On the 17th of April 2012, The Companies Act (Cell Companies Carrying on Business of Insurance) Regulations came into force under the laws of Malta. These regulations govern the setting up of insurance businesses within a cell company structure, known as a Protected Cell Company (PCC).
Income Tax Treatment
For income tax purposes, every cell of a PCC, as well as the core company, is deemed to be a separate legal entity, even though the individual cells are not separate legal entities. Accordingly, the taxable profits of each cell are computed separately, with the profits and losses being apportioned between the individual cells and the core cell. As PCCs are currently only applicable in the context of an insurance business, Article 27 of the ITA is still applicable for the determination of the chargeable income of each individual cell. As a result, each cell is taxed on its business profits at the standard corporate tax rate of 35%, subject to any tax refunds which may apply.
In recent years a number of PCCs have been set up in Malta that provides a direct writing facility into Europe avoiding fronting arrangements. This is often a desirable option for small entities that do not wish to create a stand-alone insurance company, or for those wishing to develop an affiliated insurance business.
Should you require any assistance or advice in connection with setting up of Insurance Underwriting or Intermediary Business in Malta, kindly contact Dr. Christian Farrugia.