Taxation in Malta
Taxation in Malta offers one of the most competitive and investor-friendly environments in the European Union. The island nation has built a reputation for transparent administration, moderate rates, and flexible residency rules that attract entrepreneurs, retirees, and international professionals. Malta’s tax framework is based on the concepts of residence and domicile, meaning that not everyone living in Malta pays tax on worldwide income. Instead, individuals are taxed primarily on income generated or remitted to Malta, creating opportunities for legitimate tax optimization.
Overview of the Maltese tax system
Taxation in Malta relies on three key principles: residence, domicile, and source of income. Residents are those who spend more than 183 days a year in Malta, while domicile is determined by long-term intention to live permanently on the island. Individuals who are resident but not domiciled in Malta are taxed only on Maltese-source income and on foreign income that is remitted (brought) into Malta. Foreign capital gains remain entirely exempt even if remitted.
This remittance-basis system is one of Malta’s biggest advantages for expatriates, allowing efficient structuring of global income. Corporate taxation also follows a unique system where companies pay 35% income tax but shareholders may claim a refund of up to 6/7 of the tax paid, reducing the effective rate to 5%–10%. VAT and property-related taxes are moderate compared with other EU states, while Malta maintains no wealth, inheritance, or gift taxes.
Double taxation treaties with over 70 countries, including the United States, Canada, and the United Kingdom, ensure that foreign investors avoid double taxation. The overall structure combines EU compliance with genuine flexibility for global residents.
Personal income tax in Malta
Individual income tax in Malta is progressive, with rates varying between 0% and 35%. The system differentiates between single, married, and parent computations, each offering distinct thresholds. Non-residents are taxed separately under a flat scale. Below is an overview of current income brackets for residents.
| Taxable Income (EUR) | Rate | Tax on Bracket |
| 0 – 9,100 | 0% | Exempt |
| 9,101 – 14,500 | 15% | €810 + 15% over €9,100 |
| 14,501 – 19,500 | 25% | €1,725 + 25% over €14,500 |
| Over 19,501 | 35% | €3,975 + 35% over €19,500 |
For married couples and parents, thresholds increase, reducing effective tax for families. Non-residents face slightly higher rates, but only on Malta-source income. Employment income is subject to social security contributions: employees pay 10%, employers contribute 10%, and self-employed persons pay 15% on profits up to a capped amount.
- Tax year: calendar year (January–December)
- Tax returns: filed by 30 June of the following year
- Advance payments: quarterly provisional tax for self-employed individuals
Deductions are available for life insurance, education fees, private health insurance, and rental payments under the “Private Rent Deduction Scheme.” Moreover, Taxation in Malta encourages foreign professionals by offering reduced rates through the Highly Qualified Persons Rules (15% flat rate for eligible employment in finance, aviation, gaming, and blockchain sectors).
Corporate taxation and refund system
Malta operates a full imputation system under which corporate profits are taxed at 35%, but shareholders receive a refund when dividends are distributed. The refund depends on the type of income earned:
| Type of Income | Shareholder Refund | Effective Tax Rate |
| Trading income | 6/7 refund | ~5% |
| Passive interest and royalties | 5/7 refund | ~10% |
| Foreign-source income (under DTT) | 2/3 refund | ~11.7% |
| Participating holding (dividends from subsidiaries) | Full exemption | 0% |
Foreign companies and investors find Taxation in Malta attractive because profits distributed after refunds yield some of the lowest effective rates in the EU, fully compliant with OECD standards. Malta’s tax refund mechanism is not considered a harmful practice since the initial corporate tax is paid in full before refunds are processed.
Malta also provides participation exemptions for capital gains and dividends from qualifying holdings, making it a popular jurisdiction for holding and intellectual property (IP) structures. Expenses wholly incurred in producing income are deductible, and losses may be carried forward indefinitely.
Indirect taxes (VAT, excise duties, and property)
The Maltese VAT (Value Added Tax) regime mirrors EU directives, ensuring transparency and alignment. The Commissioner for Revenue administers all VAT matters. Businesses exceeding the €30,000 threshold (goods) or €20,000 (services) must register and charge VAT on taxable supplies.
| VAT Rate | Percentage | Examples |
| Standard rate | 18% | General goods and services |
| Reduced rate | 7% | Tourism accommodation, electricity |
| Reduced rate | 5% | Books, medical equipment, artistic services |
Excise duties apply to alcohol, tobacco, and fuel products. Stamp duty is typically 5% on property transfers and 2% on share transfers. First-time buyers may qualify for partial exemption on the first €200,000 of value. Property rental income is subject to a final withholding tax of 15% unless the owner opts for standard taxation under progressive rates.
Tax incentives and expat programs
Taxation in Malta offers multiple residency and investor programs designed to attract high-net-worth individuals and professionals:
- Global Residence Programme (GRP): Flat 15% tax on remitted income with a minimum annual tax of €15,000. Applicants must own or rent qualifying property and have worldwide health insurance.
- Malta Retirement Programme (MRP): For pensioners receiving at least 75% of their income from foreign pensions. Flat 15% rate with €7,500 minimum annual tax.
- Highly Qualified Persons Rules (HQP): 15% tax on income up to €5 million for specialists in regulated sectors. No tax beyond that threshold.
- Nomad Residence Permit: For digital nomads earning foreign income; foreign income not remitted to Malta remains tax-free.
Non-domiciled residents benefit from the remittance basis, paying tax only on income and capital gains arising in Malta or remitted to the island. Foreign capital gains stay outside the Maltese tax net even if remitted.
Wealth, inheritance, and capital gains
There is no wealth, inheritance, or gift tax in Malta. Transfers of immovable property or shares are, however, subject to stamp duty and capital gains rules. Capital gains tax generally applies at 12% of the transfer value for real estate sold within 12 years of acquisition. Exemptions apply to transfers of a sole ordinary residence, inherited property, or qualifying share exchanges.
Dividends and interest received from abroad are taxable only if remitted. Capital gains realized abroad are not taxable for non-domiciled residents, even when the proceeds are brought to Malta. The country’s extensive network of double taxation treaties further reduces exposure for international investors.
Compliance, filing, and useful contacts
All taxpayers must obtain a Maltese tax identification number (TIN). Individuals submit an annual income tax return by 30 June of the following year, while companies file within nine months after the end of the accounting period. Corporate tax is payable in three provisional installments with a balancing payment upon submission of the final return. VAT returns are typically quarterly, due within six weeks after period-end.
- Tax authority: Commissioner for Revenue (CFR)
- VAT registration thresholds: €30,000 (goods), €20,000 (services)
- Corporate tax filing: within 9 months of year-end
- Individual return deadline: 30 June
Non-compliance leads to administrative penalties ranging from €50 to €2,000 and daily fines for continued delay. The system encourages electronic filing via the CFR e-Services portal. International investors often engage licensed accountants to ensure timely reporting and maximize treaty benefits.
Key tax rates in Malta at a glance
| Tax Type | Rate | Remarks |
| Personal income tax | 0%–35% | Progressive system with various computations |
| Corporate income tax | 35% (5%–10% effective) | After refund mechanism |
| VAT | 18% / 7% / 5% | Standard and reduced rates |
| Property transfer (stamp duty) | 5% | First-time buyer reliefs apply |
| Capital gains on real estate | 12% | Exemption for main residence |
| Social security | 10% employee / 10% employer | Self-employed 15% |
| Inheritance / wealth | 0% | No separate tax |
Why Malta’s taxation model attracts global residents
Taxation in Malta offers predictability, treaty protection, and low effective rates without being a tax haven. It aligns with EU directives and OECD standards, providing transparency alongside flexibility. Whether for corporate structuring, relocation, or retirement, Malta stands out as one of the most balanced jurisdictions in Europe for long-term financial planning.