April 26, 2021
Let’s start with why you’re in the right place now that you’ve decided to start a business in Malta: Malta is not only a beautiful place to live with a high quality work force and a balanced work-life culture, it is also very business-friendly – after all, it’s one of the fastest growing economies in Europe. It promotes professionalism and regulation and offers very attractive tax benefits. Also, Malta’s location in the middle of the Mediterranean means it's a doorway to European, African and Middle Eastern markets.
When it comes to starting a business, if you’re a Malta resident or an EU citizen, things will be easier than if you’re an individual from outside the EU. An important step to factor in is the rather longer process of opening a bank account in Malta (for which we have provided a separate guide, here), it’s worth factoring in that you will need to deposit a percentage of share capital prior to registering your company.
1. First things first
The first thing to do is to establish exactly what type of company you are setting up. There is a range of options for entrepreneurs - outlined below - all businesses are subject to EU business directives.
This is best if you are self-employed and don’t have or plan to have employees – or at least not initially. There are no registration costs and if your income doesn’t exceed €35,000 (for goods) or €24,000 (for services), you won’t have to register for VAT either.
Limited Liability Companies (LLCs)
This is one of the most popular business types registered in Malta. An LLCs can be public or private and act as separate entities to the shareholders. They also have a more attractive tax treatment. Public companies can trade their shares on the Malta Stock Exchange. Branches or subsidiaries of international companies may also register as LLCs in Malta. A private LLC can’t have more than 50 shareholders and must have a minimum share capital of €1,165, whereas a public LLC must have a minimum share capital of €46,600 (25% of this must be deposited before registration).
This option is quite simple to set up once a partnership agreement has been drafted and notarised. Foreign entrepreneurs have the option of two kinds of partnerships: general and limited. A general partnership has more than one partner sharing the liability for the company’s debts and obligations; in a limited partnership some partners are general and some are limited with the general partner/s being liable and obligated. The limited partners are accountable only to the extent of their contribution to the company.
2. Register your company
The next thing to do, if you haven’t already, is to choose a trade name and then register your company’s name online at the Malta Financial Services Authority.
You’ll need to have the following documents to hand in order to complete the registration process:
• M & A (Memorandum & Articles of Association) -
A ‘memorandum of association’ is a legal statement signed by all initial shareholders or guarantors agreeing to form the company and ‘articles of association’ are the written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary.
• Proof that the initial share capital has been deposited
• Proof of ID for all those subscribing to be registered.
This process takes just around 24 hours and sometimes comes with a fee. The fee depends on the amount of share capital. It’s worth noting that although you can register online if you are not in Malta your legal representatives will at some point in the process need to be physically present to sign the documents.
3. Get licenced
Again, the fee you will pay for a trading license will depend on the size of your business. The Commerce Department in Malta will help with establishing how much your license will cost. Much larger enterprises (for example, large clothing manufacturers) need an additional license. The good news is that this process is fast and painless – all you’ll need to do is fill in a form online.
4. Last items
These are the 3 main steps on your journey to having a business in Malta – although you’re not quite there yet. You’ll need to obtain a tax identification number, notify the VAT department (even if your business won’t be charging VAT), acquire a PE number (this only applies if you are registering as an LLC), register with the Employment Training Centre (ETC) and, lastly set up data protection measures. You can complete most of these steps online and can contact the governments Business First department, which was set up expressly to help with setting up businesses in Malta.
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