Table of Contents Why Malta is Perfect for Your Company Relocation Tax Advantages: More Than Just 5% Corporate Tax Legal Framework and Company Types in Malta Step-by-Step: Relocating Your Company to Malta Compliance and Ongoing Obligations Costs and Timeline: What You Really Need to Know Common Pitfalls and How to Navigate Them Smartly Frequently Asked Questions Are you considering moving your business to Malta? Great choice! After two years here, I can tell you: Malta is not just about sun, sea, and Instagram-worthy sunsets. Its a serious business destination with EU access, English-speaking administration and – yes – significant tax advantages. But wait! Before you pack your bags and rush to set up a company overnight: Maltese bureaucracy has its own quirks. I’ve seen ambitious entrepreneurs leave frustrated after three months because they underestimated local idiosyncrasies. In this article, I’ll walk you through the entire relocation process – from your first idea all the way to successful implementation. You’ll learn not just the obvious benefits but also the hidden stumbling blocks and how to sidestep them. Malta can be fantastic for your business – as long as you know how the game is played. Why Malta is Perfect for Your Company Relocation Malta is like the secret VIP area of the EU – all the important advantages without all the fuss. As an EU member since 2004, the island offers you full access to the European single market while benefitting from one of the most attractive tax systems in Europe. The Malta Formula: EU Access + Tax Benefits + English What makes Malta so special? Its the unique combination of three factors you won’t find anywhere else in the EU: Full EU membership: Passporting rights for financial service providers, free movement of capital, Eurozone Effective tax rates from 5%: Thanks to the Full Imputation System (more about this shortly) English as an official language: All administration in English, international legal framework Many international companies have chosen Malta as their location – from gaming giants like Betsson to blockchain startups. Why? The combination of legal certainty and tax optimisation is unique in Europe. Which Companies Benefit Most From Malta? Not every business will benefit equally from a Malta relocation. Here are the typical profiles I’ve observed in recent years: Type of Business Main Advantage Especially Suitable For Online Businesses Low taxes + EU legal security E-Commerce, SaaS, digital services Financial Service Providers EU passporting + regulation framework Investment Funds, Crypto Services Holding Companies Exemptions on dividends/capital gains International corporate groups IP Holdings Royalty optimisation Software, patents, trademarks So what does this mean for you? If your business model is mainly digital, serves international customers, or generates high margins, Malta could drastically reduce your tax burden. If you run a classic craftsman business targeting local customers, you’ll see fewer advantages. Tax Advantages: More Than Just 5% Corporate Tax If you read Malta 5% tax online, you’re probably thinking: That’s too good to be true. Rest assured – it’s real, but more complicated than most marketing articles suggest. The Full Imputation System Explained Malta’s tax system is based on the Full Imputation System – a mechanism that avoids double taxation at both company and shareholder level. Sounds complicated? It is, but I’ll explain it simply: A Maltese company first pays 35% corporate income tax on its profits. That doesnt sound very attractive, right? Here’s the twist: When the company distributes dividends to its shareholders, they receive a refund of up to 6/7 of the tax paid. Example Calculation: Profit before tax: €100,000 Corporate tax (35%): €35,000 Profit after tax: €65,000 Dividend distribution: €65,000 Tax refund (6/7 of €35,000): €30,000 Effective tax burden: €5,000 = 5% When Do Different Refund Rates Apply? Not all types of income are treated the same. Malta distinguishes between various types of income with different refund rates: Type of Income Refund Rate Effective Tax Burden Malta-sourced Trading Income 6/7 (≈ 85.7%) 5% Foreign-sourced Trading Income 6/7 (≈ 85.7%) 5% Passive Interest/Royalties 5/7 (≈ 71.4%) 10% Malta-sourced non-trading Income 2/3 (≈ 66.7%) 11.67% The Non-Dom Status: Additional Personal Tax Benefit As director of your Maltese company, you can benefit from Malta’s Non-Dom (Non-Domiciled) status. In practice, this means: In Malta, you only pay tax on income that arises in Malta or is remitted to Malta (remittance basis). Practical example: Your Maltese company generates profits, but you leave them within the company for now. As long as you don’t bring the money into Malta or use it for personal purposes, you pay no Maltese income tax on it. Pretty smart, right? But note: The Non-Dom status only applies if you are not domiciled in Malta. That means, Malta must not be your permanent home. What Does This Mean For You? The tax benefits are real and substantial. However, you must observe two key points: First, follow the rules closely. Second, always work with a Maltese tax advisor. The authorities check closely if substance requirements are met – i.e., if your company really operates a genuine business in Malta. Legal Framework and Company Types in Malta Legally, Malta operates a Civil Law system with Common Law influences – a combination that reflects the island’s turbulent history. For you as a business owner, this means: there’s a high degree of legal certainty, but structures may differ from those you know in Germany or other European countries. The Maltese Private Limited Company: Your Workhorse In 95% of cases, you’ll be founding a Private Limited Company (Ltd.). This is roughly equivalent to a German GmbH and is the most flexible and tax-efficient legal form for international activities. Minimum Requirements for a Maltese Ltd.: Share capital: Minimum €1,165 (25% paid up = €291.25) Shareholder: At least one (individual or legal entity) Director: At least one with EU residence Company Secretary: Mandatory, must be Malta-licensed Registered office: Must be in Malta Substance Requirements: More Than a Mailbox Here’s where it gets interesting – and it’s the point where many entrepreneurs stumble. Malta requires that your company has economic substance. You don’t have to sit in your Maltese office every day, but it must be clear that real business activity takes place. Maltese authorities check the following criteria: Criterion Requirement Practical Tip Management Strategic decisions made in Malta Hold directors’ meetings regularly in Malta Business activity Core Income Generating Activities Key functions like sales or operations in Malta Staff Sufficiently qualified employees At least 1-2 local staff or directors Office space Physical presence appropriate to business size Real office, not just a virtual office Alternative Company Forms for Special Purposes Depending on your business model, other structures might be of interest: Protected Cell Company (PCC): Ideal for investment funds or if you have several separate lines of business. Each “cell” is legally distinct – if one cell incurs losses, the others are not affected. Partnership en Commandite: Similar to a German “Kommanditgesellschaft”. Interesting for private equity or venture capital structures. Trusts: Malta has an excellent trust law, ideal for asset management and succession planning. Compliance From Day One One critical point that’s often underestimated: In Malta, compliance starts not after foundation, but already at the setup phase. You must establish clean structures right from the outset, as retroactive changes are complicated and expensive. Especially important is the so-called Beneficial Ownership Register. Since 2019, all Maltese companies must transparently disclose their beneficial owners. This is no problem as long as you are honest from the start – never try to hide anything here. What does this mean for you? Plan your structure carefully before you register. A good Maltese lawyer is worth their weight in gold – the €2,000–3,000 fee can save you much more through an optimally structured setup. Step-by-Step: Relocating Your Company to Malta Now, let’s get specific. After two years in Malta and assisting with numerous incorporations, I can tell you: A structured approach saves you time, hassle, and money. Here’s my proven roadmap: Phase 1: Preparation and Structural Planning (4-6 weeks) Weeks 1–2: Due Diligence and Tax Advice Analyse your current structure: How is your company currently set up? Which contracts, licenses, and obligations exist? Tax review: Have a Maltese tax advisor review whether Malta really offers you advantages Substance planning: How will you fulfil substance requirements? Office, staff, management? Weeks 3–4: Legal Structuring Choose a lawyer: Find an experienced corporate lawyer in Malta (budget: €200–400/hour) Draft articles of association: Must fit your business model Arrange nominee services: Company secretary and registered office Weeks 5–6: Operational Preparation Office search: Real premises, not just a virtual office (budget: €500–2,000/month) Prepare banking: Gather documents for account opening Staff planning: If necessary, identify local employees or directors Phase 2: Incorporation and Setup (3-4 weeks) Weeks 7–8: Company Formation The actual setup goes through the Malta Business Registry (MBR). Since 2021, this can largely be done online, significantly speeding up the process. Step Duration Cost Note Name reservation 1–2 days €25 Online via MBR portal Incorporation 5–10 days €245 All documents submitted digitally VAT Registration 2–3 weeks €0 Only if turnover > €35,000/year Tax Registration 1 week €0 Automatic with incorporation Weeks 9–10: Banking and Operational Setup Ah, banking – that’s a story of its own. Maltese banks are thorough, sometimes overly so. Here are my experiences with the main ones: Bank of Valletta (BOV): Largest local bank, conservative, opening takes 4–8 weeks HSBC Malta: International standard, ideal for international business, 3–6 weeks APS Bank: Smaller local bank, more personal service, 2–4 weeks Revolut Business: Quick alternative for getting started, 1–2 weeks Pro tip: Always allow more time for banking than listed above. Maltese banks move at their own pace – “next week” can easily turn into “next month”. Phase 3: Migration and Go-Live (4-8 weeks) Operational Migration: Transfer contracts: Client contracts, supplier agreements, software licenses Domains and IP: Transfer domains, trademarks, software assets Transfer staff: Employment contracts with Maltese entity, EU social security Deregister for tax: Coordinate deregistration in Germany/your previous country The First Day of Business: If all goes smoothly, Go-Live is actually rather unspectacular. Ideally, your clients won’t notice a thing – except that your invoices now show a Maltese address and no longer have German VAT. Special Considerations When Moving from Germany If you’re coming from Germany, there are a couple of extra points to consider: Exit tax: When relocating a capital company, hidden reserves may be subject to taxation. This mainly affects larger companies, but still have it checked. Double taxation treaty: Germany and Malta have a DTT to prevent double taxation – important for the transition period. Reporting obligations: You’ll need to notify various German authorities of the move – from the tax office to the chamber of commerce. So what does this mean for you? Carefully plan your migration and seek advice in both Germany and Malta. Double taxation or missed notifications can be costly. Compliance and Ongoing Obligations So, your Maltese company is up and running – congrats! Now comes the part most people underestimate: ongoing compliance. Malta is business-friendly, but definitely not compliance-light. The authorities pay close attention to whether you’re following all the rules. Annual Reporting Requirements: The Maltese Bureaucracy Marathon In Malta, you have several filing deadlines that you must stick to religiously. Here are the key ones: Report Deadline Late Penalty My Tip Annual Return January 31 From €100 Submit immediately after year-end Tax Return June 30 From €465 Extension possible to Nov 30 Financial Statements With Tax Return From €465 Audit only if turnover > €700k VAT Returns Monthly/Quarterly 5% of outstanding amount Set up automatic payment Reality check: I’ve seen entrepreneurs pay €500 fines for a late Annual Return. The Maltese tax office (IRD – Inland Revenue Department) takes deadlines very seriously. Economic Substance Requirements: The Substance Police Are Watching Since 2019, all Maltese companies must submit an annual Economic Substance Report. This is Malta’s answer to the EU’s criticism of “shell companies”. The authorities want to see that your business has genuine economic substance. What do they check? Number of full-time staff in Malta: Sufficient for your business activity Expenses in Malta: Rent, salaries, consulting fees Assets in Malta: Office equipment, servers, inventory Management in Malta: Where are strategic decisions made? Particularly strict standards apply to so-called “relevant activities” – these are business activities Malta sees as potentially problematic: Holding companies IP holdings (royalty business) Finance and leasing Fund management Banking If your company falls into these categories, you must meet higher substance standards. That means more staff, higher costs, but also more security with the authorities. FATCA, CRS and Other International Reporting Obligations As an EU member, Malta participates in all key international information exchange systems. For you, that means: Common Reporting Standard (CRS): Maltese banks automatically report account data to the tax authorities of your country of residence. Transparency is a must. FATCA: If you have US shareholders or clients, extra reporting duties may arise. DAC6: Certain cross-border tax arrangements must be reported to the EU Commission. Internal Compliance: Your Own Rules In addition to legal requirements, you should set up internal compliance structures: Document board meetings: Keep minutes of all important business decisions Malta-nexus in contracts: Ensure key contracts have a Maltese reference Transfer pricing documentation: Use arm’s length pricing for group transactions Collect substance evidence: Continuously document your Malta activities What does this mean for you? Compliance in Malta is not a one-off, but a continuous process. Invest in a good local accountant and company secretary – the €2,000–4,000 per year is money well spent if it saves you fines and headaches. Costs and Timeline: What You Really Need to Expect Let’s get down to brass tacks: What does a company relocation to Malta actually cost? Having accompanied dozens of incorporations, I can tell you – it’s more expensive than most expect, but cheaper than the pessimists claim. Setup Costs: The One-Off Investment Here are the real numbers for a standard relocation, based on current market prices (as of 2024): Item Minimum Realistic Premium Note Legal fees €2,500 €5,000 €10,000 Depending on structure complexity Tax advice €1,500 €3,000 €7,500 Initial setup + first tax return Company formation €1,200 €2,000 €3,500 Incl. company secretary for first year Office setup €3,000 €8,000 €20,000 Deposit + furnishing + first 6 months Banking €0 €500 €2,000 Consulting for complex cases Miscellaneous €1,000 €2,500 €5,000 Translations, apostilles, etc. Total €9,200 €21,000 €48,000 My experience: Most entrepreneurs end up in the “realistic” range. Those who try to save on the setup often pay more later – poor legal structures or compliance problems can become very expensive. Ongoing Costs: The Maltese Baseline After setup comes the annual operating cost. Here’s a realistic breakdown: Monthly fixed costs: Office: €800–2,500 (depending on location and size) Company Secretary: €150–300 Accounting: €300–800 Local director: €500–1,500 (if required) Banking: €20–100 Miscellaneous: €200–500 Annual costs: Government fees: €300–500 Audit: €1,500–5,000 (only if turnover > €700k) Tax advice: €2,000–5,000 Legal review: €1,000–3,000 Realistically, we’re talking about basic monthly costs between €2,000–6,000, depending on how complex your structure is. Timeline: Patience Is a Virtue Schedules in Malta tend to be… optimistic. Here are realistic timelines based on my experience: Phase Official Duration Realistic Duration Worst Case Preparation 2–4 weeks 6–8 weeks 12 weeks Company formation 1–2 weeks 3–4 weeks 8 weeks Banking 2–4 weeks 6–10 weeks 16 weeks Migration 4–6 weeks 8–12 weeks 20 weeks Total 9–16 weeks 23–34 weeks 56 weeks Why does everything take longer than planned? Malta is a small island with limited resources. All the key lawyers, tax advisors, and government officials know each other. This has advantages (personal service), but also disadvantages (longer lead times). Hidden Costs: The Unexpected Items Inevitably, there are always unexpected costs. Here are the most common “surprises”: Multiple banking attempts: If the first bank says no, every further attempt costs time and consulting fees Substance upgrades: More staff or office space than originally planned Compliance upgrades: Additional reporting or audit costs Double-tax residency issues: Extra tax advice for complex situations IP transfer costs: Domains, software licences, trademark transfers My advice: Set aside a 20–30% buffer for unforeseen costs. Malta will always surprise you somehow. What does this mean for you? Relocating to Malta is a medium-term investment. Tax savings usually cover setup costs within 1–2 years, but you’ll need sufficient cash flow to cover the initial outlay. General rule: If your annual tax savings are below €20,000, Malta probably isn’t worth it. Common Pitfalls and How to Navigate Them Smartly After two years in Malta and assisting many incorporations, I’ve seen every mistake in the book – and made some myself. Here are the most common pitfalls and how to avoid them: The Banking Nightmare: When Banks Say No This is the classic: You’ve set up your company, all documents are perfect, and then the bank rejects your application. Why does this happen so often? The Most Common Reasons for Rejection: Unclear business model: Banks don’t understand what you actually do Insufficient substance: No real office or personnel in Malta Compliance concerns: Your business is seen as “high risk” Incomplete documents: A missing apostille can delay things for weeks My solution: Never go to the bank unprepared. I have a Maltese banking consultant who checks all applications beforehand. The €1,500 in consulting fees has saved me months of delays more than once. Pro tip: Prepare a clear business deck that explains in 10 minutes what you do, who your clients are, and why Malta makes sense. Bank managers have little time and even less patience for complicated explanations. Substance Requirements: More Than Just a Mailbox The most common mistake I see: Entrepreneurs think they can set up a Maltese company and run it from the beach in Thailand. That doesn’t work anymore. What Malta really wants to see: Genuine business activity: Important meetings, strategy sessions, product development should take place in Malta Local staff: At least 1–2 employees or directors with a Malta link Physical presence: A real office lease, not just a virtual office Documentation: Board protocols, signed contracts, important emails with a Malta timestamp I know a German entrepreneur who ended up having to invest an extra €50,000 in Malta substance after the authorities challenged his initial setup. He could have done it right from the start. Tax Residency Confusion: Where Am I Taxable? A common rookie mistake: You move to Malta, set up a company, and think all tax issues are solved. Not quite! The Three Levels of Tax Liability: Corporate tax: Your Maltese company pays 35% (refundable) Personal tax (Malta): You pay on Malta-sourced or remitted income Personal tax (origin country): Depending on double taxation treaty, you may owe more It gets especially tricky with the “183-day rule”: To become a Maltese tax resident, you must spend at least 183 days a year in Malta. But for Non-Dom status you must not be domiciled there – a subtle but important distinction. My advice: Keep a meticulous travel diary and document every entry and exit. In a tax audit, you’ll need to prove every single day. Compliance Overload: When Bureaucracy Overwhelms Malta has more reporting obligations than Germany – and that’s saying something. Here are the traps almost everyone falls into: Compliance Trap Consequence How to Avoid Late Annual Return €100–500 fine Calendar reminder for December 31 Missing economic substance Loss of all tax benefits Continuous documentation Late VAT returns 5% of outstanding amount Set up automatic debit Missing beneficial owner info Up to €10,000 fine Annual updates after changes Cultural Differences: The Maltese Way Malta is different from Germany, Austria, or Switzerland. What we consider inefficient is just normal here: Burokrata ta Malta: Authorities have their own pace. Always plan twice as much time as you think you need Personal relationships: Everyone in Malta knows everyone. A good local partner is worth gold Flexibility vs. rules: Maltese people are pragmatic but also very rule-oriented – it’s a balancing act Communication style: Directness is appreciated, but politeness is a must I once waited three weeks for an urgent reply from the tax office. When I followed up, it turned out the official was on holiday and no one else was allowed to handle the case. That’s just Malta for you. Forgetting the Exit Strategy: What If It Doesn’t Work Out? No one sets up a company planning to fail, but you should have an exit strategy nonetheless: Company contracts: Avoid complex structures that are hard to unwind Asset protection: Key IP and assets should be transferable Cost control: No long-term commitments without exit clauses Documentation: All important documents and processes should be portable What does this mean for you? Malta is fantastic, but not for everyone and not forever. Keep your options open and don’t get tied down in structures you’ll regret later. The best Malta setups are those that can work elsewhere, too. Frequently Asked Questions Do I need Maltese tax residency to benefit from tax advantages? No, the tax benefits of the Maltese company (5% effective corporate tax) apply regardless of your personal tax residency. However, there may be additional benefits if you also move personally to Malta and use Non-Dom status. How much time do I actually need to spend in Malta? For the company itself, there is no minimum personal presence required. What matters is that your company has genuine economic substance in Malta – through local management, staff, or real business activity. For personal tax benefits (Non-Dom status), you must spend at least 183 days a year in Malta. Can I move my existing company to Malta or do I need to start fresh? Both are possible. Direct relocation of a registered office is legally possible but often complicated from a tax perspective. In practice, most people set up a new Maltese company and gradually transfer assets and activities – it’s cleaner and more tax-efficient. What is the minimum investment needed for real economic substance? It depends on your business model. As a minimum, plan on €30,000–50,000 per year for office, local staff, and operating costs. For complex structures or substance-critical businesses (holdings, IP companies), it can be significantly more. How does banking work for German clients? Maltese banks handle SEPA transfers, so nothing changes for your German clients. Opening a bank account takes 4–12 weeks and requires extensive documentation. Always consider banking as a critical path in your project plan. What happens to my GmbH in Germany after the relocation? That depends on your strategy. You can dissolve the GmbH, keep it as a dormant company, or continue using it for specific purposes (e.g., Germany-specific business). What’s key is the tax coordination between the two countries. Can I unwind the Malta setup? Yes, but it’s time-consuming and costly. Winding up a Maltese company takes 6–12 months and costs €2,000–5,000. It’s better to make the company dormant in case your situation changes in the future. Which business models don’t work well in Malta? Challenging are very local businesses (trades, local retail), highly regulated sectors without a Malta license, and businesses with high compliance demands but low margins. Pure holding structures without activity are also coming under increasing scrutiny. How do the cost of living in Malta and Germany compare? Malta is about 10–20% cheaper than major German cities but more expensive than rural areas. Especially in popular locations (Sliema, St. Julians), rents are at German city levels. Restaurants and services are cheaper, energy and imported goods are more expensive. Do I need a Maltese partner or can I own 100% myself? You can own a Maltese company 100% yourself. A Maltese partner is not required. However, you need a company secretary in Malta and at least one EU-resident director – this can be you, or a professional service provider.
