Subsidiary vs. Branch Office in Malta

In order to have a presence in Malta, foreign enterprises may set up branch offices or subsidiaries in this country. Our Maltese lawyers can offer detailed information on the characteristics of branches and subsidiaries and can manage the procedures involved.

Setting up a subsidiary in Malta in 2026

Both subsidiaries and branches are recognized as business vehicles by the Maltese Commercial Law; however, there are a few substantial differences between them. A Maltese subsidiary can have a single shareholder (e.g. the foreign parent company) and a minimum share capital of 1,165 euros. If the company’s share capital exceeds the minimum requirements, only 20% of the capital must be deposited. The company must also appoint a director and secretary. The subsidiary must also have a registered office in Malta. Our law firm in Malta can draft the Memorandum and Articles of Association of the company. Compared to the subsidiary, there is no minimum share capital requirement for opening a branch office in Malta.

Subsidiaries in Malta can be established with 100% foreign-owned and complete independence. Moreover, such structures can also have other operations besides the main ones. One should note that the Memorandum of Association and the Articles of Association are necessary for opening a subsidiary in Malta. 

Registering a branch office in Malta in 2026

Both subsidiaries and branch offices must be registered with the Malta Business Registry (MBR). Considering that the main difference between branches and subsidiaries is the relation between the parent company and the Maltese company, the following documents are required for the registration of a branch office:

•  a copy of the parent company’s certificate of registration issued by the Trade Register in its home country,
•  a copy of the parent company’s Memorandum and Articles of Association,
•  a copy of the foreign company’s certificate of good standing;
•  the particulars of the branch and of the persons resident in Malta authorised to represent it;
•  the document through which the branch representative is appointed by the parent company.

The Maltese branch office will also be required to appoint a representative and a secretary. The differences between the Maltese branch and the subsidiary are presented in the infographic below:

Differences between Maltese branches and subsidiaries

The major difference between these two types of companies is:

•  the branch office is an extension of the parent company,
•  the subsidiary is an independent entity.

From a financial point of view, Maltese subsidiaries are required to register for taxation and VAT and keep their own financial records, while branch offices must also register for income tax and VAT. The parent company of a branch office is required to submit annual audited accounting records to the Malta Trade Register.

Which one is best: the Maltese subsidiary or branch?

When deciding the type of entity to register, one of the most important aspects that should be taken into consideration is what is the purpose of the company. Apart from the fact that a subsidiary has independence, while a branch office does not, a Maltese subsidiary offers more flexibility in terms of business structure.

Also, if taking into account that Malta is one of the most attractive countries in Europe because of its tax system, the subsidiary can benefit from various tax deductions in comparison with a branch office. However, the tax liability in the case of a branch will be placed on the parent company, which can also bring significant tax advantages. This is why it is best to seek advice from a Maltese law firm when having to decide between a branch office or a subsidiary in 2026.

 We invite you to watch a video about the differences and similarities between branches and subsidiaries in Malta:

Facts about subsidiaries and branch offices in Malta

Here are a few interesting facts about branches and subsidiaries in Malta:

1. while the subsidiary is required to have a minimum share capital of approximately EUR 1,165, this requirement does not apply to the branch office;
2. the branch establishment can be considered a permanent establishment under Malta’s double tax treaties; therefore, the parent company can benefit from various tax deductions and exemptions;
3. the subsidiary will be taxed on its global income, while the branch office will only be taxed on the income earned in Malta;
4. both types of business forms are required to have registered offices in Malta.

Taxation on subsidiary vs. branch in Malta

The tax rate applied to branch income for branches established in Malta mirrors that of Maltese resident companies. Additionally, aside from the tax levied on a branch’s income, no taxes are deducted when transferring profits to the head office. Whereas the following taxes are applied to the subsidiaries:

• capital gains tax rate: 35%,
• corporate income tax rate: 35%.
• withholding tax on dividends: 0% (Malta levies no withholding tax on dividends).
• value added tax (VAT) rate: 18%.

Our Maltese lawyers are adept at navigating the intricacies of company taxation in Malta, offering invaluable assistance to businesses seeking clarity and compliance in this complex landscape. With a deep understanding of local tax laws and regulations, our legal experts provide tailored guidance to help companies comprehend their tax obligations fully.

Business updates in Malta in 2026

Here are some interesting business updates in Malta in 2026:

• In 2026, subsidiaries in Malta must update beneficial ownership data within 14 days of any changes made. This might include adjustments in company management and transfer of shares, as the case may be.
• Opening a bank account in Malta will be a lot easier in 2026 because the rules have been simplified for owners of foreign companies wishing to operate in this country.
• Investments of almost EUR 100 million are estimated for a suitable and rapid implementation of AI tools & technology & blockchain systems in companies. In addition, corporations will be able to benefit from about 175% deduction on R&D operational costs in 2026.

Buying a house in Malta can be a simple process, supervised by one of our lawyers. All documents can be checked by our specialists, who can also represent you with a power of attorney at the time of signing the sale-purchase contract. On the other hand, for further information about the main advantages of opening branch offices and subsidiaries in Malta in 2026, please contact our lawyers in Malta.