Table of Contents Why Malta for international companies? Step-by-step company relocation Malta: The strategy behind it Phase 1: Preparation and market analysis for Malta Phase 2: Legal structures and EU compliance Phase 3: Operational relocation and risk minimization Phase 4: Complete integration in Malta Avoiding common mistakes in company relocation Costs and timeline: What to really expect Frequently asked questions When I had my first appointment at Malta Enterprise three years ago, I still thought that relocating a company would be like moving flats: pack your bags, change your address, done. Spoiler alert: it wasn’t. Today I run my tech startup from Sliema and can give you first-hand insights on why a step-by-step relocation is not only smarter but often vital for survival. Because while your tax consultant raves about 5% corporate tax and LinkedIn is full of success stories from Valletta, reality has its own twists. Malta Business Visa takes longer than promised, EU directives change faster than bus timetables, and your entire first annual salary can easily go towards “administrative surprises”. In this article, I’ll show you how to gradually move your international business to Malta—using a strategy that minimizes risk and still gets all the benefits. Why Malta for international companies? Before we get down to business, let’s quickly clarify why Malta is even on your radar. Three main reasons bring most entrepreneurs here: Tax advantages: More than just 5% corporate tax Malta offers a Full Imputation System, which means: As a Maltese company, you initially pay 35% corporate tax. Sounds like a lot? It is. But here’s the trick: When you receive dividends as a shareholder, you get a tax credit of 6/7 of the tax paid back. The calculation in practice: 35% corporate tax minus 30% reimbursement = 5% effective tax burden. But careful—this only works for foreign shareholders and under certain conditions. EU access and English law As an EU member since 2004, Malta provides access to the internal market with English-speaking administration. You might be familiar with the Common Law System, contracts are similar to British standards, and in the offices, everyone really does speak English. Geographical position and infrastructure Three hours’ flight to Frankfurt, two to Rome, four to Dubai. Malta is strategically perfect for companies addressing European and Middle Eastern markets. Add to that: reliable internet (yes, really), modern banking infrastructure, and – surprisingly – a rising fintech scene. What does this mean for you? Malta doesn’t work for everyone. If your business is mainly focused on the German market, German clients expect personal contact or you manage complex production processes, you’re better off staying at home. For digital services, fintech, gaming, and international consulting, Malta is just right. Step-by-step company relocation Malta: The strategy behind it This is where it gets interesting. While most incorporation agencies try to sell you an “all-in” relocation, in practice: step-by-step works better. Why? Risk minimization through phased planning Imagine you relocate your entire company at once and then EU tax rules change, your main customer cancels, or Malta tightens its substance requirements—the proof that your company is actually operating in Malta. With a stepwise approach, you keep your options open. Full relocation Step-by-step relocation High initial investment Staggered costs All risk at once Test phase possible Difficult to reverse Flexibly adaptable Substance proof from day 1 Gradual build-up Tax optimization over time The Maltese authorities look closely to see whether your company really has economic substance in Malta. That means: real offices, real employees, real business activity. With a step-by-step relocation, you build up this substance naturally instead of artificially constructing it. Ensuring operational continuity Ideally, your clients won’t notice the relocation. This only works if you migrate services step by step, build teams gradually, and migrate systems one by one. With my own relocation, the core business continued seamlessly in Germany while we developed new services from Malta. What does this mean for you? Plan at least 18-24 months for a full stepwise relocation. Sounds long? It is. But you’ll save this time later during substance audits and potential compliance checks. Phase 1: Preparation and market analysis for Malta Before you spend a single euro, it’s time for homework. I know—boring. But this phase determines whether your relocation works or becomes an expensive experiment. Preliminary tax check: More than number crunching The first step is to a Maltese tax adviser—not the German-speaking advisor in Valletta (who exists), but a reputable Maltese firm. Why? Because they know the local customs and how the Malta Financial Services Authority (MFSA) really works. Checklist for the first consultation: Explain your current company structure Disclose main clients and their locations Describe your business in detail Mention any existing tax optimizations Sketch out your growth strategy Understanding and planning substance requirements Malta demands economic substance—no letterbox companies. Specifically, this means: Premises: Real offices, not just a post address Qualified employees: At least the management on-site Board meetings: Board must meet in Malta Core business activity: Key decisions made locally My tip from practice: Start looking for office space already in Phase 1. Good commercial property in Sliema or St. Julian’s is rare and expensive. Budget at least 40-60 euros per square meter for decent locations. Market analysis: Is Malta right for your business? Not every business model works as well from Malta. An honest analysis saves headaches later: Well suited Problematic Digital services Physical production Fintech and banking German on-site services Gaming and iGaming Complex logistics International consulting Trades and local services Software development Labour-intensive services Making contacts: Start networking now Malta is small—500,000 inhabitants, maybe 5,000 international entrepreneurs. Everyone knows each other, and reputation counts for more than in big anonymous cities. First points of call: Malta Chamber of Commerce: Traditional but well-connected American Chamber Malta: Very active, also for non-Americans Malta Digital Innovation Authority: For tech businesses 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 on site and get to know the ecosystem. This time will pay off many times over. Phase 2: Legal structures and EU compliance This is where it gets serious. Phase 2 means: create legal structures without endangering your current business. This is where the wheat is separated from the chaff—or better yet: professional relocation from expensive experiments. Legal entities in Malta: Which fits you? Malta offers various corporate forms. The most important for international companies: Private Limited Company: Equivalent to the German GmbH, standard for most Public Limited Company: For larger companies or planned IPOs Partnership: Similar to a German partnership Branch Office: Branch of the foreign parent company In 90% of cases you’ll end up with a Private Limited Company. Minimum capital: €1,164 (symbolic), incorporation time: 2-4 weeks with good preparation. Malta company registration: How it works in practice The real steps, not just the marketing brochure: Reserve the name: At the Malta Business Registry, costs 6 euros, takes 1-2 days Draw up articles of association: Memorandum and Articles of Association, at least €500 in legal fees Provide business address: Lease or office service, from €100 per month Appoint directors: At least one must be an EU citizen and resident in Malta File the application: Malta Business Registry, €245 fee The catch: You need a “Company Secretary”—a licensed provider who handles admin duties. Cost: €1,200-2,400 a year, depending on the service package. Setting up banking and financial structures This is where it gets interesting—and frustrating. After recent scandals, Maltese banks have tightened their due diligence. Opening an account takes 6-12 weeks and requires your personal presence. The most important banks for international companies: Bank Advantages Disadvantages Bank of Valletta Largest bank, good digital services Conservative, long waiting times HSBC Malta International orientation High minimum deposits Revolut Business Fast, digital, cheap No Maltese clearing Wise Business Multi-currency, low fees Limited local services EU tax registrations: VAT and more With a Maltese company, you are automatically in the EU tax area. This means: VAT registration: Required from €35,000 annual turnover in Malta EU-OSS (One Stop Shop): For B2C services in other EU countries Intrastat filings: For trading goods within the EU Beneficial Ownership Register: Disclose the real owners My experience tip: Start VAT registration early. The Maltese VAT rate is 18%, but for many digital services, 0% applies to exports. Saves a lot, but requires correct documentation. Running in parallel with the existing structure The beauty of phase 2: Your Maltese company can run in parallel to your existing German (or other) structure. Typical setup: German GmbH continues current business Maltese company takes on new projects Stepwise migration of services and clients No business disruption What does this mean for you? Phase 2 takes 3-6 months and costs €5,000-15,000 depending on complexity. Afterwards you have a functioning Maltese structure in parallel with your core business. Phase 3: Operational relocation and risk minimization Now comes the tricky part: actually shifting business operations to Malta without everything blowing up on you. Here’s where you see if you’ve prepared well enough or have to improvise. Team migration: People aren’t Excel sheets The hardest part of any company relocation? The people. You have three options: Move employees with you: Expensive, complex, but continuous Keep remote team: Easier, but substance risk Build a local team: Long-term best, short-term risky My recommendation: Hybrid approach. Key people (especially management) must move physically to Malta. For operational teams, you can start with remote structures and gradually build up locally. Malta as an employer: What you should know Maltese labor law follows EU standards but has some differences: Area Regulation Practical tip Minimum wage €213.34/week (2024) Only relevant for unskilled workers Paid leave 24 working days + 14 public holidays More generous than Germany Dismissal protection Less strict than Germany Use probation period (6 months) Social charges 10% employer, 10% employee Much cheaper than Germany Migrating operational systems: IT and processes This is technical but decisive for substance: Localize IT infrastructure: Run servers or cloud in Malta/EU Switch invoicing: Maltese company must actually provide services Migrate contracts: New clients via Malta, existing ones transferred stepwise Separate accounting: Separate systems, clear-cut separation One critical point: The Malta Financial Services Authority checks whether business activities are really managed from Malta. Emails from German IP addresses, contracts on German letterhead or invoices from German systems stand out negatively. Customer management: Transparency pays off Your clients don’t need to know everything, but secrecy comes back to haunt you. My approach: Communicate proactively: “We’re expanding to Malta” sounds better than “We moved” Highlight service continuity: Same contacts, same quality Emphasize EU benefits: Better scaling, international expertise Legal certainty: New contracts with the Maltese entity Risk management: What can go wrong? Here are the most common pitfalls and how to avoid them: Substance audit fails: Not enough real activity in Malta Permanent establishment problem: German tax office still sees a German base VAT compliance: Incorrect VAT handling in EU transactions Treaty shopping: Double taxation treaty is not recognized Any of these risks can be expensive—from back taxes to criminal proceedings. So: regular compliance reviews with Maltese and German advisors. What does this mean for you? Phase 3 is the most critical and takes 6-12 months. It’s where it’s decided whether your relocation is seen as proper business activity or just tax planning. Phase 4: Complete integration in Malta The final stretch. In phase 4, you turn from a German entrepreneur with a Maltese structure into a proper Maltese company with an international reach. Sounds subtle? The financial and legal differences are not. Center of management: Where are decisions really made? The tax office doesn’t look at your registered office, but rather where the major business decisions are made. This is the “place of effective management” and determines tax residency. Specific requirements for Maltese tax residency: Board meetings: At least 50% on Malta Management decisions: Strategies decided on site Day-to-day business: Operational control from Malta Documentation: Minutes, email trails, decision records My tip: Keep a “management diary”. Document every important decision with location, time, and attendees. In a tax audit, that’s worth gold. Personal tax residency: The last piece of the puzzle This is personal. Many entrepreneurs forget: Personal tax residency must fit too, or the whole structure won’t work. Malta offers various residency programs: Program Requirements Tax benefits Global Residence Programme €275k property + €15k/year Flat tax of 15% Malta Permanent Residence €300k investment + €27k donation No taxation of foreign income Standard Residency 183+ days on site Normal progressive taxation High Net Worth Individual €600k min. tax + conditions €200k flat tax on everything Property strategy: Buy or rent? With personal residency comes the housing question. Malta is expensive—really expensive. But choosing between buying or renting has tax implications. Buying makes sense for: Long-term stay (5+ years) Participation in the Global Residence Programme Stable incomes Diversification strategy Renting is better for: Trial phase or uncertain future Need for flexibility Capital better invested elsewhere Avoiding property risks Current prices (2024): Starting at €4,000/m² on the outskirts, €8,000+ in Sliema/St. Julian’s. Rent: €1,200-2,500 for 2-bedroom apartments in prime areas. Full system conversion: The final steps Now for the nitty-gritty: Close old structures: Liquidate or sell the German GmbH Asset transfer: Move company assets to Malta Finalize client contracts: Migrate all clients to the Maltese entity Banking consolidation: Close German business bank accounts Compliance setup: Fulfil all Maltese reporting obligations Integration into the Maltese business community Malta is small, and reputation decides business success. Active integration isn’t a nice-to-have but business-critical: Chamber memberships: Malta Chamber, specific industry chambers Networking events: Regular participation, not just attendance Local partnerships: Collaborations with Maltese companies Community engagement: Sponsoring, charity, local initiatives What does this mean for you? Phase 4 can take 6-18 months and marks the transition from “German entrepreneur in Malta” to “Maltese entrepreneur with an international story”. From now on, only one thing counts: does Malta still make sense for your business? Avoiding common mistakes in company relocation After three years in Malta and talking to dozens of other entrepreneurs, I know the typical pitfalls. Some are costly, some embarrassing, some both. Here are the top 10 mistakes and how to avoid them. Mistake 1: Underestimating substance The classic: Start a company, get a mailbox address, keep working from Germany. That no longer works. After the Panama Papers and EU initiatives against tax avoidance, Malta has become strict. Solution: Build real economic activity. At least 50% of working time on site, real employees, real decisions. Yes, it costs. But less than back taxes with penalty interest. Mistake 2: Overlooking German permanent establishment Just because you have a Maltese company doesn’t mean Germany lets go. If you keep managing from Germany, the tax office sees a German permanent establishment. Practical example: A software developer set up a Maltese Ltd, but continued working from his Berlin home office. After two years, the tax audit. Result: German tax liability on all profits plus penalties on €200,000 in back taxes. Mistake 3: Neglecting VAT compliance VAT in the EU is complex. Malta’s rate is 18%, but many international services are 0%—if documentation is correct. Common VAT pitfalls: Incorrect invoicing for B2B services Lack of proof for 0% rates Missing OSS for B2C services Not understanding the reverse charge mechanism Mistake 4: Oversimplifying banking strategy Many think: Maltese company = Maltese bank account. Not always true. For international business, multi-banking strategies can be more effective. 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: Migrating the team too fast or too slowly Either moving all employees to Malta at once (mostly impossible) or keeping everything remote (substance issue). Neither works. Golden rule: Relocate leadership physically, move operational levels gradually. Remote teams are okay, but top decision-makers must be on site. Mistake 6: Forgetting about personal tax residency Company in Malta, keep living in Germany. Can work, but is suboptimal and tax-damaging if you take high dividends. Rules of thumb for personal residency: Under €100k profits: residency less critical €100k-500k: consider residency optimization Over €500k: residency optimization usually necessary Mistake 7: Sloppy documentation Malta loves paperwork. So does Germany. Satisfying both at once requires meticulous documentation. Minimum documentation: All board meeting minutes Decision records with place and time Management travel logs Contracts and invoices Employee records (who works where?) Mistake 8: Underestimating compliance costs Malta is cheaper than Germany—when it comes to tax rates. Advisory and compliance costs, though, are higher than expected. Annual minimum costs (realistic): Tax adviser: €3,000-8,000 Company Secretary: €1,200-2,400 Legal advice: €2,000-5,000 Audit: €1,500-4,000 Various licenses: €500-2,000 What does this mean for you? These mistakes cost on average €50,000-200,000 in back payments plus years of hassle. Time you’d rather invest in your business. Costs and timeline: What to really expect Now, down to brass tacks. What does a step-by-step company relocation really cost, and how long does it take? Here’s the unvarnished truth from practice. Total costs by company size Costs vary greatly depending on your company’s complexity: Company size One-off costs Annual running costs Timeframe Sole proprietor €15,000-25,000 €8,000-12,000 12-18 months Small (2-10 employees) €25,000-50,000 €12,000-20,000 18-24 months Medium (10-50 employees) €50,000-100,000 €20,000-35,000 24-36 months Large (50+ employees) €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 Licenses and registrations: €1,500-4,000 Initial office fit-out: €3,000-10,000 Phase 3 – Operational relocation (6-12 months): Employee migration: €5,000-25,000 IT migration: €3,000-15,000 Marketing and communication: €2,000-8,000 Double structures: €5,000-20,000 Phase 4 – Integration (6-18 months): Residency programs: €15,000-300,000 (depending on program) Property: €200,000-800,000 (if buying) Structure optimization: €3,000-10,000 Closing old structures: €2,000-8,000 Break-even analysis: When does Malta pay off? The crucial question: At what profit level does relocation pay? 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 analysis: Under €75k annual profit: Malta usually not worth it €75k-150k: borderline, depends on extra factors €150k+: Malta usually worth it if done right €500k+: Malta almost always worth it Timeline for different business models Digital services/software (best-case): Months 1-6: Preparation and incorporation Months 7-12: Start parallel operation Months 13-18: Complete migration Months 19-24: Optimization and integration Consulting/services (standard): Months 1-9: Preparation and structural setup Months 10-18: Stepwise client migration Months 19-30: Full relocation Months 31-36: Structure optimization Complex companies (realistic): Year 1: Intensive preparation and testing Year 2: Gradual relocation of business units Year 3: Complete integration and optimization Year 4: Fine-tuning and compliance stabilization Hidden costs: What advisors tend to gloss over Beyond the obvious, there are hidden costs: Double structures: 6-18 months of parallel running costs Qualification losses: Finding/training staff Client churn: 5-15% revenue loss realistic Learning curve costs: Inefficiencies in the initial phase Compliance rework: Corrections and adjustments What does this mean for you? A realistic budget should allow for a 20-30% buffer for surprises. Better to overestimate costs than to run out of capital mid-way. Frequently asked questions Can I move my company to Malta if I still live in Germany? Basically yes, but it’s not optimal. You must prove that actual management is done from Malta. That means regular presence (at least 50% of working time) and documented decision processes on site. For high dividend payouts, personal tax residency becomes relevant too. How long does it really take to set up a company in Malta? Officially 2-4 weeks, in practice more like 6-8 weeks. The incorporation is quick, but banking, VAT registration and licenses take time. Count on 3-4 months before you’re fully operational. Tip: Start the bank account application before incorporation. What minimum requirements does Malta have for economic substance? Malta requires “adequate substance”—no fixed minimums, but practical standards: premises on site, qualified staff for core roles, board meetings in Malta, and key business decisions must be made locally. As a rule of thumb: at least one full-time employee plus director on site. Can the German tax office challenge the Malta structure? Yes, if the substance requirements are not met or there is a permanent establishment in Germany. Common attack points: management from Germany, no real business in Malta, or relocation for tax savings only with no real business reasons. Solid documentation and real substance protect against this. What happens to my German staff after relocation? You have several options: remote contracts (legally complex), transferring to your Maltese company (expensive due to relocation), or regular redundancy with severance pay. Many businesses use hybrid models: key staff in Malta, operational teams remote. Important: employment law advice in both countries. Are Malta’s 5% tax rates guaranteed? No, that’s a common myth. The 5% only applies under certain conditions: You pay 35% corporate tax but get 6/7 of it back as a tax credit on dividends. This only works for foreign shareholders and with the correct structure. If EU state aid rules change, the system might change too. Is Malta worth it for small businesses? It usually gets interesting from around €150,000 annual profit. Below that, compliance costs eat up the tax savings. For sole proprietors under €75,000 in profit, Malta is usually not viable. The break-even analysis should always be individual, as factors like EU market access also play a role. How difficult is banking in Malta for international companies? Harder than it used to be, but doable. Allow 6-12 weeks to open an account and expect to come in person. Banks will closely examine: business model, source of funds, compliance setup. Alternative: multi-banking with Revolut/Wise for the start, traditional bank later. Important: present all documentation complete and transparently. Can I simply transfer existing client contracts? No, legally this is a contract assignment, requiring client consent. In practice, it often works via novation (new contract) or assignment (transfer). Allow 6-12 months for the full migration. Important: Communicate proactively and highlight service continuity to minimize client churn. What are the biggest risks of a Malta relocation? Main risks: substance audit fails, German permanent establishment is assumed, EU rule changes impact Malta structures, compliance costs explode, or more client churn than expected. Risk minimization through professional advice, solid documentation, and stepwise (not abrupt) relocation.
