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Different types of Partnerships in Malta

Partnerships are yet a useful tool to set up business in Malta and the country’s legislation allows for the formation of two types – General Partnerships and Limited Partnerships.

Maltese legislation does not provide a regulatory framework for Limited Liability Partnerships or Limited Liability Corporation (LLCs). The former is not to be confused with Limited Liability Companies and the latter is not to be confused with Corporations.

The main difference between the General and Limited Liability Partnerships lies in the liability of the partners.

In a General partnership, liability of partners is unlimited, while in a Limited Liability Partnership it is set according to the level of contribution made to the partnership.

General Partnerships

General partnerships (en nom collectif) are defined by Maltese law as a group of traders acting together.

Persons involved in a partnership are collectively and personally liable and liability in the eyes of the law is unlimited.

In addition, any General Partnership in Malta bears its own legal responsibility and is capable of owning or holding property in its own name. General Partnerships can also be sued as an entity.

Unlike companies, such partnerships cease to exist upon death, retirement or insolvency of a partner.

This is why Partnership Agreements are always drawn up before such a setup is registered. General Partnerships registered in Malta must have a Malta office.

In terms of tax, such partnerships demand that partners declare their share of profit in their personal tax returns and are therefore charged tax according to applicable personal tax rate.

Limited Partnership (LP)

In the Limited Partnership (en commandite) setup, there needs to be at least two partners and one of them must be listed as the general partner.

In this setup, the general partner bears the same liability as sole traders. Limited liability partners are exposed to a liability which is limited to the assets belonging to the partnership.

Limited partners cannot engage in the business trading activities of the partnership arrangement.

Limited partnerships can also be established with variable share capital.

Limited Partnership are taxed as companies with a five percent tax rate on direct trading income and 10 percent for income which is generated passively.

The capital of Limited Partnership may be divided into shares.

Naming and registering a partnership

Partnerships can reserve a name for up to three months prior to the date of registration. A proviso dictates that such names must have a “Limited Partnership” or “LP” suffix.

If they are set up with variable share capital, they must also include the suffix “with variable share capital” or “VC”.

To register a partnership in Malta, a deed must be submitted with relevant documentation to the Malta Companies Registry.

The registration fees for partnerships are the same as those for companies and depend on the contribution made. Fees start at € 245 with the maximum set at € 2,250.

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