Malta tax system: audit, reporting and optimization of taxation of Maltese companies and individuals: VAT, income tax and capital gains

Basic taxes (briefly)

Personal tax 0-35%
Corporate tax (in detail) Income tax is paid by companies at a rate of 35%. However, in the future distribution of dividends, Maltese shareholders can set off this tax against income tax. Non-resident shareholders can receive a refund of most of this tax, which allows a significant reduction in the effective tax rate, depending on the type of income of the company, the tax can be reduced, as a rule, to 0 - 10%
Capital gains tax. Details included in a tax base of coporate income tax
VAT. Details The standard VAT rate is 18%. For some goods and services, the tax rate is 7% and 5%
Other taxes Social contributions, Property transfer tax
Government fee
Stamp duty 2-5%

International tax agreement

Albania, Andorra, Australia, Austria, Azerbaijan, Bahrain, Barbados, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Curaçao, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Ireland, Isle of Man, Israel, Italy, Jersey, Jordan, Korea (Republic of), Kuwait, Latvia, Lebanon, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Mexico, Moldova (Republic of), Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syrian Arab Republic, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States, Uruguay, Viet nam
   
Bahamas, Bermuda, Cayman Islands, Gibraltar, Macao (China). Convention on Mutual Administrative Assistance in Tax Matters


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Personal Income Tax

Individuals ordinarily resident and domiciled in Malta are taxed there on their worldwide income.

Non-domiciled residents are subject to tax on income from Maltese sources as well as on foreign income remitted to Malta (except for income from the sale of foreign assets).

Non-residents are subject to tax on income from sources in Malta.

The tax rate varies according to the income level and marital status.

The tax rates for single individuals are:

  • Income up to EUR 9,100– 0%;
  • EUR 9,101 to 14,500 – 15%;
  • EUR 14,501 to 19,500 – 25%;
  • EUR 19,501 to 60,000 – 25%;
  • Over EUR 60,000 – 35%.

There is a minimum income tax of EUR 5,000. Special tax rates may apply for part-time and overtime work.

There are special residency programmes, as well as rules for highly qualified specialists and specialists employed in innovative industries, which provide preferential tax regimes (often a flat tax rate of 15%).

Gains from the sale of real estate, shares and other securities (except for fixed income instruments), business, intellectual property rights, interests in a partnership or a trust are subject to taxation at the maximum rate for the respective taxpayer. Special tax rates apply to certain categories of Maltese real estate. Gains from the sale of shares listed on recognized stock exchanges are tax exempt, except in certain cases.

Tax paid by a Maltese company is considered as tax prepaid by the shareholder of the company. In such system, dividends distributed by Maltese companies, as a rule and subject to certain conditions, are not further taxed in the hands of an individual, it is possible to credit tax against the tax paid on the company's profits.

Dividends from foreign companies are subject to tax (for domiciled residents).

Corporate Income Tax

Companies are subject to corporate income tax at the rate of 35%.

However, upon further distribution of dividends, Maltese shareholders may credit this tax against income tax.

Non-resident shareholders can receive a refund of most of this tax, which allows significantly reducing the effective tax rate. Depending on the type of the company’s income, the tax can be reduced, as a rule, to 0-10%.

Gains from the sale of shares are subject to tax, except for gains from the sale of shares listed on recognized stock exchanges.

Dividends received by a Maltese company from another Maltese company are subject to tax; if the distributing company has paid tax, there is no further taxation.

Dividends from foreign sources and profits from the sale of shares may be exempt from taxation under the substantial participation exemption. The conditions for exemption include, among others, 5% participation interest, less than 50% of the distributing company's income must be passive income, or the company must be resident in an EU member state or be taxed at least at 15% rate; there are alternative criteria for granting the exemption.

CFC Rules

A controlled foreign company is a foreign company in which a Maltese resident, directly or indirectly, individually or jointly with related parties, owns more than 50% of the capital, voting rights or rights to profits, and which is taxed at a rate less than half of the tax that would be paid in Malta.

The taxpayer must include the CFC’s non-distributed profit in its tax base if such profit arose from arrangements that were aimed at obtaining tax advantages and is generated through the assets, risks and significant people functions performed by the taxpayer.

CFC’s profits below certain thresholds are tax exempt.

Withholding Tax

Malta does not levy withholding taxes on income paid to non-residents.

VAT

The standard VAT rate is 18%.

Some goods and services are subject to 7% and 5% VAT rates.

Social Security Contributions

Social security contributions are paid by both employers and employees at the rate of 10% of the remuneration and in the amount of EUR 48.57 per week for salaries exceeding EUR 24,986 per year.

Stamp Duty

Stamp duty is payable on various transactions, in particular transactions with real estate (general rate – 5%) and marketable securities (general rate – 2%).

Property Transfer Tax

Real estate transfers are subject to withholding tax at various rates. The general rate for transactions made after 1 January 2015 in respect of Maltese real estate is 15%. There are different rates for different situations.

Double Tax Agreements

Malta has entered a whole range of double tax and tax information exchange mechanisms:

76 DTCs: Albania, Andorra, Australia, Austria, Azerbaijan, Bahrain, Barbados, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Curacao, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Ireland, Isle of Man, Israel, Italy, Jersey, Jordan, Korea (Republic of), Kuwait, Latvia, Lebanon, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Mexico, Moldova (Republic of), Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syrian Arab Republic, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States, Uruguay, Vietnam.

5 TIEAs: Bahamas, Bermuda, Cayman Islands, Gibraltar, Macao (China).

Exchange Control

Malta has no exchange control.

    Taxes of Malta

    Min. rate for corporate tax 35%
    Capital gains tax Regular rate
    VAT 18%
    Withholding tax No
    Exchange control No
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