Malta has long established itself as one of the world’s leading maritime jurisdictions, with a ship and yacht register that attracts owners and operators globally. A key recent development in Malta’s legal and regulatory framework is the introduction of Legal Notice 139 of 2025, i.e. the Audit Exemption Rules, 2025 which brings forward new audit exemption provisions for certain entities under the Companies Act (Cap. 386 of the Laws of Malta).
These provisions apply to accounting periods starting on or after 1st January 2024, with particular rules taking effect from 1st January 2025.
Key features of the legal notice include:
A two-year audit exemption for qualifying new companies, provided that certain conditions are met as per Rule 3, or alternatively, as per Rule 4, a 120% tax deduction on audit costs, capped at €700 per accounting period for the first two years.
Eligibility thresholds based on turnover limits, individual shareholder status, and small company classification, as per the below:
- -In terms of Rule 5, if the composition of a company’s shareholders shifts such that one or more shareholders no longer satisfy the required personal or educational qualifications, the previously applicable exemptions and tax deductions outlined in Rules 3 and 4 are immediately revoked.
- Starting 1 January 2025, Rule 6 provides that companies qualifying under Article 185(2) of the Companies Act will face adjusted tax audit requirements; those meeting two out of three defined thresholds must provide a review report instead of a full audit, while those meeting all three thresholds are fully exempt from submitting either an audit or review report. This framework also applies to companies preparing consolidated accounts, provided the entire group qualifies as a “small group” under Article 185(5) of the Companies Act.
Rule 7 is particularly significant for shipping companies registered under the Merchant Shipping Act (Cap. 234 of the Laws of Malta). By the introduction of this Rule, entities that qualify for an exemption under Regulation 64 of the Merchant Shipping (Shipping Organisations – Private Companies) Regulations (S.L. 234.42) are now deemed to be compliant with Article 19(4)(a) of the Income Tax Management Act (Cap. 372 of the Laws of Malta), even if no statutory audit is carried out.
This exemption is available to companies meeting the ‘small group’ thresholds with a balance sheet total of up to €6 million and turnover of up to €12 million, which primarily benefits small to mid-sized operators, such as yacht charter firms and cargo companies. By reducing compliance costs and simplifying reporting, these rules enhance cost efficiency and operational flexibility. Larger shipping companies that exceed the thresholds remain subject to full audit requirements.
Lastly, a company’s qualification for exemptions under Rules 6 and 7 is evaluated based on its status as of the balance sheet date, consistent with Article 185(3) of the Companies Act. For non-resident companies, Rule 9 specifies that eligibility is determined by considering only the operations conducted within Malta.
Here at CSB group, we can assist clients in navigating these new transformative changes and ensuring that they are fully aligned with the latest legislative developments.
Join us at the Cannes Yachting Festival and the Monaco Yacht Show to learn more about our services, or get in touch with us at [email protected]
About the Author
This article has been authored by Dr Edward Meli - Manager - Legal & Maritime, Dr Luana Agius - Legal Advisor and Laura Strickland - Legal Intern.
