Back Office Services

Revision No. 5 - Last Updated : 11-04-2002

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What are ‘back office’ services?	Commercial and Logistical considerations	Fiscal incentives
Human resources	Comparative salaries	Office costs
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What are ‘back office’ services?

Back office services are any activities and services of a routine, humdrum, administrative and on-going nature such as:

· administration services;

· book-keeping and accounting services (excluding work which may only be carried out by a person or firm holding a warrant under the Accountancy Profession Act);

· information and data processing; and

· computer bureau, database and computer outsourcing.

Such activities may include, for instance, the processing and recording of invoices, sales transactions and accounts management information reporting, form-filling work in support of trust services, shipping and maritime trade, insurance or fund administration business.

Back office services may be provided to companies engaged in such areas of activity as airline companies (e.g. ticketing, reservations), hotels, tour operating companies and other related operations.

Back office services cannot, however, include professional services and consultancy or any other services or activities which require a warrant, license or other specific control or authorisation under the financial services legislation including the Malta Financial Services Centre Act; The Investment Services Act; the Banking Act; the Financial Institutions Act; the Insurance Business Act; or the Malta Stock Exchange Act.

A back office management company established in Malta may offer its services to both financial and/or non-financial services related companies provided such companies:

· are not resident in Malta; and

· are not otherwise established in Malta.

Back office management companies are required to have a physical presence on the Island which means that they are required to establish a place of business in Malta employing a number of Maltese staff in the process.

Commercial and Logistical considerations

As a location for back-office operations, Malta also offers the following commercial and logistical considerations:

· Fiscal Incentives

· Excellent Human resources

· an independent democratic state with a history of political stability and parliamentary consensus to promote Malta as a financial centre;

· a European Union applicant;

· already an established banking and financial services centre of international repute with highly skilled and experienced professional expertise;

· in the Central European Time Zone and only a stone’s throw away from Europe’s capitals (all linked to Malta’s International Airport daily);

· relatively inexpensive in most respects; and

· has a temperate and balm Mediterranean climate.

Fiscal incentives

Back office management companies must be set up as international trading companies (ITCs) under the Companies Act, 1995.

Although ITCs are subject to the normal corporate tax of 35%, upon a distribution of dividends to their non-resident shareholders, various fiscal incentives and tax refunds come into play which render the effective Malta tax rate a mere 4.17%.

Companies wishing to provide back office services in the financial services sector (i.e. investment services, banking, insurance etc.) must first seek the prior approval of the Malta Financial Services Centre.

For further information on ITCs please refer to our fact sheet entitled ‘International Trading Companies’

Human resources

Malta offers a number of advantages to individuals or companies locating their operations on the Island. Apart from Maltese and English, which are the Island’s official languages, many Maltese are fluent in Italian, French or German.

The workforce includes highly qualified professionals including over 300 advocates and 600 accountants and auditors many of whom have qualifications from European institutions besides those from the 400-year old University of Malta which, currently, has a student population of around 8,000.

Malta also provides training facilities for the financial services industry through institutions such as the Chartered Institute of Bankers and the Mediterranean Insurance Training Centre. The ‘Big-6’ accounting firms are all present in Malta and, in recent years, financial service practitioners have built up a wide network of international contacts.

Below is a table with average salaries offered in Malta for various posts in the private industry (excluding fringe benefits such as company vehicle, allowances etc.):

POSITION	SALARY (GBP)
general manager	20,000 - 24,500
finance & administration manager	13,000 - 20,000
department manager	11,500 - 15,000
accountant	11,000 – 13,000
computer programmer	9,000 - 11,000
senior/executive staff	7,000 - 11,000
executive secretary	5,800 - 8,000
office clerk/secretary	4,500 – 6,200
receptionist/telephone operator	4,100 - 4,800
minimum wage	3,900

Incidental labour expenses which are paid by the employer consist of:

· national insurance contributions : 10% of employee’s wage

· half-yearly bonus : 95 GBP each (approx.)

· half-yearly allowance : 85 GBP each (approx.)

Overtime rates are paid at 150% of basic pay whilst on Sundays and public holidays overtime rates are 200% of basic pay.

Comparative salaries

A study of comparative salaries in a number of jurisdictions which are financial centres like Malta reveals that Malta is, indeed, competitive. The following tables illustrate comparative salaries in the areas of fund management and banking and finance.

FUND MANAGEMENT SALARIES (GBP)

	Portfolio administration manager	settlements supervisor	settlements clerk
Dublin	32,000 – 45,000	17,000 - 23,000	10,000 - 15,000
Luxembourg	40,000 – 56,000	28,000 - 42,000	20,000 - 25,000
Jersey	26,000 – 40,000	15,000 - 23,000	11,000 - 14,000
Malta	20,000 – 28,000	8,000 - 13,000	6,000 - 8,000

BANKING & ASSETS FINANCE SALARIES (GBP)

	corporate bank manager	business development manager	credit administration supervisor
Dublin	45,000 – 60,000	34,000 - 52,000	20,000 - 25,000
Luxembourg	50,000 – 80,000	40,000 - 70,000	28,000 - 42,000
Jersey	24,000 – 38,000	28,000 - 34,000	17,000 - 22,000
Malta	18,000 – 24,000	12,000 - 18,000	7,000 - 9,000

Office costs

A rough indication of the cost to purchase air-conditioned/unfurnished office accommodation is given below. Naturally, costs depend, to a large extent, on size and location. Expatriates may purchase or rent property.

	prime business area (GBP)	peripheral area (GBP)
Small office (approx. 120 sq. m.)	60,000	45,000
Large office (approx. 250 sq. m.)	90,000	60,000

Average annual rental cost of GBP 8 - 18 per sq. m. is, generally, charged for services such as maintenance, cleaning of common areas, security, lift service etc..

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