Why Start a Business in Malta?
Malta has become a significant competitor in the pharmaceutical, marine, IT, gambling, banking, and tourism industries because of solid marketing and ambitious initiatives promoting Malta as a financial powerhouse.
Malta is now firmly established on the global economic stage due to capital inflow from Germany, the United Kingdom, Spain, France, and the United States.
The GDP of Malta was €12.3 billion in 2018. Property sales have been unaffected by the 2008 global financial crisis and the current Covid-19 situation. From 2020 to 2021, it received record numbers of applications to register the sale of goods and services.
Taxation Benefits in Malta
Setting up a company in Malta can provide you with tax benefits.
The net effective tax rate in Malta is one of the lowest in the European Union. As a result, EU and non-EU investors alike can take advantage of the wide range of investment possibilities it provides.
Malta Taxation Refund System allows shareholders to claim back a percentage of tax paid in Malta after distributing dividends, which is considered the most popular. In Malta, a company’s trade gains are taxed at 35%.
A non-resident and non-domiciled owner set up in Malta can get back 6/7ths of the paid tax. This means that they can get a Net Effective Tax Rate of 5% in Malta if their profits are trading nature. And 5/7ths percent for passive nature, resulting in an effective tax rate of 10% in Malta.
It is possible to set up a Fiscal Unit in Malta where the Malta group of companies can be consolidated. If certain conditions are met, the net effective tax rate of 5 percent can be paid immediately instead of the refund system previously mentioned.
Business Starting Procedure
Here is a guide to starting a business in Malta.
Select a Payment Solution
New companies are acquainted with the standard credit card processing services now part of most e-commerce platforms. However, if you are a retail company, you need to think about payment options that function both in-store and online, all while interacting with one another.
Businesses need to figure out which mix of payment options suits their needs. Then, to stay up with client preferences, they must choose a payment system that allows them to introduce additional payment methods as they see fit. You can also decide on fintech solutions to get help. Any leading Maltese fintech company can provide you with a variety of payment options for your business.
Primary Registration Procedures
A company registration form and its memorandum and articles of incorporation must be submitted at this phase.
The Malta Business Registry (MBR) requires these papers and the deposit slip for the share capital. This is the body in charge of keeping an eye on all locally registered businesses.
Within a few days, the process of registering is usually finished. The cost of registering your business varies according to the size and scope of the company. The MBR provides information about fees and the registration process.
Prepare Registration Documentation
If you want to create a limited liability business, you must first write the memorandum and articles of the organization. A local accountant or lawyer will be of great help if you are starting a company in Malta for the first time and do not have the skills to draft these documents by yourself. Aside from registering the business, these papers outline what the company, its shareholders, and directors can and cannot do.
Gather Necessary Licenses
Almost all businesses in Malta need a trade license. So, you should check to see whether you need to get one. Most companies find the procedure straightforward.
However, if you want to open a restaurant, do a forex trading business or significant manufacturing facility, you will need to apply for additional licenses from different governmental agencies in addition to the application form for commercial activity.
The Commerce Department is the most incredible resource for all of your licensing-related inquiries. However, to get the most basic license for a small company, you will have to spend €70 an annual fee.
Get Tax Identification Number (TIN)
A tax identification number (TIN) is a legal requirement in Malta. A downloadable PDF is available online for the second time. Once a year, you will be required to submit a tax return form. If you register a new company, you will need to complete a different form. Consult an expert if you start your first company or are unsure where to begin.
Inform the VAT Department
The VAT department must also be informed before a company can officially get off the ground in Malta. There are three key points to keep in mind while doing this. First, you do not have to charge VAT if you expect a turnover of less than €30,000 in a calendar year. However, you must still register.
Businesses with projected annual revenue of more than €30,000 are required to collect VAT. At the same time, the exact amount varies by industry. Therefore, it is always a good idea to double-check with the VAT department to ensure you are following all the newest guidelines.
If the company’s annual turnover exceeds this amount, VAT must be levied. The department’s website has further information on VAT obligations. Obtaining a VAT number is completely free and takes just a few minutes.
Deposit Minimum Share Capital
Your memorandum and articles of organization should contain a reference to the amount of money that you or an accountant have determined to be appropriate. No matter how tiny, all business requires some initial funding to get off the ground.
There is a €1,200 (rounded up) minimum deposit requirement. Suppose your company is in a particular industry, like banking, you will need to have a considerable minimum share capital. Therefore, you must also create a bank account in the company’s name as part of this procedure.
Deposit your share capital with the bank teller, and they will direct you appropriately. The funds will be held until the company is legally registered. Then, you will get a receipt.
Malta has been at the forefront of global commerce for decades because of its open and friendly culture. The transparency and straightforwardness of the process of re-domiciling or starting a new business are evident. You should always hire an expert to help you since they know how to save transaction costs, benefits from other aspects, and even the documentation procedures. Good Luck!