Malta’s favorable taxation and strategic location, as well as its presence in the European Union, make the island an attractive place to do business. Malta therefore attracts entrepreneurs and investors from all over the world. How is taxation in Malta and what benefits does it bring? We answer in the article below.
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Tax system in Malta
The Maltese tax system is based on tax residence and the taxation of global income for residents. This means that entities with tax residency in Malta must pay taxes on their total income. The tax applies regardless of the country where the income is earned. Non-residents, on the other hand, are taxed only on income from Maltese sources.
Taxation in Malta – Personal Income Tax
Malta applies a progressive personal income tax system. Rates range from 0% to 35%, depending on income level and taxpayer status (single, married, or single parent). Taxation rules vary based on residency and domicile status.
| Annual Income (EUR) | Tax rate |
| up to 9 100 | 0% |
| 9 101 – 14 500 | 15% |
| 14 501 – 19 500 | 25% |
| 19 501 – 60 000 | 30% |
| Over 60 000 | 35% |
Malta offers favourable tax conditions for residents under special programmes:
- Nomad Residence Permit. It is a flat 10% tax rate for remote workers in Malta, subject to specific criteria.
- Highly Qualified Persons Rules. A 15% tax rate for skilled professionals in finance and gaming sectors, valid for up to 15 years.
- Global Residence Programme. It allows foreign income remitted to Malta to be taxed at a 15% rate, with a minimum annual tax of 15 000 EUR.
- Malta Retirement Programme. Pension income transferred to Malta is taxed at 15%, under certain conditions.
Taxation in Malta – Tax Residency of Natural Persons
Malta offers clear yet flexible rules for tax residency. This attracts individuals interested in tax optimization. The system is based on the concepts of residency, habitual residency, domicile, and the source of income. This allows tax obligations to be tailored to individual circumstances.
| Key Aspects of Tax Residency in Malta | |
| Domicile | Domicile refers to the country where an individual has a permanent home. Determining domicile is crucial for establishing the extent of global taxation. |
| Habitual Residency | Habitual residency applies to those who regularly stay in Malta as part of their standard lifestyle. There are no strict requirements regarding the number of days spent in Malta. Yet, staying over 183 days per year is usually enough to acquire residency status. |
| Income Location | The place where income is generated is determined by its source. Income from employment, investments, or property rentals is subject to different tax rules. |
| Transferring Income to Malta | Remitted income to Malta is taxable, even if earned abroad. In practice, residents can manage taxes by controlling the income brought in. |
Malta does not impose rigid residency rules. This allows for greater flexibility in tax planning. This flexibility and EU membership make Malta ideal for those who are looking for tax stability and optimization.
Taxation in Malta – Corporate Income Tax
The standard corporate income tax (CIT) rate is 35%. At first glance, it may seem high. However, Malta’s tax system, with shareholder refunds and double taxation treaties, can significantly reduce the effective tax burden. This makes Malta one of the most tax-attractive jurisdictions in Europe.
Companies registered in Malta are tax residents. They are subject to taxation on global income. This means all their income is taxed in Malta, regardless of its source. Foreign companies managed and controlled from Malta are taxed only on income earned in Malta or remitted to Malta.
| Special Tax Systems | |
| Oil Profits Tax | Income related to oil production is taxed at the standard rate of 35%. However, contracts signed before 1 January 1996, are subject to a higher tax rate of 50%. |
| Insurance Profits Tax | Profits from insurance activities are subject to the standard CIT rate of 35%. The calculation of taxable income is strictly regulated. |
| Shipping Profits Tax | Malta’s tonnage tax system offers favorable tax conditions for shipping income. This applies to ships registered under the Maltese flag, within the EU or the European Economic Area, as well as non-EU/EEA ships meeting additional requirements. |
VAT Taxation in Malta
The standard VAT rate in Malta is 18%. This is one of the lowest rates among EU member states. It applies to most goods and services unless they qualify for reduced rates.
In addition to the standard rate, Malta has four other VAT rates: 12%, 7%, 5%, and 0%
| 12% VAT rate | Starting in January 2024, Malta introduced a 12% VAT rate. This applies to services such as recreational boat rentals, certain healthcare services, securities storage, and some credit and guarantee management services. |
| 7% VAT rate | The 7% VAT rate applies to tourism services. In particular to accommodation and sports facilities usage. This rate supports Malta’s tourism sector, which plays a key role in the national economy. |
| 5% VAT rate | The 5% VAT rate covers a wide range of products and services. For example: food (confectionery products), medical equipment and accessories, products for disabled persons, printed materials (e.g., books and newspapers), electricity, art, antiques, and collectables. |
| 0% VAT rate | The 0% VAT rate applies to intra-community transport. Moreover, it concerns ready-to-eat food, prescription medicines, and food production services. This rate is essential for sectors such as pharmaceuticals and food. |
Double Taxation Agreements
What is important, Malta has an extensive network of double taxation agreements. This helps minimize tax burdens for individuals and businesses engaged in international activities.
Taxation in Malta – Summary
Malta offers a competitive tax system that is favourable for individuals and businesses. Tax exemptions, reliefs, and optimization opportunities make it an attractive place for business.
If you are planning to set up a company in Malta, our experts will assist you with the registration process. We can support you with advice on tax matters. Contact us today!
FAQ – Taxation in Malta
Is there a capital gains tax in Malta?
Yes, but there are exemptions for certain investments.
Does Malta offer tax relief for residents?
Yes, under the Global Residence Programme.
What is the effective corporate income tax rate (CIT)?
It can be as low as 5% due to the refund system.
Does Malta tax dividends?
It depends on the shareholding structure.
What are the benefits of registering a company in Malta?
A favorable tax system, EU membership, and flexible commercial law.
Do non-residents have to pay taxes?
Only on income generated in Malta.
What is the property tax rate?
Depending on the type of property, from 8% to 10%.
Does Malta impose a withholding tax?
Not on dividends and interest.
What are the requirements to obtain tax residency?
Minimum stay and meeting investment criteria.
Which sectors benefit from tax incentives?
Technology, finance, gaming, logistics.