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Taxation in Malta

Taxation in Malta

Updated on Sunday 13th November 2016

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The Maltese taxation system is one of the main reasons foreign investors open companies here. Malta offers competitive rates compared to other EU countries due to a full imputation tax system which favors both companies and individuals. The Maltese tax system is made up of:

  • -          the income tax,
  • -          withholding taxes,
  • -          other indirect taxes.

For tax minimization solutions you can request the services of our Maltese lawyers.

The income tax in Malta

Unlike other EU states where the taxation of individuals and companies is separate, Malta imposes the income tax on both natural and legal persons. Malta taxes individuals and companies based on their residency. While Maltese residents are taxed on their worldwide income, non-residents will be taxed on their income received in the country.

Individuals are taxed on the incomes arising from employment or other sources of income and are also subject to social contribution payments. Maltese companies, on the other hand will be taxed on their business profits and other sources of income, among which dividend, interest and royalties payments.

Maltese residents and non-residents are taxed progressively at rates varying from 0% to 35% depending on their income.

The taxation of companies in Malta

The Maltese corporate tax is encompassed in the Income Tax Act. Maltese companies are taxed on their profits at a fixed rate of 35%. However, due to all double taxation treaties Malta has in place and to the other EU regulations, among which the Parent-Subsidiary Directive, the effective corporate tax rate is significantly reduced. Malta’s double tax agreements also provide for tax exemptions on withholding taxes applied to dividends, interests and royalties.

Our lawyers in Malta can provide you with more information about the tax benefits companies can take advantage of.

Other taxes in Malta

The Maltese taxation system is made up of direct and indirect taxes. The most important indirect tax levied in Malta is the value added tax (VAT). The standard rate of the VAT is 18%. Other reduced rates apply as it follows:

  • -          7% on tourism services,
  • -          5% on electricity services, medical equipment and confectionery,
  • -          0% on imports and exports, different transactions.

Other indirect taxes levied in Malta are the stamp duty which applies to property transfers, environmental taxes and customs and excise duties.

The video below shows the main taxes applicable in Malta:

If you want to open a company in Malta and need more information about the corporate tax, please contact our law firm.

 

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