threMany Malta is a tiny nation in the Mediterranean Sea, strategically positioned between Europe and Africa. It is home to around 500,000 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 trustworthy face and you, as a shareholder, are better protected. There are, however, more bureaucratic steps and costs in creating a company, such as having an annual audit. You should, therefore, be pretty confident that 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 you will also bare the entirety of the risk if anything goes wrong, such as would be the case with defective products or lawsuits. If you decide to start as a self-employed, then you can go directly to Step 4.
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, but they also detail what the company, its shareholders and its directors can and can not do.
3. Deposit the minimum share capital
With the help of an account, you should 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 a particular industry, such as a financial institution, then a higher minimum share capital will be required.
You should normally deposit the share capital in a business account. As you’re opening the account, you should 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 and you’ll get a receipt. It is very important that you do not lose this receipt as you will need it to start a business in Malta.
4. Start a business in Malta
Present the filled-in company registration form, the memorandum and articles of association, and 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.
If you wish to register as a sole trader and are a Maltese resident, you can register your business and get most of the necessary submissions made through a single form. You will need either an E-ID or an ID card to access the online sole trader registration form.
If you’re an EU resident that has moved to Malta, you must first register for social security number online. Once registered, you’ll receive your tax number and be able to use the link above to register as a sole trader.
5. Obtain the necessary licenses
You’ll need to determine whether your business requires any operating licences or permits. The Malta Commerce department provides a list of online forms and instructions that can help you understand the relevant laws of your industry. You can also contact the team should you need any further clarifications.
6. Get a tax identification number
If you’re a sole trader, your tax identification number is simply your ID card number. However, a limited registered company or any other legal entity will need its own tax and VAT number. You may have already gotten these numbers when you registered your business. If you haven’t, you can get a Maltese VAT number using this helpful page.
As you’re filling in your VAT application, you will be asked to choose between three Articles. Most full-time businesses will likely register under Article 10 and be able to charge and claim VAT. You will need to register under Article 10 if you plan to sell over €35,000 worth of goods or over €30,000 from any other business activity. These thresholds apply to a calendar year. If you don’t think you’ll reach the threshold, you can instead register under Article 11.
7. Obtain a PE Number
This step only applies to businesses, including self-employed persons, that intend to employ other people. In this case, you will need to obtain a PE number. There are several online forms that can help you do this but we’ve found the Servizz.gov one to be the best.
8. Register with the JobsPlus
By now, your own employement should have already been registered with JobsPlus. Many of the forms we’ve linked to include this option. You can, and should, create a JobsPlus profile to be able to view your own employment history as well as that of your business. Moreover, you will need to update this authority every time an employee joins or leave your enterprise. You can do so conveniently by using the right employee registration forms.
9. Register with the Information and Data Protection Commissioner
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. You can learn more about your legal requirements by visiting the IDPC website.
10. Get help when you need it
As a business owner, you’re constantly looking to save costs and handle everything yourself. It probably won’t take you long to realise that you cannot do everything alone. Sometimes, getting professional assistance makes more financial sense than wasting time with trial and error. Find out if the team at Practical Business Solutions can help you with what you need to do.
You should also check out the Business First website for further information about laws and regulations. This office was set up to provide free guidance and advice to new and existing businesses in Malta, so you’ll certainly want to keep it on your contacts list.
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.