A Complete Guide to Open a Company in Malta
Starting a company in Malta is a strategic move for entrepreneurs seeking a foothold in Europe’s thriving business landscape. With over 85% of businesses in Malta leveraging its favourable tax regime and streamlined registration processes, the island nation has become a hotspot for global investors. Malta’s corporate tax rate of 35% offers potential rebates, significantly reducing the effective tax burden for foreign-owned companies. In this blog post, we will learn how to open a company in Malta, ensuring compliance and maximising opportunities.
Understanding Company Structures in Malta
One of the first steps in opening a company in Malta is understanding the available business structures. The choice of structure affects liability, taxation, and the operational framework of the business.
Private Limited Liability Company (LLC)
This is the most common business entity in Malta. It is ideal for small to medium-sized businesses due to its straightforward management and limited liability for shareholders. The minimum share capital is €1,165, with 20% required to be paid up at incorporation.
Public Limited Liability Company
This structure is suitable for large enterprises seeking to raise capital publicly. It requires a minimum share capital of €46,588, with at least 25% paid upon incorporation. Public LLCs must comply with stricter regulatory requirements.
Partnerships
General partnerships involve shared responsibility among partners for debts and obligations. On the other hand, limited partnerships include at least one general partner with unlimited liability and other partners with limited liability.
Sole Proprietorship
This structure is the simplest form of business, operated by an individual. It best suits small-scale enterprises, offering minimal regulatory requirements but exposing the owner to unlimited liability.
Branch Offices for Foreign Companies
Foreign businesses can establish branch offices in Malta. While not separate legal entities, branch offices allow overseas companies to conduct operations locally under Maltese jurisdiction.
Selecting the appropriate structure depends on the scale of operations, ownership preferences, and long-term objectives. Proper research and consultation are vital for making an informed decision.
Preparing for Company Formation
Proper preparation ensures a smooth company formation process. Every step requires attention to detail, from selecting a name to drafting key documents.
Selecting a Unique Company Name
The company name must be unique and comply with Maltese regulations. Names that are identical or too similar to existing entities, misleading, or offensive are not permitted. Certain terms like “bank” or “insurance” may require additional approval.
Drafting the Memorandum and Articles of Association
These documents are the cornerstone of the company’s legal framework. The memorandum defines the company’s purpose, while the articles of association outline the operational rules. Key details include:
- Business type and objectives
- Registered office address
- Share capital and its allocation
- Information on directors and the company secretary
- Legal representation and decision-making procedures
Share Capital Requirements
Private LLCs must have a minimum share capital of €1,165, with 20% paid upfront. Public LLCs require €46,588, with at least 25% paid at incorporation. The share capital can be deposited into a local bank account before registration.
Completing these preparatory steps establishes the foundation for a legally compliant and functional company.
Step-by-Step Company Registration Process
The company registration process in Malta is regulated by the Malta Business Registry (MBR). Following the outlined steps ensures legal compliance and a seamless business setup.
Reserving the Company Name
The first step is to reserve your chosen company name with the MBR. The name must adhere to Maltese regulations, ensuring it is unique, non-offensive, and aligned with your business activities. Names that are too similar to existing companies or include restricted terms such as “bank” or “insurance” require special approval. This reservation secures the name for a specific period, providing time to complete other registration steps.
Opening a Corporate Bank Account
After reserving the name, the next step is opening a corporate bank account in Malta. This account is necessary for depositing the initial share capital. Banks in Malta generally require specific documents, including the name reservation confirmation, identification and proof of address for shareholders and directors, and draft versions of the memorandum and articles of association. Private limited companies require a minimum share capital of €1,165, with 20% paid upfront. Public limited companies must deposit €46,588, with at least 25% paid upfront. Upon deposit, the bank issues a confirmation certificate as proof of funds for registration.
Submitting Documents to the MBR
The registration phase requires submitting a set of documents to the MBR. These include the memorandum and articles of association, which outline the company’s structure, objectives, and operational guidelines, along with the bank confirmation certificate verifying the deposited share capital. Directors and shareholders must provide identification and proof of address. An application form detailing the business name, type, and share capital is also required. Additionally, registration fees must be paid, ranging from €245 to €2,250 based on the authorised share capital. The MBR thoroughly reviews these submissions for compliance with Maltese laws.
Receiving the Certificate of Incorporation
Once the MBR approves the application, it issues a certificate of incorporation. This document legally confirms the company’s existence and authorises its operations in Malta. It includes critical details such as the company name, registration number, and incorporation date. The certificate enables the company to conduct business activities, sign contracts, and operate as a legal entity in Malta.
Finalising the Process
Completing these steps finalises the company registration process. The business is now established and can operate within the Maltese legal framework. Proper documentation and adherence to the outlined procedures ensure a smooth registration experience, allowing the company to benefit from Malta’s favourable business environment.
Post-Registration Requirements
After registering your company in Malta, adhering to post-registration requirements is crucial to maintaining legal compliance and ensuring smooth operations. These obligations include tax registration, obtaining necessary licenses, and meeting employment standards.
Register for Taxation
Every registered company in Malta must enroll in corporate taxation and, if applicable, Value Added Tax (VAT). The corporate tax rate in Malta is 35%, making it one of the highest nominal rates in the EU. However, Malta offers significant tax rebates and refunds for foreign-owned companies. These incentives can sometimes reduce the effective tax rate to as low as 5%, depending on the company’s structure and eligibility. VAT registration is mandatory if the company engages in taxable activities within Malta or exceeds the threshold for VAT-exempt businesses. The registration process is straightforward and involves submitting the required forms to the Commissioner for Revenue.
Obtain Necessary Licenses and Permits
Certain industries in Malta require specific licenses or permits to operate. For example, financial services, gaming, and healthcare businesses must obtain approval from the relevant regulatory bodies. The Malta Financial Services Authority (MFSA) oversees financial services licenses, while the Malta Gaming Authority (MGA) regulates gaming licenses. These applications often require detailed documentation, including business plans, proof of financial stability, and compliance with industry-specific standards. Acquiring these licenses ensures the company operates within the legal framework and builds stakeholder trust.
Employment Considerations
If your company plans to hire employees, several legal obligations must be met to comply with Maltese labour laws. Companies must first obtain a PE (Permission to Employ) number necessary for hiring local and foreign workers. Additionally, all employees must be registered for social security contributions. This involves submitting their details to the Department of Social Security to ensure compliance with Malta’s social security system. Employment contracts must adhere to local labour standards, clearly outlining job roles, working hours, wages, and benefits. Companies must also comply with anti-discrimination laws and provide a safe working environment for all employees.
Managing Compliance and Operations
Ensuring compliance with local laws and maintaining proper operations is vital for a company’s long-term success in Malta.
Maintaining Proper Accounting Records
All companies must maintain accurate financial records and follow International Financial Reporting Standards (IFRS). These records include details of transactions, assets, liabilities, and financial performance. Companies are required to retain records for at least ten years.
Annual Returns and Financial Reporting
Companies must submit an annual return to the Malta Business Registry every year. This includes updated information about the company’s structure, directors, and shareholders. Additionally, financial statements must be audited and filed within nine months of the fiscal year-end for public inspection.
Ensuring Regulatory Compliance
Businesses must adhere to regulations concerning anti-money laundering (AML), data protection (GDPR), and sector-specific guidelines. Non-compliance can result in penalties or legal actions, making it essential to stay updated on changes in the law.
Benefits of Hiring Local Advisors
Engaging local legal and financial experts ensures smooth compliance with Maltese regulations. These professionals can assist in navigating complex processes, filing requirements, and resolving disputes.
Cost and Timeline for Opening a Company in Malta
| Step | Description | Cost | Timeline |
|---|---|---|---|
| Reserving the company name | Apply to the Malta Business Registry (MBR) to reserve a unique company name. | Included in the registration fee | 1–2 days |
| Opening a corporate bank account | Set up a bank account and deposit the share capital. | No specific cost (bank charges may apply) | 3–5 days (depending on the bank) |
| Depositing share capital | Deposit the minimum share capital: €1,165 (private) or €46,588 (public). | €1,165 (private) or €46,588 (public, minimum 25% upfront) | 1–3 days (dependent on bank processing) |
| Submitting documents to the MBR | File the required documents: memorandum, articles of association, and bank confirmation. | €245–€2,250 (registration fee based on share capital) | 3–5 days |
| Receiving certificate of incorporation | Obtain legal proof of company registration. | Included in registration fee | 1–2 days after submission approval |
| Registering for taxation | Register for corporate tax and VAT (if applicable). | No direct cost | 1–2 weeks (dependent on application completeness) |
| Obtaining necessary licenses | Acquire industry-specific licenses (if required). | Variable (€500–€5,000, depending on industry) | 2–4 weeks (depending on authority) |
| Employment compliance | Obtain PE number, register employees for social security, and comply with labour laws. | No direct cost for PE number (additional costs for employee registration) | 1–2 weeks |
Incentives and Support for Businesses in Malta
Malta provides a range of incentives designed to attract businesses and stimulate economic growth. These benefits are especially advantageous for international investors, startups, and small to medium-sized enterprises (SMEs). These opportunities can significantly enhance a company’s growth potential and operational efficiency.
Malta Enterprise Schemes
Malta Enterprise, the national agency for economic development, offers several support schemes tailored to meet the needs of various industries and business sizes.
Investment Aid Tax Credits
These credits are granted to businesses based on eligible investments in tangible and intangible assets or job creation. For example, companies purchasing advanced machinery or expanding operations may qualify for substantial tax reductions, helping to lower operational costs and encourage growth.
Micro-Invest Schemes
This scheme explicitly supports small businesses by offering tax credits for innovation, equipment, or employee training investments. These credits provide financial relief to entrepreneurs, enabling them to allocate resources to expansion and improved competitiveness.
Research and Development (R&D) Incentives
Malta Enterprise supports companies involved in innovation through R&D grants and incentives. Businesses undertaking projects in product development, technological advancements, or scientific research can receive funding to offset the associated costs. This fosters a culture of innovation and attracts high-tech industries to Malta.
Government-Backed Incentives
Beyond Malta Enterprise, the Maltese government provides additional support through funding and grants targeting key sectors such as technology, finance, healthcare, and manufacturing. These initiatives aim to enhance the country’s economic sustainability and global competitiveness. For instance, the government promotes renewable energy projects by offering grants to businesses that adopt sustainable practices. Similarly, manufacturing enterprises benefit from subsidies to modernise production facilities, increasing efficiency and output.
Opportunities in International Trade and Finance
Malta’s strategic location at the crossroads of Europe, North Africa, and the Middle East, combined with its EU membership, makes it a prime hub for international trade. Businesses operating in Malta enjoy seamless access to European markets, supported by Malta’s adherence to EU trade regulations. Additionally, Malta has a network of double taxation treaties with over 70 countries, reducing tax burdens for companies engaging in cross-border transactions. The island’s well-established financial services industry further enhances its appeal, offering robust banking systems, investment opportunities, and comprehensive corporate solutions.
Common Challenges and Tips for Success
Despite Malta’s favourable business environment, entrepreneurs may encounter challenges that require careful planning and mitigation.
Navigating Legal and Bureaucratic Processes
The regulatory framework in Malta can be complex, especially for foreign investors. Ensuring all documents and applications meet the required standards is critical. Engaging with local experts can streamline the process.
Understanding Cultural and Market Dynamics
Adapting to the Maltese business culture and understanding consumer behaviour are essential for success. Building relationships and networking within local industries can provide valuable insights.
Managing Operational Costs
While Malta offers competitive advantages, operational costs, including wages, office space, and utilities, must be managed efficiently to maintain profitability.
Utilising Professional Services
Hiring local legal advisors, accountants, and consultants ensures businesses remain compliant and operate effectively. Their expertise can also help identify opportunities for cost savings and strategic growth.
FAQs
How much does it cost to start a company in Malta?
The cost to start a company in Malta depends on the type of business. Registration fees range from €245 to €2,250, based on the authorised share capital. Additional costs include legal and administrative fees, licensing, and bank account setup.
Can a foreigner start a business in Malta?
Yes, foreigners can start a business in Malta. There are no residency requirements for shareholders or directors. However, compliance with Maltese regulations and proper documentation, including proof of identity and address, is necessary.
How long does it take to open a company in Malta?
Opening a company in Malta typically takes 5 to 10 working days. This timeline includes document preparation, bank account setup, and registration with the Malta Business Registry.
What is the minimum capital for a company in Malta?
The minimum share capital for a private limited company is €1,165, with at least 20% paid at incorporation. The minimum for a public limited company is €46,588, with at least 25% paid upfront.
What is the minimum investment in Malta?
The minimum investment required depends on the business type and sector. For certain industries or incentives, additional investment thresholds may apply. Consulting Malta Enterprise can help determine sector-specific investment requirements.
