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Setting Up a Sole Trader in Malta

Setting Up a Sole Trader in Malta

Updated on Tuesday 19th April 2016

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The first step when opening a business in Malta is to select the type of business that suits you best. Some of the most employed types of structures in Malta are: the sole trader, partnerships and limited liability companies. The simplest form to start a business is by setting up a sole trader or partnership in Malta.

Choosing the right type of business is very important and our lawyers in Malta can explain in detail what each type of company requires in order to be able to operate.

What is a Maltese sole trader and how is it set up?

The sole trader is the simplest and easiest form of doing business in Malta. The sole trader is basically a self-employed individual. He is required to obtain certain permits or licenses according to the Commercial Coderegister with the Employment and Training Corporation as a self-employed and with the Inland Revenue for taxation purposes and then start operating.

The sole trader will be funded by the owner and the liability for the debts of the business will also fall on him or her. The best part when setting a sole trader in Malta is that all profits will go to the individual that established the business. It is also important to know that if a sole trader’s returns exceed 35,000 euros for goods or 24,000 euros for services, he or she must also register for VAT with the Maltese authorities.

What are the taxes a sole trader must pay?

Depending on the residence of the individual, when setting up the sole trader in Malta, the individual will be subject to the income tax and capital gains tax. The income tax may reach a maximum of 35%, but the rate depends on the marital status of the individual and whether he or she has children. Foreign citizens establishing a sole trader will be applied the income tax on the profits they make in Malta and the capital gains tax.


Documents required to open a sole proprietorship in Malta

The Commercial Code does not require an individual to register with the Trade Register when doing business as a sole proprietor. Foreign individuals must obtain an employment pass and register for social security before starting operating. Then, the sole trader must also apply for a tax number and register for VAT. If the trader wants to import or export goods within the EU, they are also advised to obtain an EORI number.

Our law firm in Malta can assist sole traders in registering for taxation purposes.


What are the advantages of setting up a sole trader in Malta?

The sole trader is the easiest way of starting a business in Malta and requires no set up or registration costs. In terms of taxation, the sole trader must submit one tax return a year. Registering as a self-employed also means less bureaucracy in Malta. The sole trader offers total control and ownership over the business.

Our attorneys in Malta will guide you through the registration process of your company and will provide you all required information about the taxation system.




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