Table of Contents Why 6 Months Are Realistic (and 3 Months Wishful Thinking) Preliminary Clarification and Basics: What You Must Know Before Month 1 Month 1: Legal Foundations for Your Malta Relocation Month 2: Tax Positioning and EU Compliance Month 3: Building Operational Infrastructure in Malta Month 4: Employees, HR and Maltese Labour Law Month 5: Finalization and System Testing Month 6: Go-Live of Your Business Relocation The 7 Most Common Pitfalls When Relocating to Malta Realistic Cost Overview: What to Expect FAQ on Business Relocation to Malta Why 6 Months for Relocating Your Business to Malta Are Realistic (and 3 Months Are Wishful Thinking) Have you decided to move your business to Malta? Congratulations on your decision! But let me take away any illusion right away: theres no such thing as just do it quickly here. I constantly hear from entrepreneurs who believe it’s possible to wrap the whole thing up in 6-8 weeks. Spoiler: This usually ends in chaos, expensive fixes, and gray hairs. After two years of Malta experience and countless talks with entrepreneurs who’ve taken the plunge, I can assure you: 6 months are realistic, 12 months relaxed, 3 months pure stress. Why Maltese Authorities Have Their Own Sense of Time Malta works differently. What takes 2 weeks in Germany will likely take 6 weeks here. Not out of laziness – the Maltese system simply is more thorough and bureaucratic than expected. The Malta Business Registry (MBR) for example often takes 4–6 weeks for company formations, although online it says 10–15 working 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. Do you see the pattern? The 6-Month Timeline at a Glance Month Main Tasks Critical Path Buffer Time Preliminary Clarification 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, aftercare 2-4 weeks Medium What does this mean for you? Plan for 6 months, expect 8, celebrate if you finish in 5. This way you avoid stress, burning bridges in Germany and costly rush procedures in Malta. Preliminary Clarification 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 wasn’t tax-optimal. Painful. Is Malta Even Right for Your Business? Malta isn’t the answer for everyone. The Malta tax advantages mainly apply to: Holding structures with shareholdings (6/7 refund system) IP-heavy companies (Patent Box, 0–5% tax) Trading companies with international customers E-commerce and digital services Financial services (with corresponding license) Malta is NOT optimal for: Purely German business (permanent establishment risk) Craft businesses with local customers Companies under €500,000 annual revenue (effort > benefit) German Tax Optimization: Exit Tax and Unstringing This gets technical: If you move your company to Malta, the German tax office wants a cut. The Exit Tax according to § 6 AStG arises when you transfer hidden reserves of over €500,000 abroad. With unstringing (§ 4g EStG), assets are valued at fair market value. Sounds complicated? It is. That’s why you need a German tax advisor who knows Malta — not just anyone. Legal Due Diligence: What Needs to Be Clarified Upfront Review Area Critical Questions Time Required Corporate Law Shareholder structure, management 2-3 weeks Tax Law Exit tax, double taxation 3-4 weeks Labor Law Employee transfers, terminations 2-4 weeks Contract Law Customer contracts, suppliers 1-2 weeks What does this mean for you? Invest €3,000–5,000 in professional advice BEFORE you start. It will save you five-digit sums in corrections later. Month 1: Establishing Legal Foundations for Your Malta Relocation Now it starts! Month 1 is the cornerstone for everything else. Here you set the legal foundation on which your Malta adventure is built. Let me be honest: this month is the most annoying—but also the most important. Malta Company Formation: Choose Your New Legal Form In Malta, you have three main options for your company type: Private Limited Company – the classic for 99% of relocations Public Limited Company – only relevant for large structures Partnership – mainly for local businesses The Private Limited Company is your friend. Why? It’s equivalent to the German GmbH, only requires €1,165 minimum capital, and is recognized EU-wide. Plus: You can set it up 100% remotely. Registered Office in Malta: More Than Just an Address Here’s a very common beginner’s mistake. Many think: “I’ll just take the cheapest registered office for €300 per year.” Bad idea. Your registered office must: Accept and forward business mail Be available for authority visits Make a professional impression (banks check this!) Be compliant with the Malta Business Registry Realistic cost: €1,200–2,400 per year for a proper registered office with service. Cheaper usually goes wrong. Memorandum and Articles of Association: The Legal DNA Code These documents define what your company can do and how it operates. Standard templates usually work, but if you have special business models, you’ll need custom articles. Important points: Objects Clause – what can your company do? (better too broad than too narrow) Share Structure – ordinary shares are usually sufficient Director Powers – who decides what? Dividend Policy – important for the 6/7 refund Appoint Company Secretary and Compliance Officer Malta requires a local Company Secretary. This isn’t optional, it’s mandatory. Their tasks include: Task Frequency Penalties for Omission Annual Return Filing Annually €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 per year for a good company secretary. Cheap providers will pay off at the first compliance check at the latest. Timeline for Month 1: What Has to Happen When Week 1–2: Name reservation at Malta Business Registry Week 2–3: Complete memorandum and articles Week 3–4: Submit company formation Week 4–6: Wait for certificate of incorporation Week 6–8: Appoint company secretary, hold initial board resolutions Realistic? Yes. Stressful? Definitely. Worth it? Absolutely—if done right. Month 2: Tax Positioning and EU Compliance in Malta Month 2 is all about taxes. This is where it’s decided whether you’ll benefit from Malta’s famous 6/7 system later or pay the “normal” 35% EU company tax. Spoiler: The difference can be several hundreds of thousands per year. VAT Registration Malta: Faster Than You Thought Good news first: VAT registration in Malta is much faster than in Germany. 2-3 weeks is normal if your documents are complete. You need a VAT number if: Your EU-wide revenue is over €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 dont need it yet. Banks like to see this, and retroactive applications take longer. Income Tax Return and Non-Resident Certificate This gets technical: Malta basically taxes all companies at 35%. BUT – and this is the big “but” – you get up to 6/7 of the tax back via the 6/7 refund system. This works as follows: Type of Income Tax Rate Refund Effective Burden 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 given if you distribute profits as dividends. That’s why the right dividend policy in your articles is so critical. EU Compliance: VIES, Intrastat and Other Joys As an EU company, you have further obligations. The most important ones: VIES filings for EU B2B transactions (quarterly) Intrastat reporting for goods trading from €400,000 Economic Substance Requirements for certain activities EU DAC6 reporting for cross-border structures Sounds complicated? Unfortunately, it is. That’s why you need a Maltese tax advisor who can do this in their sleep. Using the Double Taxation Treaty Germany-Malta The DTT Germany-Malta is your friend. It ensures you’re not fully taxed in both Germany and Malta. But beware: You must meet the conditions. Critical points: Management and Control truly must be in Malta Economic Substance — real business activity needed Director meetings should take place in Malta Key business decisions must be made in Malta What does this mean for you? You really need to move to Malta or at least be there very regularly. Shell companies no longer work. Economic Substance Requirements: The New Sheriff in the EU Since 2019, Economic Substance Requirements have changed a lot. Malta companies must have real substance, especially in: Holding activities IP licensing Financial services Shipping business This means in practice: Appropriate number of Malta-based employees Substantial business expenses in Malta Actual business management in Malta Appropriate office space Rule of thumb: With €1 million profit, you should invest at least €100,000 in Malta substance. What does this mean for you? Malta is no longer a tax haven for home-office warriors. You must actually relocate operations to Malta. Month 3: Building Professional Operational Infrastructure in Malta Now it gets hands-on! Month 3 is when paperwork becomes real business activity. Banking, office, IT—this is where you’ll find out whether Malta really fits your business or if you’ve been deluding yourself. Banking Malta: The Battle for a Business Account Let me start with the bad news: Getting a Maltese business account is currently much harder than a few years ago. Banks have become super cautious after various scandals. Your options ranked by likelihood of success: Bank Success Rate Minimum Deposit Special 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 Specialized for corporates 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: Show up in person. Online banking applications are rejected 90% of the time. Banks want to see and assess you in person. Office Setup Malta: More Than Just a Desk You need a real office in Malta. Not just for the 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, networking, less prestigious Own office – €1,200–3,000/month, maximum control Home office – only works in exceptions For most relocations I recommend a serviced office for the first 1–2 years. Why? Professional address for banks and authorities Meeting rooms available for important appointments Secretarial service for mail and calls Flexibility for 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 practical Mriehel – cheaper, 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 standard, 1 Gbit/s in business buildings available. Cloud services and hosting: AWS/Azure both have Malta presence GDPR compliance automatically through EU location Local providers mostly unnecessary Accounting and Financial Management Setup Malta has different accounting standards than Germany. You need a local setup compatible with the German system. Software recommendations: Software Cost/Month Advantages Disadvantages Sage Business Cloud €80–200 Malta-compliant, available in German Expensive, overloaded QuickBooks €40–80 Simple, international Less Malta-specific Xero €60–120 Cloud-based, strong API Learning curve Important: Your accounting must meet both Maltese and German requirements. Very few standard systems do this perfectly. Insurance and Risk Management In Malta, you need different insurance than in Germany. The most important: Professional indemnity – for consultancy/services (€3,000–8,000/year) Public liability – standard protection (€1,000–3,000/year) Employers liability – mandatory if you have employees Cyber insurance – increasingly important (€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 proper insurance. Being cheap will cost you more if you need it. Month 4: Successfully Managing Employees, HR, and Maltese Labour Law Month 4 is HR-intensive. Now you find out whether your German staff will come along, whether you’ll find new people in Malta, or if you’ll go remote. Spoiler: Each option has its pitfalls. Transferring Employees to Malta: What Works, What Doesnt? The good news: EU freedom of movement theoretically makes staff transfers easy. The bad: In practice, it’s more complicated than you think. Legal framework: EU citizens do not need a work permit for Malta Social security transfers via A1 certificate Tax residency shifts after 183+ days in Malta German employment contracts can usually be taken over Practical hurdles: Housing market – shortage, especially for families Schools – international schools are expensive and full Cost of living – often higher than German cities Language barrier – Maltese/English not for everyone Employee Profile Transfer Success Typical Challenges Singles, 25–35, Tech 80% Housing, salary, networking Couples without children 60% Finding two jobs, bigger apartment Families with children 30% Schools, housing, childcare 50+ years 40% New environment, health Maltese Labour Law: Whats Different Than in Germany Malta’s labour law is EU-compliant but has its quirks. Main differences: Working hours and vacation: 48-hour week is standard (not 40h as in Germany) 24 days minimum annual leave (Germany: 20–30 usual) Overtime from 40h/week with 25% surcharge 6 months probation possible (Germany: max. 6 months) Termination protection: After 6 months: 1 week’s notice After 2 years: 2 weeks’ notice After 5 years: 4 weeks’ notice Severance payments are uncommon (except redundancy) Malta social security: Contribution Employer Employee Cap Social Security 10% 10% Max. €837/year Maternity Fund 0.55% 0.55% Same as Social Security Private health insurance Voluntary Recommended €1,000–3,000/year Recruitment Malta: Where to Find Good People Malta has a very tight labor market. Unemployment is under 3%, qualified professionals are scarce and expensive. Recruiting channels by success rate: Networking/Recommendations (60% success rate) Recruiting agencies (40% success rate) LinkedIn/Online (30% success rate) Jobs.mt (20% success rate) Newspaper ads (10% success rate) Realistic salaries 2025 (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: Competition with iGaming, fintech, and other well-paying industries. Remote Work and Hybrid Models Many Malta relocations work hybrid: management in Malta, team partly remote in Germany or other EU countries. What works: 25% Malta presence, 75% remote (usually sufficient for economic substance) Quarterly meetings in Malta Key positions (management, finance) in Malta Development/operations remote What’s risky: 100% remote with no Malta substance Important business decisions made outside Malta Less than 10% of work time in Malta Expat Community and Networking Malta has a very active expat community. This helps with recruitment, business development and personal integration. Important 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 that mean for you? Invest time in networking. Malta is small—everyone knows everyone, and recommendations open all doors. Month 5: Finalization and System Testing for Your Malta Structure Month 5 is the reality check. Here you test if all systems work together and your Malta setup really functions. I’ve seen too many entrepreneurs discover critical interface problems only at go-live. End-to-End System Testing: From Invoice to Tax Return Now it gets hands-on. Run through your entire process once—from your first client invoice to tax treatment. Test scenarios you should run: EU B2B transaction: Invoice with Malta VAT number to a German business customer Outside-EU business: Export invoice to UK/US clients Intra-company transfer: Invoice between German and Maltese entities Dividend payout: Profit distribution with 6/7 refund Employee onboarding: Fully onboard a new Malta employee Check banking integration: SEPA transfers in both directions Multi-currency management (USD, GBP, EUR) Online banking API for accounting Credit card processing for clients Compliance reporting to German/Maltese authorities Compliance Management: Keeping All Reporting Obligations Under Control Malta has what feels like 47 different reporting requirements. Okay, it’s only 12, but it feels like 47. Here are the key ones: Report Frequency Deadline Penalties VAT return Quarterly 15th of following month €100–500 Income tax return Annually June 30 €500–5,000 Annual return (MBR) Annually May 31 €500–2,000 Financial statements Annually 18 months after year-end €1,000–10,000 Beneficial ownership On changes Immediately €5,000–50,000 Automation is your friend: Calendar reminders for all deadlines Automatic data transfer between systems Backup responsibility for critical reports External service providers for complex filings Emergency Plans and Continuity Management Malta is an island. Sometimes there are power outages, sometimes internet is down, and sometimes 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: Stand-in arrangements for key people Data: Daily backups outside Malta Test worst-case scenarios: What if you can’t travel to Malta for 4 weeks? How does business run if the Malta office isnt available? Who makes decisions in emergencies? How do you access your money if there’s a bank problem? Define Performance Monitoring and KPIs You need benchmarks to measure if the Malta move is successful—not just financially, but operationally as well. Financial KPIs: KPI Benchmark Target year 1 Target year 2 Effective tax rate 15–25% (Germany) 8–12% 5–8% Setup cost vs savings N/A Break-even ROI 200%+ Compliance cost €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 go live with new services? Regulatory response time: How quickly do you respond to authority requests? Employee satisfaction: How happy are team members transferred to Malta? Customer impact: Do clients notice the move negatively? Documentation and Knowledge Management You’ll forget why you made certain decisions. Document everything important. Key documentation areas: Setup decisions: Why this bank, this tax structure, this office? Compliance calendar: Who does what when? Service provider contacts: Lawyers, tax advisors, bankers Emergency procedures: What to do in compliance issues? Financial workflows: How does cash flow between entities? What does this mean for you? Month 5 is the most important test month. Better to catch problems now than later in live operations. Month 6: Go-Live of Your Business Relocation to Malta Showtime! Month 6 is the moment of truth. This is when you launch your Malta setup and start real business operations. After 6 months of preparation, everything should run smoothly. Should. Soft Launch vs Hard Cutover: The Right Go-Live Strategy You have two options for your go-live. Most entrepreneurs choose the wrong one. Hard cutover (Big Bang): D-day: everything runs through Malta Fast, but risky Only works with perfect preparation One mistake = big problem Soft launch (phased approach) – RECOMMENDED: Step-by-step relocation over 4–6 weeks Start with new customers, then existing clients Fix mistakes without drama Learning curve is factored in My soft launch plan for 90% of cases: Week Transition Risk Level Focus 1–2 Internal processes, new contracts Low System stability 3–4 Small new clients, test invoices Medium Billing workflows 5–6 Important new clients Medium Customer experience 7–8 Migration of existing clients High Change management Customer Communication: How to Explain the Move Your customers need to be informed of the Malta relocation. But how? Many entrepreneurs create communication disasters here. What DOESN’T work: “We’re now in Malta for tax reasons” (sounds like tax evasion) “Nothing changes for you” (obviously false—new VAT number, IBAN, etc.) No information at all (customers will notice anyway) What works – messaging framework: Focus on expansion: “We’re expanding into the EU market” Customer benefits: “Better service for EU customers” Stability: “Same teams, same quality” Transparency: “New billing details from X date” Sample customer email (works 80% of the time): Dear customers, Due to our growth in Europe, we are relocating our EU headquarters to Malta. This allows us to serve you even better and offer new services. For you, nothing really changes: same contacts, same quality, same service standards. From [date] you will receive invoices from [Malta Company Name] with a Maltese VAT number. All existing contracts remain valid. If you have questions, we’re here for you as always. German Entity: Close or Keep? What to do with your German company? You have three options: Option 1: Liquidation (Clean Exit) Complete winding-up of the German GmbH Clean, but final Liquidation gains may be taxable Makes sense if 100% focused on Malta Option 2: Dormant Company (Set to Inactive) German GmbH remains but is inactive Costs: about €2,000–4,000/year Flexibility for returning Reduced compliance burden Option 3: Service Company (Specialization) German GmbH provides specific services for Malta company Intercompany settlements possible More complex but flexible Good for larger structures My recommendation for 70%: Option 2 (Dormant) for the first year, then decide. Monitoring and Troubleshooting in the First Few Weeks The first 4 weeks are critical. 90% of all problems pop up here. You need a system for quick problem-solving. Daily checks in weeks 1–2: Banking: Do all transfers work? VAT: Are invoices received correctly? Systems: Are all integrations working? Team: Any operational issues? Customers: Any complaints or questions? Typical week 1 problems and solutions: Problem Frequency Quick Fix Permanent Solution SEPA transfers delayed 80% Use alternative bank Optimize banking setup VAT validation fails 60% Manual correction System update Clients don’t understand invoices 50% Personal calls Revise template Compliance report missed 30% Late filing + fine Automation Success Metrics: How to Tell If It’s Working After 30 days you should reach these benchmarks: Operational metrics: Customer complaints: Under 5% of client base Payment delays: Under 2% of transactions System downtime: Under 1% (excluding planned maintenance) Compliance issues: Zero critical breaches Financial metrics: Cash flow: Normalized after 2 weeks Tax efficiency: First 6/7 refunds received Banking costs: Under 0.3% of revenue Setup ROI: Visible after 6 months Post-Go-Live Support and Optimization Month 6 is not the end, but the beginning. You’ll be optimizing a lot in the first 6 months of live operations. Continuous improvement areas: Process automation: What can be automated? Cost optimization: Where are unnecessary costs hiding? Compliance efficiency: How can reporting be simplified? Team development: What skills does your 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 Relocating Your Business to Malta After two years of consulting in Malta and countless relocation projects, I know the typical traps. Here are the 7 pitfalls that affect 80% of Malta relocations—and how you avoid them. Pitfall #1: Underestimating Economic Substance The problem: Many think relocating means just a new mailbox address + business flights to Valletta. Wrong! Since Economic Substance Requirements 2019, Malta wants to see real business activity. Common misconceptions: “I fly to Malta 4x per year, thats enough” “A serviced office for €500/month is plenty of substance” “I’ll still make all key decisions in Germany” The reality: You need to spend at least 25% of your work time in Malta, have real Malta-based staff for core functions, and all strategic decisions must be made in Malta. How to avoid it: Plan for real Malta presence from day one. At least one key person (ideally the managing director) should live mainly in Malta. Pitfall #2: Banking Nightmare Due to Poor Preparation The problem: “Malta banking is tough” is now a meme. But it’s usually poor preparation, not evil banks. Typical mistakes: Submit bank applications without a business plan Unrealistic financial projections No references from the German bank Underestimate required minimum deposit Only try at one bank How to do it properly: Business plan in English (10–15 pages) 3-year financial projections Reference letter from German bank Prepare €25,000+ minimum deposit Apply to 2–3 banks in parallel Attend appointments in person Pitfall #3: VAT Chaos in EU Business The problem: EU VAT is complicated, Malta VAT even more so. Many companies get caught in costly VAT traps. Frequent VAT pitfalls: Incorrect VAT handling for B2B vs B2C OSS (One Stop Shop) vs normal VAT registration Reverse charge for services overlooked VIES validation of client VAT numbers forgotten Chaos example: German software company sells to French B2B client. Invoice with 19% Malta VAT instead of 0% (reverse charge). The client doesn’t pay, as they dont get VAT refund. Corrections cost time and nerves. The remedy: Invest in a Malta VAT specialist. €2,000 for proper VAT advice will save you €20,000 in trouble later. Pitfall #4: Employee Transfers Fail The problem: “Our best people will come to Malta with us”—one of the most common misjudgments. Reality check: Employee Type Transfer Success Main Reasons for Refusal Singles, 25–30 70% Salary, career prospects Couples without children 50% Partner can’t find job Families with children 20% School, housing, environment 50+ years 30% Health, family, habit How to plan realistically: Expect 50% transfer rate among key staff Plan pay raises for Malta transfers Offer relocation support (housing, school, moving) Build up a local Malta team in parallel Pitfall #5: Compliance Chaos Due to Poor Organization The problem: Malta has seemingly 1,000 compliance duties. Okay, it‘s only 15—but they all come due at different times and in varying formats. Typical chaos scenario: Forget VAT return → €500 fine. Annual return late → €2,000 fine. Beneficial ownership not reported → €10,000 fine. After 12 months: €15,000 in fines for avoidable omissions. The anti-chaos strategy: Compliance calendar with all deadlines Automatic reminders 4 weeks ahead Backup responsibilities for critical reports Service providers for complex compliance Monthly reviews of all open points Pitfall #6: Cash Flow Problems Due to Banking Delays The problem: German entrepreneurs are used to same-day banking. Malta works differently. Realistic 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 Calculate a cash flow buffer: Always plan for 5–10 days more liquidity than in Germany. For important payments, have a backup bank ready. Pitfall #7: Overestimating Tax Optimization The problem: “Malta = 5% tax” is marketing, not reality. The effective tax burden depends on many factors. Realistic Malta tax burden (year 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 EU-wide services 8–12% Proper structure Mixed business 10–15% Partly Malta source What is often forgotten: Setup costs: €50,000–100,000 in year one Ongoing compliance: €25,000–40,000 per year Economic substance: €50,000–150,000 per year Opportunity costs: time, attention, flexibility What does this mean for you? Malta relocation pays off from about €500,000 annual profit. Below that, costs usually outweigh benefits. Realistic Cost Overview: What Awaits You When Relocating to Malta Let me be honest: Relocating to Malta isn’t cheap. I constantly hear from entrepreneurs who start with a €20,000 budget for everything but end up at €80,000 their first year. Here’s the brutal truth on costs. Setup Costs (Year 0): The Big Shock These are one-off costs, incurred before you even make a single euro of revenue in Malta: Cost Item Minimum Realistic Premium Notes Company formation €2,500 €4,500 €8,000 Incl. legal, registered office Banking setup €1,000 €3,000 €10,000 Consulting + minimum deposit Tax & VAT registration €1,500 €3,500 €6,000 Tax advisor + applications 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 (personnel) €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 medium-sized relocations land at €60,000–90,000 setup costs. Spend less and you’re probably cutting corners in the wrong places. Ongoing Costs (Annually): The Hidden Cost Traps These are annual costs, as long as 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 Cost Factor Since 2019, meeting economic substance requirements is often the biggest cost driver. You need to build real substance in Malta: Staff costs in Malta: Position Annual salary (gross) 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 = about €120,000/year ROI Calculation: When Does Malta Become Worthwhile? Now the most important question: When do Maltas costs pay off? Break-even analysis (simplified): Annual profit DE taxes (30%) Malta taxes (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 becomes worthwhile financially from about €500,000 annual profit. Below that, costs usually outweigh tax advantages. Hidden Costs: What’s Often Forgotten These cost items are often forgotten in calculations: Opportunity costs: Your time managing Malta (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: Fixes, especially in the first year Currency risk: EUR/USD fluctuations in international business Flexibility loss: Fewer spontaneous business decisions possible Savings: Where You Can (and Cannot) Save Save with low risk: Office location (Mriehel instead of Sliema saves 50%) Office setup (serviced office instead of own office) Banking (local banks instead of international) Software (standard tools instead of premium solutions) DON’T save in high-risk areas: Legal advice (bad legal advice gets very expensive) Tax advisory (wrong tax structure costs a fortune) Company secretary (compliance violations carry big fines) Economic substance (too little substance = tax risk) What does this mean for you? Budget at least €80,000 for the first year and €60,000 ongoing. Going for less almost always ends up costing more. FAQ on Business Relocation to Malta How long does a complete business relocation to Malta take? Realistically 6–8 months for a professional relocation. Anything under 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. Allow time for economic substance, office setup and staff integration. What real tax advantages does Malta offer? Malta taxes companies at 35%, but via the 6/7 refund system you get back up to 6/7 of that. For foreign source and trading income that’s 5% effective tax. For IP licensing through the Patent Box even 0–5%. Important: The refunds only come with dividend payouts and proper economic substance. Do I really need economic substance in Malta? Yes, since 2019 it’s required for EU compliance. You need real business activity in Malta: appropriate staff, real office space, Malta management and substantial local expenses. Shell companies are no longer possible. Rule of thumb: With €1 million profit, invest at least €100,000 in Malta substance. Is it difficult to open a bank account in Malta? Yes, since 2018 Maltese banks are very cautious. Success rates are 40–70% depending on the bank. You need a solid business plan, financial projections, references and usually €15,000–25,000 minimum deposit. In-person appointments are mandatory—online applications are usually rejected. Plan for 6–10 weeks for the banking process. What happens to my German GmbH when relocating to Malta? You have three options: 1) Liquidation (clean but final), 2) Set dormant (about €3,000/year, flexible), 3) Use as a service company for the Malta firm. Most choose option 2 for the first year for flexibility. Important: Exit tax and unstringing must be checked in advance. Can my German staff come to Malta with me? Legally yes under EU law, but practically difficult. Success rates: singles 70%, couples 50%, families only 20%. Main issues: housing market, schools for children, partner jobs, higher cost of living. Plan for pay raises and relocation support. Hybrid models (part Malta, part remote) often work better. From what turnover/profit does Malta become worthwhile? Rule of thumb: from €500,000 annual profit Malta becomes attractive. Setup costs: €60,000–90,000, ongoing costs: €60,000–80,000/year incl. economic substance. Below this, costs often outweigh benefits. At €2 million profit you save about €300,000 per year net. What ongoing compliance obligations do I have in Malta? Quarterly VAT returns, annual income tax returns, annual returns at the Malta Business Registry, financial statements, updates to the beneficial ownership register. Also EU filings like VIES and, for large businesses, Intrastat. Penalties for violations: €500–50,000. A good company secretary costs €3,000–5,000/year but saves a lot of hassle. How does the 6/7 refund system work in practice? You first pay 35% corporate tax. On dividend payout you get 6/7 of that back (for foreign source and trading income). Example: €100,000 profit → €35,000 tax → €30,000 refund → €5,000 effective tax (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 requirements and permanent establishment risk. You must spend at least 25% of your time in Malta and make all major decisions there. 100% remote no longer works. Hybrid models are possible but require real Malta presence with local key staff.
