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The Self-employed Guide to Malta: Tax, Sales and Expenses!

Most of us want to be our own bosses, and we all anticipate a life of independence and flexibility as a result of being freed from anyone telling you what to do and when to do it. It sounds like a dream to work as a freelancer in Malta; you can control your schedule according on your preference, and you may make money while lounging on the beach or having fun with friends.

However, if you don’t know how to handle the administrative (and tedious) side of your business, it may not be all sunshine and rainbows. You might end up spending a lot of money on fines and interest if you don’t set up your company correctly. To spare you time, we’ve compiled a list of things to think about before freelancing in Malta.

Let’s start from the beginning

The first thing you need to do is register your self-employment with Jobs Plus. You can do so by printing the ‘Self-employment engagement form’ which can be found here: https://jobsplus.gov.mt/resources/forms . Send a physical copy (don’t forget to keep a copy for yourself) to “Jobsplus Gozo Employment Records Unit Sir Arturo Mercieca Street Victoria Gozo VCT 2024” or send a scanned copy to hriuforms.jobsplus@gov.mt

 

Taxes

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 and file it along with your tax return.

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

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.

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

Sales and Expenses

When you make a sale to another VAT registered person, you must issue an invoice. You must issue an invoice every time you make a sale, even if the sales are continuous.

The invoice must have the following details;

  • Your Name, Address and VAT Number
  • Client’s Name, Address and VAT Number
  • Date of Sale
  • Price excluding VAT
  • VAT amount ( and %)
  • Total Price
  • (Optional): Your Bank Details & Contact number to encourage quicker payments

It is also extremely important to keep a copy of all your expenses receipts and sales invoices. These can be checked by authorities at any time should they need to clarify something. If you don’t have proof of something that you claimed you sold/bought you will get in trouble.

Make sure to negotiate payment terms, getting paid ASAP is always ideal, however this is not always the case. The ideal payment terms would be 60 days from date of sale. If you are freelancing on the internet, make sure to always create an account with your business name and use a secure payment gateway (such as Paypal) so that clients can safely pay without having any doubts. Also, if possible ask for upfront payment before starting work! This may seem like it is “asking too much” but freelancing is a business. If you do not protect yourself, who will?

Protect Yourself

Unfortunately, not every client will be the ideal client. You will deal with people who do not have good intentions, so you must always safeguard yourself as a freelancer in Malta. If your services go for a high price, and there is more at stake, ALWAYS sign a contract before starting the job. Make sure that you include what you will deliver, your price, your payment terms, and any responsibilities that you are not willing to take.

This would not make sense if you’re selling a product/service for €100, but if your services cost €5,000 and your client doesn’t want to pay in advance then it should really makes you think.

You can find many freelancers contracts online. Just be careful as some of them may not fit your business needs completely or the terms stated in the document might put you at risk should things go wrong with that client. You will need to make sure that all the freelancers contracts that you use comply with Maltese Law.

Don’t be afraid to stand up for yourself and your business! Protecting it is the number one thing on a freelancer’s agenda, always stay professional and play fair. This will ensure that even if things do go wrong in some point of time, chances

Advertise your business

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 freelance services 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 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

As you can see, freelancing in Malta is not as scary or complicated as it may seem. This guide covers the basics that every freelancer needs to know about tax, sales and expenses! If this article was helpful please share with your friends 🙂

Good luck on getting started freelancing!

If you are interested in knowing more tips and tricks on freelancing then follow our blog!

If you need professionals to help you set up your business, you can find plenty of reliable ones on Tminta!

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