Reduced Audit Requirements in Malta from 1 January 2025

Recent regulatory changes in Malta have introduced simplified audit obligations for certain companies. The new rules aim to reduce administrative costs and compliance burdens for smaller businesses and start-ups while maintaining appropriate financial oversight.

The new framework introduces two main forms of relief:

• Temporary audit exemptions for newly formed companies

• Simplified financial review requirements for micro-entities

These updates apply to accounting periods starting on or after 1 January 2025.

Audit Exemption for New Start-ups

One of the most notable updates is the possibility for certain newly incorporated companies in Malta to avoid mandatory audits during their initial years. Eligible start-ups may be exempt from including an auditor’s report in their financial statements for their first two accounting periods, provided they satisfy specific requirements.

To qualify for this exemption:

• Annual turnover must not exceed €80,000

• The shareholders must be individuals holding a qualification at MQF Level 3 or higher

• The company must be established within three years of obtaining that qualification

  
  

This initiative is intended to support entrepreneurs and new businesses by lowering compliance costs during the early phases of operation.

If the company chooses to carry out an audit despite being eligible for the waiver, it may benefit from a tax deduction equal to 120% of the audit cost, capped at €700 per accounting period, for the first two years.

Reduced Audit Requirements for Small Companies

In addition to start-up relief, the rules introduce simplified reporting obligations for companies that qualify as micro-entities or small businesses.

A company is considered a micro-entity if it does not exceed two of the following thresholds:

• Turnover: €93,000 or less

• Total assets: €46,600 or less

• Average number of employees: 2 or fewer

  
  

Companies that meet these conditions are not required to undergo a full statutory audit.

Instead, the requirement can be satisfied through a review engagement report, which provides a limited assurance review of the financial statements rather than a full audit.

What This Means for Businesses

The revised framework reflects Malta’s efforts to make its corporate environment more accessible for smaller businesses and start-ups. By reducing mandatory audit requirements for qualifying companies, businesses can:

• Lower compliance and professional service costs

• Reduce administrative workload

• Allocate resources more efficiently toward growth and operations

  
  

At the same time, the system maintains oversight through review engagements or audits when companies grow beyond the defined thresholds.

Final Thoughts

The introduction of reduced audit requirements marks a significant step toward simplifying corporate compliance in Malta. These changes particularly benefit start-ups and small companies that often face disproportionate regulatory costs in their early years.

Businesses should still assess their eligibility carefully and consider seeking professional advice to determine whether they qualify for the new exemptions and how best to take advantage of them.