Table of Contents Why Malta Is the Perfect Place for Your Company Relocation Tax Advantages: More Than Just 5% Corporate Tax Legal Basics and Corporate Structures in Malta Step-by-Step: Moving Your Company to Malta Compliance and Ongoing Obligations Costs and Timeline: What to Really Expect Common Pitfalls and How to Smartly Avoid Them Frequently Asked Questions Thinking about moving your business to Malta? Great choice! After two years here, I can tell you: Malta isn’t just about sun, sea, and Instagram-worthy sunsets. Its a serious business location offering EU access, English-speaking administration and—yes—serious tax benefits. But hold on! Before you start packing your bags, imagining you can set up a company at the drop of a hat: Maltese bureaucracy has its own quirks. I’ve personally witnessed ambitious entrepreneurs leave frustrated after three months because they underestimated the local specifics. This article walks you through the entire relocation process—from your first idea to successful implementation. You’ll learn not only the obvious advantages, but also the hidden pitfalls and how to sidestep them. Because Malta can be fantastic for your business—if you know how the system really works. Why Malta Is the Perfect Place for Your Company Relocation Malta is like the EU’s secret VIP area—all the key advantages, without all the noise. As an EU member since 2004, the island gives you full access to the European single market, while letting you benefit from one of Europe’s most attractive tax systems. The Malta Formula: EU Access + Tax Advantages + English What’s so special about Malta? It’s the unique combination of three factors you won’t find anywhere else in the EU: Full EU Membership: Passporting rights for financial services, free movement of capital, Eurozone Effective tax rates from 5%: Thanks to the Full Imputation System (more on that below) English as an official language: All official dealings are in English, international legal framework Many international companies have chosen Malta as their base—from gaming giants like Betsson to blockchain startups. The reason? The combination of legal certainty and tax optimization is unique in Europe. Which Companies Benefit Most From Malta? Not every business profits equally from a move to Malta. Here are some typical profiles I’ve observed over the years: Type of Business Main Advantage Best For Online Businesses Low taxes + EU legal security E-Commerce, SaaS, digital services Financial Service Providers EU passporting + regulatory framework Investment funds, crypto services Holding Companies Exemptions on dividends/capital gains International corporate groups IP Holdings License fee optimization Software, patents, trademarks What does this mean for you? If your business model is mainly digital, serves international customers or generates high margins, Malta could drastically reduce your tax burden. On the other hand, if you run a traditional craft business with local customers, you’re unlikely to see major benefits. Tax Advantages: More Than Just 5% Corporate Tax When you read “Malta 5% tax” online, you probably think: “Too good to be true.” Rest assured—it’s true, but more complicated than most marketing articles suggest. The Full Imputation System Explained Malta’s tax system is based on the Full Imputation System—a mechanism that avoids double taxation at the company and shareholder level. Sounds complex? It is, but here’s an easy explanation: A Maltese company pays 35% corporate tax on its profits. That doesn’t sound attractive, right? Here’s the kicker: when the company pays dividends to its shareholders, they get a tax refund of up to 6/7 of the tax paid. Example: Profit before tax: €100,000 Corporate tax (35%): €35,000 Profit after tax: €65,000 Dividend payout: €65,000 Tax refund (6/7 of €35,000): €30,000 Effective tax burden: €5,000 = 5% When Does Which Refund Apply? Not all income is treated the same. Malta distinguishes between different types of income with different refund rates: Type of Income Refund Rate Effective Tax Burden Malta-sourced Trading Income 6/7 (approx. 85.7%) 5% Foreign-sourced Trading Income 6/7 (approx. 85.7%) 5% Passive Interest/Royalties 5/7 (approx. 71.4%) 10% Malta-sourced Non-trading Income 2/3 (approx. 66.7%) 11.67% The Non-Dom Status: Extra Tax Benefit For You Personally As managing director of your Maltese company, you can benefit from Malta’s Non-Dom (non-domiciled) status. This means: In Malta, you only pay tax on income generated in Malta or remitted to Malta (remittance basis). Practical example: Your Maltese company generates profits, but you leave the money in the company for now. As long as the money isn’t brought into Malta or used for personal purposes, you don’t owe Maltese income tax on it. Pretty smart, right? But be careful: Non-Dom status only applies if you’re not domiciled in Malta. In other words, Malta can’t be your permanent home. What Does This Mean For You? The tax advantages are real and significant. However, you should pay attention to two key points: First, you must follow the rules closely; second, you should always bring in a Maltese tax advisor. The authorities are meticulous about “substance requirements”—your company must actually conduct real business activities in Malta. Legal Basics and Corporate Structures in Malta Legally, Malta is a civil law system with common law influences—a mix born from the island’s colorful history. For you as an entrepreneur, that means: Legal certainty is high, but the structures can differ from what you’re used to in Germany or other European countries. The Maltese Private Limited Company: Your Workhorse 95% of the time, you’ll set up a Private Limited Company (Ltd.). This is comparable to a German GmbH and is the most flexible and tax-efficient corporate form for international business. Minimum requirements for a Maltese Ltd.: Share capital: At least €1,165 (25% paid up = €291.25) Shareholder(s): At least one (individual or company) Director(s): At least one with EU residence Company Secretary: Mandatory, must be Malta-licensed Registered office: Must be in Malta Substance Requirements: More Than Just a Letterbox This is where things get interesting—and where many entrepreneurs run into trouble. Malta requires your company to have “economic substance.” That doesn’t mean you need to sit in your Maltese office every day, but authorities must see that real business is happening. Here’s what Maltese authorities check: Criterion Requirement Practical Tip Management Strategic decisions made in Malta Hold directors’ meetings regularly in Malta Business activity Core income generating activities Core functions like sales or ops in Malta Personnel Appropriate number of qualified staff At least 1–2 local employees or directors Office premises Physical presence matching business size Real office, not just a virtual office Alternative Structures for Special Purposes Depending on your business, other legal forms may also be interesting: Protected Cell Company (PCC): Ideal for investment funds or separating multiple lines of business. Each “cell” is legally distinct—if one loses money, the others aren’t affected. Partnership en Commandite: Similar to a German “Kommanditgesellschaft.” Good for private equity or venture capital setups. Trusts: Malta’s trust law is excellent, especially for wealth management and succession planning. Compliance From Day One A point many underestimate: In Malta, compliance starts during the setup—not after incorporation. You need to set up clean structures from the outset; making changes later is complex and expensive. Especially important is the “Beneficial Ownership Register.” Since 2019, all Maltese companies must transparently declare their beneficial owners. This isn’t a problem as long as you’re honest from the start—never try to hide anything here. What does this mean for you? Carefully plan your structure before founding. A good Maltese lawyer is worth their weight in gold—the €2,000–3,000 in advice can save you that sum many times over down the line. Step-by-Step: Moving Your Company to Malta Now let’s get hands-on. After two years in Malta and many incorporations I’ve supported, I can tell you: A structured approach saves you time, nerves, and money. Here’s my tried and tested roadmap: Phase 1: Preparation and Structure Planning (4–6 weeks) Weeks 1–2: Due Diligence and Tax Advice Analysis of your current setup: How is your company structured? What contracts, licenses and commitments do you have? Tax assessment: Have a Maltese tax advisor check if Malta really benefits you Substance planning: How will you meet the substance requirements? Office, staff, management? Weeks 3–4: Legal Structuring Choose a lawyer: Find an experienced corporate lawyer in Malta (budget: €200–400/hour) Draft the articles of association: Should fit your business model Arrange nominee services: Company secretary and registered office Weeks 5–6: Operational Prep Office search: Real office space, not just a virtual office (budget: €500–2,000/month) Prepare banking: Collect documents for account opening Plan personnel: If needed, identify local staff or directors Phase 2: Incorporation and Setup (3–4 weeks) Weeks 7–8: Company Formation Formal incorporation is via the Malta Business Registry (MBR). Since 2021, most of this can be done digitally, speeding up the process a lot. Step Duration Cost Note Name reservation 1–2 days €25 Online via MBR portal Incorporation 5–10 days €245 Digitally submit all docs VAT registration 2–3 weeks €0 Only above €35,000/year sales Tax registration 1 week €0 Automatic with incorporation Weeks 9–10: Banking and Operational Setup Ah, banking—a topic of its own. Maltese banks are thorough—sometimes too thorough. Here’s my experience with the main players: Bank of Valletta (BOV): Largest local bank, conservative, 4–8 weeks to open account HSBC Malta: International standard, good for cross-border business, 3–6 weeks APS Bank: Smaller bank, more personal service, 2–4 weeks Revolut Business: Quick digital solution for the start, 1–2 weeks Pro tip: Always allow more time for banking than stated. Maltese banks have their own sense of time; “next week” can easily become “next month.” Phase 3: Migration and Go-Live (4–8 weeks) Operational migration: Transfer contracts: Client contracts, supplier deals, software licenses Domains and IP: Transfer domains, trademarks, software assets Move personnel: Employment contracts with the Maltese company, EU social security Deregister for tax: Coordinate deregistration in Germany/your previous country The first business day: Ideally, the go-live is uneventful. Your customers shouldn’t notice the change—except maybe that your invoices now show a Maltese address and no longer list German VAT. Special Points for Migrating from Germany If you’re coming from Germany, there are some specifics: Exit tax: When relocating a limited company, hidden reserves may be taxed. Mainly affects larger firms, but always check. Double taxation treaty: Germany and Malta have a DTA (DBA), preventing double taxation. Key for the transition period. Notification obligations: You must inform various German authorities—from tax office to Chamber of Commerce. What does this mean for you? Plan the move carefully and get advice in both Germany and Malta. Double taxation or missed notifications can get costly. Compliance and Ongoing Obligations So, your Maltese company is up and running—congrats! But now comes the part that’s often underestimated: ongoing compliance. Malta is business-friendly, but definitely not “compliance-light.” The authorities pay very close attention to whether you’re following the rules. Annual Reporting Obligations: Malta’s Bureaucratic Marathon In Malta, there are various reporting deadlines you must strictly observe. Here are the most important: Report Deadline Late Penalty My Tip Annual Return 31 January From €100 File right after financial year-end Tax Return 30 June From €465 Extension until 30 November possible Financial Statements With tax return From €465 Audit only above €700k turnover VAT Returns Monthly/quarterly 5% of unpaid amount Set up direct debit Reality check: I’ve seen entrepreneurs fined €500 for missing the annual return deadline. The Maltese tax office (IRD – Inland Revenue Department) does not joke about due dates. Economic Substance Requirements: The “Substance Police” Are Watching Since 2019, all Maltese companies must file an annual Economic Substance Report. This is Malta’s response to the EU’s criticism of “letterbox companies.” Authorities want to see real economic substance. What do they check? Number of FT staff in Malta: Must be appropriate for your activities Operating expenses in Malta: Rent, salaries, consultants Assets in Malta: Office equipment, servers, inventory Management in Malta: Where are strategic decisions made? Things are especially strict for “relevant activities”—business types Malta views as potentially problematic: Holding companies IP holdings (royalty businesses) Finance and leasing Fund management Banking If your business falls into these categories, you need to meet higher substance standards. That means more staff, higher costs, but also more certainty with the authorities. FATCA, CRS and Other International Reporting Obligations As an EU member, Malta takes part in key international info exchange systems. This means: Common Reporting Standard (CRS): Maltese banks automatically report account data to the tax office in your home country. Transparency is a must. FATCA: If you have US shareholders or clients, extra reporting could be required. DAC6: Some cross-border tax arrangements must be reported to the EU Commission. Internal Compliance: Your Own Rules Besides statutory duties, you should set up your own compliance structures: Document board meetings: Keep minutes for all significant company decisions Malta-nexus in contracts: Make sure key contracts have a Malta connection Document transfer pricing: Use “arm’s length” prices for related-party transactions Collect evidence of substance: Keep track of your Malta business activities What does this mean for you? Compliance in Malta is an ongoing process, not just a one-off. Invest in a good local accountant and company secretary—the €2,000–4,000 a year is money well spent to avoid fines and headaches later. Costs and Timeline: What to Really Expect Let’s talk brass tacks: What does moving a company to Malta really cost? After supporting dozens of incorporations, I can tell you—it’s pricier than many expect, but cheaper than the pessimists say. Setup Costs: The One-Off Investment Here are the real numbers for a standard move, based on current market prices (as of 2024): Item Minimum Typical Premium Note Legal fees €2,500 €5,000 €10,000 Depending on complexity Tax advisory €1,500 €3,000 €7,500 Initial setup + first return Company formation €1,200 €2,000 €3,500 Incl. company secretary (year 1) Office setup €3,000 €8,000 €20,000 Deposit + fit-out + first 6 months Banking €0 €500 €2,000 Consultancy for tricky cases Miscellaneous €1,000 €2,500 €5,000 Translations, apostilles, etc. Total €9,200 €21,000 €48,000 In my experience, most entrepreneurs end up in the “typical” range. Those who try to scrimp at the setup stage often pay more later—bad legal structuring or compliance headaches can get really expensive. Ongoing Costs: The Maltese Baseline After setup come the annual running costs. Here’s what’s realistic: Monthly fixed costs: Office: €800–2,500 (depends on location and size) Company secretary: €150–300 Accounting: €300–800 Local director: €500–1,500 (if needed) Banking: €20–100 Miscellaneous: €200–500 Annual costs: Government fees: €300–500 Audit: €1,500–5,000 (only if over €700k turnover) Tax advisory: €2,000–5,000 Legal review: €1,000–3,000 Realistically, you’re looking at monthly baseline costs of €2,000–6,000, depending on how complex your setup is. Timelines: Patience Is a Virtue Time estimates in Malta are… optimistic. Here are the real timelines based on my experience: Phase Official Time Realistic Time Worst Case Preparation 2–4 weeks 6–8 weeks 12 weeks Company formation 1–2 weeks 3–4 weeks 8 weeks Banking 2–4 weeks 6–10 weeks 16 weeks Migration 4–6 weeks 8–12 weeks 20 weeks Total 9–16 weeks 23–34 weeks 56 weeks So why does everything take longer? Malta’s a small island with limited resources. All the top lawyers, accountants, and officials know each other personally. That has upsides (personal service), but also downsides (longer processing times). Hidden Costs: The Surprise Items In my experience, unexpected costs always crop up. Here are the most common “surprises”: Multiple banking attempts: If one bank refuses, each new try costs time and advice Extra substance requirements: More staff or office space than planned Additional compliance work: Extra reporting/audit costs Double-tax residency issues: More tax advice in complex cases IP transfer costs: Transferring domains, software licenses, trademarks My tip: Allow for a 20–30% buffer for unforeseen expenses. Malta always has surprises in store. What does this mean for you? A Malta move is a medium-term investment. The tax savings usually cover the setup costs within 1–2 years, but you need enough cashflow to shoulder the initial investment. Rule of thumb: If your annual tax saving is under €20,000, Malta probably isn’t worth it. Common Pitfalls and How to Smartly Avoid Them After two years in Malta and many company setups, I’ve seen every mistake in the book—and made a few myself. Here are the main hazards and how to dodge them: The Banking Nightmare: When Banks Say No This is the classic: Your company is set up, paperwork perfect—and the bank rejects your account application. Why does it happen so often? The most common reasons for rejection: Unclear business model: Banks don’t get what you actually do Lack of substance: No real office or staff in Malta Compliance concerns: Your business falls into a “risky” category Incomplete documents: A missing apostille stamp can delay things by weeks My solution: Never go to the bank unprepared. I use a Maltese banking consultant who pre-checks all documents. The €1,500 in advice has saved me months of delays before. Pro tip: Prepare a clean business deck that explains in 10 minutes what you do, who your clients are, and why Malta makes sense. Bankers have little time and less patience for complicated stories. Substance Requirements: More Than Just a Letterbox The biggest mistake I see: Entrepreneurs think they can set up a Maltese company and run it from a beach in Thailand. That no longer works. What Malta really wants to see: Real business activity: Key client meetings, strategic sessions, product dev should take place in Malta Local staff: At least 1–2 employees or directors with Maltese ties Physical presence: A real office lease, not just a “virtual office” Documentation: Board minutes, contract signings, key emails with Maltese timestamps I know a German entrepreneur who had to invest an extra €50,000 for more Malta “substance” after authorities rejected his structure. He could’ve done it right initially. Tax Residency Confusion: Where Am I Taxable? A classic rookie mistake: You move to Malta, set up a company, and assume all tax issues are sorted. Not so fast! The three layers of tax residency: Corporate tax: Your Maltese company pays 35% (with refund possible) Personal tax (Malta): You pay on Malta-sourced or remitted income Personal tax (home country): Extra taxes can arise depending on the DTA It gets especially tricky with the “183-day rule”: To be a Maltese tax resident, you must spend at least 183 days per year in Malta. But for Non-Dom status, you mustn’t be “domiciled”—a subtle but vital difference. My advice: Keep a meticulous travel log and document all arrivals/departures. In an audit, you’ll need to prove every single day. Compliance Overload: When Bureaucracy Overwhelms Malta has more reporting duties than Germany—which says something. Here are the traps almost everyone falls into: Compliance Trap Consequence Avoidance Strategy Late annual return €100–500 penalty Calendar reminder for 31 December Missing economic substance Loss of all tax advantages Continual documentation Late VAT returns 5% penalty of unpaid amount Set up direct debit Missing beneficial owner info Up to €10,000 penalty Annual update after changes Cultural Differences: The Maltese Way Malta isn’t like Germany, Austria, or Switzerland. What’s “inefficient” to us is normal here: Burokrata ta Malta: Authorities have their own concept of time. Always allow double the time Personal relationships: Everyone knows everyone. A good local partner is worth their weight in gold Flexibility vs Rules: Maltese are pragmatic, but also very rule-focused—a delicate balance Communication style: Directness is appreciated, but politeness is essential I once waited three weeks for an “urgent” reply from the tax office. Turns out, the case officer was on vacation and no one else could handle it. Thats Malta for you. Forgetting an Exit Strategy: What if Things Don’t Work Out? No one sets up in Malta expecting to fail, but you should still have an exit strategy: Corporate contracts: Avoid overly complex structures that are hard to unwind Asset protection: Key IP and assets should remain transferable Cost control: No long-term commitments without exit clauses Documentation: All critical documents and processes should be portable What does this mean for you? Malta is fantastic—but not for everyone or forever. Keep your options open, and don’t get tied into setups you might regret later. The best Malta structures are those that would also work elsewhere. Frequently Asked Questions Do I need Maltese tax residence to access the tax benefits? No, the tax advantages of a Maltese company (5% effective corporate tax) apply regardless of your personal tax residence. However, you may get additional benefits if you move to Malta personally and qualify for Non-Dom status. How much time do I actually need to spend in Malta? For the company, there’s no minimum stay required on your part. What matters is that the company has real economic substance in Malta—local management, staff, or business. For personal tax benefits (Non-Dom status) you must spend at least 183 days per year in Malta. Can I relocate my existing company to Malta or do I need to set up a new one? Both are options. Moving the registered office is legally possible but usually complicated tax-wise. Most opt to set up a new Maltese company and gradually transfer assets and business activities—simpler and tax optimal. What’s the minimum investment needed for real economic substance? Depends on your business. As a baseline, budget €30,000–50,000 a year for office, local staff, and running costs. Complex setups or “substance-critical” businesses (holdings, IP companies) may need a lot more. How does banking work for German clients? Maltese banks process SEPA payments—so practically nothing changes for German clients. Account opening, though, takes 4–12 weeks and lots of documentation. Treat banking as a critical path in your schedule. What happens to my German GmbH after the move? Depends on your strategy. You can dissolve the German GmbH, let it remain dormant, or keep it for specific (e.g. Germany-focused) business. What’s crucial is tax coordination between both countries. Can I undo my Malta setup? Yes, but it’s time-consuming and expensive. Dissolving a Maltese company takes 6–12 months and costs €2,000–5,000. Better to put the company into “dormant” status and reactivate if needed later. Which business models don’t work well in Malta? Very local businesses (e.g. trades, retail), heavily regulated sectors without a Maltese license, and low-margin, high-compliance ventures are tough. Simple holding structures with no activity are increasingly under scrutiny. How do the cost of living in Malta compare to Germany? Malta is about 10–20% cheaper than major German cities, but pricer than rural areas. Rents in top spots (Sliema, St. Julians) are on German city level. Restaurants and services are cheaper; energy and imports are more expensive. Do I need a Maltese partner or can I own 100%? You can own a Maltese company 100%. No Maltese partner needed. But you do require a Maltese company secretary and at least one EU-resident director—you can fulfil these yourself or use professional services.
