Table of Contents Why Malta for International Businesses? Step-by-Step Business Relocation to Malta: The Strategy Phase 1: Preparation and Market Analysis for Malta Phase 2: Legal Structures and EU Compliance Phase 3: Operational Relocation and Risk Minimisation Phase 4: Full Integration in Malta Avoiding Common Mistakes in Business Relocation Costs and Timeline: What to Really Expect Frequently Asked Questions Three years ago, when I had my first appointment with Malta Enterprise, I thought relocating a business would be as simple as moving house: pack your bags, change your address, done. Spoiler alert: it wasn’t. Today I run my tech startup from Sliema, and I can tell you first-hand why relocating step by step isn’t just smarter, but often critical to survival. While your tax advisor raves about 5% corporate tax and LinkedIn is brimming with success stories from Valletta, reality has its own twists. Malta business visas take longer than promised, EU directives change faster than bus timetables, and your first year’s salary might well disappear into “administrative surprises.” This article shows you how to gradually move your international business to Malta — with a strategy that minimises risk while reaping all the benefits. Why Malta for International Businesses? Before we dive in, let’s quickly clarify why Malta is even on your radar. Three main reasons bring most entrepreneurs here: Tax Benefits: More Than Just 5% Corporate Tax Malta offers a full imputation system, meaning you pay 35% corporate tax as a Maltese company. Sounds high? It is. But here’s the trick: When shareholders receive dividends, 6/7 of the tax paid is refunded as a tax credit. In practice: 35% corporate tax minus a 30% refund leaves you with an effective tax burden of 5%. Important – this only works for foreign shareholders and under certain conditions. EU Access and English Law As an EU member since 2004, Malta offers access to the single market with English-language administration. You may already know the common law system—contracts are similar to British standards, and offices really do operate in English. Geographical Position and Infrastructure Three hours to Frankfurt, two to Rome, four to Dubai. Malta sits perfectly for businesses targeting European and Middle Eastern markets. Add to that: stable internet (yes, really), modern banking infrastructure, and—surprise—a growing fintech scene. What does this mean for you? Malta isn’t for everyone. If your business is mostly German-focused, your customers expect face-to-face contact, or you manage complex production processes, you might be better off staying put. But for digital services, fintech, gaming, and international consulting, Malta is spot on. Step-by-Step Business Relocation to Malta: The Strategy Here’s where it gets interesting. Most incorporation agencies try to sell you an “all-in” relocation, but in practice, gradual works better. Why? Risk Minimisation Through a Phased Approach Imagine moving your entire company at once — and then EU tax rules change, your main client quits, or Malta tightens its substance requirements (proof your company truly operates in Malta). A step-by-step approach keeps your options open. Full Relocation Stepwise Relocation High upfront investment Staggered costs All risks at once Pilot phase possible Difficult to reverse Adaptable and flexible Substance proof from day 1 Gradual build-up Tax Optimisation Over Time Maltese authorities scrutinise whether your company has real substance in Malta: genuine offices, real employees, actual business activity. With a phased relocation, you build substance naturally—rather than faking it. Ensuring Operational Continuity Your customers ideally should notice nothing. That only works if you migrate services step by step, gradually build teams, and transition systems in stages. In my own relocation, our core business continued in Germany while we developed new services from Malta. What does this mean for you? Allow at least 18-24 months for a full, stepwise relocation. Sounds long? It is. But it’ll save you time later when it comes to substance and potential audits. Phase 1: Preparation and Market Analysis for Malta Before you spend a single euro, it’s homework time. I know, not exciting. But this phase decides whether your relocation is a success—or an expensive experiment. Preliminary Tax Review: More Than a Calculation Your first step is to a Maltese tax advisor—not a German-speaking consultant in Valletta (they exist), but an established Maltese firm. Why? Because they know local conventions and understand how the Malta Financial Services Authority (MFSA) really operates. Checklist for the first consultation: Explain your current company structure Disclose key clients and their locations Describe your business activities in detail Mention existing tax optimisations Outline planned growth strategies Understanding and Planning for Substance Requirements Malta requires genuine economic substance—no letterbox companies. Specifically: Business premises: Real office space, not just a mailing address Qualified employees: At least management on location Board meetings: Must be held in Malta Core business activities: Major decisions made locally Pro tip: Start looking for office space in Phase 1. Good commercial properties in Sliema or St. Julian’s are scarce and expensive. Budget at least €40-60 per square metre for decent locations. Market Analysis: Does Malta Suit Your Business? Not every business model thrives from Malta. Honest analysis now will save you headaches later: Well suited Problematic Digital Services Physical Production Fintech and Banking German onsite services Gaming and iGaming Complex logistics International Consulting Trades and local services Software Development Labour-intensive services First Contacts: Start Networking Now Malta is small—500,000 residents, maybe 5,000 international entrepreneurs. Everybody knows everybody, and reputation counts more than in big anonymous cities. First stops: Malta Chamber of Commerce: Classic but well connected American Chamber Malta: Very active, open to non-Americans Malta Digital Innovation Authority: For tech companies Local meetups: Surprisingly many, surprisingly well attended What does this mean for you? Invest 3-6 months in Phase 1. Fly to Malta at least twice, have meetings locally, and get to know the ecosystem. This upfront time will repay you many times over. Phase 2: Legal Structures and EU Compliance This is where things get serious. Phase 2 means building legal structures without endangering your existing business. This is where the amateurs are separated from the pros—or, better said, professional relocation from an expensive experiment. Company Forms in Malta: Which Fits You? Malta offers several corporate forms. The most relevant for international businesses: Private Limited Company: Equivalent to a German GmbH, standard for most Public Limited Company: For larger corporations or planned IPOs Partnership: Similar to a German partnership Branch Office: Subsidiary of the foreign parent company In 90% of cases, you’ll go with a Private Limited Company. Minimum capital: €1,164 (symbolic), incorporation time: 2-4 weeks if well prepared. Malta Company Registration: How It Really Works Here’s how it really goes—not the marketing version: Reserve company name: With the Malta Business Registry, costs €6, takes 1-2 days Create company deed: Memorandum and Articles of Association, at least €500 in lawyer fees Prove business address: Lease or serviced office, from €100 per month Appoint directors: At least one must be an EU citizen with a Maltese residence Submit application: Malta Business Registry, €245 in fees The catch: You need a “Company Secretary”—a licensed service provider who handles administrative duties. Cost: €1,200-2,400 per year, depending on scope. Banking and Setting Up Financial Structures This part gets both exciting and frustrating. After various scandals, Maltese banks have tightened their due diligence. Opening an account takes 6-12 weeks and requires in-person presence. Top banks for international businesses: Bank Advantages Disadvantages Bank of Valletta Largest bank, strong digital services Conservative, long waiting times HSBC Malta International orientation High minimum deposits Revolut Business Fast, digital, low-cost No Maltese clearing Wise Business Multi-currency, low fees Limited local services EU Tax Registration: VAT and More With a Maltese company, you’re automatically within the EU fiscal area. That means: VAT Registration: Mandatory from €35,000 annual turnover in Malta EU OSS (One Stop Shop): For B2C services in other EU countries Intrastat reports: For intra-EU goods trade Beneficial Ownership Register: Must declare ultimate beneficial owners Pro tip: Start the VAT registration early. The Maltese VAT rate is 18%, but for many digital services, 0% applies to exports. That can save big—but requires proper documentation. Running Parallel to Your Existing Structure The beauty of Phase 2: your Maltese company can run in parallel with your existing German (or other) company. Typical setup: German GmbH continues legacy business Maltese company takes on new projects Gradual migration of services and clients No business interruption What does this mean for you? Phase 2 takes 3-6 months and costs €5,000-15,000, depending on complexity. At the end you’ll have a fully operable Maltese structure running alongside your main business. Phase 3: Operational Relocation and Risk Minimisation Now for the tricky part: moving real operations to Malta without things blowing up. Here’s where your preparation is truly tested. Team Migration: People Aren’t Spreadsheets The hardest part of any relocation? People. You have three options: Relocate staff: Expensive, complex, but continuous Keep remote team: Easier, but potential substance problem Build locally: Best long-term, riskier in the short run My advice: a hybrid approach. Key personnel (especially management) must be physically in Malta. Operational teams can start remotely, then gradually build presence on site. Malta as Employer: What You Need to Know Maltese labour law is EU-based but has its quirks: Area Regulation Pro Tip Minimum wage €213.34/week (2024) Relevant only for unskilled workers Paid leave 24 working days + 14 public holidays More generous than Germany Dismissal protection Less strict than Germany Use probation (6 months) Social contributions 10% employer, 10% employee Much lower than Germany Migrating Operative Systems: IT and Processes This gets technical—but it’s key for substance: Localise IT infrastructure: Host servers or cloud instances in Malta/EU Switch invoicing: Maltese entity must deliver genuine services Migrate contracts: New clients via Malta, existing ones gradually moved Separate accounting: Distinct systems, clean separation of transactions Critical point: The Malta Financial Services Authority checks that management really happens from Malta. Emails from German IP addresses, German letterheads on contracts, or invoices from German systems will raise red flags. Customer Management: Transparency Pays Your clients don’t need to know everything, but secrecy backfires. My approach: Communicate proactively: “We’re expanding to Malta” sounds better than “We’ve relocated” Emphasise continuity: Same contacts, same quality Highlight EU advantages: Better scale, international expertise Provide legal certainty: New contracts with Maltese entity Risk Management: What Can Go Wrong? The most common pitfalls and how to avoid them: Failing substance test: Too little actual activity in Malta Permanent establishment issue: German tax office still sees a German base VAT compliance: Incorrect VAT handling in EU transactions Treaty shopping: Double tax treaty not recognised Each can be expensive—from back taxes to criminal proceedings. So: regular compliance reviews with both Maltese and German advisors. What does this mean for you? Phase 3 is the most critical, lasting 6-12 months. Here it’s decided whether your move counts as genuine business or just tax planning. Phase 4: Full Integration in Malta The home stretch. In Phase 4, you become a Maltese company with international vision—not just a German entrepreneur with a Maltese structure. Sounds subtle? The tax and legal implications are not. Center of Management: Where Are Decisions Really Made? The tax office doesnt care about where your registered office is, but where key business decisions are actually made. That’s known as the “place of effective management” and determines your tax residency. Specific requirements for Maltese tax residency: Board meetings: At least 50% of board meetings in Malta Management decisions: Major resolutions made locally Day-to-day operations: Business run from Malta Documentation: Meeting minutes, email trails, decision logs Pro tip: Keep a “management diary.” Record every key decision with place, time, and participants. In an audit, this is invaluable. Personal Tax Residency: The Final Piece This one is personal. Many entrepreneurs forget: Your personal tax residency must align, or the whole structure crumbles. Malta offers different residency programs: Programme Requirements Tax Benefits Global Residence Programme €275k property + €15k annually Flat tax of 15% Malta Permanent Residence €300k investment + €27k donation No tax on foreign income Standard Residency 183+ days in country Normal progressive taxation High Net Worth Individual €600k minimum tax + conditions Fixed €200k tax on everything Property Strategy: Buy or Rent? Personal residency means housing. Malta is expensive—very expensive. But the buy or rent decision has tax implications. Buying makes sense if: Staying long-term (5+ years) Joining the Global Residence Programme Stable income conditions For diversification strategy Renting is better if: Pilot phase or uncertain future Need for flexibility Capital is better deployed elsewhere You want to avoid real estate risks Current prices (2024): Purchase from €4,000/sqm in outlying areas, €8,000+ in Sliema/St. Julian’s. Rent: €1,200-2,500 for 2-bedroom apartments in good locations. Complete System Migration: The Final Steps Now for the nitty-gritty: Wrap up old structures: Liquidate or sell your German GmbH Asset transfer: Move company assets to Malta Finalise customer contracts: Migrate all clients to Maltese entity Consolidate banking: Close German business accounts Compliance setup: Fulfil all Maltese reporting obligations Integrating into the Maltese Business Community Malta is small, and reputation determines your success. Active integration isnt a nice-to-have—its business-critical: Chamber memberships: Malta Chamber and industry associations Networking events: Attend regularly, not just occasionally Local partnerships: Collaborate with Maltese companies Community engagement: Sponsorships, charities, local initiatives What does this mean for you? Phase 4 can take 6-18 months and marks the shift from “German entrepreneur in Malta” to “Maltese entrepreneur with an international track record.” From this point on, the only thing that matters is: Does Malta still make sense for your business? Avoiding Common Mistakes in Business Relocation After three years in Malta and discussions with dozens of other entrepreneurs, I know the classic pitfalls. Some are expensive, some embarrassing, some both. Here are the top 10 mistakes and how to avoid them. Mistake 1: Underestimating Substance The classic: incorporate, get a mailbox, continue working from Germany. Doesn’t fly anymore. Since the Panama Papers and EU anti-avoidance initiatives, Malta has tightened up. Solution: Build real economic activity. Invest at least 50% of working time locally, real staff, real decision-making. Yes, it costs—but less than back taxes with interest. Mistake 2: Ignoring German Permanent Establishment Just because you’ve set up a Maltese company doesn’t mean Germany lets go. If you still manage things from Germany, the tax office sees a permanent establishment. Practical example: A software developer set up a Maltese Ltd but kept working from his Berlin home office. Two years later: tax audit. Result: German tax on all profits, plus interest on €200,000 of back taxes. Mistake 3: Neglecting VAT Compliance VAT in the EU is complex. Malta’s rate is 18%, but for many international services, 0% applies—if the documentation is in order. Common VAT pitfalls: Incorrect invoicing for B2B services Missing documentation for 0% rates Forgetting OSS registration for B2C services Not understanding reverse-charge mechanisms Mistake 4: Oversimplified Banking Strategy Many think: Maltese company = Maltese bank account. Not always true. For international business, multi-banking strategies can work better. Account Type Use Recommendation Maltese business account Local expenses, payroll Bank of Valletta or HSBC Multi-currency account International payments Wise Business or Revolut Investment account Liquidity management International private bank Mistake 5: Team Migration Too Fast or Too Slow Either trying to move all staff at once (usually impossible), or keeping everything remote (substance issue). Neither works. Golden Rule: Move management physically, then migrate operations gradually. Remote teams are fine, but key decision-makers must be on site. Mistake 6: Neglecting Personal Tax Residency Company moves to Malta, but you keep living in Germany. It can work—but is sub-optimal and, with large dividends, can become tax-inefficient. Rules of thumb for personal residency: Under €100k profits: Residence less critical €100-500k: Consider optimising residency €500k+: Residency optimisation usually a must Mistake 7: Sloppy Documentation Malta loves paperwork. So does Germany. Satisfying both at once means ultra-clean documentation. At minimum: All board meeting minutes Decision-making trails with location and time Travel records for management Contracts and invoices Staff records (who works where?) Mistake 8: Underestimating Compliance Costs Malta is cheaper than Germany for tax rates. But advisory and compliance costs are often higher than expected. Annual minimum costs (realistic estimate): Tax advisor: €3,000-8,000 Company Secretary: €1,200-2,400 Legal advice: €2,000-5,000 Audit: €1,500-4,000 Various licences: €500-2,000 What does this mean for you? On average, these mistakes cost €50,000-200,000 in back taxes and years of frustration. Better to spend your time building your business. Costs and Timeline: What to Really Expect Let’s talk numbers. What does a stepwise company relocation really cost, and how long does it take? Here’s the unvarnished truth. Total Costs by Company Size Costs vary widely by the complexity of your business: Company Size One-Off Costs Annual Running Costs Timeframe Solo entrepreneur €15,000-25,000 €8,000-12,000 12-18 months Small (2-10 staff) €25,000-50,000 €12,000-20,000 18-24 months Medium (10-50 staff) €50,000-100,000 €20,000-35,000 24-36 months Large (50+ staff) €100,000-300,000 €35,000-80,000 36-48 months Detailed Cost Breakdown: Where Does the Money Go? Phase 1 – Preparation (3-6 months): Tax advice and due diligence: €3,000-8,000 Legal advice: €2,000-5,000 Market analysis and travel: €2,000-4,000 Office search and viewings: €1,000-2,000 Phase 2 – Legal Structures (3-6 months): Company formation: €2,500-5,000 Banking setup: €1,000-3,000 Licences and registration: €1,500-4,000 Initial office fit-out: €3,000-10,000 Phase 3 – Operational Relocation (6-12 months): Staff migration: €5,000-25,000 IT migration: €3,000-15,000 Marketing and communications: €2,000-8,000 Dual structures: €5,000-20,000 Phase 4 – Integration (6-18 months): Residency programmes: €15,000-300,000 (depending on programme) Property: €200,000-800,000 (if buying) Structural optimisation: €3,000-10,000 Winding up old structures: €2,000-8,000 Break-Even Analysis: When Does Malta Pay Off? The crucial question: From what profit does the move pay off? Here’s a simplified calculation: Example: German GmbH vs Maltese Ltd Annual Profit Tax Germany Tax Malta (eff.) Savings ROI after €100,000 €30,000 €5,000 €25,000 2-3 years €250,000 €75,000 €12,500 €62,500 1-2 years €500,000 €150,000 €25,000 €125,000 6-12 months €1,000,000 €300,000 €50,000 €250,000 3-6 months Rules of thumb for break-even: Below €75k annual profit: Malta usually not worthwhile €75k-150k: Grey area, hinges on extra factors €150k+: Malta typically pays off if properly implemented €500k+: Malta almost always pays off Timeline for Different Business Models Digital services/software (ideal case): Months 1-6: Preparation and incorporation Months 7-12: Begin parallel operations Months 13-18: Full migration Months 19-24: Optimisation and integration Consulting/services (standard): Months 1-9: Preparation and structural setup Months 10-18: Stepwise client migration Months 19-30: Complete relocation Months 31-36: Structural optimisation Complex companies (realistic case): Year 1: Intensive preparation and pilot phase Year 2: Gradual relocation of business units Year 3: Full integration and optimisation Year 4: Fine-tuning and compliance stabilisation Hidden Costs: What Advisors Don’t Tell You Besides the obvious, hidden costs include: Dual structures: 6-18 months of overlapping expenses Loss of qualifications: Finding/training new staff Client loss: 5-15% drop in turnover is realistic Learning curve: Early inefficiencies Compliance corrections: Retrofitting systems What does this mean for you? A realistic budget should include a 20-30% buffer for the unexpected. Better to overestimate than find yourself undercapitalised halfway through. Frequently Asked Questions Can I relocate my business to Malta if I keep living in Germany? In principle, yes, but its suboptimal. You’ll need to prove that actual company management takes place in Malta—meaning regular stays (at least 50% of working time) and documented local decision-making. For high dividend payments, personal tax residency also becomes important. How long does it really take to incorporate a business in Malta? Officially 2-4 weeks, practically more like 6-8 weeks. The incorporation is quick, but banking, VAT registration, and licences take time. Expect 3-4 months until fully operational. Tip: Start the bank application before legal setup is complete. What are Malta’s minimum requirements for economic substance? Malta requires “adequate substance”—no fixed minimums, but practical standards: local offices, qualified staff for core functions, board meetings in Malta, and key business decisions made locally. Rule of thumb: at least one full-time employee plus managing director on site. Can the German tax office challenge the Malta structure? Yes, if substance requirements aren’t met or a German permanent establishment exists. Common problems: management from Germany, no real activity in Malta, or relocation is done only for tax savings without valid business reasons. Solid documentation and real substance are your shield. What happens to my German staff after moving the business? You have several options: remote work contracts (legally complex), transferring to the Maltese company (expensive due to relocation), or regular redundancy with severance. Many firms use hybrid models: core staff move to Malta, operational teams stay remote. Important: Seek employment law counsel in both countries. Is Malta’s 5% tax rate guaranteed? No, that’s a common myth. The 5% only applies under certain conditions: You pay 35% corporate tax, but 6/7 is refunded at dividend payout. This works only for foreign shareholders and the correct company setup. If EU state aid rules change, the system could also change. Is Malta worthwhile for small businesses? It gets interesting from about €150,000 annual profit; below that, compliance costs eat up any tax savings. For solo entrepreneurs with less than €75,000 profit, Malta is usually not cost-effective. Always assess the break-even individually—EU market expansion may also be a factor. How hard is banking in Malta for international businesses? Harder than it used to be, but doable. Allow 6-12 weeks for account opening and plan on being there in person. Banks scrutinise: business model, source of funds, compliance setup. Alternative: Multi-banking with Revolut/Wise at first, traditional bank later. Above all: have all documents complete and transparent. Can I just transfer my existing customer contracts? No—legally, that’s a contract takeover which requires client consent. In practice, this is often done via novation (new contract) or assignment (transfer). Plan 6-12 months for full client migration. Key: communicate proactively and maintain service continuity to minimise client loss. What are the biggest risks of relocating to Malta? Main risks: Failing the substance test, German permanent establishment, changes to EU regulations affecting Maltese structures, exploding compliance costs, or higher than expected client losses. Minimise risk with professional advice, solid documentation, and a phased—not abrupt—relocation.
