Let's talk about why you should consider setting up a Malta company.
You may have heard of setting up a company in Malta because of all the tax benefits that the island offers, but that's only one reason.
There are multiple attractive points with setting up a Malta Ltd, and in this article, you'll learn why.
Overall, Malta is a very attractive place for many people to move to and setup a business in, but not only for business reasons.
You may also personally fall in love with the place (read my view on Malta for more information about living in Malta).
I have been living here for almost 5 years now (update: I moved to Cyprus), and been through the moving process of business and legal paperwork for various of procedures required for long term settlement.
While it does take some time to setup a Malta company initially, it's well worth the low taxes once you are up and running.
Business first – I'll jump right into it and list the actual upsides of setting up a Malta Limited Company.
Navigation
Benefits of the Malta company setup
There's a ton of benefits of setting up a company in Malta. Below are some of the main reasons why you should consider a Malta company.
1. Lowest effective corporate taxes in EU
The main reason to set up a Malta company is the effective corporate tax.
The corporate taxes in Malta is 35%, flat rate, which is highest in EU. However, you can reduce it down to an effective tax rate of 5-7% by distributing all the profits to the holding company.
Usually the holding company will be set up in Cyprus, Seychelles or Gibraltar.
Being a resident in Malta only makes you liable to pay taxes on income remitted to Malta. Having a Malta Company can therefore create a total tax pressure of 5% tax.
2. Sane income taxes
The income taxes are not very low (compared to EU neighbours), so taking out big salaries would result in a quite high tax pressure. If you take out a salary that's just enough, the effective tax rate will be relatively low.
The previous income stages are deducted from the tax rate, so the tax rate is only applied on the difference. For example, a salary of €14,400 (€1,200/m) would be taxed €885 per year, approximately 6-7% tax.
| Income from | Income to | Tax rate |
|---|---|---|
| €0 | €8500 | 0% |
| €8501 | €14,500 | 15% |
| €14,501 | €60,000 | 25% |
| €60,001 | unlimited | 35% |
Tax rates from: IRD Malta
3. Lower minimum wage
Minimum wage in Malta is €720. which gives you an idea of the salary situation. Employees can be satisfied with salaries ranging €1,000 – 2,000 for most common work which can be beneficial if you plan on running your Malta company directly from the island.
4. Share capital requirement is only €1,165
The minimum amount of share capital that is required to open up a business in Malta is €1,165, but only a 20% of this needs to be in your bank account. In other words, less physical money required to setup a Malta Ltd. There is also an annual fee of €100.
5. Low social securities
Social security is paid to all employees and is 10% of the employees salary, plus another 10% that the company pays. So basically the effective rate is 20%, but half of it is taken from the employee's share.
6. Less restrictions on expenses
Having a Malta company lets you deduct a lot of expenses on your company.
I'm not going to get into details but generally the policies in regards to using your company's money to pay business related costs are not strict.
Traveling on behalf of business errands are not questioned on any serious degree, so for us digital nomads who like to travel and work at the same time, we can deduct a lot of costs from our business – given that it's a work related trip of course.
Personal reasons to relocate to Malta
7. Stay safe with low crime
Personally I feel really safe here, even out walking during nighttime. Throughout the years here on the island there has been very few crime related incidents happening to me.
8. Enjoy a decent climate
In Malta, the sun shines more than 300 days per year. Even though the island receives a lot of rain during winter time, most of it are falling in a concentrated period of time and usually passing by within a few hours.
| Month | Day °C | Night °C | Water °C | Daily sun hours |
|---|---|---|---|---|
| January | 16 | 13 | 17 | 7 |
| February | 16 | 13 | 16 | 8 |
| March | 18 | 15 | 16 | 9 |
| April | 20 | 17 | 17 | 11 |
| May | 24 | 20 | 19 | 12 |
| June | 29 | 24 | 22 | 13 |
| July | 32 | 27 | 26 | 14 |
| August | 32 | 28 | 27 | 13 |
| September | 28 | 25 | 26 | 10 |
| October | 25 | 22 | 24 | 9 |
| November | 21 | 18 | 22 | 8 |
| December | 18 | 15 | 19 | 7 |
9. Less of a language barrier
English, together with Maltese, are official languages of Malta.
I would estimate that 90% of the Maltese speak fluent English, some of the older generations are not as fluent. But all papers & contracts, part of school, signs, instructions and food menus for example, are in English.
10. More like-minded entrepreneurs
Networking is a big key to become successful. In Malta, business networking is very easy.
The good business climate that Malta has to offer attracts a lot of entrepreneurs from all over the world.
Being an online entrepreneur myself, it's awesome being surrounded by people with a similar mind. There's entrepreneurs from all over the world and you'll easily make friends with people who's waking the same path.
Spending time with other successful entrepreneurs is the easiest way to become a successful entrepreneur yourself.
Setup a Malta company on your own
Personally, I don't recommend you trying to setup Malta company on your own. It's a common mistake people make.
Even if you have plenty of experience of company formation in other countries, Malta might work different, and it's also safe to say that hiring a firm to do it for you will usually be faster, as they have established a process and might know people in the right places.
In the end, it will be very time consuming to start the Malta company on your own.
Also, you will need to setup a bank account, which sometimes is tricky if you don't have a contact at the bank.
However, you could also consider opening up an online bank account as it can take a long time to open up a local bank in Malta.
If you need any help with formation of the Malta company, I'd suggest asking people who already established Malta companies, or reach out to me.
Hey,
Great article! Got a couple questions – we’re considering Malta as we are 100% location independent with our business. We’re not big shots though so costs matter to some degree.
How much does a structure like that cost to set up and maintain for you? I mean a Maltese company + a Gibraltar holding company for example.
Thanks a lot!
Hey Mantas,
Malta + Cyprus is cheaper setup. It costs about €3000-4000 EUR one time fee to setup both companies (including everything). It can differ between the legal companies that help you setup the structure but that’s what I paid.
Then also expect to pay a yearly fee of €2000-6000 depending on the level of activity. That is payroll services, VAT, declarations and everything else you need.
Thanks – those numbers are very reasonable.
Would using a Maltese holding company (instead of Cyprus) work or is there a catch somewhere? I guess Malta would fully tax all dividends paid out to you in that case. But if I were to use the holding company for investment back into the trading company that shouldn’t incur any extra taxes I guess.
Dividends get taxed as normal income right (income tax + social security)?
Lots of questions – sorry. Not many people around here with first-hand Malta company experience.
Sorry for late response.
You can use a Maltese holding company if you are not planning to be resident in Malta. If you are resident, you need the holding company outside of Malta.
Dividends gets taxed normally, but only if remitted to Malta. You don’t pay any tax on dividends if they are outside of Malta.
Thanks! I’ve been in contact with a accounting/law firm in Malta and I believe I have it all figured out now. Thanks for the nudge in the right direction. :)
Hi Mantas,
You mentioned below you’ve made ‘contact with an accounting/law firm in Malta’. Would you recommend them and could you pass their contact details on to me?
Thank you in advance.
Hey Johannes, I am an internet entrepreneur and i own a home in Malta, it really is a nice place. I am currently staying in the UK but I’m travelling back to Malta soon… be good to meet up for a chat my friend. Dan
Sure! Skype? “jontzlar”
Hi Johannes. I’ve found your article going to lots of other info about Malta – as I’m planning to move there…hopefuly this year. I would like to start an online shop there and I’m wandering if you know that they have any good and decent cost shipping deals to link with the continent in order to be able to sell all over the EU or worldwide. Thanks
Hello Johannes, I would also be really interest in a reply to the above question.
Many thanks
Sorry, I have not the slightest clue about that.
Hey Alex,
I was reading this article and found your comment on online shops. I have ab online shop myself and planning to move to Malta.
Could you let me know if you figured everything out.
Thanks and I look forward to your response.
HI, I am a British entrepreneur with an Internet business and I am currently resident in Sardinia with my partner and our two children. My business is registered as n LLC in Wyoming which has no corporation taxes and so I only pay income tax on profit that I bring into Italy, however Italian income tax is very high so I am looking to see if moving to Malta might be an option to lower my tax burden and also because English is spoken (at least on legal documents etc) I would find it much easier to deal with the bureaucracy then I do in Italy..
I have some savings which I thought I might invest in a sail boat and wondered if becoming resident in malta while living and working on the boat would be a viable/possible option instead of renting or buying property. I do plan to spend most of the year in Malta but want the freedom to travel while keeping a base in Malta and seeing family in Italy and traveling further afield. What is mobile internet like there, is there good coverage?
Thanks
Hi,
Johannes
I am interested to settle there. I am doing Cellphone business in my city last 10 years.My wife is as a Medical Laboratory Technician.Can possible to settle there?Please give me some idea or details about how to open company there and also extra expense there.
Thanks
Hi Johannes;
I am a female Portuguese South African, and read all your amazing comments about Malta, including experiences, pros and cons etc..
I am not sure if you can help me, or direct me onto the right path, but I would really appreciate some indication regarding working in Malta, who to contact especially after reading that they are keen in people with foreign language skills. I am fluent, reading, writing and speaking English, Portuguese and Afrikaans, plus speak only Zulu.. and seeing that I love the warm weather and the Ocean, that seems to be my dream Land.
Thanking you in advance.
Kind Regards
Maria
I am analyzing my business opportunities in Malta. Thanks for the helpful article.
Johannes! Want To Know if I want to start a business In Malta what kind of business is suitable In a Small Investment? Thnx for article.
Lot of valuable information that has been gathered out of personal experience.
Businesses flourish in environments that have stable govts & long term progressive business friendly policies, friendly people, no law & order problems & nil/ minimum taxes (afterall businesses generate employment for the locals). I guess Malta offers it all. Thnx for the great insight.
Malta has a lot of benefits, happy to help, Garcia!
Hi Johannes, how can I benefit from starting an Online Business as an Affiliate Marketer placing my business in Malta operating from Germany? Thank you
I’ve outlined the main benefits of starting your business in Malta here in this post, but feel free to check out my posts on affiliate marketing for advice specific to that https://johanneslarsson.com/affiliate-marketing/ :)
I hv been there a number of times and found it fantastic little country. A big advantage there for me is that Maltese drive on the left which I have been used to for years. Also very safe.
It really is! It’s always nice to have a few familiarities when visiting somewhere new.
dear Johannes Larsson,
my name is Hakeem I am from Indian, please can you Gide me to help what is proceri for get work visa to went Malta
there is lots of vacancy’s please I need you kind support & helping me,& at present I am in Saudi Arabia working in (oil & Gas company in Sabic affiliates in Yanbu) I have a total 15 years’ experience & I work in UAE Dubai as a lead supervisor
forward the same to you for the getting the suitable job in you organization you kindly help see below my personal mail Id & what sup number thanking you for will be highly appreciate
my whatsup number 00966598817986
Hi Hakeem, thank you for reaching out! If you’re interested in intrapreneurship then please get in touch here and we can definitely consider you for a future position https://johanneslarsson.com/intrapreneur-jobs/. If you have any other questions about finding work or moving to Malta please let me know, or alternatively, you may want to consider checking out my entrepreneurship series where I walk you through every step of creating a business so you can make money online and work from many different countries. i hope that helps a little and wish you the best!
Company incorporation in malta
Hey Rajiv, do you have a question about this? Feel free to ask me anything.
We are looking at options to relocate the operating office of our company. We have an online English language learning platform based in Belarus reaching out to the native Russian speaking countries. Banking sanctions are difficult to deal with along with high employee tax rates.
We will need to be able to receive payments and make payments in many currencies inc. Russian & Belarus rubles.
Any options? Impossible challenge?
Mel
Hi Mel, I can’t see why this wouldn’t be possible but would recommend getting some expert advice to be on the safe side. Good luck!