Malta: Business Environment

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.

Tax Rate

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.