How To Start A Business In Malta In 10 Steps

Malta is a tiny nation in the Mediterranean Sea, strategically positioned between Europe and Africa. It is home to around 400,000 inhabitants, including a certain Fun Entrepreneur, and has over 5000 years of history and culture at its roots. Malta is also a good place for business, offering year round great weather, short commutes and a skilled and flexible workforce. Whilst the local population does not offer huge market opportunities, it is a great testing ground. Existing logistical connections to mainland Europe and North Africa mean that companies wishing to expand beyond Malta can do so with ease. For those who wish to start a business in Malta, here are 10 simple steps to follow:

 

1. Limited Liability or Self-Employed?

 

The main difference is that by having a limited liability company you give your business a more trusted face and you, as a shareholder, are better protected. There are also more bureaucratic steps in creating such a company, such as having an annual audit, so I would recommend making sure your business is viable before registering it as LTD. You also need to be at least two shareholders to register a company.

 

For a self-employed person to start a business in Malta, the steps are much simpler, but so is the personal risk if anything goes wrong, such as with defective products or lawsuits. If you decide to start as a self-employed, then you can go directly to Step 5.

 

2. Prepare Registration Documentation

 

If you are going to proceed with a limited liability company, then you need to draft the memorandum and articles of association. Whilst you could prepare these yourself if you have the experience, I would strongly recommend seeking the assistance of local accountants or lawyers especially if you are starting a business in Malta for the first time. These documents are not only important for registration, they also detail what the company, its shareholders and its directors can and can not do.

 

3. Deposit the Minimum Share Capital

 

The amount will be determined in your memorandum and articles of association. To start off, any company needs some capital, however small. The minimum amount allowed is €1,200 (value rounded up), but you only need to deposit 20% of this value at a bank. Therefore, this step also includes you needing to open up a bank account in the company’s name. Inform the bank teller that you are depositing your share capital.

 

The money will go into a holding account until the company is properly registered. You will be given a receipt. It is very important that you do not lose it as you will need it to start a business.

 

4. Start A Business In Malta

 

In this step you need to present the filled in company registration form, together with the memorandum and articles of association and the share capital deposit slip to the Malta Financial Services Authority, who oversees all locally registered companies. Registration is done within 2 to 3 days and there is a registration fee to be paid, depending on the size of the company. The MFSA offers detailed information about fees and the registration procedure.

 

5. Obtain Licences

 

All those who start a business in Malta need to obtain a trading licence. For most businesses the process is quite simple. You only need to fill in the Application form for a commercial activity, although if you are setting up a food preparation business, beautician related business or a large manufacturing business you will need to apply for further licences from various governmental departments.

 

The best place to get your answers to all your questions about proper licencing is the Commerce Department. You will need to pay one or more annual fees for each licence but the very basic licence will cost you €70 for a small business.

 

6. Get a Tax Identification Number

 

Whilst this step might not be the most exciting, it is a legal requirement that a business has a tax identification number. Once again the necessary form can easily be found online. There are no fees to be paid, however once a year you will need to fill in a tax return form and this varies depending on whether you are a limited liability company or a self-employed person. In this case, especially for your first year in business, I would recommend  seeking the assistance of an accountant or a lawyer.

 

7. Inform the VAT department that you will Start A Business

 

Another requirement to start a business in Malta is registering with the VAT department. When doing this there are 3 important thresholds to keep in mind. If you are foreseeing a turnover of not more than €7,000 in a year period (January – December) then you are not obliged to register or charge VAT.

 

For businesses which expect a turnover of between €7,001 to between €14,000 and €35,000, depending on the business, registration is optional, though I would recommend it. In this case the business would not charge VAT either. For turnover values above this figure VAT would need to be charged. More information about VAT requirements can be found on the department’s website. Obtaining a VAT number is free and the process is extremely fast.

 

8. Obtain a PE Number

 

This step can be skipped if you are self-employed and do not intend to employ any employees. If, however you have a limited liability company, you are automatically working for the company, therefore you are an employee. In such a case and in cases where you intend to have employees then you need to carry out this step.

 

To obtain a PE number you need to fill in a form online by the Inland Revenue Department. This process normally takes around 3 days and is also free of charge.

 

9. Register with the ETC

 

The Employment and Training Centre (ETC) is responsible for all employment registration in Malta. Irrespective of whether you will start a business as a self-employed person or a limited liability company, you need to fill in a form for each employee. Forms needs to be filled in upon registration and again upon termination of each employee. The process is quick and free of charge.

 

10. Data Protection Registration

 

This step only applies for businesses that will be collecting personal details of their prospective or existing customers. In recent years Malta has caught up with the rest of Europe in providing safety to people’s information. It is important that when you start a business you create certain safety processes to ensure that customer’s details cannot be stolen by third parties. More information on Data Protection in Malta can be found on their website.

 

You might have other questions of uncertainties when you start a business in Malta. The government has set up a department, Business First, which can handle almost all of these steps for you. If you have any further questions you can contact them via email.

 

Please leave a comment below if you have found this information to start a business in Malta useful.

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The FUN Entrepreneur

Having started my first business at the age of 16 I was always eager to dive into the exciting world of entrepreneurship, but seeing so many others fail I sought ways to succeed, not only by making money, but also by having fun whilst doing it!

36 thoughts on “How To Start A Business In Malta In 10 Steps

  • June 11, 2016 at 9:00 pm
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    Please let me know if you’re looking for a article writer for your blog. You have some really good posts and I think I would be a good asset. If you ever want to take some of the load off, I’d absolutely love to write some material for your blog in exchange for a link back to mine. Please send me an e-mail if interested. Kudos!

    Reply
  • July 25, 2016 at 10:22 am
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    You’re so cool! I have been looking for advice on setting up a business in Malta for ages. It feels so good to locate somebody with helpful ideas on this topic, and not trying to sell you services! Seriously.. many thanks for starting this up. This site is one thing that’s needed online, someone with a certain amount of originality with a local perspective!

    Reply
    • July 27, 2016 at 1:11 pm
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      Thanks Simon for your comment. Indeed there is a lot of advice on opening a business abroad, but not much easily accessible advice for setting up in Malta. The Fun Entrepreneur will help change this. Be sure to subscribe to receive immediate updates on new articles which will be of interest to you. Have a great day! 🙂

      Reply
  • August 3, 2016 at 6:38 am
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    I’m getting many ideas after reading your post, thank you.

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    • August 8, 2016 at 2:18 pm
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      With the new incentives for businesses in Malta now really is a great time to start a business on the Island.

      Reply
  • August 16, 2016 at 6:24 pm
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    Wow, this post is good, my sister is thinking of starting a business here so I am going to share it with her. Thanks!

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    • August 19, 2016 at 11:44 am
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      I wish your sister luck Mark, let her know she can subscribe to our site to get new articles straight in her inbox. Thanks.

      Reply
  • September 4, 2016 at 11:47 am
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    Thanks for this really useful guide and the link for Business First. I am setting up a business here after having moved from Australia. Looking forward to more articles on business in Malta.

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    • September 4, 2016 at 12:11 pm
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      You’re most welcome, Jean. Be sure to subscribe for more articles directly to your inbox. Malta Enterprise’s assistance department, Business First, is very helpful and can help you get started with comfort. Good Luck.

      Reply
  • September 15, 2016 at 2:26 pm
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    bookmarked!!, I love your web site!

    Reply
  • September 17, 2016 at 5:37 am
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    Great post. I’m setting up a business in Malta at the moment so found great information.

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    • September 22, 2016 at 2:03 pm
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      You’re welcome, Trevor. Be sure to subscribe to The Fun Entrepreneur as you will receive great grants and other support measures which are available to you when you set up a business in Malta.

      Reply
  • July 17, 2017 at 2:06 am
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    …Shared to Facebook

    Reply
    • July 17, 2017 at 8:32 pm
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      Thank you, Sharita. We take this opportunity to thank all our readers who share our articles on social media. Keep doing it – it really makes a difference 🙂

      Reply
  • July 20, 2017 at 2:46 pm
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    I cannot thank you enough for the article. Great.

    Reply
  • August 11, 2017 at 12:16 pm
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    Pretty! This was an extremely wonderful article. Thank you for providing this information.

    Reply
  • August 18, 2017 at 2:18 pm
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    Excellent post! We will be linking to this great article on our website.
    Keep up the great writing.

    Reply
  • August 29, 2017 at 6:08 am
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    Great article! Wanted to ask how to treat the startup phase of the business where you are still testing the waters. Are you legally bound to set up a company immediately and incur all the setup costs before you know the business will catch on? For example – setting up a .com.mt domain requires providing a VAT number. Should one have everything in place even before setting up a domain and simple landing page to gauge interest?

    Reply
    • August 29, 2017 at 3:30 pm
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      As you rightly point out setting up a business without knowing if it will be a success does not make sense. Fortunately there are some things you can do to check if your business will be a success without breaking the bank. We discuss these in more detail here – http://thefunentrepreneur.com/2016/08/26/is-my-business-idea-going-to-be-a-success/

      I strongly recommend you start with doing Market Research to prove that your idea has potential. You probably already believe this, but you are biased. Market research helps reduce the assumptions and show if there is a need or not for your solution.

      The next step is carrying out proof of concept. In simple terms, get the core product/service and offer it. To do this you will need to register with ETC and other departments depending on the business idea. However, entities such as the VAT department allow you to test the waters without needing a VAT number. There are several thresholds depending on the type of business. Proof of concept may cost you some money, but it can help you shape the product or service in a way that once you launch you know that the market wants your product/service.

      Reply
  • October 12, 2017 at 4:24 pm
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    Is a resident director required, or can all the owners be overseas, and be paid exclusively with Dividends?

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    • October 18, 2017 at 11:08 am
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      A limited liability company can be set up in Malta and have only foreign owners. Shareholders are normally paid in dividends whereas Directors are either paid a salary or given Director Fees.

      Reply
      • December 5, 2017 at 1:35 pm
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        Hi – thank you for a really useful article! I just wanted to check this point. It was my understanding that owners/shareholders can be foreign but the Company Director and Company Secretary must be a resident of Malta. (They don’t have to be a Maltese national, but must be a resident of Malta). Can you confirm or clarify this? Many thanks!

        Reply
        • December 6, 2017 at 11:56 am
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          It it preferable that at least 1 Director is a Maltese resident but it does not seem compulsory. In any case it would be best to check directly with the MFSA to put your mind at rest.

          Reply
  • October 23, 2017 at 6:53 am
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    This article really brings to light the answers to the issues that many people face on a day to day basis

    Reply
  • November 13, 2017 at 11:33 pm
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    Hi , i want to start a business in Malta and i got Italian residence permit and my nationality is Pakistani , can you tell me please how i can start and what is the process and which steps need to be follow .
    Thanks.

    Reply
  • November 18, 2017 at 4:17 pm
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    Hello! Very interesting article!

    Do you know if personal blogs have to be registered in Malta? As I´m sure you know, blogs can generate income through ads and other things, so I´d like to know if this a commercial activity that has to be registered and if tax has to be payed.

    I thought that self employment might apply to this situation, but if I´m already employed and I just want to have additional income from a blog then what should I do in order to comply with the law?

    Thank you very much!

    Reply
    • November 22, 2017 at 8:14 am
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      Hi Miguel, there is no need to register personal blogs in Malta, especially until they are generating a substantial amount of revenue. Although you are employed you can still be part time self employed. You should always declare your incoming, be it from employment or other sources (such as ad revenue) in your taxes and pay your fair share. Remember that you can claim costs spent to create your blog. It would be best to speak to a qualified accountant to assist you. However, until your blog starts generating a considerable revenue you needn’t worry to much about this and instead focus on growing your audience. Oh, and remember to share our page in your social circles too 🙂

      Reply
  • December 26, 2017 at 11:45 pm
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    Your page is a fantastic starting point for everyone seeking to start a business on Malta. Congratulation and thanks a lot for the valuable info!

    However, I have some questions left, answers may be useful for the whole community:

    1. I run a very small UK based company since 2012 and can do all the mandatory returns online myself, without expensive lawyers, tax consultants etc. Given a certain level of experience, can I do everything myself for a Maltese company too, or will I need consultants at a certain point, i.e. for the annual return or the corporation tax?

    2. In the UK I use a web based software called FREE AGENT / MYBUSINESSWORKS, to do my bookkeeping etc. Is there similar software available for a Maltese Limited Company?

    3. Can you provide an example (txt or doc) for a “memorandum and articles of association”, for a very simple Maltese Limited Company?

    Reply
    • December 28, 2017 at 7:56 am
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      Hi Henning and thank you for your comment. With a little knowledge it is possible to make the VAT and Tax returns yourself if you do not have a high turnover and a complicated accounting process. Our recommendation would be to first use a qualified Accountant and let them guide you how to do things, even if you hire them as consultants, rather than Accountants. If your company is a Limited Liability (Ltd.) you will have to do at least 1 annual audit and this needs to be done by a qualified auditor. There are a number of open source software which allow you to amend the tax rate depending on the country and we are sure that there exist some created with Malta in mind, however we are not in a position to endorse one over another. There is not such thing as a template M&As as each other should be especially written for the business activities. We do offer the service of drafting M&As and Business Plans if you are interested contact us on thefunentrepreneurblog@gmail.com.

      Reply

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