Malta individual taxation overview
When talking about taxation in Malta, we should mention such terms as residence, ordinary and permanent residence, domicile, locality of income, and the remittance of income to Malta.
- Malta offers two types of residency: ordinary or permanent residence.
- Ordinary residence applies to EU nationals and is subject to renewal every five years.
- Permanent residence is open to everyone and renewable every year. It is the only way for non-EU nationals.
- Domicile can be either a domicile of origin, i.e. acquired by birth, or a domicile of choice if an individual intends to establish their permanent home in this case in Malta.
- The locality of incomeis where that income arises.
- The remittance of incomeapplies to any foreign income that arises outside Malta and is brought there.
Personal income tax
|Domiciled residents||Ordinary/permanent residents (non-doms)||Non-residents|
|Taxable income||Worldwide income||Income arising in Malta and foreign income remitted to Malta (for details see below)||Income arising in Malta|
|Income tax rate||Graduated rates from 0% to 35%||From 0% to 35% for ordinary residents and 15% for permanent residents||15% flat rate|
Taxable income, tax bill and filing obligations also depend on the marital status of an individual and whether or not they have children. For example, tax returns can be filed by spouses either jointly or separately.
Non-domiciled and not ordinarily resident in Malta do not have to pay tax on remuneration received for services provided outside Malta.
Malta introduced various programmes that offer potential applicants a preferential tax status subject to their eligibility. Please read Individual Investor Programme, Residency and Visa Programme and Other Programmes for more information.
Normally, the following benefits are taxable:
- Benefits from employment;
- Fringe benefits, e.g. use of motor vehicles, accommodation, reimbursement of private expenses, gifts, etc.
- Benefits in kind, with exemptions
- Living allowances;
- Housing allowances;
- Tax reimbursements;
- Paid vacation trips.
Any gross income received from renting out immovable property that has been refurbished through one of the Malta Environment and Planning Authority scheme is taxable at 10% for residential property and 15% for commercial property.
If it is not a MEPA refurbished property, both residential and commercial, provided that the commercial is not being rented to or from a related body of persons, a final 15% tax on the gross rental income can be opted for.
Pension income is taxable when it is over an exempt amount.
Capital gains withholding tax
Capital Gains Tax (CGT) must be paid on the transfer of real estate, shares and other securities, business, intellectual property, interests in a partnership and trust. Generally, 8% is payable on the transfers of Maltese real estate if made on or after 1 January 2015 and 10% if made before 1 January 2004, subject to exclusions. Reduced rate of 5% applies to real estate in Urban Conservation Areas
No tax must be paid on capital gains derived outside Malta by not domiciled non-resident or returned migrants liable for a reduced income tax rate, even if the income is remitted to Malta.
Non-residents are exempt from tax on any discount, interest, premium or royalties, and capital gains from certain sources, e.g. disposal of units in collective investment schemes and of shares or securities in companies, subject to certain conditions
Investments that yield a fixed rate of return or the transfer of shares in a company listed on a recognised stock exchange are exempt from CGT.
Capital acquisition tax
Real property tax
Tax on listed shares
Social security contributions
10% of the individual employee’s salary (+10% from employer) both for residents and non-residents.
- Transfer of immovable property – 5% (reduced for first- and second-time buyers, and for property in Urban Conservation Areas, 0% in certain cases)
- Transfer of marketable securities and/or an interest in a partnership – 2% or 5% in certain cases (reduced rate 1.5%)
Everyone engaged in supplying goods and services in Malta must register for VAT. The standard rate is 18%; reduced rates of 7%, 5% and 0% apply in certain cases.
Customs and excise duties apply on certain goods.