This process in Malta is a simple-enough and straightforward procedure, set out by The Malta Companies Act 1995 which is modeled on its UK counterpart.
Griffiths + Associates’s experts may assist you with the company registration procedure, and you will be satisfied with the outcome within meeting the legal requirements set out in Malta.
Malta Company Registration Process:
1. Fill in a company application form and due diligence documents on the directors and shareholders.
2. After evaluation of documentation by our experts, we will make a formal proposal entailing all the details, price, terms, and payment.
3. We begin working immediately we receive the client’s confirmation and prepayment, following client acceptance post due diligence. The memorandum and articles of the established company will be drafted for signature.
The usual deadlines:
– for a private limited liability (“ltd.” or “Limited”) – about a week,
– for a public limited liability company (“p.l.c.”) – after MFSA’s approval are around one week.
How To Register A Company In Malta 2022:
1. Select a trade name and choose a business form:
Each option comes with its own pros and cons, it depends on your business model and the level of risk you’re willing to take.
Here are another few considerations worth weighing up:
— Cost of setup procedures
The setup process of a self-employment is less bureaucratic and thus less costly. The incorporation of a company requires one to draft the companies Memorandum and Articles of Association. Furthermore, such a process would also require the submission of additional applications and disclosures and the registration of the company for tax purposes. In terms of timelines, both set-ups can be managed within one week.
— Corporate and Personal Taxes
Overall income would be your deciding factor here. Companies are subject to a flat income tax rate of 35% on profits. On the other hand, self-employed individuals are subject to progressive tax rates starting at 0% and gradually increasing to 15% then to 25% and finally to 35%.
— Malta Tax Refund System
Malta’s tax refund system for international investors can only be availed of by corporate structures and thus not by self-employed individuals.
— Grants / Tax Credits
any government incentives schemes like grants and tax credits are usually equally available to all registered businesses regardless of whether they operate as a company or self-employed business.
2. Prepare registration documentation (the Memorandum and Articles of Association):
Register them with the Registry of Companies.
Important: For self-employed status this step is not necessary.
The amount of money invested as capital should make up part of the Memorandum and Articles of Association.
The minimum share capital must be more than €1,200, but only 20% of the agreed sum needs to be deposited at a bank at the beginning.
4. Register with MFSA:
Important: This step is only needed for a LLC and involves sending documents to the MFSA: a company registration form needs to be completed and sent in to the authority along with the share capital receipt from the bank, the Memorandum and the Articles of Association.
There is a registration fee to pay, usually this takes a couple of days.
5. Obtain necessary licence for your business.
6. Tax registration:
Get a tax identification number, register with the VAT department.
You just need to complete an online form.
Once you have the TIN you will need to submit yearly tax returns whether you are a LLC or self-employed.
VAT registration process is free and quick.
7. Register with the ETC Jobplus:
When applicable, and obtain a PE number from Inland Revenue Department.
All businesses must register with Jobs Plus when a new business is started; a new form must be completed for every employee taken on and upon termination of an employee, further forms must be filled and filed.
Getting a PE number is another free and quick process, you just need to complete the form online that can be found at the Inland Revenue Department’s website and in three days you will gain the PE number.
A PE Number is only required for Limited Liability companies as you will be one of the employees by default.
8. Register for with the Data Protection Commissioner, when applicable:
If your business is going to collect personal and sensitive data from clients, you must register a company for data protection and comply with the GDPR requirements when collecting data.
Comparative Characteristics Of Maltese Entities:
What types of companies can you register in Malta?
Enjoy Tax Benefits of company registration Malta:
10%-30% – Government cash grant or tax credit (which may be claimed against future tax bills) for inbound investment.
Tax credit or a cash grant to qualifying undertakings carrying out qualifying activities, which include such activities as manufacturing activities, the maintenance/repair/overhaul of any water craft/aircraft/industrial engines/electromechanical equipment, industrial services, computer programming, audio-visual productions, activities of research/development/design, education and tuition and hotels and guest houses, restoration/preservation of works of art and antiques, environmental solutions, the treatment of waste, pharmaceutical activities.
Tax credits or cash grants are quantified as a percentage of qualifying expenditure (the acquisition of qualifying tangible and intangible assets required for the implementation of an eligible Initial Investment project, or the estimated wage costs arising from job creation as a result of an initial investment) incurred in terms of the guidelines (The Investment Aid 2021 Regulations, issued on 12 April 2021, L.N. 156):
- 30% of the qualifying expenditure for an undertaking ‘Small-sized’;
- 20% of the qualifying expenditure for an undertaking ‘Medium-sized’;
- 15% in respect to initial investment project carried out by ‘Small’ and ‘Medium-sized’ undertakings in the development of hotels, guest houses and their amenities as licensed by the Malta Tourism Authority;
- 10% of the qualifying expenditure for an undertaking ‘Large-sized’.
- Confirmation by the applicant that it has not carried out a relocation in the two years preceding the application for aid and commits that not such relocation will occur up to two years after completion of initial investment.
- Both the investment and the Qualifying Economic Activity shall be retained in Malta for the minimum period of at least 5 years or 3 years in the case where the beneficiary is an SME, after completion of the investment project.
- The beneficiary provides a financial contribution of at least 25% of the eligible costs, either through its own resources or by external financing, in a form, which is free of any public support.
- Must result in the development, expansion, diversification, or a fundamental change in the carrying out of a Qualifying Economic Activity.
The aid will be awarded to eligible investment projects commencing after 31st December 2021, but no later than 31st December 2023, the application in relation to them should reach Malta Enterprise by 31 October 2021.
10,000 € – 200,000€ – Government cash grant and/or tax credit, the Business Start 2021 scheme.
The funding from this scheme splits into two parts:
- the “Pre Business Plan”, where a company can benefit up to € 10,000 on each project;
- the “Post Business Plan”.
For those Startups that present an economically viable business plan, a maximum grant of €200,000 can be awarded. This grant will be spread over a period of not more than 36 months, with €20,000 distributed quarterly.
- an applicant must be registered as a recognized business entity such as a self-employed, co-operative, or LLC.
- tax credit or a cash grant to undertakings carrying out following activities: manufacturing, software development, industrial services analogous to manufacturing, health, biotechnology, pharmaceuticals and life sciences, other innovative economic activities.
This aid will remain effective until 31st October 2023.
45-65% – Government tax credit for micro enterprises and the self-employed.
A tax credit of 45% of the eligible expenditure is approved to the undertaking or a self-employed person. An additional bonus of 20% (total 65% tax credit) applies to undertakings operating from Gozo.
Eligible expenditure includes:
- Furbishing, refurbishing, and upgrading of business premises;
- Investment costs: acquiring machinery, technology, apparatus or instruments which enhance the operations;
- Commercial motor vehicles costs;
- Increase in wage costs; and
- Certification Costs.
The maximum tax credits awarded to each undertaking is capped at €50,000 over a period of 5 consecutive fiscal years. The capping is increased by €20,000 for undertakings that: operate from Gozo; registered as Family Business, having more than 50% of ownership attributed to female persons.
- At the date of application, the undertaking must at least employ 1 person on a full time or part time basis. Being registered as self-employed with Jobplus is considered to be sufficient to meet this condition.
- In the year when the costs were incurred, the undertaking did not employ more than 50 full time employees.
- In the fiscal year preceding the year when the application is submitted, the turnover or annual balance sheet total of the applicant did not exceed €10 million.
- The undertaking should be registered for VAT (unless exempted).
For an eligible cost to be claimed the costs must be incurred between 1st January and 31st December (both days included) of the year preceding the year in which the claim is submitted.
The deadline of 23 March 2022 applies for any eligible expenditure incurred from 1 January 2021 to 31 December 2021 by any self-employed individuals submitting their tax return in June.
On the other hand, the deadline of 25 May 2022 applies for companies that submit their tax return in September.
Tax credits awarded in 2022 may be utlised up to YA 2025. In all other cases, unless extended through other provisions, the tax credit may be utilised by the third year of assessment commencing from that specified on the Incentive Entitlement Certificate.
Up to 2,000,000 € – Government tax credit to support the development of new skills among Maltese workers.
This support is available to duly registered undertakings (including self-employed persons) that carry out an economic activity in Malta and are engaged in investing in staff training to improve their skills and increase the quality of the Maltese labour market.
This scheme has a budget of EUR 30,000,000. The aid intensity shall be established according to the size of the undertaking, but shall not exceed the following percentages of the eligible costs: small 70%, medium 60%, large 50%. The maximum support shall be of €2,000,000 per skills development project.
This aid will be applicable until 31st December 2022.
Up to 45% – Government tax credit or cash grant to support research and development projects.
This scheme allows a company to claim tax credit on costs incurred directly or indirectly in carrying out a research and development project or projects relevant to the company’s trade.
Aid intensity is up to 45% of eligible costs, depending on the size of the enterprise:
- The large undertaking that carry out an eligible research and development activity will receive a tax credit calculated at 25% of the eligible expenditure;
- The percentage shall be increased by 10% when the applicant is a medium sized enterprise; and
- The percentage shall be increased by 20% when the applicant is a small enterprise.
Eligible costs include:
- Qualifying Employee costs;
- Contracted R&D expenditure (may not exceed 20% of total cost claimed);
- Materials and utilities; and
- Software – when directly related to the research and development activity.
This scheme allows a company to claim tax credit on costs incurred directly or indirectly in carrying out a research and development project or projects relevant to the company’s trade.
With regard to the deduction and carryforward of the R&D tax credits, the same rules apply as provided by the COVID-19 Temporary Support Measures Regulations, 2020. Additional rules are also provided regarding the distribution of income that has been relieved from tax as a result of the R&D tax credit, including that dividends distributed from such income by a company are exempted from income tax in the hands of the members of the company on receipt of such distribution. Where a member is also a company, the exemption carries on to the subsequent distribution to the second company’s members and so on.
This aid will be applicable till the 31st of December 2022.
0-35% – Corporate Profits Tax.
Despite the default 35% corporate tax rate, as a result of Malta’s full imputation and tax refund system, the effective tax rate in Malta may be reduced to 5% or in some situations even lower.
0% – Withholding tax rates:
On dividends/interest/royalties – none.
0 years – Net operating losses.
Net operating losses may be carried forward indefinitely until absorbed, but no carry-back of losses is allowed, even in terminal years.
0-18% – VAT.
In Malta, goods and services are generally taxable at a standard VAT rate of 18%. However, certain goods and services have a reduced rate of 7% or 5% or 0%.
81 – number of tax treaties.
Malta has a vast network of double tax treaties with important trading countries and emerging economies in order to encourage the growth of international trade.
To date treaties are in force with 81 countries rendering considerable advantages to businesses who have chosen to establish legal entities in Malta and individuals who have chosen to relocate in Malta.
Core benefits of Malta company formation:
Generally Maltese a company law does not impose any restrictions, but you need to know that certain activities of majority of companies selected industries in Malta are regulated by MFSA or LGA.
› Generally Maltese a company law does not impose any restrictions, but you need to know that certain activities of majority of companies selected industries in Malta are regulated by MFSA or LGA.
› Minimum number of shareholders: a Malta LLC only requires one shareholder and one director, whom can be of any nationality and do not need to reside in the country;
› Minimum annual government fee: €100 (if the authorised share capital of the Company does not exceed €1,500)
› Minimum authorized/issued share capital is:
- 46,600 Euros for public LLC limited companies of which only 25% needs to be paid up
- 69 Euros for private LLC limited company (it could be rounded up to €1200 – 1200 shares of €1 each) of which 20% (€ 233) must be paid up
› If properly-structured, registering a company in Malta is an ideal, tax-efficient way to conduct international business, because:
Malta has a full-imputation system of corporate taxation and therefore any income tax that is paid by a Maltese company is fully imputed or credited to the shareholder who receives dividends of the company, enabling the same to benefit from the full relief of economic double taxation of corporate profits.
Although the standard rate of taxation in Malta currently stands at 35% of the chargeable income of the company, a shareholder of such company would be entitled to a refund of any tax paid by the company of 5/7, 6/7 or 7/7 depending on the source of income of the company, which typically results in an effective net tax rate of approximately 10%, 5% or 0% respectively.
Such refund may be reduced if double taxation relief is claimed on the income;
› Capital gains tax which is derived by non-residents on transfers of shares and increases of share capital are not subject to tax in Malta if the assets of the company do not include immovable property situated in Malta;
› Exemption from Duty on Documents. Malta companies carrying out international activities are exempt from duty on documents, which effectively means that transfer of shares and increases of share capital of the company are exempt from duty;
› Licenses in Malta are valid for the entire EU; but in Malta, costs for obtaining and administrating the authorization are much lower whether online-gaming, shipping, airline or investment-funds;
Fees of Company Registration 2022:
We practice individual approach to each client.
Please submit your request and we reply with a Personal Proposal.
Author: © By Olga Saliba
Frequently Asked Questions
about Company registration in Malta
Is Malta offshore?
There are several reasons why Malta is not offshore financial center: Malta is a fully entitled EU member state that means the island has the same rights and obligations as all other member states.
Consequently, Malta has the same accounting obligations as any other company in any other EU country. And the tax liability also exists and it cannot be circumvented – a limited company in Malta basically pays the same tax as any other European company.
The headline rate of Malta corporate tax is 35% on operating or net profit. B
ut upon the declaration of a dividend of the remaining 65% profit, shareholders may claim a refund on all or part of the corporate tax liability.
How to set up a company in Malta in 2022?
Step By Step Guide, setup a company in Malta in one- two weeks:
Step 1: Choose your company type: LLC, PLC, General Partnership, Single Proprietorship, Branch Office, Representative office, Malta Freeport company, or Self-Employed status.
Step 2: Choose your company name: business name registration takes a few hours.
Step 3: Completing on-boarding and customer due diligence.
Step 4: Drafting incorporation documents: the Memorandum and Articles of Association for a company; for self-employed status this step is not necessary. It takes a day.
Step 5: Deposit the Minimum Share Capital, it takes a day.
Step 6: Company registration: this step is only needed for LLC and involves sending documents to the Malta Business Registry. Usually, it takes a couple of days.
Step 7: Open up a bank account: the process to open up a bank account in Malta could be lengthy due to the increased regulations within the banking industry. A Maltese company does not have a legal obligation to have a bank account in Malta.
Step 8: Obtain a Tax Identification Number: it takes a day.
Step 9: Register for VAT, when applicable: it takes a week.
Step 10: Obtain a PE number: this step only for companies, it takes around three days.
Step 11: Report to the Jobs Plus in case of employment: when a new business is started a new form must be completed for every employee taken on.
Step 12: Register for data protection: in case if your business is going to collect personal and sensitive data from clients.
In general, the length of time required to Malta company setup depends on the type of company involved and on the timely submission of all information and documentation to our offices. But once the original package of certified documents are received, within a few days the Company may be set up.
Cost of setting up a company in Malta?
Setting up a company in Malta, you have to be prepared to pay following fees:
Minimum Capital: the minimum authorized capital for a private company in Malta is € 1,164.69 (at least 20% of the issued share capital must be paid-up on the signing of the Memorandum of Association of a company) and that of a public company – € 46,587.47 (at least 25% of the issued share capital must be paid-up on the signing of the Memorandum of Association of a company).
Registration fees: the registration fee payable to the Registrar in Malta depends on the authorised share capital of the company, it starts at € 245 with the maximum set at € 2,250 if the authorised share capital exceed the total of € 2,500,000. There is also an annual Company Registration Fee (based on the minimum authorised share capital) payable to the Registrar of Companies, with the minimum being € 100 and maximum set at € 1,400.
Fee for bank account opening: the cost on the Maltese market between corporate services providers varies, generally from €500 to €2,500.
Company formation fee: the cost on the Maltese market between corporate services providers varies, generally from €2,500 to €6,500.
Registered office fee: the cost on the Maltese market between corporate services providers varies, generally from €750 to €2,500/annually.
Following fees are not “company formation fees”, nevertheless we’re showing them here as under Malta tax legislation, every registered taxpayer is required to submit annual audited accounts and an Income Tax return to the Inland Revenue Department; this applies to all companies, whether or not they had business activities during that particular year.
Tax Return: the cost on the Maltese market for accounting firms for the preparation and submission of the company income tax return varies, but normally starts at €500/annually.
Audit fee: the cost on the Maltese market for auditing services varies, but generally starts at €1,500/annually.
Accountancy fee: the cost on the Maltese market for accounting services generally starts at €500/month.
If you want to know our pricing options, send us request, and we will provide you with our standard fee schedule or a customized proposal.
Buying a business in Malta is a smart idea?
No a definite answer to this matter; there are pros and cons.
We would rather recommend setting up a new company from day one than try to find a shelf company with only a reason that the cost, time and documentation to set up a new company are identical. But buying a business, you also obtain a trading history, client roster, and most probably staff who know how the business runs. You can easily analyze the business by looking through the accounting for the prior years, and prepare a business plan with this in mind. When you buy a business, it is important to understand a real reason – this is one thing if the business is for sale due to retirement or ill health, and quite another if the business is struggling.
We prepared checklist to answer questions about the company’s viability and if it’s worth purchasing:
- General aspects: a reason for sale, the history of the business, the outlook for this industry.
- Financial aspects showing the company’s financial status: current debts, any liens against the business, adequate working capital, relationship with its bank.
- Legal aspects: the company’s current contracts, ongoing/in the past lawsuits (if so, what are the details/outcome?)
- Market aspects: the target market, market situation, how much market share does the business command, the company’s primary competitors and their condition.
- Marketing aspects: the sales history for the prior few years, sales channels, marketing methods, the seasonality of the products/services, projected sales.
- Assets: the company’s reputation, brand recognition, the company’s intellectual property (will the ownership rights transfer to you?), does the company own or lease property (terms of the lease), does the business own or lease work equipment.
- Suppliers: the existing contracts, stock.
- Employees: the corporate culture, staff turnover, employee wages.
Summarizing the above, before buying a business, do due diligence and auditing which will be carried out by an independent auditor of recognized standing. In this case, you will have a clear shot of the business.
Need Our Assistance With Company Formation Malta?
We assist you throughout all stages of Company Incorporation Process in Malta.
Company Formation Services include:
• The business name reservation;
• Drafting and notarizing incorporation documents;
• Malta corporate bank account opening;
• Business licensing;
• Company and Tax registration;
• VAT registration;
• Obtaining an employer identification number;
• Registration for employment purposes.
Expert publications to grow your business in Malta:
The corporate tax rate in Malta is set at 35% and companies incorporated in Malta are subjected to tax in Malta on their worldwide income. However, Malta offers a highly efficient fiscal regime that eliminates double taxation on taxed company profits distributed as dividends.23.04.2022
Need help with your Malta VAT compliance? Griffiths + Associates has a range of solutions that can help your business depending on where and how you trade.02.04.2022
The transfer of immovable property in Malta is subject to the Property Transfer Tax instead of capital gains tax. We have a team of tax advisors who are capable of deftly handling all the complexities of capital gains tax in Malta and property transfer tax Malta.24.03.2022
Tax system in Malta: take a dive into Malta taxation for individuals and businesses: tax benefits, Indirect taxes and Direct taxes in Malta. Expert Tax Advice.28.02.2022
How will the new Budget 2022 measures impact you and your business? Our comprehensive summary offers a look into the salient points of the new Budget document08.01.2022
Guidelines on the VAT treatment for pleasure yacht leasing in Malta 2022. It opens the possibility for the yacht owners to benefit from VAT optimization.06.01.2022