Table of Contents Why 6 Months is Realistic (and 3 Months is Wishful Thinking) Preliminary Assessment and Basics: What You Need to Know Before Month 1 Month 1: Laying the Legal Foundations for Your Malta Move Month 2: Tax Positioning and EU Compliance Month 3: Setting Up Operational Infrastructure in Malta Month 4: Employees, HR and Employment Law in Malta Month 5: Finalization and System Tests Month 6: Go-Live of Your Business Relocation The 7 Most Common Pitfalls When Moving to Malta Realistic Cost Overview: What to Expect FAQ about Relocating Your Business to Malta Why a 6-Month Timeline for Relocating Your Business to Malta is Realistic (and 3 Months is Pure Fantasy) Youve decided to relocate your business to Malta? Congratulations! But let me be upfront: Theres no such thing as a quick fix here. I constantly hear from entrepreneurs who think they can complete the process in 6-8 weeks. Spoiler alert: That usually ends in chaos, expensive rework, and plenty of grey hairs. After two years of Malta experience and countless talks with entrepreneurs whove made the leap, I can assure you: 6 months is realistic, 12 months is comfortable, 3 months is pure stress. Why Maltas Authorities Run on Their Own Calendar Malta marches to a different beat. What might take 2 weeks in Germany can easily take 6 weeks here. Its not laziness—the Maltese system is just more thorough and bureaucratic than you’d expect. The Malta Business Registry (MBR), for example, often takes 4-6 weeks for company formations, even though the website says 10-15 business days. On top of that: Every step depends on the previous one. No Maltese company registration, no bank account. No bank account, no VAT registration. No VAT number, no EU compliance. Get the picture? The 6-Month Roadmap at a Glance Month Main Tasks Critical Path Time Buffer Preliminary Assessment Tax advice, legal review 4-6 weeks High Month 1 Company formation, registered office 4-8 weeks Medium Month 2 Tax registration, VAT 3-6 weeks Low Month 3 Banking, IT setup, office 4-8 weeks High Month 4 HR setup, employee transfers 6-10 weeks Medium Month 5 System integration, testing 2-4 weeks Low Month 6 Go-live, post-launch support 2-4 weeks Medium What does this mean for you? Plan for 6 months, expect 8 months, celebrate if it’s done in 5. That way, you avoid stress, burned bridges in Germany, and costly expedited procedures in Malta. Preliminary Assessment and Basics: What You Need to Know Before Month 1 Before you transfer a single euro to Malta, you should clarify three fundamental questions. I know too many entrepreneurs who only realized after setting up their company that Malta wasnt the optimal tax jurisdiction for them after all. Ouch. Is Malta Even the Right Fit for Your Business? Malta doesnt work for everyone. The tax advantages in Malta mainly apply to: Holding structures with shareholdings (6/7 refund system) IP-heavy businesses (Patent Box, 0-5% tax) Trading companies with international clients E-commerce and digital services Financial services (with the relevant license) Malta is NOT optimal for: Purely German businesses (permanent establishment risk) Craft businesses with local clients Companies turning over less than €500,000 per year (cost-benefit ratio doesnt add up) German Tax Issues: Exit Tax and Entstrickung This gets technical: If you move your company to Malta, the German tax office wants its share. The exit tax under §6 AStG applies if you move hidden reserves of more than €500,000 abroad. With “Entstrickung” (§4g EStG), assets are valued at fair market value. Sounds complicated? It is. Thats why you need a German tax adviser who knows Malta—don’t settle for just anyone. Legal Due Diligence: What Has to Be Clarified in Advance Area of Review Critical Questions Time Required Corporate Law Shareholder structure, management 2-3 weeks Tax Law Exit tax, double taxation 3-4 weeks Employment Law Employee transfers, terminations 2-4 weeks Contract Law Client and supplier contracts 1-2 weeks What does this mean for you? Invest €3,000-€5,000 in professional advice BEFORE you start. It’ll save you five-figure sums down the road in corrections. Month 1: Laying the Legal Foundations for Your Malta Move This is where the journey begins! Month 1 is the cornerstone for everything else. You’re setting the legal foundations your Malta adventure will stand on. Let me be honest: This month is the most tedious, but also the most important. Malta Company Formation: Choosing Your New Legal Entity In Malta, there are three main options for your company structure: Private Limited Company – the go-to for 99% of relocations Public Limited Company – only relevant for large organizations Partnership – mostly for local businesses The Private Limited Company is your best bet. Why? It’s equivalent to a German GmbH, requires just €1,165 in minimum capital, is recognized EU-wide, and you can establish it entirely remotely. Registered Office in Malta: More Than Just an Address This is one of the most common rookie mistakes. Many think: I’ll just take the cheapest registered office for €300 a year. Bad idea. Your registered office has to: Receive and forward business mail Be available for official visits Make a professional impression (banks will check this!) Comply with Malta Business Registry rules Realistic costs: €1,200–€2,400 annually for a proper registered office with service. Cheaper setups usually end badly. Memorandum and Articles of Association: The Legal DNA These documents define what your company may do and how it operates. Standard templates usually suffice, but for special business models, you need customized articles. Important points: Objects clause – what is your company allowed to do? (Better too broad than too narrow) Share structure – ordinary shares are sufficient in most cases Director powers – who has the authority to decide what? Dividend policy – critical for the 6/7 refund Appointing Company Secretary and Compliance Officer Malta requires a local Company Secretary. This is mandatory, not optional. Their responsibilities include: Task Frequency Penalties for Non-Compliance Annual return filing Yearly €500–€5,000 Beneficial ownership register Ongoing €1,000–€10,000 Board resolutions As needed Compliance risk Statutory books Ongoing €500–€2,000 What does this mean for you? Budget €2,000–€4,000 annually for a competent Company Secretary. Cheap providers will come back to bite you at the first compliance check. Month 1 Timeline: What Needs to Happen When Weeks 1-2: Name reservation with Malta Business Registry Weeks 2-3: Prepare memorandum & articles Weeks 3-4: Submit company formation Weeks 4-6: Wait for certificate of incorporation Weeks 6-8: Appoint company secretary, first board resolutions Realistic? Yes. Stressful? Absolutely. Worth it? 100%—if you do it right. Month 2: Tax Positioning and EU Compliance for Malta Things get tax-specific in month 2. This is where you secure the benefits of Malta’s famous 6/7 system, or wind up as a regular EU company paying 35% tax. Spoiler: The difference can be hundreds of thousands a year. VAT Registration Malta: Faster Than Youd Think Good news first: VAT registration in Malta is much swifter than in Germany. 2-3 weeks is standard if your documents are complete. You need a VAT number if: Your EU-wide revenue exceeds €35,000 You sell B2B services to other EU countries You import or export goods You want to benefit from VAT refunds (highly recommended) Insider tip: Apply for the VAT number right away, even if you don’t need it immediately. Banks like to see it, and it takes longer if you apply later. Income Tax Return and Non-Resident Certificate This gets technical: Malta generally taxes all companies at 35%. BUT—and this is key—you can reclaim up to 6/7s of the tax via the 6/7 refund system. It works like this: Type of Income Tax Rate Refund Effective Rate Foreign source income 35% 6/7 5% Trading income 35% 6/7 5% Passive interest 35% 5/7 10% Maltese source 35% 2/3 ~12% Important: Refunds are only available if profits are paid out as dividends. That’s why having the right dividend policy in your Articles is vital. EU Compliance: VIES, Intrastat, and Other Obligations As an EU business you have additional obligations. The main ones: VIES filings for EU B2B sales (quarterly) Intrastat filings for goods traded above €400,000 Economic Substance requirements for certain activities EU DAC6 notifications for cross-border structures Sound complicated? It is. That’s why you need a Maltese tax adviser who handles this in their sleep. Utilizing the Germany-Malta Double Tax Treaty The Germany-Malta double tax treaty is your friend. It ensures you’re not fully taxed in both Germany and Malta. But beware: You need to meet key requirements. Critical points: Management and control must be in Malta Economic substance – real business activity is required Director meetings should be held in Malta Key business decisions must happen in Malta What does this mean for you? You have to actually move to Malta or at least spend significant time there. Shell companies don’t cut it anymore. Economic Substance Requirements: The New Sheriff in the EU Since 2019, Economic Substance Requirements have changed the landscape. Malta companies need to prove genuine substance, especially for: Holding activities IP licensing Financial services Shipping businesses This means: Adequate number of Malta-based employees Appropriate business expenditures in Malta Real management in Malta Suitable office premises Rule of thumb: With €1 million profit you should invest at least €100,000 in Malta substance. What does this mean for you? Malta isn’t a tax haven for home office warriors anymore. You need to genuinely operate from Malta. Month 3: Professionally Building Your Operational Infrastructure in Malta Now things get hands-on! Month 3 is when paperwork becomes real business operations. Banking, office, IT—this is where you find out if Malta really suits your business, or if you’ve been kidding yourself. Banking in Malta: The Battle for a Business Account Let’s start with the bad news: Opening a Maltese business bank account is much tougher now than a few years ago. The banks have become ultra-cautious after a number of scandals. Your options, from highest to lowest chance of success: Bank Success Rate Min. Deposit Notes HSBC Malta 70% €25,000 International reputation Bank of Valletta 60% €10,000 Local market leader APS Bank 50% €5,000 Smaller, local bank Lombard Bank 40% €15,000 Corporate-focused What banks want to see: Business plan in English (10-15 pages is enough) Financial projections for 2-3 years References from your German bank Economic substance – real Malta presence Clean track record – no compliance issues Insider tip: Attend meetings in person. 90% of online banking applications get rejected. Banks want to meet you and size you up. Office Setup Malta: More Than Just a Desk You need a real office in Malta. Not just for economic substance requirements, but also for banks, authorities, and your own credibility. Your options: Serviced office – €800–€1,500/month, flexible, professional Co-working space – €300–€600/month, network-friendly, less prestigious Private office – €1,200–€3,000/month, maximum control Home office – works in rare exceptions only For most relocations I recommend a serviced office for the first 1-2 years. Why? Professional address for banks and authorities Meeting rooms always available for key appointments Secretarial service for mail and calls Flexibility if your team size changes Top locations for business offices: Sliema/St. Julians – international, expensive but prestigious Ta Xbiex – financial services cluster, very business-oriented Valletta – historic, prestigious, less convenient Mriehel – more affordable, less international IT Infrastructure and Digital Services in Malta Malta’s IT infrastructure is better than its reputation, but different from Germany. Here’s the reality: Internet & connectivity: GO (main provider) – fiber up to 1 Gbit/s, usually reliable Melita – cable/fiber, good alternative Mobile internet – 4G/5G everywhere, perfect as backup Typical speeds: 100–500 Mbit/s is standard, 1 Gbit/s in business buildings. Cloud services and hosting: AWS/Azure both have a presence in Malta GDPR compliance is ensured through EU location Local providers are usually unnecessary Bookkeeping and Financial Management Setup Malta uses different accounting standards from Germany. You need a local setup that’s compatible with the German system. Recommended software: Software Cost/Month Pros Cons Sage Business Cloud €80–€200 Malta-compliant, German language available Expensive, overloaded QuickBooks €40–€80 Simple, international Less Malta-specific Xero €60–€120 Cloud-based, strong API Steep learning curve Important: Your bookkeeping must satisfy both Maltese and German requirements. Very few out-of-the-box systems can handle this perfectly. Insurance and Risk Management You need a different insurance mix in Malta than in Germany. Key types: Professional indemnity – for consultants/services (€3,000–€8,000/year) Public liability – standard cover (€1,000–€3,000/year) Employers liability – mandatory if you have employees Cyber insurance – increasingly essential (€2,000–€5,000/year) D&O insurance – for directors (€3,000–€10,000/year) What does this mean for you? Budget €8,000–€15,000 per year for a solid insurance package. Skimping will come back to haunt you when it matters most. Month 4: Managing Employees, HR, and Employment Law in Malta Successfully Month 4 is all about HR. Here’s where you decide whether to relocate your German team, hire in Malta, or go remote. Spoiler: Each option has its pros and cons. Transferring Employees to Malta: What Works, What Doesnt The good news: EU free movement means transferring employees is theoretically simple. The bad news: In practice, its more complicated than you’d expect. Legal framework: EU citizens don’t need a work permit in Malta Social security can be transferred with A1 certificate Tax residency switches after 183+ days in Malta German contracts are usually recognized Practical challenges: Housing market – Malta is short on apartments, especially for families Schools – international schools are pricey and full Cost of living – often higher than in German cities Language barrier – Maltese/English isn’t for everyone Employee Profile Transfer Success Rate Typical Challenges Singles, 25-35, tech 80% Housing, salary, networking Couples without kids 60% Both need jobs, larger apartment Families with children 30% Schools, housing, childcare 50+ years 40% New environment, health concerns Malta Employment Law: What’s Different from Germany Maltas labor law is EU-compliant but has its own quirks. Key differences: Working hours and vacation: 48-hour work week is standard (not 40 like in Germany) 24 days minimum holiday per year (Germany: typically 20–30) Overtime past 40 hours/week at 25% premium 6-month probation is possible (Germany: max. 6 months) Termination protection: After 6 months: 1 week notice period After 2 years: 2 weeks’ notice After 5 years: 4 weeks’ notice Severance is uncommon (except redundancy) Malta Social Security: Contribution Employer Employee Cap Social Security 10% 10% Max. €837/year Maternity Fund 0.55% 0.55% As above Private health insurance Voluntary Recommended €1,000–€3,000/year Recruitment in Malta: Where to Find Good People Malta has an extremely tight job market. Unemployment is below 3%, and skilled staff are hard to find—and expensive. Recruiting channels by success rate: Networking/recommendations (60% success rate) Recruiting agencies (40%) LinkedIn/online (30%) Jobs.mt (20%) Newspaper ads (10%) Realistic 2025 salaries (gross/year): Junior developer: €25,000–€35,000 Senior developer: €40,000–€60,000 Marketing manager: €30,000–€45,000 Office manager: €25,000–€35,000 Accountant: €28,000–€42,000 Note: Top talent in Malta often costs more than in Germany! Reason: intense competition with iGaming, fintech, and other high-paying sectors. Remote Work and Hybrid Models Many Malta relocations function as hybrids: Management in Malta, teams partially remote in Germany or other EU countries. What works: 25% Malta presence, 75% remote (usually enough for economic substance) Quarterly meetings in Malta Key positions (CEO, finance) in Malta Development/operations remote What’s risky: 100% remote with no Malta substance Key business decisions happening outside Malta Spending less than 10% of working time in Malta Expat Community and Networking Malta has an extremely active expat community. This helps with recruitment, business development, and personal integration. Key networks: Malta Business Network – monthly events Chamber of Commerce – official business hub Malta AI & Blockchain Association – for tech companies German-Maltese Business Circle – German-speaking network What does this mean for you? Invest time in networking. Malta is small—everyone knows everyone, and recommendations open every door. Month 5: Finalizing and System Testing Your Malta Structure Month 5 is the reality check. Now you test if all your systems fit together and if your Malta setup truly works. I’ve seen too many entrepreneurs only discover at go-live that critical interfaces were broken. End-to-End System Tests: From Invoice to Tax Return This is hands-on. You need to run through your entire business process—from the first client invoice to the tax treatment. Test scenarios you should play through: EU B2B transaction: Invoice with Maltese VAT number for German business client Non-EU sales: Export invoice for UK/USA client Intra-company transfer: Invoice between German and Maltese entity Dividend payout: Profit distribution with 6/7 refund Employee onboarding: Fully integrating a new Malta employee Check your banking integration: SEPA transfers both ways Multi-currency handling (USD, GBP, EUR) Online banking API for accounting Credit card processing for clients Compliance filings to German/Maltese authorities Compliance Management: Keeping on Top of All Reporting Obligations Malta feels like it has 47 different reporting requirements. Okay, its really only 12, but it feels like 47. Here are the most important: Report Frequency Deadline Fines VAT return Quarterly 15th of the following month €100–€500 Income tax return Yearly 30 June €500–€5,000 Annual return (MBR) Yearly 31 May €500–€2,000 Financial statements Yearly 18 months post financial year-end €1,000–€10,000 Beneficial ownership On change Immediate €5,000–€50,000 Automation is your friend: Calendar reminders for all deadlines Automated data transfer between systems Backup responsibilities for key filings External service providers for complex filings Contingency and Continuity Management Malta is an island. Sometimes the power cuts out, the internet drops, or bank staff go on strike. You need backup plans. Critical backup systems: Internet: Two providers + mobile backup Banking: At least two banks with online access Power: UPS for critical systems Personnel: Cover arrangements for key staff Data: Daily backups outside Malta Test worst-case scenarios: What happens if you can’t travel to Malta for 4 weeks? How does business run if your Malta office is unavailable? Who can make decisions in emergencies? How will you access funds if a bank is down? Defining Performance Monitoring and KPIs You need KPIs to measure if your Malta move was successful—not just financially, but operationally too. Financial KPIs: KPI Benchmark Year 1 Target Year 2 Target Effective tax rate 15–25% (Germany) 8–12% 5–8% Setup costs vs. savings N/A Break-even ROI 200%+ Compliance costs €20,000–€40,000 €25,000–€45,000 €20,000–€35,000 Banking efficiency Same-day transfers 1–2 days Same-day Operational KPIs: Time-to-market: How fast do you launch new services? Regulatory response time: How quickly do you handle authority requests? Employee satisfaction: How happy are transferred Malta staff? Customer impact: Do clients notice the move negatively? Documentation and Knowledge Management You’ll forget why you made certain decisions. Document everything that matters. Key documentation areas: Setup decisions: Why this bank, this tax structure, this office? Compliance calendar: Who does what, when? Service provider contacts: Lawyers, tax advisers, bankers Emergency procedures: What to do in a compliance crisis? Financial workflows: How does cash flow between entities? What does this mean for you? Month 5 is the most important testing phase. Better to find problems now than in live operation. Month 6: Go-Live of Your Business Relocation to Malta Showtime! Month 6 is the moment of truth. You flip the switch on your Malta setup and start real operations. After 6 months of prep, everything should run smoothly. Should. Soft Launch vs. Hard Cutover: Choosing the Right Go-Live Strategy You have two options for go-live. Most entrepreneurs pick the wrong one. Hard Cutover (Big Bang): Cut-off date X: Everything transitions to Malta Quick but risky Only works if everything is flawlessly prepared One mistake = big problem Soft Launch (Phased Approach) – RECOMMENDED: Gradual relocation over 4–6 weeks First new clients, then existing clients Fix mistakes without drama Built-in learning curve My soft launch plan for 90% of cases: Week Transition Risk Level Focus 1–2 Internal processes, new contracts Low System stability 3–4 Minor new clients, test invoices Medium Billing workflows 5–6 Key new clients Medium Customer experience 7–8 Migrating existing customers High Change management Customer Communication: How to Explain the Relocation You need to inform clients about the Malta move. But how? Many entrepreneurs create PR disasters here. What DOESN’T work: We’re now in Malta for tax reasons (sounds like tax evasion) Nothing changes for you (obviously wrong—new VAT, new IBAN, etc.) No communication (clients notice anyway) What works – Messaging Framework: Focus on expansion: We’re expanding into the EU market Customer benefits: Better service for EU clients Stability: Same team, same quality Transparency: New invoicing from [date] Sample customer email (works in 80% of cases): Dear clients, As a result of our growth in Europe, we are moving our EU headquarters to Malta. This allows us to serve you better and offer new services. Nothing changes for you: Same contacts, same quality, same service standards. From [date] you’ll receive invoices from [Malta Company Name] with a Maltese VAT number. All existing contracts remain valid and unchanged. If you have questions, we are available as always. German Entity: Close or Keep? What happens to your German company? You have three options: Option 1: Liquidation (Clean Exit) Fully dissolve the German GmbH Clean, but final Liquidation profit may be taxable Best if your focus is 100% Malta Option 2: Dormant Company (Put on Ice) German GmbH stays, but is inactive Costs: approx. €2,000–€4,000/year Flexibility to return Lower compliance workload Option 3: Service Company (Specialization) German GmbH delivers special services for the Malta company Intercompany billing possible More complex, but flexible Good for larger structures My recommendation for 70% of cases: Option 2 (Dormant) for the first year, then decide. Monitoring and Troubleshooting in the First Weeks The first 4 weeks are critical. That’s when 90% of problems appear. You need a system for rapid problem-solving. Daily checks during weeks 1-2: Banking: Are all transfers working? VAT: Are invoices delivered correctly? Systems: Are all integrations up? Team: Any operational issues? Clients: Complaints or questions? Typical week-1 problems and solutions: Problem Frequency Quick Fix Permanent Solution Delayed SEPA transfers 80% Use alternate bank Optimize banking setup VAT validation fails 60% Manual correction System update Clients dont understand invoices 50% Personal calls Revise templates Forgot compliance filing 30% Late filing + penalty Automation Success Metrics: How to Know It’s Working After 30 days you should reach these benchmarks: Operational metrics: Client complaints: Under 5% of your client base Payment delays: Under 2% of transactions System downtime: Under 1% (outside planned maintenance) Compliance issues: Zero critical violations Financial metrics: Cash flow: Back to normal after 2 weeks Tax efficiency: First 6/7 refunds have arrived Banking costs: Under 0.3% of revenue Setup ROI: Visible after 6 months Post-Go-Live Support and Optimization Month 6 isnt the end, its the start. You’ll be fine-tuning a lot in your first 6 months live. Continuous improvement areas: Process automation: What can be automated? Cost optimization: Where are hidden costs? Compliance efficiency: How to simplify reporting? Team development: What skills does the Malta team need? What does this mean for you? Month 6 is just the start of your Malta journey. The real optimization begins now. The 7 Most Common Pitfalls When Moving Your Business to Malta After two years advising Malta projects, I know the classic traps. Here are the 7 pitfalls that trip up 80% of Malta relocations—and how you can avoid them. Pitfall #1: Underestimating Economic Substance The problem: Many think Malta relocation = new mailbox + business flights to Valletta. Wrong! Since 2019s economic substance requirements, Malta wants to see real operations. Typical misconceptions: I fly to Malta four times a year, thats enough A €500/month serviced office provides enough substance I’ll still make all key decisions in Germany The reality: You need at least 25% of your working time in Malta, real Malta staff for core roles, and all strategic decisions must be made in Malta. How to avoid it: Plan for real Malta presence from the start. At least one key person (ideally the MD) should primarily live in Malta. Pitfall #2: Banking Nightmares Due to Poor Preparation The problem: Malta banking is tough is a meme now. Usually its due to poor prep, not mean banks. Common mistakes: Submitting bank applications without a business plan Unrealistic financial projections No references from the German bank Planning too little for minimum balance Only applying to one bank The right approach: Business plan in English (10–15 pages) 3-year financial projections Reference letter from the German bank Keep €25,000+ ready for minimum deposit Apply to 2–3 banks in parallel Attend meetings in person Pitfall #3: VAT Chaos with EU Transactions The problem: EU VAT is complex, Malta VAT even more so. Many companies run into costly VAT traps. Common VAT pitfalls: Incorrect VAT handling for B2B vs. B2C OSS (One Stop Shop) vs. regular VAT registration Ignoring reverse charge on services Forgetting VIES validation of client VAT numbers Example chaos: German software company sells to French B2B client. Invoice includes 19% Malta VAT instead of 0% (reverse charge). Client refuses payment as they can’t reclaim VAT. Retrospective corrections cost time and energy. Solution: Invest in a Malta VAT expert. €2,000 spent on decent VAT advice saves you €20,000 in headaches later. Pitfall #4: Employee Transfers Go Off the Rails The problem: Our best staff will happily move to Malta—one of the most common illusions. Reality check: Employee Type Transfer Success Rate Main Reasons for Refusal Singles, 25–30 70% Salary, career prospects Couples without kids 50% Partner can’t find a job Families with children 20% School, housing, environment 50+ years 30% Health, family, habits How to plan realistically: Assume 50% success rate with key employees Plan salary increases for Malta transferees Offer relocation support (housing, school, moving) Simultaneously build a local Malta team Pitfall #5: Compliance Chaos Due to Poor Organization The problem: Malta feels like it has 1,000 reporting requirements. Reality: only 15, but they each come at different times, in different formats. Typical chaos scenario: Forget VAT return → €500 fine. Late annual return → €2,000 fine. Don’t file beneficial ownership → €10,000 fine. After 12 months: €15,000 in avoidable fines. The anti-chaos strategy: Compliance calendar with all deadlines Auto-reminders 4 weeks ahead Backup responsibilities for critical filings Service providers for complex compliance Monthly reviews of all outstanding items Pitfall #6: Cashflow Issues Due to Banking Delays The problem: German entrepreneurs expect same-day banking. Malta functions differently. Typical banking times in Malta: SEPA transfers: 1–2 days (not same-day) International transfers: 2–5 days New payee setup: 2–3 days Credit limit changes: 1–2 weeks Cashflow buffer tip: Always plan for 5–10 extra days’ liquidity versus Germany. For critical outgoings: prepare a backup bank. Pitfall #7: Overestimating Tax Optimization The problem: Malta = 5% tax is sales hype, not reality. The effective tax rate depends on many factors. Realistic Malta tax burden (Years 1–2): Business Model Effective Tax Rate Requirements IP licensing 0–5% Patent Box + economic substance Trading company 5–8% 6/7 refund + foreign source Services EU-wide 8–12% Proper structure Mixed business 10–15% Part Malta-sourced Commonly forgotten: Setup costs: €50,000–€100,000 in the first year Ongoing compliance: €25,000–€40,000 per year Economic substance: €50,000–€150,000 annually Opportunity costs: time, focus, flexibility What does this mean for you? Relocation to Malta is worth it starting from around €500,000 annual profit. Below that, costs often outweigh benefits. Realistic Cost Overview: What to Expect When Relocating to Malta Let’s be honest: Relocating to Malta isn’t cheap. I keep hearing from entrepreneurs who started out with a €20,000 budget and then hit €80,000 in their first year. Here’s the brutal truth about costs. Setup Costs (Year 0): The Big Shock These costs are one-off—before you earn a single euro in Malta: Cost Item Minimum Realistic Premium Notes Company formation €2,500 €4,500 €8,000 Including legal, registered office Banking setup €1,000 €3,000 €10,000 Advice + minimum deposit Tax & VAT registration €1,500 €3,500 €6,000 Tax adviser + filings Legal structuring €5,000 €12,000 €25,000 M&A, articles, compliance Office setup €3,000 €8,000 €20,000 Deposit + equipment IT & systems €2,000 €5,000 €15,000 Software, integration Relocation (staff) €5,000 €15,000 €35,000 Move, housing, registration Advisory & consulting €8,000 €18,000 €40,000 Tax, legal, strategy Total setup costs: €28,000–€77,000–€159,000 Most mid-sized businesses end up spending €60,000–€90,000 on setup. Spending less usually means cutting the wrong corners. Ongoing Costs (Yearly): The Hidden Cost Traps These costs recur every year you operate in Malta: Cost item Minimum/year Realistic/year Premium/year Company secretary €1,800 €3,500 €8,000 Registered office €600 €1,800 €4,000 Accounting & bookkeeping €6,000 €12,000 €25,000 Tax compliance €4,000 €8,000 €15,000 Legal & regulatory €3,000 €8,000 €20,000 Banking fees €1,200 €3,000 €8,000 Office rent €6,000 €15,000 €36,000 Insurance €3,000 €6,000 €15,000 IT & software €2,400 €6,000 €15,000 Total ongoing costs: €28,000–€63,300–€146,000 per year Economic Substance Costs: The New Budget Buster Since 2019, economic substance requirements are the biggest driver. You have to build real substance in Malta: Typical Malta employee costs: Position Annual gross salary Employer costs Total cost Managing director €60,000 €8,000 €68,000 Finance manager €45,000 €6,000 €51,000 Office manager €30,000 €4,000 €34,000 Developer (senior) €55,000 €7,000 €62,000 Minimum economic substance for a typical holding: 1 Managing Director + 1 Finance Manager = approx. €120,000/year ROI Calculation: When Does Malta Pay Off? Now for the key question: When does the Malta project break even? Break-even analysis (simplified): Annual profit DE tax (30%) Malta tax (8%) Malta costs Net benefit €200,000 €60,000 €16,000 €80,000 -€36,000 €500,000 €150,000 €40,000 €100,000 +€10,000 €1,000,000 €300,000 €80,000 €120,000 +€100,000 €2,000,000 €600,000 €160,000 €150,000 +€290,000 Rule of thumb: Malta makes sense financially from about €500,000 annual profit up. Below that, the costs usually outweigh the tax benefits. Hidden Costs: What’s Often Forgotten Most spreadsheets miss these cost points: Opportunity costs: Your time for Malta management (20–40h/month) Travel costs: Regular Malta trips (€10,000–€20,000/year) Double costs: German and Maltese costs often run in parallel Correction costs: Fixing errors, especially in year one Currency risk: EUR/USD fluctuations if you do international business Flexibility loss: Less spontaneous business decisions possible Saving on Costs: Where You Can Save (and Where You Cant) Low-risk savings: Office location (Mriehel instead of Sliema saves 50%) Office setup (serviced office vs. own office) Banking (local instead of international banks) Software (standard tools over premium apps) DONT save where risk is high: Legal advice (bad lawyering gets very expensive) Tax advice (wrong tax structure costs a fortune) Company secretary (non-compliance penalties are high) Economic substance (too little substance = tax risk) What does this mean for you? Budget at least €80,000 for year one and €60,000 ongoing. Anything less will usually cost more than you planned down the road. FAQ about Relocating Your Business to Malta How long does a full company relocation to Malta take? Realistically 6–8 months for a professional move. Anything less than 4 months is usually stressful and error-prone. Company formation alone takes 4–8 weeks, banking another 6–10 weeks, and tax setup another 4–6 weeks. Add time for economic substance, office setup, and employee integration. What tax advantages does Malta actually offer? Malta taxes companies at 35%, but you can get up to 6/7 of that refunded. For foreign source and trading income, that means 5% effective tax. For IP licensing through the Patent Box, even 0–5%. Critical: Refunds only come with dividend payouts and proper economic substance. Do I really need economic substance in Malta? Yes, since 2019 it’s mandatory for EU compliance. You need real business activity in Malta: sufficient staff, proper office, Malta-resident management, and substantial local spending. Letterbox companies are history. Rule of thumb: With €1 million profit, invest at least €100,000 in Malta substance. Is it hard to open a bank account in Malta? Yes, since 2018 Maltas banks have become extremely risk-averse. Success rates range 40–70% depending on the bank. You’ll need a solid business plan, financial projections, references, and usually €15,000–€25,000 minimum deposit. In-person meetings are a must—online applications are usually rejected. Allow 6–10 weeks for the banking process. What happens to my German GmbH when moving to Malta? You have three options: 1) Liquidation (neat, but final), 2) Put dormant (approx. €3,000/year, flexible), 3) Use as a service company for the Malta entity. Most opt for 2 in year one to keep options open. Warning: Exit tax and entstrickung must be checked in advance. Can my German employees come with me to Malta? Legally in the EU, yes—but practically, it’s tough. Success rates: singles 70%, couples 50%, families only 20%. Biggest hurdles: housing, schools for kids, partners job, higher living costs. Plan for higher salaries and relocation support. Hybrid models (part Malta, part remote) often work better. From what revenue/profit is Malta worthwhile? Rule of thumb: From €500,000 profit per year, Malta gets interesting. Setup costs: €60,000–€90,000, running costs: €60,000–€80,000/year with economic substance included. With less profit, costs usually outweigh the tax benefit. At €2 million profit, you save around €300,000/year net. What are the ongoing compliance obligations in Malta? Quarterly VAT returns, annual income tax returns, annual returns with the Malta Business Registry, financial statements, beneficial ownership register updates. Plus EU notifications like VIES and (with high volume) Intrastat. Penalties for non-compliance: €500–€50,000. A decent company secretary costs €3,000–€5,000/year—but is worth every cent. How does the 6/7 refund system actually work? You pay 35% corporate tax upfront. On dividend payout you get 6/7 of that back (for foreign/trading income). E.g. €100,000 profit → €35,000 tax → €30,000 refund → €5,000 effective burden (5%). Important: Refund application must be filed, takes 3–6 months. Can I run my Malta business remotely from Germany? Legally problematic due to economic substance and permanent establishment risks. You need to spend at least 25% of your working time in Malta and make all key decisions there. 100% remote is no longer viable. Hybrid models are possible but you need real Malta presence with local key staff.
