Mistakes to Avoid When Starting a Business in Malta

Published on October 22, 2025 and written by Cyril Jarnias

Malta, a small Mediterranean archipelago, has become a popular destination for entrepreneurs looking to establish their companies in Europe. With its favorable tax system, business-friendly regulatory framework, and strategic location, the island attracts numerous foreign investors. However, embarking on an entrepreneurial venture in Malta also comes with its share of challenges and pitfalls to avoid. In this article, we will review the most common mistakes made when starting a business in Malta, as well as strategies to prevent them and stack the odds in your favor.

A Flawed Business Plan: The Achilles’ Heel of Your Project

One of the most frequent yet crucial mistakes is neglecting to develop a solid and realistic business plan. Too many entrepreneurs dive headfirst into their Malta project without sufficiently planning and anticipating the various aspects of their business.

A well-crafted business plan is the cornerstone of your success. It will not only help clarify your vision and strategy but also convince potential investors or partners. Take the time to conduct thorough market research, analyze local and international competition, and precisely define your value proposition.

Don’t forget to include realistic financial projections for at least 3 years, taking into account the specifics of the Maltese market. For example, if you’re entering the online gaming sector, which is highly developed in Malta, make sure you fully understand the costs associated with obtaining a gaming license and the related regulatory obligations.

Finally, your business plan must be flexible enough to adapt to market changes. Plan for different scenarios and contingency plans for unexpected events.

Risky Financial Management: The Cash Flow Trap

Another fatal mistake is underestimating the importance of rigorous financial management from the outset. Too many entrepreneurs focus solely on revenue without paying enough attention to their cash flow and margins.

In Malta, as elsewhere, cash is king. A business can be profitable on paper but find itself in trouble if it lacks the liquidity to meet its obligations. Establish a detailed budget forecast and closely monitor your cash flow. Anticipate payment delays, which can be longer in Malta than in other European countries.

Also beware of hidden costs associated with setting up in Malta. While the tax system is advantageous, some expenses may be higher than anticipated, such as rents in popular business areas or salaries in high-demand sectors like information technology.

Don’t hesitate to consult a local accountant to help you navigate the subtleties of the Maltese tax system and optimize your financial structure. For example, the shareholder tax refund system can be very beneficial if properly managed.

The Regulatory Maze: Don’t Get Lost Along the Way

While Malta offers a business-friendly environment, this doesn’t mean an absence of regulation. A common mistake is underestimating the administrative and legal complexity associated with starting and managing a business on the island.

Neglecting regulatory aspects can have disastrous consequences, ranging from simple fines to the outright closure of your business. Make sure you fully understand all legal obligations related to your specific activity. For example, if you operate in the financial or online gaming sectors, you’ll need to obtain specific licenses from the Malta Financial Services Authority (MFSA) or the Malta Gaming Authority (MGA).

Don’t forget practical aspects either, such as obtaining a Maltese VAT number, registering with tax and social security authorities, or obligations regarding personal data protection (GDPR). The language barrier can also complicate procedures, even though English is widely used in business in Malta.

To navigate this administrative maze smoothly, it’s highly recommended to surround yourself with local professionals: business lawyers, accountants, business startup consultants. Their expertise will save you valuable time and avoid many pitfalls.

Underestimated Competition: Keep an Eye on Your Rivals

Many entrepreneurs arrive in Malta with an idyllic view of the local market, thinking that the island’s small size means limited competition. This is a mistake that can be costly.

The Maltese market is more competitive than it appears, particularly in certain sectors like tourism, financial services, or online gaming. Moreover, competition isn’t limited to local players: many international companies choose Malta as a base for their European or Mediterranean operations.

Before launching, conduct a thorough analysis of your business sector in Malta. Identify your direct and indirect competitors, study their strengths and weaknesses, and clearly define what sets you apart. Don’t hesitate to visit the location to meet local players and better understand market dynamics.

Also keep in mind that reputation and personal relationships play an important role in business in Malta. Invest time and energy in building your local network, participating in professional events, and making yourself known in your sector.

Winning Strategies: Keys to Avoiding Pitfalls

To maximize your chances of success when starting your business in Malta, here are some essential strategies to implement:

1. Prepare Like a Pro

Meticulous preparation is the key to success. Even before setting foot in Malta, immerse yourself in the local business culture. Read sector reports, follow Maltese economic news, and if possible, make several scouting trips to familiarize yourself with the environment.

Assemble a team of trusted local advisors: lawyer, accountant, business startup consultant. Their expertise will be invaluable for navigating the subtleties of the Maltese system and avoiding beginner mistakes.

2. Master Your Finances Inside Out

Rigorous financial management is essential from the start. Establish a detailed financial plan for at least 3 years, taking into account the specifics of the Maltese market. Plan for sufficient cash reserves to handle unexpected events and sometimes lengthy payment delays.

Familiarize yourself with the Maltese tax system and its particularities, such as the shareholder tax refund system. Consider hiring a local accountant to optimize your tax structure.

3. Scrupulously Comply with Regulations

Following the rules is crucial for your business’s longevity. Make sure you understand and comply with all legal and regulatory obligations related to your activity. This includes obtaining necessary licenses, registering with competent authorities, and adhering to current standards.

Implement internal processes to ensure ongoing compliance, and stay informed about regulatory developments in your sector.

4. Differentiate Yourself from the Competition

To stand out in the Maltese market, focus on innovation and added value. Clearly identify what makes you unique and effectively communicate your strengths. Adapt your offering to the specifics of the local market while leveraging your international expertise.

Invest in networking and building strong relationships with local players. Reputation and word-of-mouth play an important role in Malta.

5. Stay Flexible and Adaptable

The ability to adapt quickly is a major asset in an ever-changing environment. Stay attuned to the market and be ready to adjust your strategy if necessary. Conduct regular reviews of your business plan and don’t hesitate to pivot if you identify new opportunities.

Cultivate an agile and change-oriented corporate culture that will allow you to respond quickly to challenges and opportunities in the Maltese market.

In conclusion, starting a business in Malta offers numerous opportunities but requires meticulous preparation and constant vigilance. By avoiding common pitfalls and applying the winning strategies presented in this article, you’ll maximize your chances of success in this dynamic and promising market.