Choosing to work as a sole trader in Malta means you run your own business, manage your own schedule, and invoice clients directly. It’s appealing for freelancers, consultants, creatives, and anyone who wants control without forming a company.

The process is fairly straightforward but still involves registering with various authorities, paying social security, filing taxes, and possibly getting licenses depending on your field. Bureaucracy is moderate; most people get through without too much hassle when they follow the steps carefully.

Challenges include understanding which VAT article applies, handling social security contributions (especially if earnings fluctuate), and ensuring all relevant licences are in place. The benefits are strong: you get flexibility, full ownership of profits, simpler compliance compared to companies, and you can scale when ready.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Malta?

In Malta, a sole proprietorship is generally referred to as being self-employed or a sole trader. These terms describe one person running a business without forming a separate legal entity. You are personally responsible for the business's liabilities and profits.

How does a sole proprietorship (sole trader) work in Malta?

Here are the main features you need to know.

Self-employed vs a limited company in Malta

Here’s how the sole trader model stacks up against forming a company (e.g., private limited company) or partnership.

Step-by-step guide: How to register a sole proprietorship in Malta

Step 1: Check if you are eligible to become a Sole Trader

You need a valid Maltese ID for citizens. Non-Maltese citizens (including EU/EEA) must have a valid residence status. You’ll also need a Social Security number and be able to meet licensing or permit requirements if your field demands them.

Step 2: Choose your business name

You may use your own full legal name. If you prefer a trade name, ensure it’s not misleading. There’s no formal requirement to reserve a business name in the same way as companies do.

Step 3: Gather required documents

You’ll typically need:

• Valid identity or residence card, and passport

• Social Security number

• Details of business activity and address

• Any licences/permits required for the specific activity (for example, trading licence, professional registration).

• If importing or exporting, an EORI number may be needed.

Step 4: Register with the relevant authorities

• Register as self-employed with Jobsplus (using a self-engaged form). This alerts the authorities that you are working independently.

• Register with the Revenue Department/Inland Revenue for tax and social security obligations.

• If your business involves VAT-liable goods or services, register for VAT using the correct article (10, 11, or 12).

Step 5: Pay registration fees and contributions

• Registration cost is minimal or none for many sole trader registrations.

• Social security (Class II) contributions apply when your income from business/trade/profession exceeds €910 per annum.

• The rate of contributions depends on your net income in the preceding year.

Step 6: Complete post-registration obligations

File your annual income tax return, declaring profits and allowable deductions. Keep proper records: invoices, receipts, and expense proofs. Pay social security contributions on time (usually quarterly for self-employed individuals). Maintain or renew any licences or permits needed for your trade or profession.

Financial and tax obligations for sole proprietors in Malta

• Income taxes: Malta’s income tax rates are progressive. The top marginal rate can reach 35%, depending on your income level and circumstances.

• Social security/pension contributions: If you earn more than €910 from an economic activity and are not employed, you pay Class II contributions. Amount depends on net profit in the prior year.

• VAT obligations: If your turnover or activity crosses thresholds, or your business falls under VAT Articles 10 or 12, you must register for VAT. Articles 11 and 12 have specific conditions.

• Record-keeping: Maintain proper accounting of income and expenses, hold onto receipts, invoices, and bank records. Reliable records are essential for deductions and in case of an audit.

• Periodic obligations: Tax return annually; social security contributions paid on schedule; renewing any permits/licences as required.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start as a sole trader in Malta?
There is no minimum capital required. You can begin operations without putting in share capital as in a company form.

Do sole traders need to register for VAT?
Only if your turnover or activities require you to under Malta’s VAT Act (Articles 10, 11, or 12). If your business is small and qualifies under Article 11, you may be exempt from charging VAT, but you also won’t reclaim VAT on purchases.

How much are the standard social security contributions?
If your business income exceeds €910 per year from an eligible economic activity and you’re not employed, you’ll pay Class II contributions. The amount depends on your net income from the previous year. For example, there are scales with weekly rates (for certain income bands) starting around €31.27 per week, etc.

Can a sole trader hire employees?
Yes. If you employ others, you’ll need to register with the Revenue Department for employer obligations, obtain a PE (Permission to Employ) number, handle payroll taxes and withholdings, and comply with employment law.

How long does it take to register as a sole trader in Malta?
Often, you can get registration numbers within 48 hours after submitting the required forms, assuming documents are all in order.

Can foreign nationals register as sole traders in Malta?
Yes. Foreign nationals can register, but they must have the appropriate residence status. Passport plus a valid residence permit where required. Also, they must register for a Social Security number and meet licensing requirements just like locals.

Do sole traders need a separate business bank account?
It’s not always legally required, but strongly recommended. Using a separate account helps with transparent accounting, invoicing, taxation, and separating personal vs business finances.

What happens if I stop working as a sole trader?
You’ll need to inform the authorities: stop declaring self-employment earnings, cancel any registrations (VAT if applicable), stop paying social security contributions, and complete the final tax return. Also, ensure any licences or permits are surrendered or allowed to expire.

Are there any government incentives or reduced rates for new sole traders?
Malta offers minimal to moderate relief or exemptions depending on your income and situation. The €910 threshold exempts very low-earning individuals from Social Security Contribution obligations. There may be reliefs for part-time self-occupied persons, students, or pensioners in certain categories.

Can I use Deel as a sole trader in Malta to get paid by international clients?
Absolutely. Deel supports sole traders in Malta to receive payments from clients abroad. You’ll want to ensure your invoicing meets Maltese legal requirements (correct identifiers, VAT where applicable) and keep records for tax and social security purposes.

Does Deel generate compliant invoices for sole traders in Malta?
Yes. Deel’s invoicing tools are designed to generate invoices that include required fields (name, tax ID, VAT info, etc.). It helps ensure your invoices align with local legal and tax standards.

Can Deel help me with taxes as a sole proprietor in Malta?
Yes. Deel provides payment reports, expense tracking, and transaction logs. These help greatly when you prepare your annual tax return. Deel isn’t a substitute for an accountant, but it makes your financial life easier.

Does Deel offer contracts for freelancers and sole traders?
Yes. Deel offers contract templates compliant with local Maltese law, giving you secure and professional agreements with your clients.

Can I access benefits through Deel as a sole trader in Malta?
Yes. Depending on your plan, Deel may offer optional benefits (e.g., health insurance, retirement plans) or tools that support your access to statutory social security benefits.