Business and taxes

Business in Malta: benefits, taxes, and features

Half of our clients are interested in starting a business abroad and choosing a proper tax jurisdiction for the company they are about to form. The Maltese tax system is appealing to investors. The conditions for entrepreneurs in Malta are among the most favourable in Europe and include numerous benefits to businesses. We discuss the advantages of living and doing business in Malta.

To live in Malta and run a business there, you need to obtain a Maltese residence permit or citizenship. The Maltese Citizenship Act offers citizenship by naturalization for exceptional services by direct investment over 14 months or longer. For this, you need to invest €690,000 in the Maltese economy and undergo a strict Due Diligence check.

Investment in the Maltese economy

To the south of Sicily, the Maltese Islands are located on trade routes from Asia and Africa to Europe. The maritime logistics business and financial services for various enterprises are thriving here.

Malta has a population of slightly more than 400,000, and 1.2 million tourists visit the country every year. Tourism provides 35% of the country's GDP, and most of the real estate, consisting primarily of apartments, is rented out. Serving tourists is an entire industry, and almost any well-organized business is profitable.

The electronics and software programming sectors are among the well-developed industries in Malta. International companies, such as ST Electronics, Playmobil, Trelleborg, and TRC Media Group, have invested in the Maltese high technology sector.

Until 1964, Malta was part of the British Empire, and it is still considered one of the world's leading centres for learning English. Specialists with international diplomas work here, and private schools earn high incomes.

However, the agricultural sector is poorly developed due to a lack of land. Mainly just, potatoes are grown for sale. At the same time, seafood processing remains a fairly profitable business, and Malta is also known for its pharmaceuticals.

Benefits of setting up a business in Malta

Investors in Maltese businesses benefit for several reasons:

  • Malta's stable economy survives economic and financial crises when they occur, with minimal losses. For example, in 2020, despite the severe economic impact of the covid-19 pandemic, Malta’s credit rating was maintained at A or A+.
  • International business centre. There are numerous representative offices of well-known global corporations and large companies in Malta.
  • Hard currency zone and reliable banks. Since 2008, the country has been a member of the eurozone, resulting in investors and their assets being given even more protection than in the past.
  • Personal safety. Malta is recognized as one of the safest countries in the European Union in terms of crime.
  • Government support for business. There are government programs in operation that are designed to help develop entrepreneurship.
  • Beneficial tax regime. Maltese tax residents receive significant tax benefits.

Second citizenship. Malta grants investors who have undergone its strict Due Diligence check citizenship for exceptional services by direct investment. A second passport can be obtained within 14 months.

Investment in the Maltese economy
Sliema is the business centre of Malta. Representative offices of well-known corporations and the largest shopping centres in the country are located here

Maltese company taxation

At first glance, the Maltese income tax rate of 35% is not particularly appealing to investors. However, this rate applies only to companies in Malta whose income grows by more than 10% per annum.

If a Maltese company is used as part of an international structure accumulating profits from other countries, then the lion's share of the tax is returned. The state keeps only 5% for itself, making it extremely attractive for any international company.

Part of the tax is also refunded when dividends are distributed. In this case, income is taxed at an effective rate of just 10%. If an international company pays dividends to the owners of a Maltese company, such payments are not subject to tax in Malta.

A company can become a Maltese tax resident by registering in Malta or opening its main office here.
We also discussed tax incentives for businesses in Malta in our article Taxes in Malta. The attraction of the Maltese tax system.

Financing incentives

The Government of Malta finances business projects in Malta and can offer concessional loans for up to 33% of a project’s costs. Sometimes the state even provides up to half of the loan amount. Malta Enterprise, the government agency focused on supporting business in Malta, has developed various incentives to promote investment and support the expansion of industry and innovative enterprises. It can finance up to 75% of a project.

Entrepreneurs in Malta also have access to the European Regional Development Fund, which can provide up to 50% of the cost of approved projects. Business startups can receive grants of up to €200,000 for business development in Malta.

Is it worth starting a business in Malta?

Forms of legal entities in Malta

There are three main forms of companies registered in Malta:

  • A closed company with limited liability: the entire capital of the business is distributed in shares, which are owned by all members of the company.
  • Partnership with unlimited liability: all partners are equally liable for their debts and liabilities.
  • Limited liability partnership: each partner’s liabilities are limited by their share in the company’s capital.

How to register a business in Malta

To start a business in Malta, you must register the articles of association with the Malta Financial Services Authority and pay a registration fee. The registration fee when forming a company is calculated on a progressive scale, depending on the declared share capital. When forming a company with the minimum share capital, the fee is 7.5% of this amount, and with a higher share capital, the fee can drop to just 1%. A registration certificate is issued after payment of the fee.

To qualify for financial assistance from the Government of Malta, you need to register your company with the Department of Social Security.

A limited liability company must have a minimum share capital of €1,250. Of this amount, 20% is deposited in the company’s bank account during the registration process. A legal entity can act as a director, but the company secretary has to be an individual who can be a Maltese or foreign citizen.

Additional fees for opening a company in Malta:

  • €8 - booking a company name;
  • €23 — registration with the data protection commissioner's office;
  • From €100 to €1900 - company registration with the Registrar of Companies. The fee depends on the type of company;
  • €1,000 - obtaining a trading license for the calendar year.

The company must have at least two shareholders, either individuals or legal entities, by law. Only shareholders not resident in Malta are eligible to receive tax deductions. A trustee may be a shareholder.

It usually takes 1-2 weeks to register a company in Malta. The company must have a registered office in Malta before starting the registration process.

Business in Malta: types of companies
Malta Business Registry
Source: lovinmalta.com

9 steps: how to set up a business in Malta

1. Choice of company typeThere are three main forms of companies registered in Malta:
  • Closed company with limited liability: the company's entire capital is distributed in shares, the owners of which are all members of the company.
  • Partnership with unlimited liability: all partners are equally liable for their debts and liabilities.
  • Limited liability partnership (LLP): the general partners are liable for all debts of the LLP, while the limited partners are not liable for debts of the LLP exceeding their contribution.
2. Choice of company nameThe name of the company must be:
  • original;
  • not contain offensive words;
  • reflect the essence of the company correctly.
Sometimes it is necessary to prove that you are allowed to use certain words. For example, "insurance", "blockchain", "bank".
3. Preparing the necessary documentsThe following documents are usually required to register a company in Malta for all types of companies:
  • Information about the name of the company.
  • The memorandum of incorporation.
  • Information on registered address in Malta.
  • Confirmation of the deposit of capital into the local bank account.
  • Details of directors, shareholders, and secretary.
4. Obtaining a Certificate of registrationOnce the registrar has accepted and verified the documents, the Certificate of Incorporation is issued. This certificate confirms the right of the company to conduct business in Malta.
5. Getting the necessary licensesYou need to check with the Commerce Department to see if you will need a license. To get a license, you will need to fill out a business application

You will need to pay one or more annual fees for each license.
6. Obtaining a tax identification numberTo obtain a taxpayer identification number, you need to apply online.  There are no fees for registration. 
7. VAT registration in MaltaVAT registration usually takes one day. You will need to fill out an application at the tax office and get a registration number.
8. Obtaining a PE numberTo obtain a PE number, you need to fill out a form online at the Department of Internal Revenue. This process usually takes about 3 days and is also free.
9. Register with the JobsPlusJobsPlus is a government organization responsible for all employment registration in Malta.

You need to fill out a form for each employee when employed or dismissed. 

How to become a Maltese resident

Since 2020, Maltese legislation has allowed wealthy people to obtain citizenship for exceptional services by direct investment. An investor applies for a residence permit and applies for citizenship after 12 or 36 months. In just 14 months, they can become an EU citizen. The application for a Maltese residence permit or citizenship by direct investment includes undergoing a strict Due Diligence check. 

Cost of getting Maltese citizenship by direct investment

Type of investmentCost
Investment in the Maltese National Development and Social Fund€750,000: residence permit after 1 year, or €600,000: residence permit after 3 years
Investment in fund per dependent family member€50,000
Purchase or rent property€700,000/€16,000 per annum
Charitable donation€10,000

We discuss the conditions under which investors receive Maltese citizenship for exceptional services by direct investment.

Is it worth starting a business in Malta?

Malta attracts entrepreneurs from all over the world through the appeal of its attractive taxation system and the prospect of doing business globally. Individual entrepreneurs are eligible to receive several benefits. Operating businesses are rarely offered for sale in Malta. Investors usually start their own companies.

Frequently asked questions

How to register a business in Malta

To start a business in Malta, you must register the articles of association with the Malta Financial Services Authority and pay a registration fee. The registration fee when forming a company is calculated on a progressive scale, depending on the declared share capital. When forming a company with the minimum share capital, the fee is 7.5% of this amount, and with a higher share capital, the fee can drop to just 1%. A registration certificate is issued after payment of the fee.

Is Malta good for business?

Malta attracts entrepreneurs from all over the world through the appeal of its attractive taxation system and the prospect of doing business globally. Individual entrepreneurs are eligible to receive some benefits. Operating businesses are rarely offered for sale in Malta. Investors usually start their own companies.

What are the main forms of legal entities in Malta?

There are three main forms of companies registered in Malta:

  • Closed company with limited liability: the company’s entire capital is distributed in shares, the owners of which are all members of the company.
  • Partnership with unlimited liability: all partners are equally liable for their debts and liabilities.
  • Limited liability partnership (LLP): the general partners are liable for all debts of the LLP, while the limited partners are not liable for debts of the LLP exceeding their contribution.
How to get a business license in Malta?

You need to check with the Commerce Department to see if you will need a license. You will need to fill out a business application to get a license.

You will need to pay one or more annual fees for each license.

How do I register a business name in Malta?

The name of the company must be:

  • original;
  • not contain offensive words;
  • reflect the essence of the company correctly.

Sometimes it is necessary to prove that you are allowed to use certain words. For example, “insurance”, “blockchain”, “bank”.

How much does it cost to register a business in Malta?

The cost of company registration in Malta depends on the size of the company’s share capital and its type.

A limited liability company must have a minimum share capital of €1,250. Of this amount, 20% is deposited in the company’s bank account during the registration process. A legal entity can act as a director, but the company secretary has to be an individual who can be a Maltese or foreign citizen.

Additional fees for opening a company in Malta:

  • €8 – booking a company name;
  • €23 — registration with the data protection commissioner’s office;
  • From €100 to €1900 – company registration with the Registrar of Companies. The fee depends on the type of company;
  • €1,000 – obtaining a trading license for the calendar year.
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Business in Malta: benefits, taxes, and features