Taxation in Malta

Malta's unique tax system, together with its extensive and growing double tax treaty network, offers foreign indivudals and businesses who use a Malta Company to carry out operations, a list of unprecendented fiscal benefits and effeciences. 

In fact, Malta's tax system is the only EU tax system that is fully imputated. Such system, which has been in force since 1948 and is compliant with EU directives and ECJ case laws, ensures that both resident and non-resident shareholders of a Maltese company are entitled to a refund of any tax paid by the company which is in excess of the shareholder's income tax liability. 

Income tax in Malta is charged on income from all sources and capital gains on transfer of immovable property, securities and certain intangible assets. Companies in Malta are charged at a flate rate of 35% which is also the maximum rate at which individuals are charged. Other forms of taxes include Value Added Tax (VAT), stamp duty, customs and excise duty.

Under Malta's full imputation system, which is the only system in force in the EU, the shareholder of a company incorporated in Malta will, upon distribution of dividends, be entitled to a refund, in part or in full, of any tax paid by the distributing company. Refunds are as follows.

  • Tax refund attributed to a Malta Company is set at 6/7ths of the corporation tax paid thus reducing the tax net effect to a 5%

  • In case of passive interests and royalties received by a Malta Company, the refund is that of 5/7ths of the corporation tax paid

  • When the distributing company claims a double taxation relief, the refund is reduced to a 2/3rds of the corporation tax paid.

  • When a company meets the participating holding criteria, i.e. owns at least 10% of the equity shares of a non-resident company, the Maltese company receiving the dividend can apply for a full 100% refund on the corporation tax paid.

  • Malta also offers a taxation scheme for groups of companies. The Maltese Tax Law allows companies that qualify as a 'group' to offset their losses thus reducing the tax levied on the group profits.

Contact us for further information and guidance regarding taxation in the Maltese Islands.