10 Things You Need to Know Before Setting Up a Business in Malta
by Frank Salt Real Estate
26th May 2021
Malta is known for implementing sound business practice, due diligence and for rooting out any money laundering activities. These practices are very reassuring especially to business owners who want to take calculated risks on their new ventures. The country’s entire tax structure is not only monitored but also regulated by high and stringent EU standards, making it one of the safest and most compliant jurisdictions anywhere in the world.
If you are interested in setting up a business in Malta, here are 10 things you need to know before you get started:
There’s a variety of options for setting up a business in Malta, be it a large or a small company. This can range from being a sole proprietor to having hundreds of employees and whether it is private or public. Different regulations and laws apply to each one as to what the responsibilities are, what needs to be done legally regarding audit reports and more. Here’s the list of options for Malta company types:
o The Limited Liability (LTD) Company
o Public Company
o General Partnerships
o Limited Partnerships
o Sole Proprietorships
o Shelf Companies
For a limited liability company, you will need to draft the articles of association and the memorandum. Your appointed auditor can do this for you and it needs to be done thoroughly, according to required legislation. It will set out what the company intends to do, its core business, all the shareholders and the rules regarding what shareholders and directors are allowed and not allowed to do. This needs to be clear and factual. Some of the clear directives and content that must be included in the memorandum will cover/include:
Your auditor or appointed official will inform you of the amount required and this will be stated in both the articles of association and the memorandum. Usually in the region of about €1,200 this amount is very little when compared to other parts of the world, but this is business dependent and certain types of businesses will be required to deposit a bigger amount for starters. It is best to clarify this with your auditor before proceeding to the next step.
In order to follow the correct procedures, a bank account will have to be opened in the business’s name. This step may take some time, as Malta has introduced very tough anti-money laundering legislation recently. Banks will guide you through the process and ask you to submit additional documentation supporting your application and a thorough background check and stringent due diligence procedures will be followed. Do not be frustrated if it takes longer than usual, as you will know that you have made the grade once approval for the opening of a bank account has been approved. Keep all documentation, receipts and copies of communication no matter how trivial you may deem it to be. Once opened, the share capital will be deposited and reflected in the company’s bank account and until such time it will be held in a trust account.
Optionally it is possible that your auditor can confirm receipt of the share capital without the need for a bank account, but here are the figures for the most popular two types as an example:
– Minimum share capital for a private company is €1,165 (a minimum of 20% to be paid up).
– Minimum share capital of a public company is €44,588 (a minimum of 25% to be paid up).
The next step will be to have your auditor submit and present all the completed and signed forms together with proof of the share capital deposit to the Malta Business Registry, the official body that oversees all of the companies registered in Malta. The registration process will not take long and you will be expected to pay the registration fee which will be based on the size and range of activities undertaken by your company.
This is a case-by-case scenario and the various licenses you may need depends on your business activities. Should it be for instance admin, the various licenses you will need to obtain will be far less than for instance a concern that is in food processing, beauty products, or other fields of manufacturing and production. We advise finding a professional to do this on your behalf as it will involve various government departments for the issuing of different licenses but rest assured that although it may take some time, the costs are extremely affordable for all licenses.
For your business to legally operate in Malta, obtaining a tax ID number is required. No fees are needed for this step. However, you will have to submit an annual tax return.
You have to register for a VAT number irrespective of turnover. Always check the latest rules and legislation as to what amount of VAT you are supposed to charge, as this varies according to your turnover and type of business. Getting a VAT number is free of charge and fast.
If you have a limited liability company and thus employees (if you work for the company you are an employee) you will have to obtain a PE number. This will be issued by the Inland Revenue, and is free of charge.
JobsPlus is the official gateway to dealing with all employment in Malta whether you are self-employed or have employees. All persons taking up or leaving employment at any business in Malta needs to be registered and vetted through them. JobsPlus works in tandem with ID Malta, the official residency agency who is responsible for all visas and residency permits related to working on the islands. As an employer and business owner, it will be your responsibility to deal with both these agencies on behalf of your employees.
We advise that you call on Business First, a government initiative that was set up to assist businesses starting up in Malta and do not forget to investigate possible grants and supportive funding by the government and even the EU. For more information on Business First, click here.
Should you wish to find out more about setting up a business in Malta, do not hesitate to call on our commercial specialists at Frank Salt Real Estate Limited’s Commercial Division to assist you. We have more than 51 years of experience and have built a sound reputation over this time in assisting our clients setting up business in Malta.