Applying for a trading licence or submitting a notification to the Trade Licensing Unit (the “TLU”) is a fairly straightforward process and the applicable fees are not prohibitive.
This brief article sets out general information on the rules applicable under both:
- the Trading Licences Act (Chapter 441) (the “TLA”); and
- the Trading Licences Regulations (Subsidiary Legislation 441.07) (the “TLR”).
A. The General Rule under the TLA
The general rule laid down in the TLA is that “[n]o commercial activity shall be carried out in Malta without a licence from the regulatory authority”1. The TLU within the Commerce Department in Malta is the responsible regulatory authority2 and has such powers as established in the TLA and the TLR.
These laws are widely relevant due to their broad scope which results from the definition of commercial activity in the TLA. Indeed, “commercial activity” means the exercise of any trading or economic activity including the sale3 of goods, and the provision of any services as may be prescribed, irrespective of whether such commercial activity is exercised from commercial premises or otherwise, but shall not include any commercial activity regulated under any other law.4 The First Schedule of the TLR also lists several commercial activities some of which cast a very wide net, including a generic category listed as “[o]ther professional and business activities not elsewhere classified”. Furthermore, there is a presumption that a commercial activity is being carried out where it consists of the provision of services from any premises, unless such activity constitutes the exercise of a profession by an individual who, under the provisions of any other law, requires a warrant to exercise such profession and provided that the premises are not also used for the exercise of any other commercial activity.
At times, such as when the activity is essentially an online activity, the question arises as to whether the commercial activity is actually being conducted “in” Malta. In such cases it is often useful to look at what the activity consists of, where the base of operations or resources of the business are situated and whether Maltese consumers are being targeted. In such cases it might also be useful to look at the manner in which this question is dealt with under other regulatory legislation such as in the investment services sector where often a distinction arises between services provided “in” Malta or “from” Malta. The reference to “from Malta” would imply a physical establishment in Malta and the offering of the proposed activities from Malta. On the other hand, the reference to “in Malta” would cover a situation where the proposed activities are provided to Maltese clients in Malta but are provided from a place outside of Malta. One assumes that in both these cases the requirements under the TLA and the TLR kick in.
It is recommended that any ambiguity as to whether an activity is a “commercial activity” and/or whether it is being carried out “in” Malta for the purposes of the TLA should be verified and discussed with the Trade Services Directorate at the Commerce Department.
B. Exemptions to the General Rule
The TLA and the TLR provide that a trading licence is not required in a number of scenarios. In particular, unless otherwise provided by or under the TLA, the provisions of the TLA shall not apply in relation to any commercial premises licenced, or commercial activity regulated, under any other law.5 In any such case, no further licence or regulation shall be required under the TLA.6
The following are but two of the exempted scenarios:
- where a person wishes to carry out a commercial activity in Malta on a non-permanent and occasional basis7; and
- where a commercial activity constitutes the exercise of a profession by an individual who, under the provisions of any other law, requires a warrant to exercise such profession and provided that the premises are not also used for the exercise of any other commercial activity.8
Furthermore, the nature of the commercial activity may only necessitate a permit from the relevant local council or the Commissioner of Police or both, rather than a licence under the TLA.
Other exemptions apply in certain specific cases.
C. Distinction between Notifications and Licensing Applications
The TLR distinguishes between:
(a) a commercial activity listed under Part I of the First Schedule to the TLR (“Part I”); and
(b) a commercial activity listed under Part II of the First Schedule to the TLR (“Part II”).
A person who wishes to carry out a commercial activity listed under Part I is required to submit an application for a trading licence with the TLU.9 The applicant must not commence the commercial activity before a formal licence is issued by the TLU.10
On the other hand, a person who wishes to carry out or is carrying out a commercial activity listed under Part II is required to submit a notification to the TLU within 30 days from the “commencement date of the commercial activity”.11 Once the notification is submitted to the TLU as described above, the person is deemed to be licenced.12
D. Application and Notification Procedures
An application or notification submitted to the TLU inter alia requires:
(a) the name and address of the applicant who shall be carrying out the commercial activity;
(b) proof of identification of the applicant;
(c) in the case of a legal entity, its name, country of incorporation and registration number;
(d) the Value Added Tax registration number where its issue is not exempted by law;
(e) the nature of the commercial activity that is intended to be carried out as set out in Part I or Part II; and
(f) certain details where the commercial activity is to be carried out from commercial premises.13
Further requirements are set out where the application or notification is submitted by a legal person.14 It is also essential to note that where the commercial activity is to be carried out from commercial premises, the owner or the person holding title of the said premises must be in possession of the relevant permit/s issued by the Malta Environment and Planning Authority.15
E. Other Information
Upon receipt of an application or notification form, the TLU must acknowledge receipt without delay.
As regards applications for licences, within 10 days of receipt of the application, the TLU must either request further information from the applicant, accept the application and grant a licence, or refuse the application. The 10 day period is extendable to a further period of 10 days provided that the extension and the reasons for it are notified to the applicant without delay.16 Appeal processes are available to applicants before the Licensing Appeals Board.17
As regards notifications, where the information or notification is incomplete, the TLU must request the required information or documentation without delay and the notification will not be considered to have been made until the complete form, information and documentation is received by the TLU.
It is also worth noting that a change in the commercial activity carried out from the commercial premises is notifiable to the TLU or requires re-application depending on the type of change.18
Any person who contravenes any of the provisions of the TLA or the TLR is guilty of an offence and, on conviction, liable to the penalties established therein.
It is essential for all of the rules discussed above to be borne in mind when carrying out commercial activities in Malta.
1 Article 10(1), TLA.
2 Regulation 4, TLR.
3 The definition of “sale” found in the TLA is also wide since it extends to any exchange or transfer in solidum.
4 Article 2, TLA. In this context, “commercial premises” includes any shop, showroom, stall, store, or any other premises from where any commercial activity is carried on; and includes any enclosed area within which commercial fairs are held and includes also any other premises as may be prescribed from which any service may be provided.
5 Article 4, TLA.
7 Article 11, TLA.
8 Regulation 3(1), TLR.
9 Regulation 5(4), TLR.
11 Regulation 5(5), TLR. In this context, the “commencement date of the commercial activity” means, in the case of a manufacturing activity, the first day of production; in the case of a wholesale and/or retail activity the day when the first sale is made; and in the case of provision of services, the day when the first service for a charge is provided.
12 Regulation 5(6), TLR.
13 Regulation 7(1), TLR. See also Regulations 6 and 7(2) – (9), TLR for full details.
14 Regulation 7(4) and (5), TLR.
15 Regulation 6(4), TLR.
16 Regulations 8 and 9, TLR.
17 See Articles 5 – 9, TLA and Regulations 40 – 49, TLR.
18 Regulations 14 and 15, TLR.
Disclaimer: This article is not intended to impart advice and readers are asked to seek verification of statements made before acting on them.