Malta is a European island located south of Italy, acting as a natural gateway between Europe and North Africa. Malta offers a great opportunity for expatriates attracted to the Mediterranean climate and its citizens, and those seeking a country where English is spoken.
This beautiful island also provides an ideal environment to start a business, especially with Malta’s startup visa program, which offers medium-term residency for entrepreneurs from outside the European Union to live in Malta while launching and expanding their startups.
This residence permit lasts for three years, renewable for an additional five years after the third year, allowing entrepreneurs to stay in Malta during their business development. Founders and co-founders, along with their families, can also access Schengen countries without a visa for business and travel purposes. Do you think this opportunity is right for you? If you’re ready to take a serious step in establishing your own business in Malta, follow this topic.
Starting a Business in Malta
As mentioned, starting a business in Malta presents a significant opportunity for foreign investors looking to set up a company in a European country. By taking this step, you can also secure residency in one of the EU and Schengen Area countries.
Malta’s economic conditions make it a favorable location for business investment and the establishment of companies.
Can Foreigners Establish a Company in Malta?
Yes, foreigners can definitely establish a company in Malta. There are no restrictions on foreign ownership, and Malta prides itself on a business-friendly environment, making it easy for companies to be established and managed in the country. For foreigners, the preferred business entity type is often a Limited Liability Company (LLC).
However, before starting a business in Malta, several factors must be considered, including:
- Securing funding for company registration.
- Opening a business bank account in Malta.
- Obtaining insurance.
- Applying for a PE number (Employment Permit).
- Completing employee hiring procedures.
- Identifying a company office, warehouse, or factory location.
Benefits of Establishing a Business in Malta
There are numerous advantages to starting a business in Malta, such as:
- Tax Benefits for Companies: Although the corporate tax rate on business profits is 35%, Malta has one of the lowest effective tax rates in the European Union. Through a tax refund system, shareholders can reclaim part of the tax paid, reducing the effective tax rate to 5% for business activities and 10% for passive income. These tax reductions significantly lower the actual tax rate.
- Low Barrier to Entry: Foreign companies and individuals can establish a company in Malta with 100% ownership.
- Double Taxation Avoidance Agreements: Malta has signed over 70 agreements to avoid double taxation with various countries, protecting businesses from being taxed twice.
- Exemption from Customs Fees on Documents: Malta offers exemptions on fees related to stock transfers and capital increases, reducing operational costs and improving efficiency.
- No Visa Required: Being part of the Schengen Area allows easy movement between Malta and other Schengen countries, facilitating business operations.
- Strategic Location: Malta’s position in the Mediterranean offers easy access to major European capitals and North Africa, making it convenient for business and travel.
- Mediterranean Climate: The mild Mediterranean weather throughout the year adds to Malta’s appeal as a business destination.
Types of Companies in Malta
When establishing a company in Malta, you have several types of companies to choose from, including:
- Limited Liability Company (LLC): The most common type, which can be either private (up to 50 members, no public offering of shares or bonds) or public (offering shares or bonds to the public).
- General Partnership: Suitable for medium to small businesses, which can be either En Nom Collectif (partnership between two or more individuals or entities) or En Commandite (limited partnership where members have limited liability).
- Sole Proprietorship or Single Member Company: Owned by one individual, either from the beginning or through the acquisition of all shares later on.
- Foreign Companies: Companies that have a legal entity based outside Malta but have set up a branch in Malta.
How Can Foreigners Establish a Company in Malta?
To establish a company in Malta, foreigners must follow these steps:
- Choose the Type of Company.
- Select the Company Name.
- Prepare the Required Documents for Company Registration.
- Pay the Registration Fees.
- Obtain the Company Registration Certificate.
- Register for VAT.
These are the basic steps involved in registering a company in Malta, and now we will explore each step in detail.
Choosing the Type of Company
There are several types of companies available for registration in Malta, including:
- Limited Liability Company (Private or Public)
- General Partnership (En Nom Collectif or En Commandite)
- Sole Proprietorship
- Branch of a Foreign Company
Choosing the Company Name
The company name is an important part of your business identity, so it must be chosen carefully. The name must not be duplicated, offensive, or misleading about the nature of the business. Approval from the relevant authorities is required for the name.
Preparing the Required Documents for Company Registration
This includes the company’s Memorandum and Articles of Association, which provide important details about the company, such as its type, members, registered office, capital, and directors. The BO1 form may be required for shareholders, and proof of paid-up capital must also be submitted, usually in the form of a bank deposit.
Required Documents for Company Registration in Malta
These are the documents required to register a company in Malta, and all copies of documents must be notarized by a notary or lawyer:
- Memorandum and Articles of Association.
- BO1 Form.
- Proof of Paid-up Capital.
- Identity proofs for individuals and employees involved.
- Beneficial Ownership Form.
- Satisfactory Bank References for non-EEA residents.
- Registration Fees Verification.
- Any additional forms or documents requested by the Registrar.
For a foreign company establishing a branch in Malta, the following documents are required:
- Original copies of the Charter or Articles and Memorandum of Association.
- List of Directors and Secretaries.
- Returns of the foreign company with details.
- Appropriate Trade Name.
- Branch office address.
- Business Activities.
- Authorized Representative.
- Information on the legal form of the foreign company and its registration.
Paying Registration Fees
One of the most important steps in establishing a company in Malta is paying the registration fees, which vary depending on the company’s authorized share capital.
What is the cost of establishing a company in Malta?
To register a company in Malta, you must pay registration fees to the Companies Registrar, which depend on the company’s authorized share capital.
For companies with authorized share capital under €1,500, the fee is €245.
For companies with authorized share capital over €2.5 million, the fee is a maximum of €2,250.
For investment companies with variable capital (SICAVs), commonly used for collective investment schemes, the standard fee is €1,750.
Obtaining the Registration Certificate
After completing the previous steps, submitting all the required documents, and paying the registration fees, if all documents are accepted, the registrar will issue a certificate confirming the company’s existence and its authorization to conduct business.
VAT Registration
Once the company is registered, it must register for VAT at an 18% rate if it is a commercial entity. The process varies depending on the applicant's status (sole owner, legal representative with a Maltese ID, or foreigner).
What are the main options for establishing companies in Europe?
Other Options for Establishing Companies in Europe
If you’re considering other options for establishing companies in Europe, you have two main choices:
Establishing a Company in Spain
Spain is an ideal location for establishing a company in Europe and is considered a stronger option than Malta in terms of economic advantages. Key benefits of establishing a company in Spain include:
- Spain is one of the strongest economies in Europe and is home to many successful global companies.
- The country offers excellent infrastructure necessary for major business ventures.
- Spain is an important global market that enables businesses and foreign projects to thrive.
- Spain’s business culture is ideal for networking and achieving success in your project.
- The country provides a great environment for both work and leisure with its vibrant culture and lifestyle.
Establishing a Company in Italy
Italy is also one of the top choices for investment and company establishment in Europe. Key advantages of establishing a company in Italy include:
- Italy provides easy access to global markets, allowing Italian products to reach international markets quickly.
- Italy is one of the strongest economies in Europe, offering foreign investors greater opportunities both locally and globally.
- Italy offers a variety of company types to establish, depending on factors such as budget, investment size, and number of employees.
- Italy provides incentives for entrepreneurs, including investment in research, development, and programs for small investors.
Residency in Malta
As mentioned, establishing a company in Malta can help you obtain permanent residency in Europe by acquiring a residence permit in Malta for 3 years, which can be renewed for an additional 5 years. After this 5-year period, you can convert it into permanent residency. Key benefits include:
- There are no language barriers, as English is also an official language alongside Maltese, making it easy to communicate with locals.
- Malta’s climate is ideal for those who enjoy snowy winters and hot, dry summers.
- Your residency permit in Malta allows you to apply for residency for your family.
- Malta offers stunning natural scenery, including places like St. John’s Bastion, Casa Rocca Piccola, Popeye Village, and the Blue Grotto.
- You can easily travel between Schengen Area countries with the Maltese Digital Nomad Visa, allowing you to stay in any Schengen country for up to 90 days within a 180-day period.
Can I get help with establishing a company in Malta as a foreigner?
Getting Help with Company Establishment in Malta
It is always advisable to seek help if you want to establish a company in Malta, as this will ease the process and speed up the establishment. Having the assistance of a specialized lawyer can help you review all the required documents for registration and ensure they are 100% legal.
You might also need assistance from an accountant to review your company’s financial statements and tax matters. You can get all these services from a single place by requesting company establishment services from Zajel, and you can also consult with our legal experts who have over 10 years of experience.
Establishing a Company in Europe
Easy and fast procedures for establishing your company in Europe with Zajel.
FAQ
Can foreigners establish a company in Malta?
Yes, foreigners can establish and register companies in Malta without any restrictions on foreign ownership. Malta is known for its business-friendly environment, making it a preferred destination for foreign entrepreneurs to start businesses. The most common type of company chosen by foreigners is a limited liability company (LLC).
What are the benefits of establishing a company in Malta?
Companies choose to register in Malta because it offers:
- Tax advantages for companies with a low effective tax rate, allowing shareholders to claim back part of the taxes paid.
- A low entry barrier, allowing 100% foreign ownership and reasonable registration costs.
- A wide network of double tax treaties and tax exemptions.
- Malta is also part of the Schengen Area and enjoys a strategic geographic location and a Mediterranean climate.
What is the VAT rate in Malta?
The standard VAT rate in Malta is 18%. This rate applies to most goods and services unless exempted or subject to a reduced rate of 0% or 5%. There are two reduced VAT rates: 7% for tourist accommodation and sports facilities, and 5% for certain goods like food, medical equipment, and printed materials. Some supplies are exempt from VAT, including healthcare, education, sports activities, and specific goods.
Are companies in Malta exempt from taxes?
The income tax rate in Malta is a flat rate of 35% on all income earned both locally and internationally, regardless of profit amount.
What is the company tax rate in Malta?
The corporate tax rate in Malta is 35%. However, companies registered in Malta can apply for tax reductions and may receive refunds of 6/7, 5/7, 2/3, or even a full refund, depending on specific conditions that must be met.
How long does it take to establish a company in Malta?
It takes approximately two weeks to register a company in Malta.
Do I need a physical address to establish a company in Malta?
Yes, a registered office address within Malta is required for a Maltese company.
What is the required capital to establish a company in Malta?
For a private company in Malta, the minimum required capital is €1,164.69, while for a public company, it is €46,587.47. At least 20% of the capital for a private company must be paid upon signing the memorandum of association (20% for public companies).
How many directors and shareholders are required to establish a company in Malta?
At least one director and one shareholder are required.
What are the obligations for document submission and annual fees?
Each year, Maltese authorities require submission of audited financial statements, corporate tax returns, and annual returns.
Are there any restrictions on company names?
The chosen name must be unique and should not include offensive words. Additionally, the company name must accurately reflect the nature of the business.
What is the role of the Companies Registry in Malta?
The Companies Registry in Malta registers new business partnerships, processes partnership-related documents, issues certified documents including certificates of good standing, maintains company names, collects registration fees and other charges, publishes notices, conducts company investigations, and maintains the company and partnership records.
Which authority registers companies in Malta?
The Companies Registry in Malta is responsible for registering companies in Malta.