Malta's Financial Institutions: A Deeper Look

Malta's Strengths & Opportunities

Malta has solidified its position as a top-performing nation in the financial sector, thanks to a thriving economy and a strategically advantageous standing within the European Union (EU).


Malta’s Financial Landscape 

Renowned for its advanced telecommunications infrastructure, highly skilled IT workforce, and a welcoming regulatory environment for digital financial services, Malta has been propelled to the forefront of global recognition, highlighting the unique elements that contribute to its sustained success. 

The Regulatory Environment 

Within Malta’s regulatory framework, licensed financial institutions enjoy the flexibility to engage in diverse activities, ranging from acting as payment service providers (payment institutions) to issuing electronic money (electronic money institutions). These institutions may offer various services including foreign exchange, data storage, and operating payment systems. 

The Malta Financial Services Authority (the “MFSA”) is the regulatory authority overseeing financial institutions and it stands out for its commitment to transparency and adherence to international standards. The result of this commitment was highlighted in its 2022 Annual Report whereby the value provided to the Maltese economy by the financial services industry increased to €1.1 billion, a marked increase of 4.3% from the previous year.

Recognising the advantages of a thriving financial sector, the Malta Chamber of Commerce understands the benefit of a growing financial sector and has taken the initiative to sign agreements with multiple financial institutions for the purpose of collaborating closely and improving the sector for all stakeholders.

The Licensing Process

The licensing process is a testament to Malta’s efficiency, with the MFSA ensuring that only institutions with a strong financial standing and stringent compliance measures secure licenses. This streamlined approach facilitates the sourcing of funds from various channels, including the interbank market, credit institutions, and professional market entities like institutional investors and insurance companies.

The licensing process starts by submitting a high-level presentation to the MFSA. The primary objective is for the MFSA to provide guidance to the prospective applicant and to identify potential issues that could hinder the overall effectiveness and efficiency of the submission of the application. Additionally, the MFSA may arrange a meeting with the applicant in order to further discuss and clarify any aspects of the proposed financial institution. Once this stage has been completed, the formal application is to be submitted and the MFSA will proceed with the review process. Finally, approval is granted to financial institutions, subject to any post-licensing requirements that the MFSA may impose. 

The specific duration of the licensing process is contingent upon the type of authorisation sought by the applicant and may vary based on the complexity of the information provided in the application.

Why Malta?
  • Passporting Benefits  

Securing a license in Malta provides a significant advantage, enabling financial institutions to passport their financial services within the EU. 

European financial institutions intending to provide payment services, issue electronic money, establish a branch, or engage an agent or distributor in Malta can communicate their intentions to their regulatory authority and undergo assessment by the MFSA. Similarly, it is equally enticing for Maltese financial institutions to operate in other EU states. The transparent communication required among European financial institutions, regulatory authorities, and the MFSA further enhances the regulatory oversight and cooperation framework, making the process of securing a license in Malta particularly favourable for those seeking to operate internationally within the European market.

  • Diverse and Multilingual Workforce

Central to Malta's economic success is its diverse and highly skilled workforce, proficient in multiple languages. This talent pool is a driving force for companies navigating the complexities of global markets. The commitment to cultivating a diverse workforce enhances Malta's appeal, ensuring effective communication and understanding in an international business environment.

  • Finance Innovation & Telecommunication Infrastructure

Malta's financial sector is not only characterised by robust regulatory frameworks but also by a commitment to fintech innovation and cutting-edge telecommunications infrastructure. The country actively promotes the integration of emerging technologies, fostering an environment conducive to financial innovation. The implementation of blockchain and distributed ledger technologies, coupled with the adoption of fintech solutions, has positioned Malta as a forward-looking hub in the financial services domain. Moreover, telecommunications infrastructure, known for its reliability and high-speed connectivity, provides a solid foundation for the seamless operation of digital financial services, further contributing to Malta's appeal.

Between 2022 and 2023, Maltese telecommunications companies have cumulatively committed €90 million to enhance their networks and service offerings to both corporate entities and the general public.

  • Global Recognition and Unique Elements

Malta's ability to balance innovation with regulatory diligence, coupled with its advantageous geographical and economic position, reinforces its standing as a globally recognised and respected player in the financial sector.

Malta's appeal as a jurisdiction for businesses seeking financial institution authorisation is further underscored by its favourable corporate income tax regime. The country has approximately 70 double taxation treaties in place, offering significant advantages for business looking to reduce their tax liabilities and avoid double taxation on international income. For this reason, Malta boasts an effective corporate tax rate of 5% if the company is owned by a non-resident or a resident without domicile in Malta.

This advantageous tax framework, combined with Malta's other strengths in the financial sector, positions the nation as an appealing hub for corporations looking to establish a tax-efficient and financially resilient presence in Europe.

  • Strategic Location

Malta's central Mediterranean location offers excellent connectivity to continental Europe through various sea and air routes. With a well-established IT infrastructure, conducting business across Europe becomes seamlessly convenient. Additionally, Malta's advantageous climate, boasting 300 sunny days annually, adds to the overall appeal of this business-friendly destination.

Future Outlook 

Looking ahead, Malta's financial sector is poised for even greater heights, fuelled by strategic initiatives and forward-thinking policies set in motion by the Malta Financial Services Advisory Council (the “MFSAC”). As part of an extensive strategy unveiled by the government, the MFSAC has meticulously identified 175 initiatives aimed at bolstering the financial services sector. The MFSAC is now actively prioritising these initiatives, with a focused aim of achieving tangible results within an ambitious 18-month timeframe, concluding on 31 December 2024.

The concerted efforts of the MFSAC underscore Malta's commitment to sustained growth, innovation, and adaptability in the rapidly evolving financial sector. 

How BDO Malta Can Help?

At BDO Malta, we offer invaluable expertise to financial institutions navigating the entire licensing process in Malta. Serving as your dedicated point of contact and trusted advisor, we offer invaluable expertise from inception to completion. Our specialised advisory services are designed to streamline the complexities inherent in the licensing process, ensuring seamless compliance with local regulations and the successful establishment of your entity within Malta's dynamic financial landscape.

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