Supporting Your Business Through Every Step of the Audit

Statutory audits are essential for maintaining transparency, credibility, and compliance. In Malta, audited financial statements must be filed with the Malta Business Registry (MBR) within strict deadlines. Depending on the nature and size of your business, which thresholds we outline here, your accounts must be prepared under the applicable accounting standard, being either the General Accounting Principles for SMEs (GAPSME) or the International Financial Reporting Standards (IFRSs) as adopted by the EU.

Audits are not just about ticking boxes; they are about proving that your business is well governed, financially accurate, and aligned with its regulatory duties. A properly conducted audit provides independent assurance to your stakeholders that a company’s financial statements give a true and fair view of its financial position and performance. Poor preparation or missed deadlines can lead to penalties, reputational damage, or delays in other filings, such as tax submissions or corporate restructuring.

Annual accounts must be approved within 10 months of the financial year-end and filed with the Malta Business Registry within 10 months and 42 days. Timelines vary depending on the company’s incorporation date, financial periods exceeding twelve months that may arise following a change in year-end and licensed or public interest entities.

A company may, by giving notice in the prescribed form to the Registrar, specify a date in the calendar year as its accounting reference date.

• This notice must be given within nine months of the company’s registration.
• If no notice is given, the company’s accounting reference date will automatically be 31st December.

A company’s first accounting reference period: 

• Begins on the date of its registration; and
• Ends on its accounting reference date; and
• Must be at least six months and not more than eighteen months long.

Each following accounting reference period will last twelve months, ending on the accounting reference date for each year.

The directors of a parent company must ensure that, unless there are valid reasons otherwise, the accounting periods of all its subsidiary undertakings coincide with the parent company’s accounting period.

At A2CO, we monitor all relevant timelines and ensure your audit is completed well in advance of these deadlines.

Micro Entity

To qualify as a Micro Entity, a company must not exceed two out of three of the following criteria:

• Total assets of €46,600 or less
• Turnover of €93,000 or less
• Two employees or fewer

Key points:

• May use simplified financial statements under GAPSME.
• May qualify for the Audit Exemption Rules 2025, if thresholds are met for two consecutive years.
• Must still file unaudited financial statements with the Malta Business Registry (MBR).

Exemptions when submitting financial statements:

• Director’s report may be excluded.
• Profit and Loss statement may be excluded for small private exempt companies.
• Auditor’s report may be excluded.

Small Entity

A company qualifies as a Small Entity if it does not exceed two out of three of the following:

• Total assets of €4 million or less
• Turnover of €8 million or less
• 50 employees or fewer

Key points:

• Can prepare financial statements under GAPSME (default) or IFRS.

Exemptions when submitting financial statements:

• Director’s report may be excluded.
• Profit and Loss statement may be excluded for small private exempt companies.

Medium Entity

A company qualifies as a Medium Entity if it does not exceed two out of three of the following:

• Total assets up to €20 million
• Turnover up to €40 million
• 250 employees or fewer

Key points:

• Can prepare financial statements under GAPSME (default) or IFRS.

Large Entity

A company is considered a Large Entity if it:

• Exceeds the Medium Entity thresholds, or
• Forms part of a group structure requiring consolidation.

Key points:

• Must prepare financial statements under IFRS.

Note: Certain regulated entities, such as those licensed by the Malta Gaming Authority (MGA) or regulated by the Malta Financial Services Authority (MFSA), are required to prepare accounts in full compliance with IFRS.

The Companies Act offers certain exemptions for certain entities, however, this is typically overridden by tax legislation, meaning most companies must still prepare audited accounts to submit their tax return.

Newly-incorporated companies (Start-up relief)

For accounting periods commencing on or after 1 January 2024, Rule 6 under Legal Notice 139 of 2025, offers a waiver of the statutory audit requirement for new companies, provided that certain conditions are met. 

The main conditions are:

1. The company is newly incorporated (and the relief applies to the first two accounting periods).
2. The shareholders are individuals (i.e., no corporate shareholders) and they hold educational qualifications at MQF Level 3 or higher (or equivalent) recognised by the Maltese Qualifications Recognition Information Centre.
3. The company must be established within three years of the individuals obtaining their MQF Level 3+ qualification.
4. The company’s annual turnover must not exceed €80,000 (or a pro-rata amount if the first accounting period is shorter than 12 months).

If all these are satisfied, then the company can avail of the below: 

With the MBR: 

• Unaudited annual accounts can be submitted, availing from the auditor’s report exemption mentioned above 

With the MTCA: 

• Micro entity thresholds 3 out of 3 criterias satisfied – the company qualifies for audit exemption for the first two accounting periods, and the Tax Return can be submitted on unaudited accounts. 
• Micro entity thresholds 2 out of 3 criterias satisfied – the company qualifies for audit exemption for the first two accounting periods, however the company will need to carry out a review engagement on the accounts in line with ISRE 2400 (Revised) in order to submit the Tax Return.

If the company is not newly incorporated and satisfies the Micro Entity thresholds, it may still avail from the above exemption with MTCA.

Should the company not avail itself from the audit report waiver, it may claim a deduction against its income of one hundred and twenty per cent (120%) of the costs incurred for such auditors report. This deduction is capped at €700 per accounting period. 

The exemption should cease with immediate effect should there be a change in shareholding, resulting in individuals  who  have  not all attained  the  educational  qualifications mentioned above. 

If the company exceeds the Micro entity thresholds, then the exemption cannot be availed. 

Micro Entity 

If a company satisfies at least two out of the three criteria under the micro entity thresholds, it may omit the auditor’s report from its submission to the Malta Business Registry (MBR).

Shipping Companies registered under the Merchant Shipping Act

If a company is registered under the Merchant Shipping Act and does not exceed the following threshold, the company will be considered as a small entity and is exempted from carrying statutory audits, therefore availing itself from submitting the reports thereunder:

Small Entity

A company qualifies as a Small Entity if it does not exceed two out of three of the following criteria:

• Total assets of €6 million or less
• Turnover of €12 million or less
• 50 employees or fewer

Exemptions when submitting financial statements to the Malta Business Registry:

• The Director’s report may be excluded.
• The Auditor’s report may be excluded.