Malta Tax

Enquire Now

Malta Tax Laws and Regulations

Dealing with tax, payroll, and employment regulations for your staff from overseas is always a tricky process and poses complications that demand expert guidance. Malta is no exception with a multi-layered system applying in particular to personal income tax rates.

With over 20 years’ experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of tax and employment law across the globe. Our ‘know-how’ is vital for foreign companies expanding into Malta.

By using our PEO-service, we will take care of the complicated legwork so that you can focus on your business goals. Bradford Jacobs’ dedicated specialists remove the burdens of worrying about these complications while you focus on building your business in a new territory.

We have made it our goal to keep track of the latest changes in the tax policies to always ensure complete compliance. To keep you informed and updated too, we created this guide which includes the basic facts regarding tax regulations in Malta.

Overview of Taxes in Malta

  • Personal tax rates 2021:
    Single rates:
    - (Tax-free allowance of €9,100)
    - Four rates from €9,101 (US$10,420) to €60,001 (US$68,702) and over - 15% to 35%

    Married tax rates 2021:
    - (Tax-free allowance of €12,700)
    - Four rates from €12,700 (US$14,541) to €60,001 (US$68,702) and over - 15% to 35%

    Parent tax rates 2021:
    - (Tax free allowance of €10,500)
    - Four rates from €10,501 (US$12,022) to €60,001 (US$68,702) and over - 15% to 35%

    Non-resident tax rates for 2021:
    - (Tax-free allowance of €700)
    - Three rates from €701 (US$801) to €7,801 (US$8,932) and over - 20% to 35%

  • Social Insurance Taxes:
    - Employer and employee contributions from employees’ salary - 10%
    - Self-occupied and self-employed from the previous year’s net profit - 15%

  • Corporate Income Tax (CIT): Standard rate - 35%
  • Value Added Tax (VAT): Standard rate - 18%
  • Other taxes: Malta has no capital gains tax. Income tax is imposed on any gain made from shares, securities, intellectual property, partnerships, or trusts. Malta imposes no taxes on inheritances, estates, or gifts, though stamp duty may apply in some cases.

Malta Individual Tax – Single, Married

Individuals living in Malta for more than 183 days a year are taxed on their income earned in Malta and worldwide income that is received in Malta, but not taxed on income earned abroad that is not paid into Malta. Individuals married to a person who is resident and domiciled in Malta are liable for taxation on their worldwide income. Non-residents are taxed only on income and capital gains received in Malta.

Married couples or those with an authorized civil partnership have a joint obligation to file returns and decide which is to be the registered taxpayer, with the decision being effective for five years. The couple’s registered taxpayer can still elect to have their partner taxed separately; in which case they are taxed at single payer’s rates.

Single personal tax rates for 2021

  • A tax-free allowance of €9,101
  • €9,101 (US$10,420) - €14,500 (US$16,602) - 15%
  • €14,501 - €19,500 (US$22,328) - 25%
  • €19,501 - €60,000 (US$68,701) - 25%
  • €60,001 and over - 35%

Married rates 2021

  • A tax-free allowance of €12,700
  • €12,701 (US$14,543) - €21,200 (US$24,274) - 15%
  • €21,201 - €28,700 (US$32,862) - 25%
  • €28,701 - €60,000 (US$68,701) - 25%
  • €60,001 and over - 35%

Parent rates 2021

  • A tax-free allowance of €10,500
  • €10,501 (US$12,023) - €15,800 (US$18,091) - 15%
  • €15,801 - €21,200 (US$24,274) - 25%
  • €21,201 - €60,000 (US$68,701) - 25%
  • €60,001 and over - 35%

Non-resident rates 2021

  • A tax-free allowance of €700
  • €701 (US$802) - €3,100 (US$3,549) - 20%
  • €3,101 - €7,800 (US$8,931) - 30%
  • €7,801 and over - 35%

Employee Social Insurance Taxes

  • Employee contributions remitted from salary - 10%
  • Self-occupied and self-employed from the previous year’s net profit - 15%

Malta Individual Tax Rules

  • Individuals living in Malta for more than 183 days a year are taxed on their income earned in Malta, in addition to income earned worldwide that is received in Malta. They are not taxed on income earned abroad but not paid into Malta.
  • Non-residents are taxed only on Malta-sourced income.
  • Persons married to a domiciled resident are liable for worldwide taxation.
  • A husband and wife, or registered civil partnership, should file joint returns after deciding which is to be the registered taxpayer. The decision is valid for five years.
  • The couple’s registered taxpayer can still elect to have their partner taxed separately; in which case they are both taxed at single taxpayers’ rates.
  • Tax payments are made through the Provisional Tax System (PTS), the Final Settlement System (FSS) or by self-assessment.
  • Due tax not paid during the earning year by either PTS or FSS must be paid by June 30 of the following year by self-assessment.
  • The tax registration number for Maltese citizens is their national ID.
  • Foreigners have a nine-digit tax registration number, and they must register as taxpayers even if they do not work.
  • ‘Non-filers’ do not have to submit a return as all their relevant data regarding earnings, deductions and credits has been forwarded to the Commissioner for Revenue by their employer.
  • Malta’s tax year is the calendar year.

Indirect Taxes

Value Added Tax (VAT) has a standard rate of 18% on goods and services.

Malta Employers’ Social Security and Statutory Contributions

  • Social Insurance: Employers contribute the equivalent of 10% of each employee’s wages and remit them to the Commissioner for Revenue for the Directorate of Social Security.

  • National Minimum Wage: Employers must comply with minimum wage requirements. In 2021 the minimum was increased to €784.08 (US$906) per month or €9,416 (US$10,876) per year, based on 12 monthly payments for full-time workers aged 18 and over. Wage Regulation Orders (WROs) applying higher rates to different sectors take precedence over national minimum rates. The minimum wages of part-time employees are calculated pro rata with the hourly rate of full-time employees.

Malta Corporate Taxes

  • Corporate Income Tax (CIT): Corporate tax is 35% and includes worldwide income and certain capital gains. Malta’s tax refund system is attractive for international businesses taking advantage of the island’s proximity to Europe, North Africa and the Middle East and can leave entrepreneurial companies paying around only 5% corporation tax.

  • Value Added Tax (VAT): VAT is administered by the Maltese Ministry of Finance. Companies with a turnover above €35,000 must register for VAT, but registration is optional for turnover between €7,001 and €35,000. VAT is set at 18% on goods and services, though tourist accommodation, medical equipment, electricity, and other categories are charged at lower rates.

  • Other Taxes: Malta has no capital gains tax. Income tax is imposed on any gain made from shares, securities, intellectual property, partnerships, or trusts. Malta imposes no taxes on inheritances, estates, or gifts, although stamp duty may apply in some cases

Corporate Deductions and Capital Allowances:

Potential deductions must be incurred exclusively in creating income for the company and backed by documentation for the Commissioner for Revenue. The Maltese Income Tax Act allows for depreciation including computers, vehicles, construction equipment, various aspects of aircraft ownership, ships, and fittings and equipment inside premises.

Deductions can also apply to intellectual property rights, start-ups and interest expenses and bad debt. Charitable donations are generally not tax-deductible.

Avoid risks – make the right move

Malta’s tax regulations demand expert advice for incoming foreign companies. Businesses cannot risk stumbling into mistakes over payroll and taxation, with the threat of fines and sanctions. Do not waste time worrying about your move into Malta – contact us today!