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Building Your Construction Business in Malta – Complete Guide

The construction industry in Malta has been on a steady rise for the past decade. The construction sector is one of the fastest growing industries, and it’s expected to grow even more as people turn their attention towards improving their homes or investing in property development. With this said, construction workers are always needed to keep up with demand. Now that you’re considering building your construction business in Malta, we have put together a guide on what you need to do from the planning stages all the way through managing your daily tasks as an independent construction worker!

How much capital do you need to start?

Setting up in the construction industry can be quite costly at first. You need to purchase machinery, hire employees, and pay for construction materials.

However, you can start with a low budget of roughly €10,000 to buy basic construction tools such as cement mixers or drills. These construction tools can be used for both small and large construction projects.

If you do not have that capital available, you may borrow from a local bank or financial institution in Malta, although you would need to provide them with collateral such as an asset worth the same amount of money borrowed. Keep in mind that it’s harder to get approved for loans if your credit history is not desirable.

If you have a tight budget, you can also hire equipment at first. In the long run this is much more costly than actually buying it. But in the early days where you still have no revenue, it might be a viable solution to get the ball rolling.

Taxes, VAT and Registration

Before you start taking work and charging for it, you need to register as a self-employed with Jobsplus. You have to do this before you start working as a construction worker in Malta.

When you’re registered as freelancer in Malta, you must take care of your own NI and tax dues. Tax is paid on a yearly basis, when you receive your tax return you must include your profit and pay tax accordingly.

You can benefit from a preferential tax rate of 15% on the first €12,000 of profit earned if you work as part-time self-employed. However, to qualify for this tax rate you must:

  • Not engage more than 2 part-time employees
  •  Keep proper accounting records
  • Work with a company other than that with which you are employed on full-time basis.
  • Be registered for VAT if you sell more than €30,000 a year

Do not forget to fill in form TA22 (https://cfr.gov.mt/en/individuals/Documents/Others/ta22.pdf) and file it along with your tax returns.

If on the other hand you are a full-time self-employed, you must pay Provisional tax in advance in 3 settlements: 30th April (where you pay 20% of your total tax), 31st August (where you pay 30% of your total tax) and 21st December (where you pay 50% of your total tax). The total tax to be paid is calculated on the previous year’s income ( No Provisional tax is paid in the first year. If you believe that this year you will earn less than last year and want your total tax for the year to be reduced, you can fill in a PT Reduction Form. (https://cfr.gov.mt/en/inlandrevenue/corporatetax/Documents/PT%20Reduction%20Form.pdf)

You can calculate how much tax you’re going to pay based on the normal tax rates (https://cfr.gov.mt/en/rates/Pages/TaxRates/Tax-Rates-2021.aspx) :

VAT

You have to pay VAT on construction services in Malta.

If you are doing construction jobs for clients, they will most likely ask you to invoice them so that they can reclaim the tax back from the government – this is standard practice across all industries and not specific to construction workers only.

If you sell less than €30,000 a year, you are considered as VAT exempt, this means that you will not charge your customers any VAT on top of your prices. This also means that you can not claim VAT costs back.

If you do however qualify for VAT you must apply for a VAT Book and give a VAT receipt with every sale that you make (if the customer is not a business). If you are selling to businesses on the other hand, you would need to issue an invoice with 18% VAT included.

To register for VAT: https://cfr.gov.mt/en/eServices/Pages/Online-VAT-Registration.aspx

What License should a construction worker have?

To be self employed in construction work, you will need to apply for a construction licence. The construction licensing body on Malta are called BCA (Building & Construction Authority). The construction licence is needed in order to legally operate construction activities. These construction activities will include the following:

–  Prefabrication or fabrication of any building elements which are made offsite, including but not limited to precast concrete, metal works and wooden window frames

– Installation of structural systems such as steel reinforcement bars (rebars), concrete construction elements, and/or building insulation

– Installation of construction systems such as carpentry work (including installation of precast stairs) or electrical wiring in buildings.

For more detailed information, make sure to visit the BCA website and contact them to make sure that everything is in line.

Staying competitive in the construction industry

The construction industry in Malta has grown into a massive one, with many people offering the service. Therefore you can expect great competition, but at the same time, construction is a business with high turnover and low margins. If you have limited capital for your construction business in Malta, then we would recommend starting off small – don’t start with big projects immediately as this might lead to problems later on as you will not be able to handle them efficiently as a new company.

One way of getting ahead of your competition is by offering a better service at a lower price, which can be done by having your construction business in Malta work harder and smarter. For example – working smart would mean using technology to streamline the construction process from start to finish. Utilizing mobile apps for managing time sheets or project schedules will help you remain organized and avoid losing time, and as we all know in every business; time is money.

Offering a lower price is not always easy as you need to make a good profit margin to stay afloat. In this case, it is important to cut costs and expenses wherever possible. You can start off by buying construction equipment that serves your needs and nothing more; something like an SUV for transporting construction materials will probably cost you less than a van and yet serve the same purpose.

Promoting construction in Malta

The first challenge you’ll find is how to make people aware of your services so that you start getting calls and requests for your work. Tminta provides a quick and easy way to promote your services of construction in Malta. Our platform connects potential customers with our large network of freelancers and self employed in Malta such as yourself.

Here’s how it works:

– You set up a profile and upload all relevant information about your construction services. Including photos of your work and a detailed description of what type of services you offer helps your profile become more trustworthy.

– Potential Clients in need of a construction professional find you directly on our platform.

Conclusion

The construction industry is expected to grow even more in the coming years, meaning that business opportunities are plentiful! You just need to get started and start building your construction business in Malta today.

Check out this blog if you want to learn more about becoming self-employed in Malta

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