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Expats Owning and Operating a Business in Malta

Submitted: November 2013

If you are an expat planning to set up your own business in Malta, you will be glad to hear that Malta is very business-friendly and one of the most favourable tax jurisdictions in Europe. However, for best results, make sure to do thorough research and start planning well in advance!

Business Plan

First of all, you should have a clear idea of what you wish to do and in how far your business idea is feasible. Make sure to research which businesses already operate in your field and determine your potential customers, partners and competition. At the same time, take ample time to consider your best financing options. Based on your research you can then develop a proper business plan which sets out your business objectives, target market, commercial strategies, potential obstacles and financial projections. To read more on business plans see the Business First guidelines on writing Business Plans and the article on the Business Plan Format.

Immigration Matters

Another crucial step is to ensure you have the legal right to live and work in Malta. Expats wishing to start their own business will generally need to apply for a Long Stay ‘D’ visa. As part of the requirements you will likely have to prove that you have sufficient financial means to set up the business and relevant expertise in your field.

For further information on immigration matters see the Expat Briefing articles on Immigration in Malta and the Government website on Visa Applications. To apply for a visa, contact Malta’s diplomatic mission or its representation in your country.

Legal Structure, Registration and Obligations

The next important step is to decide which legal structure is best suited for your business. The legal structure will determine the nature of your legal, financial and tax obligations. The two most common business structures in Malta are Sole Trader and Private Limited Liability Company.

Sole Trader

The advantage of starting a business as Sole Trader is that it is very easy to set up. Another advantage is that you will have full ownership and control over the business, and all profits after taxes will remain yours. At the same time, however, you will be personally liable for all losses your business might make.

To start your business as Sole Trade you will have to register as self-employed with the Employment and Training Corporation and obtain all required licenses for your type of business. You do not have to register a business name. Sole Traders will also have to register with the Inland Revenue for income tax and for value added tax (VAT) if they exceed the applicable VAT registration threshold of €35,000 for goods or €24,000 for services.

Private Limited Liability Company

Setting up a Private Limited Liability Company involves more paperwork. However, the advantage of a Private Limited Liability Company is that it forms an independent legal subject and its finances are separate from your personal finances. It is typically led by a director and has members who own shares in the company. It is also subjected to regular reporting requirements and must comply with the rules and regulations set out in the Companies Act.

The process of setting up a limited liability company generally involves the following steps:

  • choosing a business structure
  • choosing a business name
  • registering the company with the Registry of Companies, for which you will need to submit the memorandum and articles of association as well as proof that the initial share capital has been deposited and an identification document of the founder
  • paying the incorporation fee, which depends on the amount of deposited share capital and typically ranges between €350 and €1,750
  • paying the annual fee to the Registry of Companies, which depends on the amount of share capital and ranges between €165 and €979, and
  • registering for taxes with the Inland Revenue

The company registration with the Registry of Companies is typically completed within 24 hours. Once your registration is completed, you will be issued a registration certificate.  For detailed guidance on how to register your company, see the Guide to the Registration of Companies, prepared by the Malta Financial Services Authority.

Note that Limited Liability Companies are subject to the Corporate Income Tax at a flat rate of 35%. Companies also need to be registered for VAT if their annual turnover exceeds the applicable thresholds (€35,000 for goods or €24,000 for services). To read more on taxation matters in Malta, see Taxation in Malta.

Other business forms

For information on other forms on business available in Malta see Business Formation.

Employing staff

As employer, you will have to ensure that your business complies with Malta’s labour regulations. You should familiarise yourself with different types of contracts, minimum wage requirements, equal opportunities policies, work permits and recruitment options. You will also have to register as employer with the Inland Revenue by completing the applicable registration application form which can be downloaded from the Inland Revenue website.

Financing

There are various direct and indirect financing options available to Maltese businesses. For a useful overview see the guidelines on Access to Finance in Malta, prepared by the EU.
To find out more about Government incentives for Start-Ups see Start-Up Support & Facilities.

Further information

For further information on starting or operating a business have a look at the Business First website or the Malta Enterprise website. You can also contact Business First on +356 2542 0000 or under info.businessfirst@maltaenterprise.com.

 

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