No withholding tax on outgoing royalty payments and dividends. This alone would be enough to show how starting a franchise from Malta is certainly strategic from a tax point of view, considering that the royalties generated by the franchise are taxed in Malta at 35% as part of the business income.

But that is not all: at the subsequent distribution of the income as a dividend, the Maltese law provides for a refund of 6/7 on the tax paid by the company to the shareholder, thus effectively reducing the final tax rate to 5%.

Entering a franchise, however, involves an investment that requires due attention, starting from an analysis of the idea and a precise verification of the strengths and weaknesses of the brand.

It is also necessary to study in depth the consistency between the product or service and the reference market, and to establish the most suitable corporate scheme for this by defining the type of company, company name, copyright protection and other elements necessary for the establishment.

On the other hand, the process of selection of franchisees by the franchisor (the one who grants the brand) is also a particular activity that requires an accurate analysis process.

What a potential franchisee is asked to do is to put their trust in the project, to follow their marketing choices, and to invest their savings in an already consolidated business: this is why the utmost care is needed in the choice of suitable subjects to pursue this new path.

Therefore, it is not enough to guarantee the success of a business, even in franchising, by means of reduced taxation and simplified bureaucracy alone. But if the path is followed consistently and carefully, without taking great risks, success is just around the corner.

Malta Business can accompany all entrepreneurs, whether franchisors or franchisees, in the process of setting up a successful business in Malta, guaranteeing a quality service that matches the ambitions of the investor. To request further information or advice, please contact Malta Business Agency by filling out the following form: