Who must pay taxes in Malta
Malta tax residents, and people and companies who earn profits in Malta are obliged to pay taxes in the country. The taxable base depends on an individual’s or legal entity’s tax status.
Individuals pay taxes on a worldwide, remittance or territorial basis. It depends on whether a person is a tax resident in Malta and is domiciled there or not. Let’s observe these terms.
Tax residents in Malta are usually people who spend 183+ days a year there. In some cases, such a long stay is not needed: for example, if a person regularly visits Malta for at least three years in a row and establishes strong personal and economic ties with the country, they can also become its tax resident.
If one doesn’t live in Malta permanently, they are usually considered non-residents.
Domicile is a country that one considers to be their home. Usually, people get domicile at birth, the same as their fathers’. Then, over a lifetime, a person may change their domicile if another country becomes their place of permanent residence and a centre of vital interest. A person can have only one country of domicile.
To make Malta their domicile, one must break their ties with other countries and prove they intend to live in Malta permanently. So, obtaining Malta residency or citizenship doesn’t automatically change an applicant’s domicile.
So, a person may be a domiciled resident, non-domiciled resident, non-resident without domicile or a tax resident with domicile in Malta. The status determines the taxable base.
Taxable income for individuals in Malta, depending on their status
|Status in Malta||Income and capital gains earned in Malta||Worldwide income||Capital gains earned abroad|
|Non-domiciled tax resident||If transferred to Malta|
|Domiciled non-residents||If transferred to Malta|
If a non-domiciled tax resident is married to a domiciled resident of Malta, they also pay taxes as domiciled residents. And it implies to persons who have obtained Malta permanent residency by the common way after living there for at least five years.
Legal entities must register in the Business Registry and get a Malta tax number if:
- they are incorporated in Malta;
- their management and control are in the country;
- they carry on some business activities in Malta.
Maltese companies must pay corporate tax on their worldwide income and capital gains. Companies incorporated abroad only pay the tax on income they earned in Malta.
Principal taxes for individuals
Income tax is levied from wages, pensions, dividends, interest, royalties and other investment income. Self-employed also pay the income tax at the same rates.
Tax rates for Malta tax residents depend on a person’s marital status and income. Also, there are subtracts which are deducted from the tax base.
Malta income tax brackets for tax residents
|Annual chargeable income||Tax rate||Subtract|
|Up to €9,100||0%||0|
|Up to €12,700||0%||0|
|Up to €10,500||0%||0|
Parental income tax rates apply if a child of age less than 18 is under the person’s custody. If a child studies full-time at a university in Malta, their age must be under 22 years old.
Non-domiciled tax residents in Malta must pay a minimum tax of €5,000:
- If their income is not subject to any other tax threshold in Malta; and
- they have earned more than €35,000 abroad without transferring it to Malta the previous year before submitting the tax return.
In the case of a married couple, their total foreign income is considered for the minimum tax liability, and €5,000 is implied for the couple.
Non-residents pay taxes in Malta if they have gained income in the country: for example, they rented out a property.
Tax rates for non-residents depend only on their income; their marital status doesn’t matter. Also, the income threshold for the 35% tax rate is significantly lower than for tax residents, and there are no subtracts to lower the taxable base.
Income tax rates for non-residents in Malta
|Annual chargeable income||Tax rate|
|Up to €700||0%|
In some cases, the personal income tax can be decreased. For example, highly qualified expats may pay a 15% flat tax on their employment income in Malta. Also, the retired can get a tax rebate, which is 15% of the taxable base.
Individuals must send their tax returns for the previous year by 30 June. Taxpayers must not file a tax return in the case that the Commissioner for Revenue has already been provided with the necessary data.
Withholding tax is not levied in most cases if a Maltese company pays dividends, interest or royalties to non-residents. If Malta residents receive dividends, they may be taxed at source by 15% in some cases; interest is taxed at 25%, and royalties are not taxed at all.
Malta operates a full-imputation system: a company pays corporate tax at 35%, and the dividends carry imputation credit on the tax paid by the legal entity. The maximum income tax for individuals is also 35%, so usually, they mustn’t pay income tax on their dividends. And in cases when their income tax rate is lower than 35%, they may get a refund.
Social security contributions are paid by employed persons at up to €50 a week, and their employers pay the same amount. In some cases, an employee may choose to pay the contributions of 10% of their basic weekly wage.
Self-employed persons pay the contributions for themselves at 10—15% of their income.
Programmes for foreigners. The Maltese government provides several programmes for foreign nationals who wish to reside in Malta and pay taxes under a special regime:
- The Residence Programme (TRP);
- The Global Residence Programme (GRP);
- The Malta Retirement Programme;
- The United Nations Pensions Programme.
TRP and the Malta Retirement Programme are designed for the EU, EEA and Swiss nationals. The United Nations Pension Programme applies only to UN pension beneficiaries. So, the Global Residence Programme may be the most suitable for third-country HNWIs.
The Global Residence Programme provides individuals with residence permits and a special tax regime:
- 15% on foreign income transferred to Malta; the minimum annual tax is €15,000 for a family;
- 0% on foreign income not transferred to Malta;
- 35% on income earned in Malta.
To get a Malta residence permit under the GRP, an investor must rent or buy a property and pay the administrative fee. Additional costs include legal services and health insurance.
The programme’s beneficiaries must not live in Malta to retain residency, but they shouldn’t spend more than 183 days a year in any other jurisdiction.
Malta taxes for legal entities
Corporate tax in Malta is levied at a flat rate of 35%. It may seem quite high compared to some other European countries, but with a tax refund for shareholders, its effective rate may reduce to 0—10%.
The corporate income tax in Malta is charged for each calendar year. The accounting profits before tax are the chargeable income.
A Maltese company’s shareholders, no matter of their tax residency, may apply for a tax refund which is equivalent to the following shares of the paid corporate tax:
- 2/3 of the tax paid in Malta if the company has claimed for a double taxation relief;
- 5/7, if the dividends were paid from passive interest or royalties;
- 6/7, if the income was gained from commerce; this is the most common refund;
- 100% if the taxable profits were gained from a participating holding if it fits some requirements — for example, if a Maltese company has at least 10% share in a non-resident one.
Companies in Malta must keep proper records. The tax return must be submitted within nine months after the end of the company’s financial year.
VAT, or value-added tax, in Malta is usually paid at 18%. However, there are some goods and services that are taxed at lower rates:
- 7% — tourist accommodation, use of sporting facilities;
- 5% — supply of electricity, confectioneries, medical accessories, domestic care services, printed products, tickets to museums and art galleries, minor repair of shoes and clothing, etc.;
- 0% — food, pharmaceutical products, exports, intra-community supply of goods, domestic and international public transport.
The last category is usually exempt from taxation, but a registered company may claim back input VAT incurred in providing this supply.
Health, welfare, financial and insurance services, renting out properties exempt tourist accommodation and commercial properties, and some public authorities services are exempt from taxation.
VAT returns are submitted on the 15th day of the month; the period for submission may be extended for seven days if the return is filed online. Payments can also be made online or at any Maltapost office.
Excise duty is levied on some goods and services, for example, alcohol drinks, tobacco products and mineral oils. The rate depends on the product type and is calculated in different ways. For example, beer is taxed at €0.19—€0.75 per 100 litres, and in the case of some beverages, the alcohol content counts. To sell cigarettes, one must pay 50% of their retail price plus €22 per 1,000 cigarettes.
Import duty doesn’t apply to goods from other EU countries. Goods from non-EU countries may be subject to customs duty, which is calculated according to the transaction value and product type.
Goods imported into a Malta Freeport, an international port for transhipment purposes, may be exempt from taxation unless brought out of the free zone.
Stamp duty is levied on transactions with immovable properties, securities, insurance, etc. Its rate depends on a particular type of deal; it is usually 2—5% when transferring real estate or securities.
Withholding tax is not paid if a Maltese company distributes income as dividends, interest or royalties to another resident or non-resident company.
Social security contributions are 10% of an employee’s weekly wage, usually up to €50 a week.
Property taxes in Malta
Purchase of a property. The stamp duty is 5% of the property’s value. It is paid by the buyer and consists of two parts: 1% after signing the promise of sale and the remaining amount after the conclusion of the sale and purchase agreement.
An investor must turn to a notary in Malta to buy real estate. The notary helps the investor to pay all necessary fees and taxes.
Ownership of a property. Malta has no annual property tax, but a land tax may be levied. It is about €40—€250 a year.
If you decide to rent out your property in Malta, you must pay the income tax at the regular rates. Also, you may apply to pay tax on rentals at 15%; please note that this will apply to all objects you rent out, and no subtraction is applicable.
Sale of a property. The stamp duty is not levied if a residential property has been owned for three years. If the ownership time is less than three years, a 5% duty is paid.
Selling non-residential real estate is taxed at 5—12%. The largest rate applies to properties that have been owned for 10+ years.
A 15% capital gains tax is levied if the owner has not yet taken ownership of the object and is already at the stage of promising the sale agreement, reselling the property for a higher price.
Inheritance tax is not applicable if a parent’s residence is inherited by children, or a spouse gets the share of their deceased spouse in their sole residence. In other cases, a stamp duty of 3.5—5% applies.
Real estate to buy in Malta
Malta double taxation treaties
Malta has agreements with about 80 countries that allow taxpayers to avoid double taxation. These can be useful if you are a tax resident in Malta and get income from abroad, or vice versa.
Countries having DTAs with Malta
|Austria||Egypt||Isle of Man||Luxembourg||Qatar||Syria|
Tax information exchange
Malta passes tax data to other countries by request or automatically. The last way includes using the Common Reporting Standard (CRS) and exchanging information with the USA according to the Foreign Account Tax Compliance Act (FATCA).
CRS is an information standard that allows authorities to exchange tax data automatically. Malta has been using it since 2017 to exchange information with all the EU states, the UK, China, India and other countries.
The taxpayers’ information exchanged with CRS:
- Taxpayer Identification Number (TIN).
- Date and place of birth.
- Name and the identifying number of the reporting institution.
- Information about the accounts: numbers, balances, capital gains.
FATCA requires Malta to pass tax information about the US taxpayers to that country. The agreement between Malta and the USA came into force in 2014.
If one is not a US taxpayer, Maltese institutions won’t pass the information to the USA under FATCA rules.
Also, Malta has some duties since it is an EU member state. For example, according to Directive 2021/514/EU (DAC7), digital platform operators must collect and verify the information of their sellers, including the earned income. These requirements must be implemented until 31 December 2022.
How can foreign investors benefit from Malta’s tax system?
Becoming a Malta tax resident or opening a business there may be advantageous if one uses all the system’s benefits. A foreigner needs a residence permit to live in Malta for 183+ days a year.
The Global Residence Programme allows non-EU residents to obtain Malta residence permits for themselves and their relatives and pay taxes under a special regime. The minimum tax for the entire family is €15,000 a year, and the tax on income earned outside Malta and not transferred to the country is 0%.
In addition, a Malta residence permit allows one to visit the country whenever they wish and travel to other Schengen states for 90 days in 180.
Malta permanent residence or citizenship by naturalisation for exceptional services are also available for investors. These statuses don’t bring tax benefits, but they allow investors to reside in Malta to become tax residents and apply to launch a business there.
Frequently asked questions
Malta’s personal income tax is 0% to 35%, depending on a person’s income and marital status. For Malta tax residents, subtracts are applicable.
Malta’s taxes may seem high compared to some other countries. However, many tax incentives make Malta’s tax system attractive: for example, companies’ shareholders may return up to 100% of the corporate tax.
Yes, a foreigner who lives in Malta for 183+ days a year becomes its tax resident. In some cases, the required annual stay is lower: for example, if an individual visits Malta regularly for 3+ years and has personal and economic ties with the country.
Also, a foreigner can get a Malta residence permit and tax residency under a special governmental programme, for example, the Global Residence Programme.
Malta has no annual property tax, but the tax may be levied on land; it is about €40+ a year. When buying or selling real estate, the stamp duty is paid.
A standard VAT rate in Malta is 18%. Also, some goods and services are taxed at 5 or 7% or exempt from taxation.
Although the country’s tax system allows individuals to have refunds and reduce business taxation, Malta can’t be called a tax haven. The usual Malta tax rates correspond to the average European level, and the legislation is strict regarding anti-money laundering.
In addition, it’s nearly impossible to hide money in Malta because the country automatically exchanges information with all the EU states, the UK, the USA, China, India and others, using the Common Reporting Standard.