Malta has one of the fastest growing economies in Europe, according to figures from the European Union. And this trend is set to continue over the next three years at least.

Family-owned businesses, big and small, have no small part to play in this.

According to a 2022 survey conducted by the Malta Chamber of Commerce, Enterprise and Industry, it was estimated that family-owned enterprises constitute approximately 75 per cent of businesses in Malta. In February 2024, another survey raised concerns about the challenges these businesses are facing.

The Family Business Survey, conducted by EMCS Advisory in collaboration with The Malta Chamber, found that most family businesses spend most of their time on day-to-day business and operations and too little time on strategy and creating future-proof infrastructure, a trend that often leads to their decline.

And this is where the Family Business Office (FBO) comes in.

The FBO is there to help family businesses tackle these difficulties and find sound, practical and responsible ways in paving a way ahead.

As Regulator, Joe Gerada is keen to highlight a core element within family businesses that is vital to understand before anything else. “Family businesses are predominantly made of family members. And that means that relationships go beyond work relationships. That is a strength and a challenge,” he explains.

So, while family members often work together and cover responsibilities for one another, introducing ideas like standardising operations, questioning the value of “hard graft”, or discussion succession can be difficult and create problems in the long term.

Dr Gerada has seen this trend play out firsthand. “I’ve heard the story so many times from children of business owners who will say about their mother: ‘she’s always been involved in the family business. She worked so hard that we barely had time to enjoy each other's company, travel.’ What happens eventually? Parents themselves will tell their children to do something else. They’ll say, ‘You don't want to live the life I lived. I barely enjoyed my family. Study and find another career.’ But does it always have to be like that? No.”

Support is available in various shapes and sizes.

Through the Skills Development Scheme, businesses can access training for their owners and employees to improve their processes, learn new approaches and how to apply them, and keep their enterprise thriving.

Separate from the scheme, the FBO also has plans to roll out a number of workshops, in collaboration with the Chamber of Commerce, for its registered members.

Advisory support is there for those that want guidance on establishing infrastructure within the business via governance and how to make sure the business survives in the long term. Through the Family Business Grant Scheme, businesses can get up to €20,000 over three years to cover 50 per cent of advisory fees, up to €2,500 per project, as well as mediation services (up to 25 hours at €100/hour).

“It’s very helpful for family-run businesses to have an external voice involved in these conversations. It gives perspective and keeps things more objective,” Dr Gerada notes.

For those passing the baton, there is a Business Transfer incentive allowing parents to pass their business on to their children with a special one-year window where stamp duty drops from five per cent to 1.5 per cent.

Through the Immovable Property scheme, property or land used by the family business can also be passed on. The first €500,000 of the property’s value gets a reduced rate of duty: €3.50 for every €100.

For those transferring shares or interests in a partnership, trust, or foundation, the first €150,000 isn’t counted when calculating duty.

These schemes go to the heart of issues Maltese family businesses have been facing for decades, particularly those related to the business transfer. “We’ve seen many situations where new generations coming into the family business found it very, very difficult to do so because it would simply be too expensive to do so. This situation was creating a scenario where family businesses were not being transferred. They were getting stuck,” Dr Gerada explains.

The success of this work is already being seen and felt, says Dr Gerada. Immediately, upon its establishment and its schemes, the FBO received 120 registrations, a number that continues to rise year on year, now standing at 379 at the time of writing.

“It was a big help. It was like these family businesses were literally waiting for this incentive to be introduced so that they would transfer their business,” recalls Dr Gerada.

Among those registered businesses is furniture supplier Invicta Ltd. Following his service in the Royal Air Force during World War II, Publius Farrugia established the business in 1947. His niche was in the production of decorative metal fittings, specifically the ones found on traditional Maltese yellow buses. These crafted items became synonymous with Maltese daily life.

In 1954, there was a giant leap in the business with the introduction of ‘Chrome Tubular Furniture’, a move that expanded its product range to include furniture for homes, hospitals, cafeterias, and offices. Thus, the company became one of the most renowned furniture manufacturers in Malta and realised Mr Farrugia’s vision of modern furniture production.

Fast forward another forty years and a rapid decline in the viability of manufacturing, eventually led to a pivotal decision. The company shifted its strategy once more, transitioning from manufacturing to importing knocked-down furniture from a reputable European supplier.

Today, Invicta is run by the third generation of the founding family, with Alfred Farrugia as Chairman and Clive Farrugia, Mark Farrugia and Brian Farrugia as Directors. They tapped into the Micro Invest scheme which allows businesses to benefit from tax credits of up to €70,000 spread over three years to support small investments. In 2024 alone, according to figures provided by the FBO, 101 family businesses benefited from Micro Invest, receiving a total of over €2 million in tax credits. “It helped us to improve our operations for the best from various angles like financially and increase in products and stock,” the Farrugias share.

With the right support businesses can develop, change shape and continue growing.

And this support isn’t limited to Malta. Gozo’s family businesses make up an even bigger share of the island’s economy, and their needs are unique.

“Per capita, Gozo actually has more family businesses than Malta,” Dr Gerada notes. “And many of them are the custodians of traditions that are part of our culture. Whether it’s food products or textile work, these skills survived because they were passed down through generations in family businesses.”

Some of these enterprises are tiny micro-operations. Others have grown into fully fledged companies that now represent a significant portion of Malta’s food manufacturing sector. What binds them is resilience. “Sometimes producing something like tomato sauce abroad would cost a fraction of what it costs here,” Dr Gerada says. “But because it’s part of their legacy, these families found ways to keep production going. That sense of responsibility to heritage is very strong in Gozo.”

This blend of tradition, legacy and long-term thinking will take centre stage at the Family Business Forum in Gozo on 27^th November.

 “We want to acknowledge the contribution these businesses make to the ecosystem – and show them we’re here to support them,” Dr Gerada explains.

The Forum is being organised in collaboration with the Ministry for Gozo and will bring together family businesses, advisors, service providers and sector professionals. But above all, it’s designed to help businesses learn from one another.

“Family businesses need to talk to each and listen to each other,” Dr Gerada laughs. “Hearing the experiences of others who have faced the same challenges; that’s when things really click. And that’s what we’re trying to facilitate with the Family Business Forum in Gozo.”

With the Family Business Office behind them, and the space to exchange real stories and ideas, Malta and Gozo’s family businesses can continue to evolve, modernise and pass their legacy to the next generation.

Register for the Family Business Forum Gozo, here: https://familybusiness.org.mt/events/family-business-forum-gozo-2025/ 

For more information, visit: https://familybusiness.org.mt/incentives/