Malta flag Malta: Business Environment

Tax rates in Malta

Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - It-taxxa fuq il-valur miżjud (Local Name)
Tax Rate
18%
Reduced Tax Rate
7% on tourist accommodation and use of sporting facilities.
5% on confectionery; medical equipment and accessories; printed matter (including e-books/audio books); supply of electricity; items for the exclusive use of the disabled; the importation of works of art, collectors’ items and antiques
0% on food, excluding catering; pharmaceutical goods; international transport; exports of goods and related services (to territories outside the EU); supplies to ships; supply of gold to the Central Bank of Malta.

Exempt supplies include: letting and transfer of immovable property; health and welfare; education; postal services; banking and insurance; grant and negotiation of credit and the management of credit by the grantor; supply by non-profit organizations of approved services related to sports or physical recreation; sports; lotteries; broadcasting; water.

Other Consumption Taxes
Excise duty is levied on the import of certain products including fuel, vehicles, cigarettes and alcohol, mobile telephony services. The exhaustive list of products subject to excise duty can be seen on the website of the Customs Office.
More detailed information on excise duties is available concerning alcoholic beverages, tobacco products, energy products on the European Commission website.

Return to top

Corporate Taxes

Company Tax
35%
(a tax rebate is available for distributed dividends: this system grants a shareholder the right to claim a refund of all or a part of the Malta tax paid on the qualifying profits out of which the dividend was distributed, resulting in an effective tax rate between 0% and 10%)
Tax Rate For Foreign Companies
A company incorporated in Malta is taxable on a worldwide basis. Foreign companies that are incorporated outside Malta but carry out business activities in the country are liable to tax on income arising or received in/remitted in Malta.
For tax purposes, a company not incorporated in Malta is considered resident if the management and control of its business is exercised in the country.
Capital Gains Taxation
Capital gains arising from the transfer of securities, copyrights, patents, trademarks and trade names and on the assignment of ownership rights over such properties are included in taxable income and taxed at the ordinary corporate tax rate. No tax is levied on investments that yield a fixed rate of return.
Non-resident companies are not subject to tax on their capital gains from the sale of long-term insurance policies, investments in a collective investment scheme or a resident firm (unless the assets of the latter are entirely or mainly composed of real estate).
Main Allowable Deductions and Tax Credits
Expenses that are wholly and exclusively incurred in the production of income are generally deductible when documented.
Depreciation of tangible and intangible assets is tax-deductible. Capital expenditure on intellectual property incurred to generate income can be deducted over the useful life of the intellectual property in question (in all cases, over a minimum period of three consecutive years). Goodwill related to the purchase of intellectual property may be deductible.
Some start-up costs, such as training, advertising or remunerations, may be deductible if they are incurred at the latest 18 months before the start of the business activity.
Interest expenses on capital used for commercial purposes are deductible. Doubtful debts proven with the tax authorities may be deducted from the tax.
Donations to charities and fines are generally not deductible.
Other deductions are provided for transportation costs of employees to and from the place of work using means of transport capable of carrying more than eight persons, and for the use of cars and the payment of employee compensation.
Payments of royalties, interest and service fees to foreign affiliates are normally tax-deductible. Commercial, operating or impairment losses may be carried forward indefinitely. The carryback of losses is not permitted.
Other Corporate Taxes
Property transfer taxes are levied at 8% (or 10% if the property is acquired before 1 January 2004). The rate is reduced to 5% on the sale of properties rehabilitated in urban conservation areas, as well as for the first EUR 400,000 of the transfer value of an immovable property. For promises of sale being signed until December 2021 with the final deed of transfer being signed until 30 June 2022, the rate is also at 5%. The first EUR 100,000 of any profits or gains arising on the assignment or cessation of any rights acquired under a promise of transfer of immovable property or any rights thereon are taxed at a rate of 15%; whereas the part over EUR 100,000 will continue to be subject to tax at 35%. Transfers of immovable property acquired through causa mortis or donation may be taxed at 12% on the difference between the transfer value and the acquisition value.
Stamp duties are mainly levied on real estate transfers at an ordinary rate of 5% (2% for properties located in Gozo). Stamp duties of 2% or 5% are also levied on the sale of shares of real estate companies.
Social security contributions payable by the employer amount to 10% of the salary, plus a fixed amount of EUR 49.97 per week for annual salaries exceeding EUR 25,258.48 (2022).
Other Domestic Resources
Inland Revenue Department (IRD)
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Malta OECD United States Germany
Number of Payments of Taxes per Year 8.0 10.1 10.6 9.0
Time Taken For Administrative Formalities (Hours) 139.0 163.6 175.0 218.0
Total Share of Taxes (% of Profit) 44.0 41.6 36.6 48.8

Source: Doing Business, Latest available data.

Return to top

Individual Taxes

Tax Rate

Income Tax - Single persons or married persons filing separately Progressive rate from 0% to 35%
EUR 0 to 9,100 0%
EUR 9,101 - 14,500 15%
EUR 14,501 - 19,500 25%
EUR 19,501 - 60,000 25%
Above EUR 60,000 35%
Married resident taxpayers
EUR 0 to 12,700 0%
EUR 12,701 - 21,200 15%
EUR 21,201 - 28,700 25%
EUR 28,701 -  60,000 30%
Above EUR 60,000 35%
Foreign-source income remitted to Malta by individuals benefiting under specific residence schemes 15%
Allowable Deductions and Tax Credits
Various deductions are allowed, including certain fees in connection with schools, child care, sports for children specified by the Minister of Finance and fees with respect to a registered private kindergarten; and fees paid on homes for the elderly. Alimony payments are deductible.
Employment expenses incurred wholly and exclusively in the production of the income can be deducted. Where the employer reimburses employees for expenses incurred on the employer's behalf, no tax liability should arise.
No personal allowances are granted under Maltese law.
Special Expatriate Tax Regime
Individuals who are both domiciled and ordinarily resident in Malta are taxed on their worldwide income. Any person who is ordinarily resident in Malta but not domiciled in the country is taxable only on income arising in Malta and on any foreign income remitted to Malta. Nevertheless, if the spouse is ordinarily resident and domiciled in Malta, a worldwide basis of taxation should apply for the other spouse too.
A non-resident individual is taxed only on income arising in Malta.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of Double Taxation Agreements signed by Malta
Withholding Taxes
There are no withholding taxes on dividends, interest or royalties. However, interest paid to residents could be taxed at 15% if it qualifies as investment income.

Return to top

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: July 2022