Malta's Finance And Insurance Sector: An Analysis

Papilio Services Limited


Papilio Services Limited, established in 2012, is based in Malta with sister companies in the Netherlands and the Czech Republic. The firm boasts a multinational team and a diverse client base, providing cross-border solutions in Corporate, Tax Compliance, and Residency services on a global scale.
Malta's finance and insurance sector, while smaller in absolute size, has a notable impact on the European Union (EU) landscape. The sector directly generated 19% of the total value-added to the Maltese economy in 2019.
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Malta's finance and insurance sector, while smaller in absolute size, has a notable impact on the European Union (EU) landscape. The sector directly generated 19% of the total value-added to the Maltese economy in 2019. This substantial figure is indicative of the sector's role in driving economic growth and stability and the contribution extends beyond direct financial metrics, influencing various aspects of the economy through job creation, investment, and enhanced productivity. Here are some key insights:

Economic Contribution

The finance and insurance sector in Malta is a substantial contributor to the nation's GDP, accounting for approximately 11% of the total economic output. This contribution is notably high compared to other EU countries, highlighting the sector's importance in the national economy. The banking sector remains strong, with a notable increase in total deposits and loans. The insurance sector also reported growth, with an increase in gross written premiums by 8% in 2023. According to the latest data, Malta's financial services industry experienced significant growth, with the funds industry recording the largest percentage increase in Europe in 2023. The total assets under management increased by 12%, reflecting the sector's robust performance and the continued influx of international financial institutions. These institutions benefit from Malta's competitive tax regimes and well-developed financial infrastructure, enhancing the sector's growth and global competitiveness.

Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is an important component of the insurance and financial industries in Malta. Due to their contribution to economic output, employment, and revenue, foreign-owned entities are essential to this industry. Malta's favourable regulatory environment, competitive tax regime, and strong legal framework, which make it a desirable location for global financial services corporations, contribute to the sector's capacity to draw FDI. Malta's financial sector is more specialised than those of other larger EU economies. Malta is a prominent location for fintech and insurance innovations since it excels at fostering an environment that supports small businesses and specialised financial services, even though the larger EU economies have higher absolute values in terms of revenue and employment.

Malta's competitive tax system, along with an extensive network of over 80 signed Double Taxation Agreements, the swift incorporation procedure, and the English-speaking educated workforce create a highly profitable business environment for international companies looking to register a company in Malta.

Regulatory Environment

Malta's financial regulatory environment is considered one of the most advanced and transparent in the EU. The Malta Financial Services Authority (MFSA) oversees the sector, ensuring compliance with both local and international standards. Recent initiatives by the MFSA include the introduction of regulatory frameworks for emerging sectors such as fintech and blockchain, further enhancing Malta's appeal as a financial hub. The recent publication of Malta's 2023 National Risk Assessment (NRA) indicates improvements in mitigating money laundering and terrorist financing risks, with a decrease in the residual risk across most financial sectors. These measures underscore Malta's commitment to maintaining a secure and compliant financial environment, which is crucial for sustaining investor confidence and sector growth.

Value Added Contribution

In 2021, Malta's finance and insurance sector contributed significantly to the national economy. It generated a substantial portion of value-added, particularly from small and medium enterprises (SMEs). According to the recent Eurostat report SMEs in Malta's financial sector accounted for 74.8% of the sector's value-added, on par with the Netherlands, and significantly above the EU average of 44.5%.

Enterprise Size Distribution

Large enterprises dominate the finance and insurance sector across the EU, however Malta shows a high reliance on micro-enterprises. SMEs in Malta's finance and insurance sector generated 74.8% of the value added, and the micro enterprises (employing fewer than 10 persons) generated 39.9% of the sector's value added in Malta, one of the highest proportions in the EU as noted by Eurostat. Malta, along with Luxembourg and the Netherlands, is highly specialised in financial services activities. The presence of a highly specialised workforce and advanced financial infrastructure further enhances Malta's competitiveness and reflects Malta's supportive environment for small businesses and startups in the financial sector.


Employment in Malta's finance and insurance sector is substantial relative to its total business economy. The sector employs a notable percentage of the national workforce compared to many other EU countries. Eurostat report states that Luxembourg leads the EU with 12.1% of its workforce employed in this sector, while Malta comes in fourth with 5%, highlighting its role as a significant employer in the finance and insurance domain, sitting ahead of Denmark, France and the Netherlands. Important to note that these jobs are not only numerous but also high-paying, contributing to an overall higher standard of living for those employed in the sector. The labour productivity in finance and insurance entities is significantly higher than the national average, which indicates a more efficient and effective workforce. The sector's ability to provide stable and lucrative employment opportunities is a significant benefit to the Maltese economy.

Environmental Impact

Interestingly, the finance and insurance sector in Malta has a relatively low carbon and physical footprint compared to other sectors. This is due to the nature of the services provided, which require less physical space and have lower energy consumption. This makes the sector an environmentally sustainable option for economic development, aligning with global trends towards greener economies.

Future Prospects

Looking forward, the sector is poised to continue its growth trajectory. Initiatives like the Digital Operational Resilience Act (DORA) and other regulatory frameworks are set to further bolster the sector's resilience and innovation. With the continued emphasis on fintech, insurance, and reinsurance, coupled with Malta's strategic location and business-friendly environment, and the ongoing regulatory improvements for a favourable business environment, Malta is well-positioned to maintain its status as a leading financial hub in the EU.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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