Global Registration

A guide on how can a foreigner start business in Malta

The Republic of Malta offers a host of benefits for those who wish to set up their businesses in Maltese territory, right from tax incentives to low registration costs for the company. This attracts a lot of foreign investors to set up their ventures in Malta. The question then arises how can a foreigner start business in Malta. This article lists down the step-by-step process of how can a foreigner start business in Malta.  

Step-by-step process of how can a foreigner start business in Malta      

• Selecting the type of business structure

A foreigner needs to select the type of business structure before starting a business in Malta. There are four major business vehicles to choose from:

Limited Liability Company (LLC)

The most common form of type of business vehicle for a foreigner to start business in Malta is an LLC. An LLC^[1] can be either private or public.

General Partnership

Such partnerships are suitable for small and medium-sized businesses. There are two types of such partnerships, viz. En Nom Collectif, where a partner can be either an individual or a corporate body and the other one is En Commandite (Limited Partnership), where limited liability exists for the partners over the partnership.

Single proprietorship

Also known as a one-person company where the enterprise is held by one person only. Such a company can be formed either at the time of incorporation or the acquisition of shares by one person only.

Overseas Company

An overseas company is one where the body corporate is registered outside Malta but has a branch office located in Malta.  

• Selecting the name of the company

Selecting the name of the company is as important as selecting the type of business structure for your business. While selecting the name for your company in Malta, the promoters must keep in mind that the name they select should not be a name of an existing enterprise and should not contain such words that are offensive. The name of the company should not be deceptive in nature. In cases where the company wishes to use a specific term in its name, such as “Insurance”, “Blockchain”, or “Bank”, then in such cases, the business must be able to show that it is engaged in such kind of activity and usage of such a name has been permitted. The name should be original and represents the nature of the business undertaken by the company.  

• Preparation of the required documentation

Once the foreigner has decided on the type and name of the company, then the next process begins with the preparation of the necessary documentation for submission of the same to the Registrar of Companies Association of Malta.

The first thing to be prepared in the documentation includes the Memorandum of Association (MoA) and Articles of Associations (AoA). MoA contains the important information related to the company, such as:

• Type of the company;
• Identification of the subscribers;
• Company’s name;
• The registered office of the company in Malta;
• Objects of the company and its main trading activity;
• Amount of share capital, division of shares, number of share capital with each subscriber and the rights attached to each class of shares;
• Number and identification of directors of the company; and
• Name and address of the Company Secretary etc.

The AoA are the documents which lay down the internal rules and regulations of the company. If the company fails to adopt a self-drafted AoA, then by default, the model articles provided under the First Schedule of the Companies Act will be applicable.

In case a newly formed entity has a corporate entity as its shareholder, then an additional document needs to be attached, known as Form BO1, which contains the information of the ultimate beneficial owners of the company.

When a foreigner starts business in Malta, evidence of the paid-up share capital also needs to be attached in the form of a bank deposit receipt.   

If the Registrar finds it necessary, it can ask for additional supporting documents.

• Obtaining the Certificate of Registration

Once all the necessary documents have been submitted and accepted by the Registrar, a Certificate of Registration is issued to the foreigner or the promoters. This certificate is evidence of the fact that the company has come into being and has become capable of conducting business under its own name.

Usually, the time taken for a foreigner to start business in Malta ranges between 5-10 days.

• Post-registration requirements

VAT Registration

Before a foreigner start business in Malta, he needs to register to pay VAT. In Malta, VAT is fixed at the rate of 18%, especially for those companies that are incorporated as a ‘trading’ and not a ‘holding’ company. The following documents are required for VAT registration for a foreigner to start business in Malta:

• Application Form submitted through a Registered Practitioner and an Authorisation Letter;
• Company’s legal director’s identification document;
• Self-registration through Company’s legal Director through eID;
• Self-registration through an ID/ Resident card or other document numbers.

Submission of Annual Returns and Accounts

After the business is incorporated, Annual Returns and Accounts signed by the Company Secretary are supposed to be submitted to the Registrar within a period of 42 days from the date of incorporation of the company. Such annual returns and accounts should bear the name of the company, registered address, share capital and identification of the shareholders, directors, secretaries and corporate bodies.

Conclusion

The above-mentioned steps answer the question how can a foreigner start business in Malta. It is advised that a foreigner, before starting a business in the Maltese territory should take into consideration factors such as funding, opening a bank account in the name of the company, getting insurance, PE number, hiring employees and deciding the premises of the business. 

Read our Article: Types of Companies in Malta