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 5,000 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.
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
You, or an accountant, will determine the right amount and include it 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. If your business is operating in particular industries, such as a bank, then a higher minimum share capital will be required.
Therefore, this step also requires you to open up a bank account in the company’s name. This can be tricky, but some companies can help you open a bank account in Malta. Inform the bank teller that you are depositing your share capital and they will guide you accordingly. The money will go into a holding account until the company is properly registered. A receipt will be given to you. It is very important that you do not lose it as you will need it to start a business.
Alternatively, your accountant may offer to confirm receipt of the share capital without requiring a bank account.
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. You need to provide these documents, along with the share capital deposit slip to the Malta Business Registry (MBR). This is the authority that oversees all locally registered companies. Registration is normally completed within a few days. You will need to pay a registration fee whose value varies based on the size and scope of the company. The MBR offers detailed information on fees and the registration procedure.
5. Obtain the necessary licences
Whilst note all those who start a business in Malta need to obtain a trading licence, you should check whether you need to. 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. A business in Malta has to have a tax identification number. Once again the necessary form can easily be found online. You do not need to pay any fees, however once a year you will need to fill in a tax return form.
The form you will need to fill varies depending on your business registration. If this is your first business or you are unsure how to proceed, you should seek professional advice.
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 €30,000 in a year (January – December) you do not need to charge VAT, however, you still need to register.
For businesses that expect a turnover of over €30,000, depending on the business, charging VAT varies. It is always best to check with the VAT department for the latest rules. 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
You can skip this step if you are self-employed and do not intend to have any employees. If, however you have a limited liability company, you are automatically working for the company, therefore you are an employee. In either case, 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 JobsPlus
JobsPlus is the government entity 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. You need to fill in these forms upon registration and again upon the termination of each employee. The process is quick and free of charge. For your convenience, you can open an online profile and access all JobsPlus’ resources and documents faster.
10. Data protection registration
This step only applies to 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 a data safety process. This will help protect your customers’ details against cyberattacks. More information on Data Protection in Malta can be found on their website.
You might have other questions or 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. You can also get in touch with Practical Business Solutions if you would like a competent team to handle your business registration or are looking to tap into grants or other funding in Malta.
Editors note: The information provided on this and all other pages of The Fun Entrepreneur is solely for information purposes and should not be considered to be legal or professional advice. Whilst we strive to update the content regularly, some or all of the information may become outdated and incorrect.