flat rate foreign tax credit

Maltas double taxation treaty network

*Agreement limited to profits derived from operation of ships or aircraft in international traffic

The Inland Revenue Department administers the income tax provisions. The income Tax Acts grant vast powers of the Commissioner of Inland Revenue, including powers to make investigations, to raise revenue assessments and to impose and waive penalties. For full details, see Tax Compliance Unit:

http://mfin.gov.mt/page.aspx?site=TCU&page=default

All employed and self-employed persons are required to pay Social Security Contributions. The amount of Social Security Contribution (SSC) payable by employees amounts to 10% of the basic wage, subject to a minimum linked to the national minimum wage and a maximum linked to the maximum pensionable income. An equivalent amount is payable by the employer in respect of each employee. The employer must deduct the employee's contributions from the wages and must remit the amount due, including the employer's share, to the Commissioner of Inland Revenue by the end of the month following the month in which the wages or salaries are paid. Self-employed persons pay contributions at 15% of their profits, subject to a minimum and a maximum. Payments by self-employed persons are made to the Commissioner of Inland Revenue every three months in arrears.

Value-added tax (VAT) applies to supplies of goods and services that take place in Malta, intra-community acquisitions and imports. The standard rate is 18% and a 5% rate applies to the supply of holiday accommodation, electricity, printed matter and confectionery. Zero rating applies to exports and intra-community supplies, international transport, domestic passenger transport, food, pharmaceuticals, and the supply and repair of ships and aircraft. Exemptions from VAT include the sale and leasing of immovable property, banking and insurance services, health, education and broadcasting.

Registration is compulsory for suppliers of goods with annual turnover over MTL 12, 000 and suppliers of services over MTL 8, 000

There are no such taxes in Malta.

A tax is charged under the Duty on Documents and Transfers Act on the transfer, whether inter vivos or by way of inheritance, of immovable property and securities. The tax on property is 5%. The tax on securities is 2% but is increased to 5% in the case of shares in property companies. The Act also imposes tax on emphyteutical grants, auction sales, credit cards and insurance policies.

There is no inheritance or gift tax in Malta. The transmission of property and company shares is, however, subhect to tax under the Duty on Documents and Transfers.

With Maltas accession to the European Union on 1st May, 2004, the Islands form part of the EUs customs union. Full details of how EU regulation affects customs & excise are available from the Department of Customs: http://www.gov.mt/frame.asp?l=2&url=http://www.maltacustoms.gov.mt

With Maltas accession to the European Union on 1st May, 2004, the Islands form part of the EUs customs union. Full details of how EU regulation affects customs & excise are available from the Department of Customs: http://www.gov.mt/frame.asp?l=2&url=http://www.maltacustoms.gov.mt

There are no restrictions on external transactions, i.e. capital and current transactions involving operations between resident and non-resident persons or other entities, whether in or outside Malta, also including operations involving foreign exchange by a resident or between residents.

However, effecting external transaction entail certain reporting requirements. Institutions licensed to deal in foreign exchange must observe the External Transactions Circulars issued by the Central Bank of Malta. These Circulars stipulate the directions and procedures, of a general or specific nature, that must be followed by such institutions when effecting external transactions on behalf of their customers.

Any person entering or leaving Malta and carrying a sum equivalent to Lm5, 000 or more in cash is obliged to declare that sum to the Comptroller of Customs, who will pass this information to the Central Bank of Malta. The Central Bank of Malta maintains a database of such declarations.

Resident individuals are taxed on their worldwide income; non-residents are taxed only on Maltese-source income. There is no strict definition of residence, but residence will be based on where a person effectively lives and has a home. Staying in Malta for six months in a year would imply residence. Tax is charged at progressive rates up to a maximum rate of 35%. There is a favourable residency scheme for those individuals seeking to move their tax residency status to Malta.

Section 4(1) of the Income Tax Act lays down the principle that everyone is subject to taxation, however a proviso to this section restricts the imposition of income tax by the notions of domicile and ordinary residence. Broadly, a person is considered to be ordinarily resident in Malta if he resides in Malta regularly. A person who is physically present in Malta for 183 days (not necessarily consecutive) in a tax year is generally considered to be resident in that particular year, irrespective of such person's nationality.

Unlike residence, the concept of domicile is not defined in the statute, and in practice Malta has adopted the English definition of domicile. Individuals are normally regarded as domiciled in the country that they regard as a permanent home.

An individual who is both ordinarily resident and domiciled in Malta is subject to tax on a world wide basis, that is on income and capital gains arising in Malta or abroad whether received in Malta or not. An individual, who is either ordinarily resident in Malta or domiciled in Malta, but not both, is subject to tax on income arising in Malta, on income arising abroad but received in Malta, and on capital gains arising in Malta. Individuals who are neither resident nor domiciled in Malta are subject to tax on income and capital gains arising in Malta only.

Permanent residents are persons who satisfy certain high net worth requirements, are not citizens of Malta and satisfy further criteria. They are taxed at a flat rate of 15%. The minimum tax liability for these residents, after double tax relief, is Lm 1, 800 for each year of assessment.

Temporary residents are persons who reside in Malta for some temporary purpose only and not with the intention of establishing residence in Malta. Temporary residents must not have resided in Malta at one or more times for a period equal to six months.

Temporary residents are not liable to tax on any income arising outside Malta. Temporary residents and individuals who are not ordinarily residents in Malta but have earned income from Malta are taxed at the normal rates applicable to individuals who are ordinarily residents and domiciled in Malta (refer to Tables in 10.7.3). Foreigners holding a work permit in Malta are subject to tax on income arising in Malta and on income

Non-residents are taxed at the following rates on all income arising in Malta:

An individual born in Malta who, after emigrating, returns as a resident of Malta after 1 January 1988 is subject to tax at normal rates. However, the individual may opt to be taxed at the rate applicable to a permanent resident if certain conditions are met, including a specified period of residence outside Malta, specified income remitted to Malta, and other conditions applicable to permanent residents. If taxed as a permanent resident, a returned migrant is taxed on all his or her income, except employment income and income from a trade, business, profession or vocation, with a minimum tax liability amount of Lm1, 000 after any applicable double tax relief.

The income tax bands for individuals and married couples opting for joint income tax computation have been revised as follows in the 2007 Budget, and take effect for tax year 2009:

Rates for married couples opting for a joint tax computation:

Present Revised

Chargeable Chargeable

Income Rate Income Rate

Lm % Lm %

0 - 4, 500 0 0 - 4, 894 0

4, 501 - 8, 000 15 4, 895 - 8, 800 15

8, 001 - 10, 000 25 8, 801 - 12, 020 25

over 10, 000 35 over 12, 020 35

Rates for single persons or married persons opting for a separate computation:

Present Revised

Chargeable Chargeable

Income Rate Income Rate

Lm % Lm %

0 - 3, 250 0 0 - 3, 498 0

3, 251 - 5, 500 15 3, 499 - 6, 010 15

5, 501 - 6, 750 25 6, 011 - 8, 156 25

over 6, 750 35 over 8, 156 35

All employed and self-employed persons are required to pay Social Security Contributions. The amount of Social Security Contribution (SSC) to be remitted to the Inland Revenue Department depends on the employees salary. The SSC amounts to 10% of the gross salary with a minimum of Lm6.11 per week and a maximum of Lm13.55 per weekLA, to be paid by both the employee and the employer. The employer must remit the amount due to the Commissioner of Inland Revenue by the end of the month following the month in which the wages or salaries are paid.

Investment income includes: bank interest interest, discounts or premiums payable by the Government of Malta interest, discounts or premiums payable by a corporation or authority established by law interest, discounts or premiums payable in respect of a public issue in Malta by a company, or other legal entity whether resident in Malta or otherwise capital gains arising on the disposal of shares or units in a collective investment scheme licensed under the Investment Services Act, where the collective investment scheme redeems, liquidates or cancels such shares or units capital gains arising on the surrender or maturity of units and such like instruments relating to linked long term business of insurance. Resident individuals may opt to pay a 15% final withholding tax on investment income.

Malta operates a full-imputation system and accordingly tax paid by a company is imputed as a credit against the tax due by the shareholders upon a dividend distribution.

Employees, pensioners and students engaged in part-time work (and the spouses if employees, pensioners and students) earning up to Lm3, 000 annually, may benefit from a special rate of tax. All income (up to Lm3, 000) derived from part time employment is taxed at a flat rate of 15% withheld at source by the employer. Part time self employed persons may also benefit from this reduced rate of tax. Recipients need not declare such income in their personal income tax return. Any part-time income earned in excess of Lm3, 000 has to be declared in the income tax return and charged at the normal rates of tax.

Fees received as well as remuneration to persons sitting on boards of directors of a body corporate are also subject to tax on such income at the normal rates of tax.

Any capital gains derived by an individual are added to all other income earned during the basis year and taxed at normal rates.

There are no such taxes in Malta.

Persons who transfer immovable property situated in Malta are liable to pay income tax based upon the sales value. This tax is calculated at the rate of 12% of the market value of the immovable property (exemption from sales tax are envisaged). A Duty on Documents and Transfers tax amounting to 5% on the market value of the property is levied on the purchaser when buying real estate in Malta. Such tax is withheld by the notary who publishes the deed of transfer and paid to the Commissioner of Inland Revenue within a stipulated time period. Residents buying real estate as their first residence will pay duty at the rate of 3.5% on the first Lm30, 000. Such tax is levied on the market value of the property and not on the actual transfer consideration.

Duty on Documents and Transfers tax is due by heirs upon inheritance of real estate and shares. Duty will be due at the rate of 5% in the case of real estate and 2% in the case of shares. There are no gift taxes in Malta.

Individuals who are residents of Malta are eligible to benefit from Malta's double taxation treaty network. Individuals resident in Malta may also benefit from other methods of double taxation relief, including Commonwealth relief and unilateral relief.

Malta has excellent connections - by air and sea and through ICT - to EU markets. This gives business, goods and personnel fast, efficient access the EU trading block.

When it comes to access coupled with an ideal location, Malta is one of the most easily-reached areas of the southern Euro-Med region. Malta is well connected by air and sea, and its information and communications infrastructure is among the most enabled in the European Union, giving the Islands excellent virtual communications. The accessibility of the Islands makes them ideal as a centre for doing business in the wider EMEA region, especially the provision of trade and services to neighbouring, growing markets.

At just two to three hours flying time from most major European cities, the Islands have direct, scheduled flights throughout Europe and are well connected for onward, long-haul destinations. On account of the growth in its tourism source markets, Malta now has a growing number of air links to Europes second cities and the newer EU accession states.

Maltas leading trading partners for exports are in fact the other 26 EU countries, which account for over 50% of the countrys total exports. Exports to the US make up 12% of total exports and those to Asia amount to 23% of the total.

The time zone is the same as continental Europe (CET), which facilitates ease of communication with the EU.

Lying mid-way between two continents, Malta is ideally placed to offer firms a strategic base from which to explore and serve North African as well as Middle Eastern markets. The Islands cultural and historic trading links with these regions help facilitate business contacts.

• By air, 2-3 hours from main European hubs
• ICT connections excellent: backbone of fibre optic submarine cables, satellite earth stations
• Major transshipment centre: Malta Freeport a main regional hub
• EU traditionally Maltas major trading partner
• Cultural & historic connections to N. Africa, Middle East Malta ideal strategic, English-speaking base in Mediterranean
• CET time zone, one hour ahead of GMT.

The Maltese Archipelago lies at the near centre of the Mediterranean Sea, some 93km south of Sicily and 288km from the nearest point on the North African coast. The archipelago consists of three islands: Malta, the largest island; Gozo, which lies to the North West half an hour away by ferry; and Comino, midway between the two islands and uninhabited except for a hotel.

Malta has a total population of around 400, 000 inhabitants. The total area of Malta and its sister Island Gozo is 316km; Malta occupies 246km.

The topography of the islands is low-lying to the South East and hilly toward the North West. At various points, the shoreline is deeply indented, providing excellent, natural harbours. Although it has some sandy beaches, the coast of Malta is predominantly rocky and includes some spectacular hills. The Island have hardly any natural resources although coralline limestone, which is used for construction purposes, is found in great quantity and quarries dot the island. There has been exploratory, offshore drilling for oil and gas but no viable sources have been found.

Malta is the centre of the archipelagos social and economic life. The capital city Valletta, which lies on a promontory between the two main harbours, is home to government and the public administration. The city is a thriving retail, commercial and tourism centre and offers a wide, cultural programme.

Of the other conurbations, Sliema, St Julians and their satellite towns provide a hub for leisure, retail, services and tourism activity, while Hamrun, Birkirakara, Paola and Mosta are inland, local retail centres with neighbouring light industrial areas. The Island of Gozo is quieter and more rural and thrives mainly on tourism and related industries such as crafts and catering, as well as agriculture and fisheries.

The country is one hour ahead of Greenwich mean-time and operates a summer time system with clocks advanced one hour between March and October.

Maltas international airport handles up to 2.5 million passengers every year. The Island is connected to most major cities in Europe, North Africa and the Middle East with regular, scheduled routes served by the national carrier. Most European cities can be reached by direct flights from Malta within a three-hour flight and there are excellent long-haul connections. The Islands are increasingly served by low-cost carriers, primarily to second cities and the main, source markets for incoming tourists.

There are two main harbours; Valletta, and Marsaxlokk. The latter is one of the largest free ports and transshipment hubs in the Mediterranean Sea, and caters for intercontinental cargo needing distribution throughout the Mediterranean basin.

There are regular, passenger and cargo ferries to mainland Italy, France and the North African coast. Domestic travel to Gozo is by passenger and car ferry from the north of the island of Malta, or by a new air service by seaplane from Grand Harbour, Valletta.

Daily commuting times within Malta are negligible compared to most similar urban-style areas on continental Europe. This gives Malta even greater appeal to skilled professionals seeking to relocate.

Malta is a bilingual nation with English as an official language. This is of supreme importance to the international investment community seeking a viable overseas jurisdiction in which to locate their operations.

By virtue of the Islands historic ties with Britain, Malta is a unique, English-speaking nation in the Mediterranean and as such it has gained an edge in southern Europe as an attractive base for international business. Maltas language capabilities have been fostered also by its tradition as an open, trading nation at the strategic heart of the Mediterranean.

English is not only the lingua franca of business, it is also spoken at all levels of society. Nearly all Maltese are competently bilingual. Official publications, including laws, are issued in both English and Maltese. Legal documents may be drawn up in Maltese or in English. Most commercial and banking documents are drawn up in English, and most business correspondence, official or otherwise, is in English.

A recent Ernst & Young Survey of some 58 foreign-owned companies operating in Malta found that 90 per cent of respondents valued the level of English of local human resources as a main reason for Maltas attractiveness as a base.

Maltese is a Semitic language in structure, however, it contains, and increasingly so, many European words mostly drawn from Italian and English. The language has its own distinct characteristics and literature. It is written in Latin script. Maltese and English are taught at primary school level. Subjects at secondary school level include at least one other language, with Italian, French and German being the most commonly taught.

Business can increasingly source other key world languages on the Islands, and skilled professionals with foreign language skills are easily attracted to working and living in Malta. The tourism, English language travel and conference & incentive travel sectors have found it easy to source native speakers of various other languages to complement their local human resources.

• English an official language spoken to native level by vast majority of Maltese
• Language & culture of business English
• Most Maltese speak Italian, and learn French and German
• Other languages easily sourced Maltas cosmopolitan, Mediterranean lifestyle attracts foreign nationals
• All official & legal documentation in English & Maltese

Malta was inhabited even in prehistoric times as is evident from its numerous megalithic temples which rank among the oldest free-standing structures in the world. These exceptional prehistoric sites, together with the baroque city of Valletta, built by the Knights of St John, and the old medieval capital, Mdina, are designated UNESCO World Heritage.

The first recorded people to have settled the Islands were the Phoenicians. For the next two millennia, the Islands were colonised by a succession of peoples. Throughout history, Maltas fortunes in peace and war were intrinsically linked to its strategic location at the conflux of shipping routes. Its deep natural harbours made the Islands ideal for trade and defensive purposes.

The Phoenicians were followed by the Carthaginians, but after the destruction of Carthage, Malta was absorbed into the Roman Empire. St Paul the Apostle was shipwrecked on the Islands in A.D. 60, converting the country to Christianity under the Roman governor Publius. In the later years of the Roman Empire, Malta formed part of the Byzantine bloc.

The Arab expansion reached Malta in A.D. 870 and the country remained under Arab domination until 1090, when Count Roger of Normandy added Malta to his conquest of Sicily. Malta shared in the fortunes of Sicily until 1530, when, in an attempt to strengthen the southern frontiers of his domains against Islam, Charles V of Spain offered Malta to the Knights of St John of Jerusalem, an international order of chivalry founded in the early years of the Crusades. For the next three centuries, the destinies of Malta and the Knights of St John were linked.

The Knights of St John were driven out of Malta by Napoleon in 1798, and the French ruled for two years. Malta became a British Crown Colony in the early nineteenth century and remained so until September 21, 1964, when it became an independent sovereign state. In 1974, Malta was declared a republic. Malta is a member of the Commonwealth and of the United Nations. Soon after independence Malta was admitted to the Council of Europe.

In 1990, Malta applied for European Union membership. Accession negotiations wereconcluded in December 2002 and the accession treaty signed in April 2003. Malta became a member state of the European Union on 1st May, 2004.

Availability of Skilled Personnel

Malta has a highly-skilled, English-speaking workforce which gives it a leading edge in the Mediterranean as a regional centre for financial services and inward investment.

When it comes to attracting skilled and specialist personnel, Malta offers a unique combination of opportunity and an excellent Mediterranean lifestyle. The exceptional quality, flexibility and work ethic of the Maltese have attracted numerous international companies to Malta not only to provide support for overseas bases, but also as fully-fledged companies with their own operations.

A key attraction of the Maltese labour force is its language skills and its high level of education. Personnel in Malta demonstrate low-mobility which ensures firms gain from continuity and low levels of staff turnover.

Malta boasts the oldest university in the Commonwealth outside the UK and has a tradition of academic excellence and research. Some 60 per cent of students (18-24 year olds) continue in education to tertiary level42 in some 85 or more institutes.

From historic and cultural ties with Britain, the Islands are English-speaking; Maltese and English are joint official languages. Business is conducted in English and a majority of the population also speaks Italian. Most world languages are easily sourced.

The nations cosmopolitan feel is a result of centuries of openness to foreign trade and its many years as a tourist destination. History has bequeathed Malta the distinct advantage of a people intuitively equipped to exploit the Islands strategic location, which straddles cultures and continents. Today, the Maltese leverage on their traditional advantages through ICT.

Malta is becoming a knowledge economy satellite in the Mediterranean on account of its IT-literate workforce. There has been significant public investment in ICT education and training over the past decade. Malta has a strong IT workforce boosted by IT centres of excellence including regional training centres for CISCO, Microsoft and Oracle. Statistics from Malta Enterprise, the agency assisting companies in locating to Malta, show that ICT and related businesses will take the lions share of job creation in the years to 2009.

Interestingly, Malta is attracting overseas personnel to train in Malta as the Islands offer a strong competitive base, especially in the provision of IT training services. For example, it has been known for companies to send people from Hamburg to train in Malta rather than to Frankfurt on account of the Islands cost effectiveness.

Maltas cost-effective, skilled, and English-speaking labour force has contributed to its growing reputation as an ideal near-sourcing centre. Accommodation and labour costs are around half to a one-third lower than those of those of the original EU of 12 countries.However, for personnel, the Islands lifestyle and lower cost of living are seen as important factors mitigating reduced earnings. Purchasing power is around 73 per cent of the EU average; more or less at par with that of Portugal.

Traditionally, Malta has always had a large pool of professional support services covering accountancy, law, and financial and management consultancy. Many firms are affiliated to international organisations and therefore have a worldwide network of resources to draw upon if required. Most legal firms have specific expertise in sectors such as financial services, commercial law, corporate tax, maritime law, property and insurance.

Labour relations in Malta are stable and backed by equitable labour laws, a social security system, and occupational health and safety measures in line with EU directives.

• Highly-educated, skilled people
• 60% of students continue to tertiary level
• Flexible & motivated workforce
• English-speaking nation: English an official language
• Excellent work ethic
• Low wage costs: around 40-50% of EU of 12 states
• Stable employee-employer relations
• Relaxed living, professional outlook
• Education & training focused on ICT & services
• An open, cosmopolitan culture

The population today numbers just over 400, 000, and Malta, given its small land mass, is one of the most densely-populated countries in the world. The population has swelled in recent years boosted also by returned Maltese migrants and an increase in foreign nationals residing in Malta.

The Islands are cosmopolitan in outlook by virtue of their long history of exposure to foreign cultures, as well some four decades of tourism. This background has left its mark on the Islands identity giving modern Malta its immediately recognisable characteristics its openness, rich heritage and trading culture. The nation has strong European cultural, historical and geo-political ties, but it architecture and language also reflect its ancient links east and south in the Mediterranean basin.

About 90% of Maltese are Roman Catholics. There are several other religious communities, both Christian and non-Christian, many of whom have their own places of worship.

The Islands have a long history of excellence in the professions and today Malta has a large pool of professional support services to business.

A large number of law firms operate on the Islands, and all the leading, international firms have a presence in Malta through associate links with local firms of long-standing repute. Many firms specialise in key areas of law which are relevant to the Islands economy, location and infrastructure.

Similarly, accountancy and related services such as business consultancy are well represented. Leading International firms are all present on the Islands. The Accountancy profession is regulated by the Accountancy Board which oversees all professional conduct and standards and other aspects of practices and individuals operating in the profession. It has close, consultative links with the Ministry of Finance.

While Malta cannot claim the highest productivity nor can it claim the lowest cost, analysis shows that balancing various costs, such as productivity with working hours, Malta ranks very favourably as a value-for-money location in which to do business. In particular, Maltas value added/hourly labour cost ranks Malta ahead of the UK, Ireland, France and Italy and ahead of all of the established EU economies. It has low minimum wage and compensation costs relative to EU-15 and provides the best value for money compared to other EU countries when productivity is compared to labour costs incurred.

Salary costs in Malta are 40 50% of those in Ireland, the UK, France, Belgium, the Netherlands and Luxembourg. When social security costs and other employment taxes are factored in, Maltas total labour costs are also competitive when compared to the newer EU member states and significantly lower than other established members of the European Union.

The total number of people employed in Malta is just over 152, 000, while the unemployment rate is five per cent of the labour supply. More than two-thirds of the labour force is male. Female participation in the labour force is very low in comparison to other EU states, standing at just under 32 per cent, however, it is rising as a result of family-friendly policies and training initiatives.

About 65% of Maltas workforce is unionised. Foreign workers are treated the same as Maltese with regard to labour legislation and collective agreements.

School attendance is compulsory up to the age of 16. Education is provided by a number of government and private schools. Over 60 percent of secondary school leavers continue with their education to tertiary level at the University of Malta and in a range of technical and vocational institutes. At present, over 10, 000 students attend the University of Malta, including some 750 students from 80 different countries.

State schools are free while a number of schemes provide financial assistance for those attending the university and other tertiary institutes. A large number of Maltese university graduates follow post-graduate courses abroad.

Malta is major centre of the teaching of English, with over 40 registered schools operating in the sector. The Islands advantages of cost, location and English, also make Malta an ideal base for companies to site regional training centres targeting students from North Africa, Europe and the Middle East.

Maltas long-standing educational system includes free education up to tertiary level and provides for a number of vocational and training schemes. There is close partnership between industry, the university and training colleges on Malta, which helps to ensure that the workforce is equipped with the required skills. The Islands are home also to some 85 local and international commercial schools and tuition centres covering areas such as fire and safety training, ICT, engineering, insurance, commercial activities, aviation, language, and the arts.

On completion of the compulsory school cycle, students are encouraged to choose from about 50 different vocational and academic courses in the post-secondary sector.These courses range from academic (as preparation for entry to University) to the more vocational courses, in such areas as tourism, secretarial, health care, and nautical and agricultural studies. Students in most of the post-secondary sector, besides being given free tuition, are also given financial stipends during their course of study.

The University of Malta has a long tradition of scholarship and research in most disciplines; it is the oldest university in the Commonwealth outside the UK. There are currently (2007-8) some 10, 000 students including over 750 foreign/exchange students from nearly 80 different countries, following full-time or part-time degree and diploma courses, many of them run on the modular or credit system. Over 2, 500 students graduate in various disciplines annually. The degree courses at the University are designed to produce highly qualified professionals, with experience of research, who will play key roles in industry, commerce and public affairs in general. Around 25 per cent of students are enrolled on courses with a direct bearing on careers in the financial services sector (law, management, economics, accountancy, IT).

The University awards degrees in Architecture and Civil Engineering, Arts, Law, Management, Accountancy, Economics, Dentistry, Education, Engineering, Medicine and Surgery, Science, and Theology. Attached to the University are a number of other institutes, including the IMO - International Maritime Law Institute and the Institute for Diplomatic Studies.

The ETC is actively involved in the development of employment policy for Malta and in the implementation of active labour market policies. The Corporation is also the key interface with European Union initiatives and funds aimed at labour mobility, employment and training, in particular projects for the European Social Fund (ESF).

The Employment and Training Corporation (www.etc.gov.mt) is responsible for the administration of many training incentives aimed at encouraging employers to train, retrain, and actively engage various categories of personnel within the labour force. Employers may benefit from financial assistance to:

• provide training for new employees as well as those that aim to update the skills of those currently employed as per labour market needs;
• promote the re-training of employees whose skills no longer fit the requirements of the enterprise they are currently employed in; and
• promote the ideology of Life Long Learning (LLL) within the workplace.

The ETC also administer various training incentives to enterprises. These may include incentives to companies in manufacturing and related service, companies involved in research and development, companies working in biotechnology and companies carrying out activities related to the repair, improvement or maintenance of aircrafts. Depending upon whether a company is classified as a large or a small or medium enterprise, training assistance may vary from 35% to 80% of costs involved.

The ETC may provide also various incentives to local enterprises aimed at making the employment of certain sectors of the unemployed for example, those over 40 years more attractive. Such incentives usually involve the part subsidisation of salaries for a predetermined period.

Malta Enterprise, a government agency supporting enterprise, manages applications for tax credits for companies to build professional capabilities in certain fields. These tax credits encourage specialisation in the fields of science and technology and facilitate the employment of highly qualified and specialised personnel.

This incentive applies only to courses and qualifications approved by Malta Enterprise. Approved qualifications generally reflect expertise in demand by local industry, including specialised vendor-specific qualifications in ICT. The focus is currently in the application of science, technology and engineering as well as information and communication technologies (ICT).

All incentives, training and otherwise, as well as EU funding opportunities are communicated and managed by Malta Enterprise under the Malta Enterprise Act (2003) and its amendments (2007).

See: www.maltaentreprise.com

The most common employment contracts are full-time contracts of indefinite duration. Fixed term employment contracts are however becoming increasingly common, as is the trend to hire temporary staff from specialised agencies.

A national minimum wage is established by law. The national minimum wage is revised every year and stands at Lm61.13 a week. All employees are entitled to a half yearly bonus of Lm58- each, and Lm2 weekly allowance. Overtime rates are paid at 150% of basic pay while on Sundays and Public Holidays overtime rates are 200% of basic pay.

Other conditions of employment include:

(Source: http://www.education.gov.mt/ministry/secretariat/conditions_of_work.htm)

The Social Security Act provides for a number of benefits, including retirement and disability pensions, sickness, injury and unemployment benefits, medical assistance and other social allowances and benefits. Entitlement to certain assistance arises regardless of contributions while other benefits can be claimed on the basis of the contributions paid, or deemed paid, by the beneficiary. Maltese law also provides for free hospital treatment for all Maltese citizens.

All persons working in Malta, whether foreign or Maltese nationals, must contribute to the social security system. However, foreigners may be exempt if they prove to the Maltese social services authorities that they continue to pay social security contributions in their home country.

For further information, reference should be made to the Ministry for Family and Social Solidarity website. http://www.msp.gov.mt/

Labour relations

Employment relations are governed by the Employment & Industrial Relations Act (Act 22 of 2002). Some 230 collective agreements regulate the conditions of employment of around 25, 000 employees in the Maltese private sector - around a third of the total gainful employment in this sector. Most of these agreements are enterprise specific.

Employer/employee relations

The Employment and Industrial Relations Act deals with conditions of employment, termination of contracts of service and the organisation of workers and employers. A basic feature of this law is that it prohibits discrimination, whether on sexual, social or other considerations, in connection with recruitment, pay, or dismissal.

The Occupational Health and Safety Authority Act places obligations on employers to grant protection against risks and accidents at work and its provisions are deemed to form part of the conditions of services of all employees. Other laws may apply to certain categories of workers, such as port workers and seamen. The Employment and Training Services Act regulates training schemes and apprenticeship.

Workers are not required to join a trade union, and the closed shop is not practiced in Malta. There are, however, few industries without union representation, and current union membership represents about a third of the total work force. Unions enjoy a wide degree of legal immunity for industrial action carried out in contemplation or furtherance of a trade dispute.

When the majority of a company's workers join a union, the company is considered to be unionised, and the union must be recognised by management as a bargaining partner and as representative of the workers. Inter-union rivalry is not an important factor in pay bargaining or otherwise, and few disputes arise over demarcation.

Collective bargaining is common and agreements reached between employers and unions are binding at law. Collective agreements are normally drawn up for a period of three years. Employment in professional and managerial grades is usually regulated by individual contracts of service. Trade disputes can be referred to the Arbitration Tribunal.

Employers are organised into employers' associations, the most important being the Association of General Retailers and Traders Union (GRTU), the Employers' Association and the Union of Self-Employed. The Federation of Industries (FOI) plays an important role in bringing managements together. Malta has a Chamber of Commerce with a large, active membership.

Considerable emphasis is placed on human resource development. The Employment and Training Corporation, a government agency, provides coherent training and retraining of labour to meet the requirements of industry. This agency provides other services, including the registration and placement of employees, the maintenance of job vacancies records and the administration of the government's training grants schemes.

Maltese law does not provide for the setting up of workers councils on places of work. Consultation with workers representatives is however mandatory in the case of collective redundancies and transfers of business in establishments that employ more than 20 employees. The notion of labour participation in management has not gained ground, but the statute of certain public corporations requires the election a worker-director.

There is no legislative provision regarding profit sharing.

Citizens of the EU have a right to enter, remain and reside in Malta, seek and take up employment or self employment therein. Subject to limitations justified on grounds of public policy, public security or public health, an EU citizen has the right to enter and exit simply upon furnishing a valid identification document and to move freely within Malta for a period of three months, commencing on the date of entry, or such other period as may be prescribed. Where such citizen intends to reside for a longer period, he must apply for a residence permit.

EU citizens may reside in Malta but where such residence is to exceed 3 months extendable to 6 months, or when, during such six month period, such citizen takes up employment, he must apply for a permit. Residence permits are valid for 5 years. Where an EU citizen wishes to take up employment, no such employment can be undertaken unless, in addition to a residence permit, a license has been issued.

Third country nationals are not permitted to enter Malta for a visit the duration of which shall exceed 3 months unless they satisfy all of the following conditions:

(a) they hold a valid passport; and

(b) they hold a valid visa, as required by the Common Consular Instructions; and

(c) they submit, before entry into Malta, documents substantiating the purpose and the conditions of the planned visit, as applicable; and

(d) they have sufficient means of support, both for the period of the planned visit and to return to the country of origin or to travel in transit to a third state into which his admission is guaranteed, or is in a position to acquire such means legally; and

(e) they have not been reported as a person to be refused entry; and

(f) they are not considered to be a threat to public policy or national security.

Third country nationals require work permits to work in Malta.

Malta offers exceptionally good value in terms of its commercial real estate in comparison to similar urban areas in the EU. It also offers enviable locations with sea views and marinas as well as prestigious landmark office complexes within easy commuting of residential areas. On account of the Islands size, all office space is within around 20 minutes of Malta International Airport. Overall, rentals are around two-thirds to half of those charged for comparable commercial spaces on continental Europe.

The Islands have seen a huge surge in high quality office space in recent years as a result of the growth of its services sector. Private consortia are developing new commercial spaces and increasingly investing in so-called lifestyle developments which offer a combination of commercial, retail, leisure and private residential spaces. These are generally located in key, urban areas and afford sea views.

At the top end of the market, commercial space in prestige developments comes in at around 300 - 420 per sq.m. a year. Mid-market, smart office blocks in the central Malta areas of Sliema, Gzira and TaXbiex are around 58 - 116 per sq.m. a year.

Industrial rentals are exceptionally good value for money. Malta Enterprise, the government agency assisting incoming firms, can provide industrial property to prospective investors at highly competitive rates. Maltas average industrial property rate of 10/m2 compares favourably relative to the secondary rental markets in Italy, Austria, France, Luxembourg, Ireland and the UK. Malta has among the lowest of all prime industrial property in EU markets. Malta has 10 industrial zones offering industrial property at these competitive rates.

Smaller, government-backed parks include Mosta Technopark in the centre of the island. Designed with technology firms in mind, it houses technology investors from Malta, Italy, France, Germany and the UK. In addition, Malta Enterprise operates a Business Incubation Centre (KBIC)for start-ups which offers a portfolio of subsidized services to its clients.

For latest data on office rental costs per annum for various types of commercial space, download the Malta Enterprise document on Operational Costs which includes also business cost indicators on communications, labour and utilities.

In the past few years, Malta has become one of the most sought-after locations in Europe for foreign nationals seeking to purchase homes as an investment or for relocation purposes. With its excellent climate, English-speaking culture and ease of access to major European cities, Malta is firmly on the map for local and overseas real estate investors.

Maltas property prices, while rising, are still competitive in comparison to those in urban areas in most of the rest of Europe. Housing prices and rentals are around half to two-thirds of the price of similar property categories on continental Europe and even more competitive in relation to the UK market.

Malta has always had a thriving real estate market; now, purpose-built developments are coming on stream which can be deemed lifestyle complexes and ideal for investment. Developments in recent years include marina and coastal complexes at the top-end of the market.

Similar projects are under way inland in established urban areas. Typically, these offer a mix of residential, retail and leisure spaces. There is a wide range of mid- to lower end apartments across the Islands as well as individual, unique properties such as farmhouses, palazzos and villas with swimming pools. Gozos property tends to appeal to the holiday rental or second home market and is dominated by rustic-style farmhouses and modern apartments.

Most Maltese estate agents have websites with property listing and the main Sunday newspapers have extensive property advertisement sections.

Rents in Malta are very competitive compared to other EU Member States. Rental contracts from private estate agents are usually five years with a maximum of 10 years. Agents service charge is normally equal to one months rent plus VAT.

The purchase of real estate in Malta by non-residents is regulated by the Immovable Property (Acquisition by Non-Residents) Act. This law restricts that direct ownership of property by non-resident companies and individuals.

For up-to-date, rental costs, see latest data from Malta Enterprise.

Property purchases by such companies will be allowed only if the property is:

• required for the companys own use or as residence for company personnel;
• to be used for an approved industrial or tourism project or other project that contributes to Maltas economic development; and
• situated in an approved development zone.

Non-residents wishing to acquire immovable property in Malta require a special permit and may do so only under certain conditions. The resale of immovable property by a non-resident is allowed as long as this is to a Maltese resident. Repatriation of full resale price, including profits, is allowed without complications.

Mortgages are available for property purchase by non-residents or non-Maltese citizens residing in the islands. Renting out of property purchase is allowed in special circumstances. More than one property can be purchased in Malta and Gozo by a company or trust if located in particular upmarket, designated areas.

Citizens of all European Union member states, who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining a permit. If they have not resided continuously in Malta for a minimum period of five years, they may only purchase their primary residence or any immovable property required for their business activities or supply of services without the necessity of obtaining a permit. A permit is required to acquire immovable property for secondary residence purposes if the person concerned has not resided continuously in Malta for a minimum period of five years.

To summarise, non-Maltese nationals purchasing property in Malta are generally able to:

• Re-sell the property;
• Repatriate capital proceeds of any sale of the property;
• Acquire a mortgage, in the case of property purchased by non-residents, or non-Maltese citizens residing in the islands, in some cases;
• Rent out a property purchased, in some cases;
• Benefit from a fast-track process for the granting of AIP Permit; and
• Purchase more than one property in certain areas on the Islands.

The procedure for buying property in Malta is simple. The purchasers appoint a Notary Public to enter into a promise of sale agreement, when it is usual that a sum equivalent to 10% of the value is paid as a deposit of the purchase price in addition to 1% of the stamp duty. This agreement binds the purchaser to buy and the vendor to sell at the price and terms agreed upon. The agreement is usually valid for three months but could be longer. During this term the Notary will undertake searches to prove clean title and apply for any relative permits. The balance of the price, stamp duty and legal expenses are paid on the signing of the final contract when vacant possession is given.

Rentals for short or long-term lets are governed by contractual lease agreements. Letting agents and property brokers generally charge fees of one months rental.

Annex1: Financial Services & Business Legislation

1. Financial Services Legislation
2. Banking Act
3. Financial Institutions Act
4. Insurance Business Act
5. Insurance Intermediaries Act
6. Investment Services Act
7. Special Funds (Regulation) Act
8. Trusts and Trustees Act
9. Companies Act
10. Financial Markets Act
11. Set-off and Netting on Insolvency Act
12. Securitisation Act
13. Prevention of Financial Markets Abuse Act
14. Professional Secrecy Act
15. Prevention of Money Laundering Act

1. Competition Law
2. Intellectual Property

Countrys full name: Republic of Malta (Repubblika ta Malta).

Capital city: Valletta

Population: 400, 000 (2006).

Official language: Both Maltese and English are official languages.

Currency: Maltese Lira of 100 cents. Malta joins the Eurozone 1st Jan., 2008

Religion: Roman Catholicism is the religion of 98% of the population. Other denominations have places of worship.

Location: 93 km south of Sicily and 288 km east of Tunisia.

International dialing code: +356

Internet domain: .mt

Area: Malta is composed of three major islands (and 3 minor):

Malta Island 246 sq km (94.9 square miles)

Gozo 67 sq km (25.9 square miles)

Comino 3 sq km (1.1 square miles)

There are also some minor uninhabited islands.

Terrain: Mostly low, rocky, with dissected plains and many coastal cliffs.

Climate: Mediterranean with hot dry summers and mild winters. Annual rainfall is 23 inches and falls mostly between October and March. Average temperature

Dec - Feb 13.2c

June - Aug 25.8c

Average annual rainfall (1990 - 2002): 591.3mm

Administrative divisions: The country is administered directly from the capital Valletta. However, there are 67 local councils.

Main Economic Indicators

Source: NSO, Malta in Figures, 2007. See footnotes for other references.

Banking

Maltas banking system is well regulated by the autonomous Central Bank of Malta which follows a policy of a stabile currency, inflation control and the promotion of a sound financial system.

Business Hours

Offices are usually open 08.00 - 12.30 and 13.30 - 17.00 Monday to Friday. Most offices are closed on Saturdays and Sundays. Shops are open 09.00 - 13.30 and 16.30 - 19.00 Monday to Saturday. Shops are generally not open on Sundays and public holidays though certain businesses are open in the main tourist centres. There are open-air markets one day a week in most towns and villages as well as a daily street market in Valletta.

Business Etiquette

Similar etiquette to that of the UK prevails. Business cards should always be presented and appointments kept with punctuality. Business people should be formally addressed, especially those in senior positions, and first names should be used only after a good relationship has been established.

Public Holidays

Central Bank of Malta

P.O. Box 378, Pjazza Kastilja, Valletta VLT 1060, Malta

Tel: 00356 25 50 0000. Fax: 00356 2550 2500. Email: info@centralbankmalta.com

Website: www.centralbankmalta.com

The Malta Financial Services Authority (MFSA)

Notabile Road, Attard BKR 3000, Malta

Tel: 00356 21 441 155. Fax: 00356 21 441 188

Website:www.mfsa.com.mt

Malta Stock Exchange (Borza Ta Malta)

Garrison Chapel, Castille Place, Valletta CMR01, Malta

Tel: 00356 2124 4051. Fax: 00356 2569 6316.

Email: borza@borzamalta.com.mt

Website:www.borzamalta.com.mt

Registry of Companies, Malta Financial Services Authority

Notabile Road, Attard BKR14, Malta Tel: 00356 21 441 155. Fax: 00356 21 441 195. Email: registry@mfsa.com.mt

Website: http://registry.mfsa.com.mt

Malta Enterprise

Enterprise Centre, Industrial Estate, San Gwann SGN 09, Malta
Tel: 00356 2542 0000. Fax: 00356 2542 3401.

Email: info@maltaenterprise.com

Website:www.maltaenterprise.com

Malta Chamber of Commerce

Exchange Buildings, Republic Street, Valletta VLT 05, Malta

Tel: 00356 2123 3873. Fax: 00356 2124 5223.

Email: admin@chamber.org.mt

Website:www.chamber.org.mt

Government of Malta

The following government website contains useful general information on a variety of aspects of Malta including useful material for businesses.

Website:www.gov.mt

Malta Federation of Industry

Represents industry in Malta and can provide advice to potential investors in Malta.

Casa Leone, Robert Samut Square, Floriana VLT 15, Malta

Tel: 00356 2123 4428. Fax: 00356 2124 0702. Email: info@foi.org.mt

Website:www.foi.org.mt