How to Choose the Right Business Structure for Your Company in Malta

Choosing the right business structure is one of the most important decisions you will make when setting up a company in Malta. Your choice determines how much tax you’ll pay, your level of liability, your reporting obligations, and your ability to grow and attract investors

With multiple options available, from sole traders to limited liability companies, the decision can feel overwhelming. This guide breaks down the main structures in Malta, explains the pros and cons of each, and highlights the key factors entrepreneurs should consider before incorporating.

The Main Business Structures in Malta

1. Private Limited Liability Company (Ltd)

• Minimum share capital: €1,165 (20% paid up).
• Shareholders: Between 2 and 50 (can also be a single-member company).
• Management: At least one director and one company secretary.
• Liability: Limited to the amount invested in share capital.
• Annual obligations: Must file Annual Returns, audited financial statements, and beneficial ownership updates.

Best for: Startups, SMEs, and businesses seeking liability protection and scalability.

2. Public Limited Company (PLC)

• Minimum share capital: €46,587 (25% paid up).
• Shareholders: At least two.
• Management: At least two directors and one company secretary.
• Liability: Limited.
• Annual obligations: More complex reporting; suitable for larger businesses.

Best for: Large corporations, companies planning to raise public capital, or those considering a stock exchange listing.

3. Partnerships

• Types:
  • Partnership en nom collectif: All partners have unlimited liability.
  • Partnership en commandite: At least one partner has unlimited liability, while others enjoy limited liability.
• Formation: Requires partnership deed registered with MBR.
• Taxation: Partnerships are generally tax transparent – profits taxed at partner level.

Best for: Family businesses, professional practices, or small ventures with trust among partners.

4. Sole Trader

• Ownership: A single individual owns and operates the business.
• Liability: Unlimited – personal and business assets are not separate.
• Compliance: Simpler registration and fewer filing requirements compared to companies.
• Taxation: Income taxed as personal income.

Best for: Freelancers, micro-businesses, and individuals testing a business idea.

Factors to Consider When Choosing a Structure

1. Liability Protection

• If you want to protect your personal assets, a Limited Liability Company is often the best choice.
• Sole traders and certain partnerships expose owners to unlimited liability.

2. Capital Requirements

• Sole traders and partnerships have low or no minimum capital requirements.
• Companies require share capital: €1,165 for Ltds, €46,587 for PLCs.

3. Taxation

• Limited companies benefit from Malta’s corporate tax regime, including the full imputation system and shareholder refunds (effective rates 5–10%).
• Sole traders pay personal income tax rates, which can be higher at certain income brackets.

4. Compliance Obligations

• Companies must file audited financial statements, Annual Returns, and beneficial ownership details.
• Sole traders face lighter reporting duties, but less credibility with banks and investors.

5. Growth & Investment

• If you plan to scale, attract investors, or expand internationally, an Ltd or PLC provides better credibility.
• Partnerships and sole traders are simpler but can limit opportunities for growth.

Case Scenarios

Scenario A: Startup Founder
Maria wants to launch a tech startup with two co-founders. Liability protection is essential, and they may seek investors in the future.
👉 The Private Ltd is the best fit.

Scenario B: Family Business
A father and daughter want to run a small restaurant. They prefer simplicity but also want flexibility.
👉 A Partnership could suit their needs.

Scenario C: Independent Consultant
James, a digital marketing consultant, wants to start small and keep compliance light.
👉 A Sole Trader structure works best initially, with the option to convert to Ltd later.

Frequently Asked Questions (FAQ)

Q1: Can I start as a sole trader and later switch to a limited company?
Yes, many entrepreneurs start small as sole traders and transition into Ltds as they grow.

Q2: Is it mandatory to have a Maltese director?
No, directors can be foreign nationals, but the company must have a registered office in Malta.

Q3: Which structure is best for tax planning?
Ltd companies usually offer more opportunities for tax efficiency, thanks to Malta’s full imputation system and refund mechanisms.

Q4: Can a non-resident own 100% of a Maltese company?
Yes. There are no restrictions on foreign ownership.

Your business structure is more than just a legal formality, it’s the foundation for your company’s success. By weighing liability, tax, compliance, and growth potential, you can choose a structure that supports your ambitions in Malta and beyond.

At NOUV, we help entrepreneurs and investors navigate this crucial decision with expert advice and hands-on support.

NOUV: Your Business Incorporation Partner

We guide businesses in selecting and setting up the right structure in Malta:

• Advisory on the best structure (Ltd, PLC, Partnership, Sole Trader)
• Full company formation & registration
• Drafting of Memorandum & Articles of Association
• Tax & VAT registration
• Ongoing compliance (Annual Returns, financial statements, BO updates)
• Restructuring and scaling advisory

Whether you’re starting small or aiming big, we’ll make sure your business rests on the right foundation.

🔗 Discover our Corporate Services: https://nouv.com/corporate/
🌐 Get in touch: https://nouv.com/contact-us/