Setting up a business in Malta
Setting up a business in Malta is rather easy. Thanks to various incentives provided by the Maltese government, many foreigners have been moving to Malta in recent years to launch new ventures. Simple procedures and low tax rates enable entrepreneurs to get started quickly. The government greatly encourages entrepreneurship to boost the country's growing economy further.
Malta's business environment
Establishing a business in a foreign country can be daunting and challenging. Making sure you comply with the local legislation and taking care of necessary documentation can be much more difficult in an unfamiliar environment.
However, Malta keeps its regulatory framework in sync with the changing demands of industries laid out for the EU, which makes it easier for expats to start conducting business in the country.
Home to a population of just over 444,000 people, Malta's development has largely been attributed to its focus on knowledge and value-added industries.
Malta's government is business-oriented, which makes it easier for expats to expand and develop their ideas. The country's many strengths, from the quality of its workforce and the lower operational costs to the quality of life and strategic location, offer expats a good work-life balance.
Why start a business in Malta
Home to tens of thousands of companies, Malta has a thriving tourism industry, provides maritime services, and attracts international talent from the information and communications sector, manufacturing, and life sciences.
Steady economic growth despite the worldwide recession, strong labor market fundamentals, and recovering investments are factors that make Malta a top destination to move management and control.
Malta's GDP enjoyed a few years of huge growth and has since stabilized with a promising average of 5.2% in 2022. The Maltese economy was affected during the Covid-19 sanitary crisis but has since experienced a good and quick recovery.
This has also allowed Malta to maintain one of the lowest unemployment rates in Europe, hovering around 2,9%, one of the lowest in the EU. Prominent sectors of the Maltese economy are financial services, tourism, iGaming and real estate.
Other industries like aircraft maintenance, life sciences, high-end manufacturing, and IT services have also been expanding quickly in recent years, with the rapidly growing iGaming industry taking the lead in attracting many foreign employees to Malta.
IT infrastructure, telecoms, and e-Financial services are some of the sectors to get involved in. Malta is a politically stable and neutral country that has the potential to become a start-up hotspot for entrepreneurs.
Benefits of setting up a business in Malta
Setting up a company in Malta will bring you a lot of benefits. Here are the main perks:
-
A favorable business environment
Malta is open to business. The conditions for company formation in Malta are more relaxed than in other countries. Investors enjoy a super-fast and easy registration process. There are a lot of incentives to set up a company in Malta: minimal bureaucracy, low incorporation and maintenance costs. The minimum share capital to open a private company in Malta is €1,164.69, 20% of which should be paid up.
-
A multilingual and multicultural environment
Malta is a bilingual country, as both English and Maltese are official languages. The large use of English makes it easier to start a business in Malta. A lot of people also speak Italian. In the international trade sector, French, Spanish and Arabic are also used. In addition, Malta offers a multicultural environment. People are coming from all over the world to live and work in Malta, thus making Malta rich in cultures, languages and skills.
-
A competitive and attractive tax system
Malta is well-known for its low net effective tax rates. People opening a business in Malta can enjoy investment incentives and even tax reductions. The “Malta Taxation Refund System” is the most popular investment opportunity. Shareholders are able to claim back a portion of the tax paid in Malta after a distribution of dividends is made.
-
Double taxation treaties
Malta has signed over 70 Double Taxation Treaties. That means you will not be taxed twice on the same income if you come from one of the signatory countries.
-
A strategic geographic position
Malta is located in the heart of the Mediterranean sea, between Sicily and North Africa. It is thus located on one of the busiest logistic routes in the world. The Malta Freeport is one of Europe's most important ones and welcomes the world's largest shipping vessels.
-
Sunny weather and Mediterranean climate
Malta enjoys around 3,000 hours of sunshine per year (one of the highest in Europe). Its Mediterranean climate is very pleasant. Setting up a business in Malta will allow you to enjoy long summers and warm winters (despite the humidity).
How to start a business in Malta: procedures
To begin conducting business in Malta, you must first apply for a social security number, which will allow you to register with the VAT Department. Registration can be performed either online or in person at the Department's office.
Once you have obtained your VAT number, you have to fill out and sign an Engagement Form (or Declaration of Commencement). This form can either be downloaded from the Business first website, the JobsPlus website, or collected in person at a JobsPlus office.
After that, you are required to register for a tax identification number (TIN) with the Office of the Commissioner for Revenue, except for EU Nationals Start-up entities who have a social security number. This will allow you to make your social security contributions and pay taxes.
You then have to apply for a trade license from the Ministry for the Economy for some specific commercial activities such as commercial fairs. You will also require an additional permit if your company is involved in the import and export of goods and freight.
Important:
Make sure to contact a local bank account to open a corporate bank account in Malta.
Formalities and fees to set up a business in Malta
Once these steps have been accomplished, you will then have to work toward completing the following:
- Booking a company name
- Drafting the company's presentation and statutes (between €500-1,000)
- Depositing the minimum capital
- Registering the company on the Registry of Companies (from €100 up to €1900, depending on the company type)
- Obtaining a trade license if your activity requires it
- Obtaining a tax identification number
- Opening a permanent bank account in the company's name
- VAT registration
- Obtaining an employer's number and registration of employees
- Registration of employees with JobsPlus
- Registration at the Information and Data Protection Commissioner's office (around €23.29)
Once you have completed all these procedures, you can proceed with the opening of your business.
The different types of companies in Malta
Before setting up a business in Malta, you need to choose a type of company. There are limited liability companies, which can be private or public, and partnerships, which can be general or limited. If you want to start small, you might opt for the self-employed status.
-
Self-employed
If you wish to work in Malta and be your own boss, you might think about becoming self-employed. It is true that creating a company, rather than becoming self-employed, will protect you better and give your company a more trusted identity. However, opting for the self-employed status can be a good idea in the beginning. It will let you try your business idea and viability in Malta. Afterward, you will be able to switch to a company if your business is doing well and you wish to bring it to the next level.
-
Private limited liability company
This is the most chosen type of company when it comes to setting up a business in Malta. In fact, the requirements are less than for the other types of companies. When opening a private limited company, foreign investors need a minimum share capital of nearly €1,200. Such a private company may not have more than 50 shareholders.
-
Public limited liability company
The requirements are more for the public limited liability company. A start-up capital of approximately €46,600 is required. Public companies can trade their shares on the Malta Stock Exchange, while private companies are not allowed to.
-
General partnership
If you want to set up a partnership in Malta, you need to draft and notarize a partnership agreement. In general partnerships, one or more partners share the liability to the company's debts and obligations with all their assets.
-
Limited partnership
Here again, a partnership agreement needs to be drafted and notarized. In limited partnerships, there are two types of partners: general and limited. The general partners are in charge of the company‘s management and are liable for all their assets to the business's liabilities. The limited partners, however, are accountable only to the extent of their contributions to the company.
-
Joint stock company
Joint stock companies are available for large businesses. The minimum shared capital is € 46,600.
-
Joint venture
Joint ventures are autonomous entities. They must be incorporated with the Registry of Companies in Malta.
-
Sole proprietorship
It is the simplest business form in Malta, preferred by independent entrepreneurs. Sole traders are fully responsible for all actions and debts in the firm.
Buying a shelf company in Malta
Setting up a company in Malta takes some steps and formalities you might wish to skip. In this case, why not buy a shelf company in Malta? A shelf company is a well-established company that has been registered with the Maltese authorities. The company is already compliant, which is a great advantage.
The ownership is transferred within a few days as soon as the documents have been accepted by the authorities. Then, erect a new management team. That is all it takes to start a business in Malta by buying a shelf company! This easy and quick procedure makes shelf-company a popular choice amongst foreigners wanting to set up a business in Malta.
Setting up a company and hiring employees in Malta
By starting a business in Malta, you will have access to a large, multilingual and multiskilled HR talent pool. Many highly educated foreigners come to work in Malta.
You need to register your company at JobsPlus and fill out a Declaration of Commencement of Employment form for each employee your company has. This form needs to be filled out, even if you are a limited liability business or self-employed. A form also needs to be filled out when an employee leaves your company.
Best locations and company premises to set up a business in Malta
Location is something you should consider when you set up a business in Malta.
-
Valletta
Valletta is the capital city of Malta. Valletta gathers many financial institutions, law firms and maritime businesses. Thus, it is a good location to set up a company in Malta, especially if your company belongs to the hospitality industry.
-
Sliema
Sliema is one of the best places to set up a business in Malta. Located a short ferry or car ride away from Valletta, Sliema attracts operators in the travel, iGaming, aviation, financial, and technology sectors.
-
St Julian's
St Julian's is the most prestigious business district in Malta. Its business centers offer a lot of facilities: spacious meeting rooms, open and private coworking areas, on-site parking, cafes, telecoms, etc.
-
Gżira
Gżira is an evolving town, full of potential. It is perfect for start-ups located in central Malta. Gżira is located next to Sliema and close to Valletta. It is a good choice for a retail outlet, a bar or a restaurant.
-
Birkirkara
Birkirkara is a place chosen by a lot of showrooms, factories and financial institutions.
Regarding the company premises, there are several options: commercial lease, serviced offices, or purchasing. Choose the best for you according to your budget, company size, and mid to long-term plans.
Finally, the whole island of Malta is served by high-speed internet and reliable electricity. Most locations are within a 40-minute drive from the airport, which is ideal for business.
Useful links:
Office of the Commissioner for Revenue
Business First - Permits & Licences Search
