MALTA Law and Practice Contributed by: Dr Josef Cachia Fenech Gonzi and Cherise Abela Grech, GTG Legal
also various residence schemes for high net worth or highly skilled individuals to relocate to Malta. These incentives, in addition to Malta’s very attractive tax system, which allows for - eign-owned corporates effective corporate tax rates as low as 5%, make Malta an ideal juris - diction for start-ups to grow and thrive, and for VC investors to invest in. These incentives also allow foreign SMEs to establish a strong base of operations in Malta and to benefit from these incentives, making them more attractive to VC investors. Such trends are quite common and, subsequently, many innovative start-ups are acquired by larger entities or attract significant foreign investment. Such investments can occur either through VC funds acquiring an interest, or through setting up separate corporate entities by the investor to invest in the project and benefit from some of the incentives available. 1.3 Key Industries Malta has seen substantial growth in various high value industries in recent years. These include gaming, aviation, financial services, crypto-assets, software development and tech - nology. In a survey carried out by the Europe Startup Nations Alliance (ESNA), Malta was ranked as the fourth best destination for innova- tive start-ups and over the past few months over 300 start-ups have launched, which have added over EUR1.2 billion into the economy. Malta’s location is also a key element allowing certain industries to flourish as it is seen as a gateway to both Europe and Africa. The gaming industry in Malta has become criti - cal and contributes more than 12% towards the country’s GDP. In this regard, various start-ups have been launched from Malta to provide B2B or B2C gaming services. Such enterprises are a prime target for VC investors seeking to invest in the industry due to the potential growth. This
can be seen with companies such as Just Slots, a B2B gaming services provider, which managed to acquire over EUR1.1 million in seed capital in 2024. Talent coming out of the University of Malta is also significantly contributing to start-up growth at the local level. Start-ups founded by alumni have significantly contributed to enterprise val - ue, which today exceeds EUR1.5 billion from 2019. Such projects have also raised EUR260 million in VC in recent years. Lastly, entities licensed by the Malta Financial Services Authority (MFSA) have seen significant growth in recent years with several financial start-ups choosing Malta for regulatory licence acquisition to provide financial services into the EU. Malta, which was also dubbed “the Block- chain Island” few years ago, had significant growth in the crypto-asset sphere and, with the Markets in Crypto-Assets Regulation (MiCAR) coming into force, Malta is one of the only juris - dictions to be MiCAR-ready from day one. It is anticipated that such industries will also attract VC investors in the coming years. In Malta, VC funds are typically structured using various legal vehicles, with the following two being the most prevalent. • Investment company with variable share capital (SICAV): this is the most common structure of VC funds due to the significant flexibility offered by SICAV structures. A criti - cal element of the SICAV is its open-ended structure, meaning that its share capital can be modified. The SICAV structure permits a 2. Venture Capital Funds 2.1 Fund Structure
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