Setting up a business in Malta can bring great rewards for your investment. Here is a walkthrough on how to start a business in Malta.
Choose the Business Structure
The type of business structure you select for your business will be a deciding factor for many of the formalities which will follow in your company formation process.
You can register your business as a Limited Liability company. This structure requires at least two shareholders for the business to qualify for registration. As a limited liability company, your business is subject to certain legal requirements such as annual audits. The protection offered by this structure is immensely beneficial to shareholders. The other route is to register your business as a sole proprietorship. The upside to this legal structure is that the registration process is less tedious as compared to the limited liability company. The downside, however, is the liability falls upon the owner—debts, lawsuits or defective products.
Complete Formal Registration Documentation
If you opt for an LTD, you will follow this legal procedure of incorporation. Most imporantly, you will have to draft the Memorandum of association as well as articles of association. These documents govern the activities of the business entity, shareholders and its board. In order not to make mistakes during this process, it is recommended to seek accounting or legal experts who are well-experienced in your business field.
Deposit Share Capital
The startup capital is determined by an accountant or if you are knowledgeable you can take up the task yourself. The figure is included in the memorandum of association and the articles of association. You will have to open a bank account in your business’s name and make a deposit as share capital. The initial deposit should be at least 20% of the agreed value capital of your business. Until the business is successfully registered the funds will be put in a holding account.
Register the Business with MFSA
The Malta Financial Services Authority is responsible for processing registration for locally registered companies. A registration fee is applicable and varies on the size of the business entity. The fee accompanies the completed company registration form, memorandum of association and the articles of association. Registration will be complete within 2 to 3 days once all requirements are fulfilled.
Apply for additional Licences
A trading license is mandatory for all businesses to begin operations. This licence covers most commercial activities in Malta with the exception of businesses dealing in food preparation, beautician related services or large scale manufacturing. These exceptions require further licensing from the government in addition to the trading license. The basic licensing fee depends on the size of the business and is renewable annually. The application is done through the Application for commercial activity form.
Register for Tax!
In order to comply with the Maltese taxation laws, your business has to file the required forms with authorities for a Tax Identification Number. The required form varies for limited liability companies and for self-employed persons. Having an accountant at hand will simplify the process for you. No fees is necessary for the process. You will be liable to file a tax return form annually.
Value Added Tax registration
Acquisition of a VAT number comes free of charge in Malta and is a hassle-free process. The VAT department registers all businesses regardless of revenue. The actual applicable VAT rates vary depending on your turnover. Any turnover amounting to twelve-thousand Euros and below within a single tax year does not incur VAT. VAT rates can be obtained from the VAT department and vary according to business. Twenty-thousand Euros is the threshold turnover where above this figure VAT is charged on all businesses.
Get a PE Number
PE Numbers are issued out free of charge and it takes about 3 days to obtain one. For sole traders, this is not necessary since you are not going to hire any employees. In the case of a limited liability company, by law, you are recognized as working for the company thus making a PE number is necessary. As an employer you will need to complete the required online form by the Inland Revenue Department
Registering with the ETC is Mandatory
Registration with the Employment and Training Centre is free of charge and fast. Both Self-employed persons and limited liability companies are required to file forms with the ETC for all their employees. Events such as hiring and termination of an employee require the business to file these form with the responsible authority.
Register for data protection
The government of Malta holds businesses responsible for the protection of personal data collected from customers both existing and potential. If your business will be involved in the collection of personal details you will be required to enforce safety measures to protect user details from third parties and register your business as such.
Malta embraces investments from all over the world and offers one of the best business environments. The incorporation process might be daunting but it’s worth it. For further help and assistance with registration you can contact SIGTAX experts. Our team of accountants, consultants and lawyers is ready to help you in any way possible and help you avoid the common pitfalls in the company formation process