Starting a Business in Malta
Find out about the various business structures available in Malta and how to get a venture started...
While not as streamlined as in some countries, the actual process of starting a business in Malta is relatively straightforward.
There are various types of business entities in Malta, for example partnerships, co-operatives and public limited companies. However, the most common business structures by far are self-employment and private limited companies.
Private Limited Companies
Along with self-employment, the most common method of starting a business is to establish a private limited company. While an entrepreneur can carry out the procedure themselves, it is advisable to consult with a professional who understands the legal framework and so can facilitate the set-up process.
All registered companies must have a registered office in Malta. This may be at the company’s business premises, or at the office of a lawyer, accountant or corporate service provider.
Limited companies in Malta are registered with the Registry of Companies (ROC), which is part of the Malta Financial Services Authority (MFSA). All documents and fees are submitted and paid to this organisation.
The main other requirements for setting up a Private Limited Company in Malta are as follows:
- Check the availability of the company name. This can be done through the ROC/MFSA website
- Draft a Memorandum of Association and Articles of Association, which specify the objectives for which the company is set up. Unless there is a single shareholder, where slightly different rules apply, the objectives can be multiple
- The minimum authorised share capital of a private company is €1,200. At least 20 percent of this has to be deposited prior to incorporation. A copy of the bank deposit receipt must be presented along with the memorandum to be registered
- A private company must have at least one director and by law, also a company secretary. Neither has to be resident in Malta
- Proof of identity (copy of passport/official ID card) is required for all persons involved in the company (directors, shareholders and company secretary). In the case of non-Maltese corporate directors or corporate shareholders, a certificate of good standing issued by the foreign company registry should be submitted
- Bank or character references must be provided for non-EU/EEA shareholders, including corporate shareholders
- Registration fees must be paid to the ROC. For the minimum share capital, the fees are €245, but increase as share capital increases
- A trading licence must be applied for. There are various types of trading licence depending on the activity. Online application forms can be found on the Commerce Department website
Once all documents have been submitted and the fees paid, the company is usually incorporated within one day and the incorporation certificate is ready in approximately three days.
Once a new company is established an income tax number is allocated (an application is not required). However, it is sometimes necessary to ask the Inland Revenue Department for the number as the company is not automatically informed of the tax number.
If the company intends to employ people, a second tax number (PE number) is required to allow the company to process income tax and social security payments on behalf of its employees.
While the above process is quite straightforward, there are two vital elements involved in starting a business. These are opening a bank account and getting a VAT number, which can be more problematic.
Opening a bank account
Opening a company bank account in Malta can be difficult. This does not apply to the self-employed, who can open a personal account relatively quickly with the relevant documents (namely ID and proof of address).
For company accounts, especially if the shareholders are not Maltese nationals, the procedure is more complicated. By law all banks have to carry out extensive due diligence on prospective customers, and these requirements are even more strict when the business owner is not a Maltese national – in particular when they come from outside the EU. Each bank has different requirements, but a number of forms will need to be filled in, documents supplied and questions answered. Some banks do not consider opening accounts for certain types of business or those originating from what they may consider “non-reputable” jurisdictions.
The procedure can take several months, and banks generally charge a bank account processing fee.
Once economic activity begins it is also necessary to obtain a VAT number. This can be done online via the VAT Department website if the applicant already has a Maltese ID number. If not a paper application is required.
The new VAT number, according to the VAT website, is issued in five working days. However, there may be delays. In some cases, for example, import/export businesses, it may be necessary to attend a meeting with the VAT Anti-Fraud Department who will want to obtain more information about the nature of the business. It can take one month to receive the VAT number and in some cases this will be considerably longer if some vital information has not been supplied.
There are many professionals in Malta who can help with the procedures of setting up a business. It should be noted that such professionals are also bound by local laws and have to carry out due diligence before accepting work from a client.