Setting Up a Business in Malta: Step by Step Guide

The Republic of Malta offers a wealth of benefits to those who decide to start a business locally: from tax exemptions to low costs for company formation and maintenance, one can see why foreign investors favour setting up their business on the island. But why open shop in Malta? Here are some of the top reasons to open a company in Malta.

Benefits of Setting Up a Business in Malta

Setting up a company in Malta can enable you to benefit from a variety of advantages that the country offers. The following are a list of such perks:

• Taxation Benefits: Malta is renowned as one of the EU states with the lowest net effective tax rates. It offers a vast array of investment opportunities to both EU and Non-EU investors.The “Malta Taxation Refund System” is arguably the most popular and sees shareholders able to claim back a portion of tax paid in Malta after a distribution of dividends is made. A company in Malta pays 35% tax on trading profits; however, if the owner of the company set up in Malta is not resident and domiciled in Malta, they can generally recover 6/7ths of the aforementioned tax, resulting in a Net Effective Tax Rate of 5% in Malta if the profits derived are of a trading nature or a 5/7 refund if the profits are of a passive nature, thus resulting in a Net Effective Tax Rate of 10% in Malta. Further tax reductions are also offered, which our team will be happy to discuss in detail. Some of these are No Exit Taxes, Wealth Taxes, Payroll-based Tax or Trade Tax. There is also the possibility of setting up a Fiscal Unit in Malta, whereby the Malta group of companies can be consolidated, and as a result, the net effective tax rate of 5% can be paid immediately as opposed to the refund system mentioned above, subject to certain conditions being met.
• Low Incorporation and Maintenance Costs: The minimum share capital to open a company in Malta is €1.165, 20% of which should be paid up, with a total of €245 to be deposited. Registry fees are also low, making Malta a very attractive jurisdiction within which to do business.
• Exemption from Duty on Documents: for those carrying out international activities, an exemption from duty on documents is in place which covers transfer of shares and increases of share capital.
• Double Taxation Treaties: Malta has signed over 70 Double Taxation Treaties, which safeguard against double taxation on the same income.
• A strategic position: The Republic of Malta is located in the middle of the Mediterranean Sea, a short couple of hours flight from major capitals of both Europe and Northern Africa.
• Multicultural and multilingual: the country is extremely diverse, ushering foreigners from all over the world to experience its culture and beauty. This creates a Babylonia of languages and cultures, with English as the common denominator between them all.
• 360 sunny days: the weather is one of the best in Europe, with the majority of days being blessed by sun and only a few rain showers to cool down the hot temperature.
• Visa-Free Zone: as a member state of the Schengen Area, there are no travel restrictions between Malta and the remaining countries that befall the Zone.

Malta has this and much more to offer to those investors who decide to open a company in Malta - a comprehensive rundown of which our advisors will be able to give you should you decide to avail yourself of our holistic services.

Step-by-step guide on how to set up a business in Malta

If you are intrigued by the benefits the country has to offer and would like a brief overview of the process of incorporatinga company in Malta, look no further. Our corporate services experts are here to assist with every step, and the following is what you can expect when you choose to register a company in Malta:

Step 3: Prepare the necessary documentation

Once the way forward is determined and an engagement letter is signed, the initial step would be an onboarding procedure whereby our specialists will guide you with respect to how all of the necessary documents are to be presented for them to be acceptable from both a compliance perspective as well as by the Malta Business Registry.
Once the onboarding process is successfully completed by all the shareholders, the proposed directors and any other officers that will form the company, our corporate specialists will proceed with the preparation of all necessary documentation that will eventually be submitted to the Malta Business Registry for the company structure to be incorporated. Forming part of the formal constitutive documents would be the company’s Memorandum and Articles of Association. These include important details such as:

• The type of company;
• Complete identification of its subscribers, be it persons or corporate bodies;
• The company name;
• The company’s registered office in Malta;
• The objectives of the company;
• The amount of share capital, its division into shares, the number of which taken by each subscriber, and the rights attached to each class of share;
• The number of directors and their identifications;
• The name and residence of the company secretary;
• Identification of each shareholder, director, legal and judicial representatives and company secretary.

The Articles of Association, on the other hand, outline the internal regulations of the company. If not registered, it is implied that the company adopts the model articles found in the First Schedule to the Companies Act.

Furthermore, if you are registering a new company and any of its shareholders are corporate entities, a supplementary document known as Form BO1 must be annexed. This will contain information on the identification of the company’s ultimate beneficial owners.

Evidence of paid-up share capital should also be produced, and can be submitted in the form of a bank deposit advice.

Additional supporting documents may be requested at the Registrar’s discretion.

Step 4: Pay the Registration Fee

Before a Certificate of Registration can be issued, the applicable registration fee must be paid to the Malta Business Registry (MBR). This fee is calculated on the basis of the company’s authorised share capital.

How the Registration Fee Is Calculated

If a company is incorporated with an authorised share capital of €1,200 (the typical minimum for a private limited liability company):

• The authorised share capital falls within the lowest fee bracket.
  
• The incorporation fee would typically amount to approximately €245, payable to the MBR upon submission of the incorporation documents.
  

If a company opts for a higher authorised share capital (e.g., €10,000, €50,000, or more), the applicable registration fee increases according to the MBR fee schedule.

How to Pay the Registration Fee

The Malta Business Registry allows payment through multiple channels:

• Online payment (via the MBR Online Portal) – the most convenient and frequently used method
  
• Bank transfer
  
• Credit or debit card
  
• Payment through a corporate service provider (e.g., CSB Group, if you are using our services)
  

Once payment is made, a receipt is generated and included in the submission package to the Registrar.

Other Fees to Consider

Aside from the initial registration fee, you may encounter:

• Due diligence / KYC fees (usually applied by corporate service providers)
  
• Document certification or notarisation fees, if required
  
• Bank account opening fees, depending on the financial institution
  
• Annual maintenance fees, including the Annual Return fee and annual financial statements filing fee, payable to the MBR after incorporation
  

Once the registration fee and complete documentation are submitted, the Registrar will review the application and, if everything is in order, proceed to issue the company’s Certificate of Registration.

Step 5: Certificate of Registration

In case all the necessary documentation is provided and accepted by the Registrar, a Certificate of Registration will be issued. This certificate proves that the company has come into existence and is authorised to conduct business starting from the date of issuing of said certificate.

The time required for incorporation of a company in Malta depends on the type of company being registered, if all documentation is satisfactory, and if any supplementary information must be provided to the Registrar. If all is in order, this normally lasts between 5-10 days following the submission of all documents to the Malta Business Registry.

Step 6: Register for VAT in Malta

When you create a company in Malta and it is officially recognised by the Registrar with a Certificate of Registration, it must then be registered for VAT which is set at 18% in Malta, especially if the company would be incorporated as a ‘trading’ and not a ‘holding’ entity. The following documents would typically be required for an application for a VAT number:

• An Application Form submitted through a Registered Practitioner alongside an Authorisation Letter.
• A Practitioner’s or Company’s Legal Director’s identification document.
• Self-registration vested as a Company’s legal Director through eID.
• Self-registration using a valid Identity/Residence card (if in possession of one) and Document Numbers.

If in any doubt, contact CSB Group’s experts who will be happy to guide you through the application for VAT process.

Step 7: I have officially opened a company in Malta, what now?

Once a company is registered in Malta, certain formalities need to be adhered to and CSB will be there to guide you every step of the way. Such formalities include adhering to all tax obligations, and preparing and submitting annual returns & annual audited accounts.

The Annual Returns should be signed by a company secretary or director and submitted to the Registrar within 42 days from the anniversary date of incorporation of the company– if not, a penalty for late filing would be imposed. The Annual Returns can take both paper form or digital form, and should include the following information:

• Company name;
• Registered address;
• The share capital and its details, such as the percentage of which is paid up;
• Identification of all shareholders, directors, secretaries, and corporate bodies.

A fee will also be payable to the Malta Business Registry when submitting the Annual Return, which depends on the amount of share capital of the company.

Furthermore, if any changes happen within the company, such as a new director taking office or if the enterprise changes address, these must be notified to the Registrar expeditiously. Different forms are available depending on the changes being reported, known as Form H for Increase in Share Capital; Form K for changes among directors, secretaries or representation of the company; Form Q for changes in Registered Office of a Company; Form T for Transfer or Transmission of Shares, just to name a few.

Things to consider before opening your business in Malta

Besides incorporating a company and fiscal matters, there are several practical matters to consider when setting up a business in Malta. These range from funding to hiring the right team and everything in between. In this section, we will take you through some of the practical matters you will need to decide on and implement as a part of the setup process.

Getting funding

Whether starting a business in Malta or anywhere else, you need money to do so. While most entrepreneurs will have some money saved up, there is often a need for additional funding. There are several options available. Firstly, if you are resident in Malta, there are commercial loans available in local banks that can assist businesses in getting started and expanding. Another option is crowdfunding or raising money from private investors. If your business is in the tech sector, particularly gaming, blockchain, crypto, and fintech, investment levels are high. This provides ample opportunity for funding from venture capitalists or angel investors to help you get started.

There are also a number of aids available by Malta Enterprise that support start-ups and enterprises demonstrating commitment towards growth, an increase in value-added and employment. For more information visit here.

Other options include sector and location-specific lending and grants, such as those from the authorities or the European Union.

Opening a bank account

When starting a business in Malta, you will need to open a bank account to accompany it. Thankfully, several options are available to you, depending on the type of company and your requirements. The process for opening an account and what documents are required will depend on the nature of your business and, to an extent, where you are from. Opening an account is best done with support from a CSB Group that has long-standing professional relationships with the top local banks and can guide you appropriately.

Getting insurance

There are certain kinds of insurance that you might need to consider when you are starting a business in Malta. Again, the exact type of insurance will depend on what type of business you are running. Malta is home to several large insurance and reinsurance companies experienced in working with businesses of all kinds. They can provide everything from professional indemnity insurance to packages of health insurance to your employees. As your business grows and diversifies, you can find insurance in line with EU standards and requirements and suits your exact needs.

Obtaining a PE number

Under Maltese employment law, every local business intending to employ staff locally must first obtain a PE number. This allows them to engage staff and pay taxes such as income tax and national insurance on behalf of staff. These payments are governed by final settlement tax reporting procedures. Acquiring the number is relatively straightforward, but there are some forms to fill out, depending on your area of operation. To ensure a smooth and swift process, it is advisable to partner with CSB Group for this stage of the process.

Hiring Employees

One of the key benefits of starting a business in Malta is access to a large, multiskilled, multilingual HR talent pool. Malta is home to many companies, including large international corporations, branches of leading firms, and smaller startups. It is mainly known for online gambling and fintech, and there are many highly qualified individuals locally who can fill every kind of role. As well as having benefited from high standards of local education, there are many foreign workers from all over the world.

Company premises

Another step to consider when starting a business in Malta is acquiring the proper commercial premises. Several options are available to you, such as a commercial lease, serviced offices, or purchasing outright. Which is the best for you will depend on your budget, company size, and your mid to long-term plans. But rest assured, there is a wide variety of options available. Many tech and gaming businesses are based in Sliema, Gzira, St Julians and Birkirkara, but there are modern, stylish, and accessible options throughout the country.

The whole island is served by high-speed internet and reliable electricity, and most locations are within a 40-minute drive from the airport. Malta Sotheby’s International Realty (operated by CSB Group) can help with sourcing property, negotiations, contracts, and finalising sales or leases.

How can we help?

CSB Group offers Corporate Services such as Company Formation in Malta, Company Redomiciliation, Branch Establishment, Directorship & Company Secreterial, Malta Back Office Administration, Trusts, Escrow & Fiduciaries, Foundations, Global Company Formation, Start-up Undertaking Criteria, Private Exempt Company, Accounting & Auditing, alongside general Tax Services, Risk & Compliance, Bookkeeping, Payroll Administration, Company Liquidation & Dissolution, amongst many others.

Our team of specialists expertly guide clients through the process of opening a company in Malta, providing assistance and advice throughout. Start your company in Malta now by contacting [email protected].

CSB International Ltd (C38923) is authorised to act as a Company Service Provider by the Malta Financial Services Authority (MFSA) (www.mfsa.mt), the single regulator of financial services in Malta. The MFSA was set up through an Act of Parliament (Chapter 330 of the Laws of Malta) and its main functions include the protection of consumers, integrity of financial markets, financial stability and the supervision of all financial services activities. The MFSA is an entity which falls under the Ministry for Finance within the Government of Malta and holds an advisory role to the Government in the formulation of policies on matters relating to the financial services industry.