When setting up a company you may want to consider these factors:
In 2015, Malta made starting business easier by creating an electronic link between the Registrar of Companies and the Inland Revenue Department to facilitate issuance of a tax identification number.
Generally speaking, Malta’s comparatively low running costs, rent and wages and competitive telecommunication systems, serve to further enhance the Island’s attraction as an international business center.
In addition, the country does not impose restrictions on the importation of goods from other countries or groups of countries, although goods imported from non-European Union countries may be subject to import duties in addition to VAT (when applicable).
The main weaknesses in doing business in Malta, according to the World Bank, are in the areas of getting credit, dealing with construction permits, getting electricity and in enforcing contracts.
The national language of Malta is Maltese, but Malta has two official languages, Maltese and English.
Malta’s Companies Act is mainly disciplined by English Law and EU directives, and describes the type of Maltese corporate entities that may be established in the country. There are three main types of business available in Malta, namely:
Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Malta and the planned business activity.
A limited liability company incorporated in Malta may be either a public or a private limited liability company. The liability of the shareholders in a Malta Limited Liability Company is limited to the amount, if any, of unpaid on the shares respectively held by each of them.
The main differences between the private and public limited liability company is the fact that a private company must limited the number of its shareholders to 50 and it cannot offer its shares to the general public.
Reserve a unique company name
It is possible to check for a company name online through the website of the Registry of Companies or in person. The reservation confirmation will be sent by email.
Deposit the paid-in minimum capital
The Bank will open a company account the moment it receives reference letters from the signatories’ respective banks. In order to open a bank account it is necessary to provide the following documents:
– A duly filled in Know-Your-Client (KYC) form;
– A request to open an account specifying the type of account, the currency and the preferred mode of tax payment;
– Copy of the Memorandum and Articles of Association together with a certified copy of the Certificate of Registration issued by the Registry of Companies once the company is registered.
– Confirmation of the permanent address of the Directors through a completed identification statement certified by a Prime bank or Maltese Embassy in the country of residence. The bank also requires the authenticated identification documents for all the directors, signatories, beneficial owners and secretaries.
– A signed form by the directors of the company appointing the bankers.
Register at the Companies Registry
– Confirmation of name reservation
– Signed memorandum and articles of association
– Confirmation of deposit of share capital
– Copy of the passport/ID of each shareholder, director and company secretary.
Processing time: The Registry will take between 2 and 3 days to incorporate the company at which point the official memorandum and articles along with the certificate of registration bearing the registration number and registration date of the company are issued.
These documents are then uploaded to the website of the Registry of Companies. The Registrar of Companies provides then an alternative service for the registration of Companies. Registration may now be carried out online through the Registry’s portal. Prior to registration, an applicant must register for an account and obtain a personal Digital Certificate by registering for an e-ID. The MFSA would then vet the application within 5 working days.
Obtain a trade license
Businesses can obtain licenses from the Trade Licensing Unit Commerce Department. There are 2 main types of trading licenses depending on whether your business activity involves the handling of food and/or beverages and activities involving hairdressing, beauty treatment, fitness or physical well-being where a No Objection Declaration issued by the Environmental Health Directorate is required.
Documents required are:
– Notification Form.
– Copy of Passport or ID Card.
– Declaration of Shareholders or by Board of Directors in case the applicant is the legal representative of a partnership or company.
– Development Class Number allocated by MEPA (where applicable) and Building Permit Number issued by MEPA and date issued.
Obtain a company Tax Identification Number (TIN)
The company’s certificate of incorporation (and Registrar of Companies number), as well as a copy of the memorandum and articles of association, are needed in order to obtain the TIN number. The company founder can also log in to the electronic service of the Inland Revenue Department and retrieve the TIN. Through an automated interface with the Registrar of Companies (ROC), the TIN is automatically generated by IRD as soon as the ROC issues the ROC number. The TIN is available for retrieval within a day or two from the date of issuance of the ROC Number.
Register for VAT
To register for VAT, the entrepreneur submits the application form S.L. 406.09 “Value Added Tax (Forms) Regulations”, along with the company Tax Identification Number (TIN). Furthermore, a copy of the memorandum and articles of association, and a copy of the original certificate of registration including the stamp of the Malta Financial Services Authority (MFSA) should be produced.
Obtain a PE number (employer identification number) and register employees
Both the VAT number and the Income Tax number are required to obtain the PE number.
For PE number: the registration form is available, the entrepreneur can either complete it online or print it and send it to IRD. The entrepreneur has to provide: – The tax ID number – The number of employees – Details of the business – Date of first employment
Register the employees with Employment Training Corporation (ETC)
The entrepreneur must declare the company’s recruits to the ETC. The PE number is required.
Register for Data Protection
Such registration must be done before the company carries out any data processing operations. VAT and registration numbers are required according to the form to be submitted.
Cost: Between €1500 and 2000
Processing Time: Approx. 4 weeks
This form of commercial partnership has its obligations guaranteed by the unlimited, joint and several liabilities of one or more “general partners” and by the liability, limited to the amount unpaid on the contribution, if any, of one or more “limited partners”.
At least one of the general partners must be either an individual or a body corporate with its obligations guaranteed by the unlimited and joint and several liabilities of one or more of its members.
A company is formed by a memorandum of association, which must contain some mandatory details, namely:
– Registered office in Malta;
– Object of the company;
– Whether it is a private (Ltd) or public (PLC) company;
– Duration or term of the company;
– Shareholder details and their paid in capital;
– Amount of capital and any information about this (split, paid-in, preference shares etc.);
– Managers’ or Directors’ details.
The Partnership en Commandite accounts do not need to be audited, unless its capital is represented by shares, in which case auditors need to be appointed and its accounts organized in the same way as for a limited liability company.
The shareholders may simultaneously agree to the articles of association, governing the company’s internal workings of the company. The company can take any name that is accepted by the Companies’ Register and generally the Register will not object to any name as long as it is not being used by another company, is not easily confused with another company and is not offensive or undesirable in any way.
The company share capital must be deposited in a domestic bank account under the name of the company being formed, before registering it. Proof of deposit will be required at the time of registration.
If the company is a Public limited company (Plc), in addition to the memorandum of association, an additional document is required, which:
(a) gives an estimate of all the costs to be borne by the company until it is authorized to begin its activity, and
(b) describes any special advantage granted to anyone who has taken part in the formation of the company or in the process to gain authorization, before the company is authorized to begin its activity.
The registration certificate is issued within a few days after the papers have been submitted. The company can begin trading as soon as it is registered.
The Registration is subject to a fee which varies according to the share capital. If the share capital is later increased, fees will be levied on the difference.
A partnership en nom collectif (referred to as a “partnership” in the following provisions of this Part) may be formed by two or more partners and operates under a partnership name and has its obligations guaranteed by the unlimited and joint and several liability of all the partners.
On formation or at any time thereafter, a partnership becomes subject to the provisions of the Companies Act and shall, within fourteen days, deliver to the Registrar for registration a notice specifying that it is subject to this article and that it shall comply with the provisions laid down in this article.
When a partnership ceases to be subject to the provisions of the Maltese Company Act, the partnership shall, within fourteen days of such cessation, deliver to the Registrar for registration a notice specifying that it is no longer subject to this article and that the provisions of this article shall not apply to such partnership as from the date that it has ceased to be so subject.
An agreement to pay a share of the profits of a partnership to a person in total or partial remuneration for his services shall not, of itself, make him a partner.
A partnership shall not be registered by a name which:
Provided that the Registrar shall notify any refusal under this sub article without delay to the person requesting the registration.
Unless specifically provided in the deed of partnership, things contributed to the partnership shall be deemed to have been transferred in full ownership: Provided that, where any of the partners has contributed his own services only, the contributions made by the other partners shall, unless specifically provided in the deed of partnership, be deemed to have been made in usufruct.
A partnership shall not be validly constituted unless a deed of partnership is entered into and signed and a certificate of registration is issued under this Act in respect thereof.
The partners draw up the Deed of Partnership. A partnership shall not be validly constituted unless such Deed is entered into and signed and a certificate of registration is issued. The Deed of
Partnership must state:
The deed of partnership shall be delivered for registration to the Registrar who shall register it.
On the registration of the deed of partnership the Registrar shall certify under his hand that the partnership is registered and the partnership shall come into existence and shall be authorized to commence business under the partnership name as from the date of the certificate: Provided that, if registration is obtained before the date fixed in the deed of partnership for the commencement of the partnership, the certificate shall indicate such date, and the partnership shall come into existence and shall be authorized to commence business as from such later date.
A certificate of registration given in respect of a partnership is conclusive evidence that the requirements of this Act in respect of registration and of matters precedent and incidental to it have been complied with and that the partnership is duly registered, under this Act.
The registration of a partnership by the Registrar under this article shall be without prejudice to any other license or other authorization as may be required in respect of the activities to be carried on by the partnership under any other law.
Unless and until a certificate of registration is issued under this Act in respect of a partnership or until the date indicated in a certificate of registration as the date on which a partnership shall come into existence:
(a) any two or more persons carrying on business under a name falsely implying the existence of a partnership shall have, as against one another and limitedly to property acquired from such business, such rights only as are by law conferred on joint owners;
(b) any obligation contracted in favour of third parties in good faith under a name falsely implying the existence of a partnership shall be jointly and severally binding on those persons, who, if a certificate of registration had been issued, would have been partners carrying on business under that name.
Statutory costs payable to the Maltese authorities
Whether to incorporate in Malta, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.
If the company intends to have staff in Malta they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where
– the company is looking to setup an office quickly
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in Malta
– the company needs help with tax, employment, immigration and payroll compliance in Malta
The complexity of employment regulations in Malta makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.
Shield GEO provides a comprehensive service in Malta allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Malta.
Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Malta. Read more about outsourced employment through Shield GEO.