Table of Contents Malta Company Formation Basics: What You Need to Know Upfront The 10 Steps to Setting Up a Company in Malta: A Detailed Guide Malta Company Formation Costs: What to Expect Tax Advantages in Malta: Why Incorporation Pays Off Avoiding Common Mistakes When Setting Up a Company in Malta After Incorporation: Ongoing Compliance and Accounting FAQ: Frequently Asked Questions Are you dreaming of starting your own business in Malta? Then let me hit you with the best—and simultaneously the most sobering—news right up front: Yes, it’s possible. But no, it isn’t as simple as an Instagram post might make you think. After two years on the island and countless conversations with founders, lawyers, and desperate entrepreneurs outside the Registry Office, I can assure you: With the right preparation, setting up a Malta Limited is doable. Go in unprepared, and you’ll find yourself in a marathon through Maltese bureaucracy. Malta entices with 5% corporate tax, EU membership, and English as its official language. Tempting, right? It definitely is. But between “I want to set up in Malta” and the reality of your first Maltese business bank account, there are a few hurdles you’ll want to avoid. Here you’ll find the whole process broken down into 10 concrete steps—with all the costs, pitfalls, and insider tips I wish I’d had back then. Malta Company Formation Basics: What You Need to Know Upfront Before we dive into the 10 steps, let’s talk basics. A Malta Limited is a private limited company—comparable to a German GmbH or Austrian GmbH. That means: limited liability, minimum share capital of €1,200, and plenty of paperwork. Malta Limited vs Other EU Company Types Why not just set up a Cyprus Limited or an Irish company? The answer lies in Malta’s unique tax system. The Malta Refund System allows for effective tax rates as low as 5% on distributed profits—but only if you follow the rules exactly. A Cyprus Limited is taxed at 12.5%, and so is an Irish company, without refund options. Country Corporate Tax Effective Rate EU Member English as Official Language Malta 35% 5% (with refund) Yes Yes Cyprus 12.5% 12.5% Yes Yes Ireland 12.5% 12.5% Yes Yes Estonia 20% 0% (if not distributed) Yes No Who Can Set Up a Malta Limited? It’s straightforward for EU citizens. Non-EU residents face a few extra obstacles, but it’s not impossible. As an EU citizen, you’ll need: At least one shareholder At least one director A Maltese business address A company secretary (this can be your service provider) The catch: You don’t have to live in Malta to set up a Malta Limited. But you do have to meet the substance requirements—we’ll cover that later. Malta Residence: Nice to Have or a Must-Have? Here’s where things get interesting. You don’t need Malta residence to incorporate. But for optimal tax benefits, you do. The Malta Refund System works best if you, as a shareholder, are taxable in Malta. If youre not resident, you’ll still pay just 5%—but you must prove you aren’t tax resident in your home country. My hands-on tip: Set up the company first, see if your business model works, and then decide on residence. You can always apply for Malta residence later on. The 10 Steps to Setting Up a Company in Malta: A Detailed Guide Now let’s get practical. These 10 steps will take you from idea to a registered Malta Limited. Expect a total duration of 4–8 weeks if everything goes smoothly. Spoiler: It rarely goes smoothly. Step 1: Reserve and Check Your Company Name The first step takes you to the Malta Business Registry (MBR). Your chosen name has to be available and must not breach the naming guidelines. Typical red flags: “Malta,” “Bank,” “Insurance,” or anything that sounds like a government body. Name reservation costs €25 and is valid for 30 days. My tip: Check availability beforehand online via the Companies House database, then reserve online through the MBR portal. It takes 2–3 business days. Important note: Your company name must include “Limited” or “Ltd.”. Without that, registration will be rejected. Step 2: Choose a Company Service Provider (CSP) This step: save either time or money—but not both. A good CSP costs €2,000–3,500 per year, but handles all the paperwork for you. Cheap CSPs cost €800–1,200, but you’ll be doing a lot yourself. Your CSP handles: The company secretary function (legally required) Registered office address Nominee director services (optional) Compliance and annual returns Bookkeeping and tax returns My recommendation: Don’t go for the cheapest offer. If your CSP goes bust after six months, it’s more trouble than what you saved. Step 3: Draw Up Memorandum and Articles of Association The Memorandum is your company’s “birth certificate;” the Articles are your “house rules.” Both documents will define: Object clause (the scope and purpose of your company) Share structure and shareholder rights Director powers and responsibilities Meeting procedures and voting rights Standard templates are free, but I’d recommend tailored articles. Especially the objects clause—don’t cut corners here, as it determines what your company can and cannot do later. Step 4: Appoint Directors and Shareholders Every Malta Limited needs at least one director and one shareholder—both can be the same person. If you’re an EU citizen, you can fill both roles. Non-EU citizens need a Maltese or EU director. Key decisions: Number of shares: Minimum €1,200, but you can also issue 10,000 shares at €0.12 each Share classes: Ordinary shares are enough for basic setups Director structure: One director is cheaper, two offer more flexibility Step 5: Deposit Capital and Open a Bank Account This is where the Malta adventure really starts. You need a minimum capital of €1,200, but you only have to deposit it after incorporation. So: You incorporate with zero capital and pay in afterwards. Opening a bank account in Malta is… a challenge. Count on 2–8 weeks and the following requirements: Certificate of incorporation Memorandum and articles Board resolution to open the account Due diligence documents for all directors Business plan and revenue projections Proof of source of funds Alternative: You can deposit the capital through a lawyer’s client account. It’s faster but comes with extra fees. Step 6: Submit Documents to the Malta Business Registry Now comes the paperwork. Submit: Form A – Incorporation application Memorandum and articles (notarised) Director and secretary consent forms Proof of registered office address Name reservation certificate The registration fee is €245. Processing time: 5–10 business days if all docs are complete. Missing documents = more waiting. Step 7: Receive Certificate of Incorporation The certificate of incorporation is your official “birth certificate.” From this point, your Malta Limited officially exists. From this moment, the compliance countdown begins—you have 18 months to file your first annual return. The certificate includes: Company registration number Incorporation date Authorised share capital Registered office address Step 8: Tax Registration with Commissioner for Revenue Within 30 days of incorporation, you must register for tax. This is done at the Commissioner for Revenue with Form VAT 1. You’ll get: Tax identification number (TIN) VAT number (if liable for VAT) Employer registration (if you employ staff) Compulsory VAT registration at €35,000 turnover per year. Voluntary registration is possible and often makes sense for EU business. Step 9: Social Security & Employment License (If Needed) If you plan to employ staff or hire yourself, you’ll need: Employment license: €200 per year, for all employers Social security registration: For each employee Work permit: For non-EU employees As an EU citizen, you can employ yourself. As a non-EU director, you’ll need a work permit—allow 6–12 weeks for this. Step 10: Corporate Bank Account & Payment Processing The last step is often the longest. With your certificate of incorporation you can activate your bank account and pay in the minimum capital. Maltese banks are… picky. Banks ranked by my experience: APS Bank: Fast, but expensive (€300 setup + €50/month) Bank of Valletta: Cheap, but slow (6–12 weeks) HSBC Malta: International, but very strict European and Revolut Business: Alternatives for basic needs You’ll need payment processing via Stripe, Square, or local providers for online business. Malta Company Formation Costs: What to Expect Here’s the unvarnished truth about costs. The “from €1,500 to set up” marketing is pure nonsense. In reality, expect your first year to cost €4,000–8,000, depending on complexity and service level. One-off Malta Limited Formation Costs Item Cost Required Name reservation €25 Yes Registration fee €245 Yes Notarial certification €150–300 Yes CSP setup fee €500–1,500 De facto yes Legal fees (lawyer) €1,000–2,500 Recommended Bank account setup €200–500 Yes Total €2,120–5,070 Recurring Annual Costs Now for the hidden costs nobody tells you about: Item Cost/year Due Company secretary €800–2,000 Annually Registered office €300–600 Annually Annual return €100 Annually Bookkeeping & tax returns €1,200–3,000 Annually Audit (from €200k turnover) €2,500–5,000 Annually Bank fees €300–1,200 Annually Total €2,700–11,800 Hidden Costs Nobody Mentions In my experience, you should also expect the following expenses: Travel expenses: 2–3 Malta trips for bank appointments, signing, etc. (€500–1,500) Apostille fees: For foreign documents (€50–200 per document) Translation costs: For non-English documents (€100–300) Express fees: If you need it fast (€200–500) Nominee director: If you need a local director (€1,000–2,500/year) Cost Optimization: Where to Save My saving tips after two years on the island: Compare CSPs: Get at least three quotes. Price differences of 100% are usual. Timing: Don’t incorporate in December. Everything moves slowly, everyone’s on holiday. Preparation: Gather all documents in advance. Any missing document costs time and money. Bank account alternatives: European and Revolut are cheaper than Maltese banks. DIY shares: You can reserve your company name and register for taxes yourself. Tax Advantages in Malta: Why Incorporation Pays Off Now to the real reason you’re here: taxes. Malta’s tax system is complex but brilliant. With the right structure, you really do pay just 5% corporate tax. But—and this is a big “but”—only if you know the rules. The Malta Refund System Explained Malta has a trick: They charge 35% corporate tax, but refund you 6/7 of it. Here’s how it works: Your Malta Limited makes €100,000 profit Corporate tax: €35,000 (35%) Distribution to shareholders: €65,000 Refund: €30,000 (6/7 of tax paid) Effective tax: €5,000 = 5% The catch: You need to distribute profits to get the refund. Retained earnings are taxed at 35%. Participation Exemption: 0% on Dividends Here’s where it gets really interesting. If your Malta Limited holds shares in other EU companies, dividends are 100% tax-free—this is called the participation exemption. Requirements: Minimum 10% holding or €1,164 purchase value Hold for at least 183 days No trading of the shares Practical example: You set up a German GmbH for operations and a Malta Limited as Holding. The German GmbH pays dividends to Malta tax free. Malta pays out to you at 5% tax. Malta vs. Other EU Jurisdictions Jurisdiction Corporate Tax Dividend Tax Capital Gains Holding Benefits Malta 5% (with refund) 0% (EU dividends) 0% (with exemption) Participation exemption Luxembourg 24.94% 0% (with exemption) 0% (with exemption) Participation exemption Netherlands 25.8% 0% (with exemption) 0% (with exemption) Participation exemption Cyprus 12.5% 0% (with exemption) 0% (with exemption) Participation exemption Substance Requirements: What Malta Demands Here’s the catch. Malta requires “economic substance” for tax benefits. That means: Management and control: Board meetings must be held in Malta Operational activities: Business decisions must be made in Malta Employees: Adequate number of qualified Malta-based employees Office: Suitable business premises in Malta What does this mean in practice? For a simple holding, 1–2 board meetings per year in Malta and a qualified director in-country are enough. Operational companies require real presence. Making Use of Double Tax Treaties Malta has a broad range of double tax treaties, meaning: Dividend distributions to you are often taxed at a lower rate. Examples: Germany: 5% withholding tax on dividends (if 10%+ holding) Austria: 5% withholding tax on dividends Switzerland: 5% withholding tax on dividends UAE: 0% withholding tax on dividends Combined with your personal tax situation, this can be extremely attractive. Avoiding Common Mistakes When Setting Up a Company in Malta From two years of Malta experience and countless chats with frustrated founders: These mistakes will cost you time, money, and nerves. Learn from others’ errors. Mistake 1: Going for the Cheap CSP and Regretting It Later The biggest mistake: picking the cheapest Company Service Provider. €800 instead of €2,500—it sounds like a deal, right? It’s not. What happens: Annual returns filed late (penalties: €233) Tax returns with errors (back taxes + interest) CSP goes bust (you need a new CSP + document transfer chaos) No advice for compliance questions My tip: Invest in a reputable CSP. The €1,500 extra is saved in your first year, simply by staying compliant. Mistake 2: Ignoring Substance Requirements Many founders think: “I’ll set up in Malta, live in Germany, and pay just 5% tax.” It doesn’t work like that. Without real substance in Malta, you get no tax benefit. Minimum substance for tax benefits: 2 board meetings per year in Malta Business decisions documented in Malta Qualified director with Malta residency Suitable office setup Costs for real substance: €3,000–8,000 per year. No substance, no 5% tax. Mistake 3: Underestimating Bank Account Setup You think: “I’m an EU citizen, company is registered—bank account is a formality.” Wrong. Maltese banks are compliance-paranoid. Typical reasons for rejection: Business model not clearly explained Source of funds not sufficiently documented No physical Maltese connection visible Director doesn’t reside in Malta Online business with no local customers Solution: Prepare a detailed business plan, prove all money flows, and allow 8–12 weeks for account opening. Mistake 4: Sleeping Through Annual Returns and Compliance You set up the limited, business is running—and then comes the nasty surprise: annual returns not submitted, tax returns late, penalties piling up. Malta Limited Compliance Deadlines: Obligation Deadline Penalty for Delay Annual return 18 months after incorporation, then yearly €233 Tax return 9 months after end of financial year €465 + interest VAT return Quarterly €200 + 0.33% daily Social security Monthly €25 + interest A good CSP manages all of this for you. But check regularly to make sure everything’s up to date. Mistake 5: Forgetting Tax Residency Planning You set up in Malta for 5% tax but remain tax resident in Germany. Result? You pay German tax on your Maltese profits. The Malta refund system doesn’t help you here. Key tax residency rules: Germany: 183-day rule + no regular place of abode Austria: 183-day rule + central life interests Switzerland: Exit tax if >20% stake Plan your tax residency before you set up a Malta Limited. You’ll need tax advisors in both countries. Mistake 6: Mixing Up Malta Residence and Company Formation A common misunderstanding: “I need Malta residence to incorporate.” Not true. As an EU citizen, you can form a Malta Limited without living there. However: For optimal tax benefits, Malta residence is very helpful. The Malta residence programs: Ordinary residence: Free, from 90 days’ stay Malta Permanent Residence Programme (MPRP): €300,000 investment Global Residence Programme: €275,000 property + 15% minimum tax Start with ordinary residence—it’s enough for most tax advantages. After Incorporation: Ongoing Compliance and Accounting Congratulations—your Malta Limited exists! Now the real work begins. Ongoing compliance is the key to lasting success. Ignore the rules and Malta quickly becomes a very uncomfortable place to do business. Malta Limited Bookkeeping: What You Need to Know Maltese accounting follows IFRS (International Financial Reporting Standards). This is more complex than German HGB accounting, but internationally recognised. Minimum requirements: Proper bookkeeping in English Profit & loss statement Balance sheet Notes to the financial statements Director’s report Mandatory audit from: €200,000 turnover OR €175,000 total assets OR 3 employees An audit costs €2,500–5,000 and takes 4–8 weeks. Budget for this in your cash flow planning. Malta Tax Returns: Deadlines and Penalties Malta tax returns are more complex than in Germany, with multiple forms: Form Purpose Deadline Frequency Form C Corporate tax return 9 months after financial year-end Annually Form D Dividend distribution On distribution As required Form R Refund application With Form D As required VAT 3 VAT return 21st of the following month Quarterly Late submissions are expensive: €465 penalty + 0.33% daily for tax returns. This adds up fast. Director Duties: What You Have to Observe as Managing Director As director of a Malta Limited, you have serious responsibilities. Violations can result in personal liability. Your main duties: Fiduciary duties: Always act in the company’s best interest Duty of care: Make informed business decisions Compliance duties: Comply with all laws Record keeping: Maintain proper accounts Filing obligations: Submit all statutory returns on time Board meetings must be properly documented. You’ll need board resolutions for: Bank account opening Dividend distributions Major business decisions Appointing new directors Share transfers Economic Substance Compliance Since 2019, tougher economic substance rules apply. Your Malta Limited must prove genuine business activity in Malta. Substance test by business activity: Business Activity Minimum Substance Monitoring Holding company Adequate directors, meetings in Malta Yearly IP business Staff, premises, core IP activities Quarterly Trading Core staff, decision making Quarterly Service business Skilled staff, suitable premises Quarterly Penalties for non-compliance: €50,000 + possible deregistration. Economic substance is no joke. Banking Compliance: KYC and Monitoring Your Maltese bank account is monitored continuously. Unusual activity leads to account reviews or even freezing. Red flags for Maltese banks: Large cash deposits with no clear business reason Transfers to high-risk countries Transactions inconsistent with business purpose No local Malta transactions My tip: Keep a transaction log showing business purpose for all major payments. It makes KYC reviews much simpler. Exit Planning: What Happens When You Leave Malta Nobody talks about exit planning, but it’s important. When your Malta venture comes to an end: Strike-off application: Costs €240, takes 3 months Final tax return: Settle all outstanding items Asset distribution: Distribute remaining assets to shareholders Employment terminations: Observe correct notice periods Dormant companies still cost €1,500–3,000 per year in compliance. Strike-off is often cheaper than dormancy. Conclusion: Is Setting Up a Malta Company Worth It? After 4,000+ words and all the details, you’re probably wondering: Is a Malta Limited really worth it? The honest answer: It depends. A Malta Limited is worth it if: You make at least €200,000 profit per year You’re ready to spend €5,000–10,000 per year for compliance You can fulfill economic substance rules You’re planning long-term (5+ years) You run an international business A Malta Limited is NOT worth it if: You make less than €100,000 profit You only have local clients in Germany/Austria You can’t spare time for compliance management You remain tax resident in your home country You’re only following social media hype My personal assessment after two years in Malta: The 5% tax is real—but it comes at a price. You’re trading German bureaucracy for Maltese bureaucracy plus international compliance. For the right business, Malta is brilliant. For others, it’s just expensive overhead. If you choose a Malta Limited: invest in good advice from the start. The €2,000 for a reputable lawyer saves you many times that in avoided mistakes. Malta isn’t some Caribbean offshore dream from Instagram. It’s a serious EU jurisdiction with real tax benefits for real businesses—if you do your homework. FAQ: Frequently Asked Questions about Malta Company Formation Do I need Malta residence for a Malta Limited? No, you don’t need Malta residence to incorporate. As an EU citizen, you can set up a Malta Limited without living in Malta. For optimal tax advantages, though, Malta residence is very helpful. How long does it take to set up a Malta company? With all documents complete, 4–8 weeks. Incorporation itself takes 5–10 business days, but bank account opening and tax registration can stretch the process. How much does a Malta Limited cost in the first year? Realistically, €4,000–8,000, including all formation costs, CSP fees, legal fees, and first-year compliance. “From €1,500” deals are marketing and don’t cover everything required. Can I run a Malta Limited from Germany? Theoretically yes, but in reality it’s problematic. Without economic substance in Malta, you lose the tax benefits. At least 2 board meetings per year in Malta are required, plus a qualified director on site. Which bank is best for a Malta Limited? APS Bank for quick setup (expensive), Bank of Valletta for low rates (slow), European/Revolut Business for straightforward online businesses. It depends on your requirements. Do I have to get audited? Audit required from €200,000 turnover, €175,000 assets, or 3 employees. Smaller companies can apply for audit exemption and save €2,500–5,000 per year. Does the 5% tax system really work? Yes, but only with the right setup. You pay 35% corporate tax and get 6/7 of it back as a refund if you distribute profits. If you don’t distribute, you pay the full 35%. What if my CSP goes bust? You’ll need a new company secretary and registered office. The transfer costs time and money. Always choose a well-established CSP with a solid track record. Can I use a Malta Limited for crypto business? Malta has specific DLT/crypto regulations. For crypto trading, you need a VFA license; for simple holdings, usually not. Compliance is complex—definitely seek specialised advice. How complicated is Maltese tax residence? Ordinary residence from 90 days’ stay is simple. Global Residence Programme requires €275,000 property. Malta Permanent Residence €300,000 investment. For EU citizens, ordinary residence is usually enough.
