Re-Domiciliation

Local legislation makes it possible to transfer a company to Malta without liquidating it. Maltese law also provides for the re-domiciliation of registered and authorised insurance entities in certain jurisdictions to re-domicile to Malta whilst maintaining their legal identity.

This is an efficient way of migrating an insurance company to these islands without having to dissolve and re-incorporate it, thus ensuring continuity of performance and minimum inconvenience to policy holders.

Why Malta?

Malta presents several advantages to companies considering re-domiciliation. First of all, Malta is the only EU jurisdiction which permits the establishment of PCC and ICC structures. The islands also boast an extensive network of double taxation agreements (no less than 65) which makes Malta a very attractive jurisdiction when it comes to the establishment of insurance and reinsurance  companies.

Thanks to a robust legislative framework and a strong level of credibility achieved by the regulator, the Malta Financial Services Authority (MFSA), the Maltese islands are considered as a particularly reputable jurisdiction, offering security and opportunity for those seeking to enter the insurance industry. Significantly, Malta’s stability as a financial services jurisdiction has been publicly praised by international entities such as the IMF and the World Economic Forum. Moeover, the MFSA is widely acknowledged as being approachable and business-minded, although prior to the granting of a license, a strict evaluation of both the Company and its key individuals takes place.

As a jurisdiction, Malta offers the right conditions to set up shop, including the availability of a very well-educated and competitive multi-lingual professional workforce, a relatively cost-competitive environment with high quality office space for rent, as well as legal and accounting fees that are generally somewhat lower than those prevailing in other financial centres.

Malta also offers a highly efficient fiscal regime with a full imputation tax system that completely eliminates the economic double taxation of company profits of up to six-sevenths of the tax borne on dividends. Company shareholders who receive dividends are entitled to a tax refund. Moreover, the passporting rights which came with Malta’s accession to the European Union have also attracted not only EU-domiciled service providers who were seeking a low-cost jurisdiction, but also a number of non-EU providers who wanted to move into the EU financial services regime. Malta’s membership of the European Union will offer your insurance company the option to passport its licence throughout the EU and EEA states by following a simple notification procedure to the MFSA.

RE-DOMICILATION PROCEDURES


Local regulations provide that the Malta Financial Services Authority may authorize insurance companies to re-domicile to Malta and operate under Maltese insurance legislation if they originate from an approved jurisdiction. Get in touch for a detailed explanation of the process which leads to the re-domiciliation of an insurance company to Malta.

Own Funds Requirements


Maltese legislation currently sets minimum capital requirements for the re-domiciliation of various classes of insurance business. These range from €2.5 million for General Insurance (captive and non-captive) – but which could go up to €3.7million in respect of Liability, Credit and Suretyship classes – to  €3.7 million for Life insurance (captive and non-captive). The requirements for the Pure Reinsurance category, on the other hand, range from €1.2 million for captive, to €3.4 million for the non-captive class. These requirements are naturally subject to company specific solvency considerations, such as level of business written and the overall claims experience of the Company, which considerations could also dictate higher capital requirements. Combined insurance and reinsurance undertakings are subject to other requirements.

The applicable legislation also specifies that insurance companies are required to constantly maintain a margin of solvency, together with adequate technical provisions which must, at all times, be covered by admissible assets. In this regard, we can guide you as to which components make up own funds, what assets are acceptable, and how best to distribute these for solvency purposes. Generally speaking, insurance entities are required to maintain a solvency cover of 150%, thereby guaranteeing a buffer beyond their minimum solvent position. This buffer is usually set at the discretion of the MFSA and is typically prescribed as one of the licence conditions.

Tax Implications on Continuation


One of the benefits of re-domiciling your company in Malta is that the continuation of a company to these islands would have no consequences for local tax purposes under the laws of Malta. Therefore the re-domiciliation of your company to Malta would not be subject to any entry tax. Once the Final Certificate of Continuation is issued by the Registrar of Companies in favour of your company, this would be characterised as being ordinarily resident and domiciled in Malta under the Malta Income Tax Act.

Passporting


Passporting or passporting rights refers to exercising the right for a company registered in the EEA (European Economic Area) with the same ‘single licence’ have the opportunity o business in any other EEA country. In Bee We are experts in advising and accompanying you in the process. A Maltese insurance undertaking which is seeking to provide services in a European Union member state or an EEA state in exercise of a European right must submit to the Authority a notice of intention. The particulars to be included in such notice are those specified in Insurance Rule 25 of 2009 – Exercise of Passport Rights by Maltese Insurance Undertakings – Services or Insurance Rule 24 of 2009 – Exercise of Passport Rights by Maltese Insurance Undertakings – Establishment reproduced below.

Exercise of Passport Rights – Services

  1. The member state or EEA State in which it intends to operate;
  2. The nature of the commitments it proposes to cover, or the risks which it proposes to undertake in the member state or EEA State concerned;
  3. Where the Maltese insurance undertaking proposes to carry on business of insurance in the member state or EEA State covering risks relating to Class 17 – Legal Expenses it is to specify the arrangement chosen from those described in Article 6 of Insurance Rule 19 of 2008 – Legal Expenses Insurance. MFSA rules may be viewed by clicking on the following: Insurance Rules – Malta
  4. Information relating to the resources available in order to provide successfully the business of insurance relating to Class 18 – Assistance.
  5. Where the Maltese insurance undertaking proposes to carry on business of insurance in the member state or EEA State covering risks relating to class 10 – Motor Vehicle Liability it is required to provide the authority with:
    1. The details of the undertaking’s membership or a certificate of application for membership of the national bureau and the national guarantee fund in the Member State or EEA State of the provision of services:
      Provided that, where a Maltese insurance undertaking provides the Authority with a certificate of application for membership, the Authority shall obtain from the undertaking a commitment that it will not engage in business concerning this class as long as it has not forwarded the final membership declaration.
    2. The name and address of the representative appointed in the Member State or EEA State of the provisions of services.

Within one month of the date on which the Authority receives the complete notice of intention, it may give a consent notice to the foreign authority of the provision of services and inform the undertaking concerned.

Exercise of Passport Rights – Establishments


A1. General information

A2. The general representative

A3. Scheme of operations

Kindly get in touch for a detailed explanation of the process and requirements for setting up an insurance/reinsurance company in Malta.

HOW WE CAN HELP YOU


Should you be interested in pursuing the option of locating your insurance undertaking in Malta, we recommend that a preliminary meeting be held with our executives in the presence of top MFSA officials, usually at the latter’s premises, in order to discuss the proposed operation. This will allow the MFSA to provide an initial indication of whether you should proceed with the formal application. At the same time, a Bee Insurance Manager will be in a position to assist in the compilation of the extensive documentation that is required for an Insurance Licence Application, and help take it through its various stages. We will also guide you on capital requirements, components of own funds, acceptable assets and how best to distribute them for solvency purposes. Upon authorisation, Bee will also be able to extend the wide range of services outlined in the section Our Services.