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Setting up a Malta Limited Company (LTD) with VAT registration might seem complex, especially for foreign shareholders, but we’re here to make it easy. Malta offers a fantastic environment for businesses, thanks to its favorable tax policies, EU membership, and strategic position. Here’s a simple breakdown of what you need to know and do to get started:
Who Needs to Register?
- Threshold-Based Registration: Companies must register for VAT if their annual taxable supplies exceed €35,000 for goods or €30,000 for other activities.
- Voluntary Registration: Companies can also voluntarily register for VAT even if they are below the threshold. This might be beneficial for reclaiming VAT on business expenses.
- Mandatory Registration: Required if the company engages in intra-community acquisitions of goods or services, or if they provide services to customers in the EU.
If you run EU company registered for VAT that sell goods via the internet to consumers in Malta, the VAT registration threshold for remote selling is €35,000 per year. Once your annual sales to Malta exceed this amount, you are required to register for VAT in Malta and charge Maltese VAT on your sales to consumers in Malta.
Types of VAT Registration
- Article 10 (Normal Registration): Required for businesses exceeding the threshold or those wishing to reclaim VAT on expenses.
- Article 11 (Small Undertakings): For companies with taxable supplies below the threshold, offering simplified reporting and exempt from charging VAT on their sales.
- Article 12 (Intra-Community Supplies): For companies involved in intra-community transactions without regular taxable supplies.
When a business makes intra-Community acquisitions in Malta from a supplier based in another EU member state that exceed EUR 10,000 in a calendar year, they must register under Article 12 and pay VAT in Malta. If the acquisitions do not exceed the EUR 10,000 threshold, there are two options: they can either pay VAT in the supplier’s member state or register under Article 12 in Malta and pay VAT locally.
VAT Registration Process
Preparation of Documents:
- Certificate of Incorporation: Proof of the company’s registration in Malta;
- Shareholders’ Director’s Information: Memorandum & Articles of the Company + identification documents of the directors;
- Questionnaire: to be completed;
- Bank Account Details: Evidence of a Maltese or EU bank account (in case if already in place).
Submission of Application: by 1 st Step, your local service provider.
Approval and Issuance of VAT Number:
Upon approval, the company receives a unique VAT number. This process can take several hours or days, depending on the completeness of the application and verification requirements.
Special Considerations for Foreign Shareholders
Foreign Ownership
- Malta allows full foreign ownership of companies;
- The registration process for VAT is the same regardless of whether shareholders are Maltese or foreign;
- It’s crucial to ensure all foreign shareholders comply with local and international regulations, including providing certified translations of documents if needed.
Tax Residency and Substance Requirements
Companies with foreign shareholders may need to demonstrate substantial presence in Malta to benefit from local tax advantages. This might include having a Maltese bank account, local directors, or physical office space.
Cross-Border VAT Implications
Companies dealing with EU or international clients must be aware of the VAT rules for cross-border transactions. This includes understanding the rules for VAT on digital services, goods, and B2B/B2C services.
Ongoing Compliance
Filing and Reporting
Quarterly Returns: Companies need to file VAT returns quarterly.
Annual Returns: An annual summary must be submitted, detailing total sales and VAT payable/reclaimable.
Record Keeping
Companies must maintain accurate records of all transactions, invoices, and VAT- related documents for at least six years.
VAT Payments
VAT collected from sales must be paid to the Commissioner for Revenue by the due dates. Late payments or filings can attract penalties.
Your Path to Success: Setting Up a Malta LTD with VAT Registration
If you’re a foreign shareholder looking to establish a Malta LTD and obtain VAT registration, rest assured – it’s a straightforward process with the right guidance. Malta’s business-friendly environment makes it an ideal choice for business owners around the globe.
With careful planning and adherence to Maltese regulations, you can smoothly register your Malta LTD for VAT and thrive in the EU market. At 1st Step, we offer comprehensive support to ensure your company complies with local laws and operates efficiently. We’re here to assist you in identifying which business expenses qualify for VAT reclamation, helping you optimize your cash flow.
Trust us to be with you every step of the way. Contact us today to get started!
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