Starting a Company in Malta and Saving Taxes – The Complete Guide for German Entrepreneurs 2025

Why Set Up a Company in Malta? Tax Benefits in Detail

Malta has been actively courting international businesses for years. The result: a tax system that looks irresistible at first glance. But let’s take a closer look.

Understanding Malta’s Tax System: The Full Imputation System

Malta uses a Full Imputation System – meaning that as a shareholder, you get a partial refund of corporate tax already paid when profits are distributed. Sounds complicated? It is.

Here’s a simplified example: Your Malta company makes €100,000 in profits. It pays 35% corporate tax, that is €35,000. You’re left with €65,000. If you distribute that €65,000 as dividends, you get – depending on your company’s activities – between 6/7 and 5/7 of the tax paid refunded.

This means: For most business models you get 6/7 of €35,000 = €30,000 back. The real tax burden then is just €5,000 on €100,000 profit – effectively 5%.

The Famous 5% Corporate Tax: When Does It Actually Apply?

Here’s the catch: The 5% effective tax applies only to certain business activities. Malta differentiates between several accounts:

• Foreign Source Account: Income from abroad (6/7 refund = 5% effective)
• Maltese Source Account: Income from Malta (2/3 refund = approx. 11.67% effective)
• Final Tax Account: Income already subject to final tax (5/7 refund = 10% effective)

Of most interest to German entrepreneurs: the Foreign Source Account. If your clients are mainly outside Malta, you probably fall into this category.

Important: EU state aid rules have led to changes in 2024. There are tougher requirements for new businesses. Make sure you get up-to-date advice.

EU Benefits: More Than Just Taxes

Malta has been an EU member since 2004. That brings you some tangible benefits:

• Freedom of movement: Live and work freely as an EU citizen, no visa required
• Single market: VAT-free sales to other EU countries
• Banking: SEPA transfers, EU deposit protection
• Legal security: EU law applies, European Court of Justice is the final authority

So what does this mean for you? You get the tax benefits of an “offshore” location with the legal security of the EU. A pretty good deal – if you play by the rules.

Malta Company Formation 2025: Step-by-Step Guide

Let’s get practical. I’ll walk you through the entire company formation process – from your first phone call with your lawyer to the first tax declaration.

Preparing in Germany: What to Do Before You Leave

Before you set foot in Malta, you need to get your homework done:

1. Tax advice in Germany: Clarify the tax consequences of a Malta company for your situation in Germany. Keyword: Controlled Foreign Company taxation (Hinzurechnungsbesteuerung) – the German tax office will be watching closely.
2. Define your business model: Malta doesn’t like pure mailbox companies. You need real business activity.
3. Provide capital: At least €1,165 share capital plus formation costs (approx. €3,000–5,000).
4. Prepare due diligence: All shareholders must prove a “clean background.”

My tip: Plan for at least two months lead time. Malta is relaxed – but slow.

Registration on Site: Your First Official Appointment

You’re standing in front of the Malta Business Registry in Valletta. The building looks like a baroque palace – and sometimes operates like one, too. Here’s what I’ve learned:

Step 1: Reserve company name
Usually takes 1–2 days. Warning: Malta is picky about company names. “Malta Holdings Ltd.” won’t fly – too generic. “Mediterranean Consulting Services Ltd.” works better.

Step 2: Submit Memorandum and Articles of Association
These are your company statutes. You’ll need a lawyer – unless you speak fluent legal English with a Maltese accent.

Step 3: Apply for registration
With all the paperwork, certified passports, and a declaration that none of you have a criminal record.

Reality check: A 9:00 a.m. appointment in Malta means: “At some point between 9:00 and 10:30, depending on how the coffee was.” Allow some buffer time.

Dealing with Authorities: VAT, Tax, and Compliance

More bureaucratic steps await after company registration:

My survival tip: Apply for everything at the same time. Malta’s authorities communicate with each other about as well as teenagers with their parents.

Malta Company Formation: Costs and Types of Companies Compared

Malta offers various types of companies. For German entrepreneurs, two are relevant: the Private Limited Company and the Public Limited Company. Let me explain the differences.

Private Limited Company (Ltd.): The Standard Choice for Most

The Private Limited Company is Malta’s equivalent of a German GmbH. Here are the essentials:

• Minimum capital: €1,165 (historically based, equals 500 Maltese lira)
• Shareholders: Minimum 1, no upper limit
• Directors: At least 1, must be resident in Malta
• Shareholder meeting: Annually mandatory
• Annual accounts: Required, must be filed

The main advantage: flexibility. You can increase share capital later, bring in new shareholders, or change your business activity at any time.

The downside: less prestige than a PLC. Some banks look more closely at Ltd.s.

Public Limited Company (PLC): For Bigger Ventures

The Public Limited Company is Malta’s equivalent of a German AG. It’s more complex but offers more opportunities:

• Minimum capital: €46,587
• Shareholders: Minimum 2
• Board: At least 2 directors
• Stock exchange: Can be listed on the Malta Stock Exchange
• International reputation: Taken more seriously by banks and partners

Who should consider a PLC? If you plan to attract investors, go public, or handle large sums of money.

Cost Overview: The Real Cost of Setting Up a Malta Company

Now for the most important question: How much will this really cost? Here’s a realistic breakdown for a standard Ltd.:

Conclusion: Expect €3,000–5,000 in formation costs and €7,000–15,000 in annual running costs. Cheaper than a German GmbH, but no bargain.

Important note: Budget providers advertising a “Malta company for €999” often leave out essential costs. The nasty surprise tends to hit in year two.

Saving Taxes with a Malta Company: Strategies for German Entrepreneurs

Here it gets technical – but also really interesting. I’ll show you how German entrepreneurs use Malta companies strategically, and where the traps lie.

Double Taxation Agreement: Your Shield Against Double Taxation

Germany and Malta have a Double Taxation Agreement (DTA) – your most important tool for legal tax optimization. The DTA governs which country is allowed to tax what.

The most important rules:

• Business profits: Taxed where actual management takes place
• Dividends: 5% withholding tax in Malta, creditable in Germany
• Interest and royalties: Usually taxed only in the country of residence

What does this mean in practice? If you actually run your Malta company from Germany, it’s considered German for tax purposes – and you lose all tax advantages. So you have to build up real operational substance in Malta.

Holding Structures: The Royal Class of Tax Optimization

Many German entrepreneurs use Malta companies as holding companies. Here’s how it works:

1. You set up a Malta holding company
2. This acquires shares in your German operating company
3. Profits are transferred as dividends from Germany to Malta
4. In Malta, only 5% withholding tax applies (thanks to the EU Parent-Subsidiary Directive)
5. When distributing to you as a private individual, you get part of the Maltese tax refunded

An example: Your German GmbH makes €200,000 profit. After German corporate tax (approx. 30%) you’re left with €140,000. This is paid as a dividend to your Malta holding company. In Malta, 5% withholding tax applies (€7,000). If the holding passes €133,000 on to you, you get about €6,000 Maltese tax refunded.

Effective tax burden: Only about 16% instead of the original 48% (corporate + withholding tax).

Compliance and Risks: What Can Go Wrong

Now for the flip side: Malta isn’t the tax haven it’s sometimes made out to be. The risks:

Controlled Foreign Company (CFC) Rules:
If your Malta company pays under 25% tax and earns mostly passive income, the German tax office can impute the profits to you personally. Game over for tax optimization.

Permanent establishment risk:
If you actually run the Malta company from Germany, you create a German permanent establishment. All profits will be taxed in Germany.

EU State Aid Rules:
In 2024, the EU Commission ruled that Malta’s tax system partly constitutes inadmissible state aid. For new companies there are stricter rules.

My advice: Don’t play with fire. A shaky company structure can cost you more than a higher tax bill. Invest in good advice.

Malta Company Address: Practical Office vs. Virtual Office

Every Malta company needs a registered office in Malta. You have several options – each with different costs and consequences.

Office Options: From Mailbox to Penthouse

Virtual Office (€1,200–2,400/year):
The cheapest option. You get a Maltese address, mail forwarding, and occasionally a phone service. Enough for most founders.

Pros: Inexpensive, instantly available
Cons: Lacks prestige, and some banks don’t accept virtual offices

Serviced Office (€2,400–6,000/year):
A real workspace with reception, meeting rooms, and a professional image. Good for: client meetings, bank appointments, and proving substance.

Own Office (from €12,000/year):
Only worthwhile if you’re actually working on site. Rents in Valletta and Sliema have exploded – expect big-city prices.

Legal Requirements: What Malta Really Demands

Malta is getting tougher on substance rules. This is what the law really requires:

• Registered office: Must be in Malta with a local address
• At least one director: Must be resident in Malta or use a nominee
• Company secretary: Not mandatory, but recommended
• Business activity: Must be actually carried out
• Board meetings: At least once a year in Malta

The reality: Malta accepts that international firms aren’t 100% locally present. But you have to be able to prove there’s real business activity.

My survival tip: Schedule at least two trips to Malta per year. Document meetings, business decisions, and operations. The Malta Financial Services Authority (MFSA) can check at any time.

Avoiding Common Mistakes When Setting Up a Malta Company

Learning from mistakes is good – but it’s better to learn from others’ mistakes. Here are the classic pitfalls I’ve seen over two years of Malta consulting.

Typical Pitfalls: What Can Go Wrong

Mistake #1: Underestimating German tax consequences
Many founders focus only on Malta and forget Germany. Result: a nasty surprise at the next tax return.

Solution: German tax advice BEFORE setting up. Clarify CFC rules, permanent establishment risk, and your personal tax obligations.

Mistake #2: Starting without substance
“I’ll just set up a Malta company to save on taxes” – many think like this. Without real business activity, this gets expensive fast.

Solution: Build real operational substance. Employees, an office, local clients, or at least regular business on site.

Mistake #3: Choosing the cheapest provider
€1,000 for the full Malta company setup? If it sounds too good to be true, it is. These providers skimp on compliance, consultancy, and aftercare.

Solution: Invest in proper advice. A good Maltese lawyer costs €2,000–3,000 – but saves you five-figure problems later on.

Compliance Pitfalls: What Authorities Really Care About

Malta is an EU member and must follow EU rules. That means ever stricter controls.

Economic Substance Test:
Malta increasingly checks whether companies have real business operations. Pure mailbox companies will be sanctioned.

Authorities’ checklist:

• Where are board meetings held?
• Who makes operational decisions?
• Are there local employees?
• Is actual value created in Malta?

Beneficial Ownership Register:
Since 2019, all Maltese companies must disclose their true owners. Complex ownership layers no longer work.

Anti-Money Laundering (AML) Compliance:
Malta takes money laundering prevention very seriously. Expect detailed checks from banks and authorities.

Reality check: Malta is no longer an offshore paradise. It’s a regulated EU financial center with matching requirements. Plan accordingly.

My Conclusion: Is a Malta Company Worth It in 2025?

After two years of Malta experience and dozens of company formations, my conclusion is nuanced: Malta can make sense – but only under specific conditions.

Malta is worth considering if:

• You’re willing to build real business operations (not just tax optimization)
• Your business model is internationally oriented
• You’re prepared to invest time and money in compliance
• You can afford €7,000–15,000 annual running costs
• You’re able and willing to travel to Malta regularly

Malta is NOT the right choice if:

• You just want tax savings without business substance
• Your business model is purely German
• The running costs are too high
• You don’t have time for international compliance

My honest assessment: Malta is an attractive jurisdiction for genuine international businesses. But it’s not some magic tax trick for German freelancers or small consulting firms.

If you decide on Malta: do it right. Get good advice, create real substance, and ensure clean compliance. Malta really can be a building block for your international business if you get it right.

Frequently Asked Questions

How long does it take to set up a Malta company?
A standard Ltd. is set up in 2–4 weeks. With VAT registration and all permits, plan for 6–8 weeks total.

Can I set up a Malta company as a German citizen?
Yes, as an EU citizen you can set up a Malta company with no restrictions. No visa or special permits required.

Do I need to move to Malta to set up a company?
No, but you do need a Maltese director. Either move to Malta yourself or use a nominee director.

How much tax can I actually save with a Malta company?
It depends a lot on your business model. If optimized, 5% corporate tax is possible. But: consider the German tax consequences!

Do German banks accept Malta companies as clients?
Most German banks are cautious with Malta companies. Expect thorough due diligence and possible rejections.

What happens if I want to close the Malta company again?
Liquidation takes 6–12 months and costs €2,000–5,000. All tax obligations must be met and you need to appoint a liquidator.

Do I need a Maltese lawyer to set up my company?
Legally not required, but in practice indispensable. The laws are complex and change frequently. Don’t cut corners here.

How does accounting work in Malta?
Malta uses International Financial Reporting Standards (IFRS). You’ll need a qualified accountant – expect to pay €3,000–6,000 per year.