Setting up yourself as a freelancer in Malta to run your new business venture can be a big step… VAT registration and VAT returns, Jobsplus application, social security contributions, taxes, administration, marketing, bookkeeping, management reports. Do you have what it takes for a self-employed lifestyle? If you are ready for the next step, have a committed mindset and motivation to succeed, then read here.
A self-employed individual is someone who works as a freelancer, on a contract basis or a business owner. There is a lot of growth opportunity but for that to happen you need to create an excellent base, starting off with a great business plan. This will be your guiding document, outlining your business model, set-up structure, your mission and vision, marketing plans and a detailed financial plan which is totally essential for your new business.
Once your business plan is set, kick-off by registering with Jobsplus and get acquainted with the social security contribution payments as you will need to take care of this. Social security contribution payments should be settled every four months: April, August and December. A 15% rate is calculated on the yearly income for the previous year. For the first year of operations, the minimum contribution rate as per law will be applied.
The next steps are applying for a VAT number with the VAT department. At application stage, depending on the estimated sales figures and services you will offer, a specific VAT registration type will be applied. Once this is set, you will start receiving VAT returns which will need to be handled accordingly. This goes hand in hand with your new bookkeeping and accounting requirements, of which you will need to have an income statement or profit and loss statement drawn up. These will come in handy when it comes to taxes.
The net profit of the self-employment business activity will be considered as the taxable income. Such net income would need to be taxed at the individual tax rates. The declaration of the yearly income and the necessary tax will need to be stated and settled by the end of June of the following year through the income tax return form. Following the second full year of operations as a self-employed, one will start receiving a Provisional Tax (PT1) form from the Commissioner for Revenue (formerly Inland Revenue Department).
Embarking in a self-employed role in Malta can be extremely rewarding, but it could also bring along headaches from the administrative point of view in terms of financial planning, VAT, accounting and taxes. If you would like any sort of consultation on the best way forward or assistance with bookkeeping, VAT returns and tax returns, please do not hesitate to contact us.