For many Malta companies, an annual statutory audit has traditionally been treated as a standard part of doing business. But this is no longer automatically the case.
Under Malta’s current audit-exemption framework, qualifying private companies may now fall into one of three categories: full statutory audit, review report instead of an audit, or no audit and no review at all.
The important point is that the answer does not depend on turnover alone. Malta applies three tests – turnover, balance-sheet total and average number of employees – and they must be considered together.
Malta audit exemption thresholds
Under Article 185(2) of the Malta Companies Act, a private company may qualify for the statutory audit exemption where it does not exceed at least two of the following three limits:
| Criterion | Threshold |
|---|---|
| Balance-sheet total | €46,600 |
| Net turnover | €93,000 |
| Average employees | 2 |
These limits are deliberately low. The exemption is therefore mainly relevant to micro-companies, small consulting businesses, low-activity holding structures and certain early-stage businesses. However, exceeding one threshold does not automatically mean that a full statutory audit is required.
A company with turnover above €93,000 may still qualify if it remains within both the balance-sheet and employee limits.
When is no audit or review required?
Where the company does not exceed all three thresholds, it may qualify for the statutory audit exemption and, under the Audit Exemption Rules introduced in 2025, no review report is required for tax purposes either.
For example:
Turnover: €70,000
Balance-sheet total: €35,000
Employees: 1
The company satisfies all three criteria.
Subject to the remaining legal conditions, it may therefore avoid both a statutory audit and a review report.
For a genuinely small Malta company, this can represent a meaningful reduction in annual compliance costs.
When is a review report required instead of an audit?
If the company satisfies two out of the three thresholds, it may still qualify for the Companies Act statutory audit exemption.
However, for tax purposes, it will normally need a review report prepared in accordance with ISRE 2400.
A review is not the same as a statutory audit.
It provides a lower level of assurance and generally requires less extensive work than a full audit.
Consider a company with:
Turnover: €150,000
Balance-sheet total: €40,000
Employees: 1
The company exceeds the €93,000 turnover limit but remains within the other two thresholds.
It may therefore still qualify for the statutory audit exemption, although a review report would generally be required.
This is an important distinction because one of the most common assumptions is that turnover above €93,000 automatically means an audit.
It does not.
When is a full audit still required?
Where the company satisfies only one – or none – of the three Article 185(2) criteria, the ordinary statutory audit exemption is not available. A full statutory audit will therefore generally remain necessary.
For established Malta trading companies with higher levels of assets, turnover or employees, the annual audit will consequently remain part of the normal compliance process.
What changed in 2025?
The statutory audit exemption itself is not entirely new.
The Malta Companies Act already contained an exemption for qualifying very small private companies.
The difficulty was that Malta’s tax legislation could still require an auditor’s report even where the company qualified for the Companies Act exemption.
The Audit Exemption Rules, 2025 partly aligned these two regimes.
As a result, qualifying companies can now make practical use of the Companies Act exemption without automatically being required to obtain a full audit purely because of the tax-reporting rules.
The relevant provisions apply to accounting periods commencing on or after 1 January 2025.
What about Malta’s new €5 million and €10 million thresholds?
This is where the terminology can become confusing.
For accounting periods commencing on or after 20 March 2026, Malta increased the general thresholds used to classify a company as a small company.
The new limits are:
€5 million balance-sheet total
€10 million net turnover
50 employees
A company generally has to remain within at least two of these three limits to benefit from the relevant small-company financial-reporting regime.
However, these are not the thresholds for the ordinary audit exemption.
The audit-exemption tests remain much lower:
€46,600 balance-sheet total
€93,000 net turnover
2 employees
A Malta company may therefore be classified as a small company for financial-reporting purposes while still being required to undergo a full statutory audit.
The two regimes should not be confused.
What happens if the company exceeds the limits for one year?
Crossing a threshold does not necessarily mean that the company immediately loses its exemption.
Except in relation to the company’s first balance-sheet date, the Companies Act generally applies a two-consecutive-accounting-period test.
This means that a temporary increase in turnover, assets or employees may not immediately change the company’s audit status.
The same principle can work in reverse: a company that previously exceeded the limits may need to remain within the relevant criteria for the required period before benefiting from the exemption again.
Audit status should therefore be reviewed each year rather than determined from one set of figures in isolation.
Special audit relief for Malta start-ups
Malta also provides separate relief for certain newly incorporated businesses.
Under the Audit Exemption Rules, a qualifying start-up may obtain an exemption from the auditor’s report required for tax purposes during its first two accounting periods where, among other conditions:
- annual turnover does not exceed €80,000;
- all shareholders are individuals;
- they hold at least an MQF Level 3 qualification; and
- the company was incorporated within three years of obtaining the qualification.
Alternatively, a qualifying business that chooses to have an auditor’s report prepared may claim an enhanced deduction equal to 120% of the audit cost, subject to a maximum deduction of €700 per accounting period.
There is, however, an important technical distinction.
The €80,000 start-up relief operates primarily on the tax side. The separate Companies Act regulations intended to introduce the corresponding start-up statutory audit exemption are still not in force.
A start-up should therefore not assume that meeting the €80,000 turnover test automatically removes every audit requirement.
The Companies Act position must still be checked separately.
Malta shipping companies
Companies registered under Malta’s merchant-shipping framework may also benefit from a separate audit-exemption regime where the applicable conditions under the shipping legislation are satisfied.
Shipping companies should therefore be assessed separately rather than applying the ordinary Article 185 thresholds automatically.
Audit exempt does not mean compliance exempt
This is perhaps the most important practical point.
A Malta company that qualifies for an audit exemption does not become exempt from accounting and annual compliance.
Depending on its circumstances, the company may still need to maintain proper accounting records, prepare annual financial statements, file accounts with the Malta Business Registry, submit a corporate income tax return, file VAT returns where applicable and maintain supporting accounting documentation.
The exemption concerns the level of external assurance over the financial statements.
It does not remove the company’s accounting, tax or corporate filing obligations.
Full audit, review or no audit?
For an ordinary Malta private company, the position can be summarised simply:
| Threshold position | Requirement |
|---|---|
| All 3 thresholds satisfied | No audit and no review |
| Exactly 2 out of 3 satisfied | Review report instead of a full audit |
| Only 1 or none satisfied | Full statutory audit generally required |
The key mistake to avoid is looking at turnover in isolation.
A company’s turnover, balance-sheet total and employees must be assessed together, together with the previous accounting periods and any special rules applicable to the company.
For genuinely small Malta companies, the current regime can significantly reduce the annual compliance burden. For normal operating businesses, however, the statutory audit will often remain part of doing business in Malta. The best approach is to establish the company’s audit status before its annual accounts and tax return are prepared – rather than discovering at filing stage that an audit or review was required.