Income Tax in Malta

Malta’s tax structure is quite appealing to foreign citizens and entrepreneurs who enjoy an advantageous tax regime in the country. There are special residence tax schemes for foreigners, but for complete details and information, you can talk to one of our lawyers in Malta. Our team is also experienced in company formation in Malta, so if you intend to start a business in this country, please feel free to send your inquiries and let us handle all the procedures.

How is the taxation of foreign residents in Malta?

The Maltese sourced income and the capital gains are subject to the personal income tax of foreign residents living and working in this country. Also, the foreign-sourced income remitted in Malta is also subject to the income tax if such incomes are deposited in a Maltese bank account. There are also tax exemptions, meaning that foreign-sourced capital gains as a result of buying and selling shares on overseas stock markets paid in a Maltese bank account are not taxable. The transfer of shares in Maltese companies are subject to a 2% income tax rate, while the stamp duty of 5% rate applies to the transfers of Maltese real estate.

What is the High Net Worth Individual Residence Scheme (HNWI) in Malta?

Foreign citizens with HNWI residence permits are not subject to the income tax imposed on foreign-sourced incomes that are not remitted in a bank account in Malta. Otherwise, such incomes are subject to taxation and an income tax rate of 15% for money paid in a Maltese bank account, and a 35% rate for incomes arising in the country.

Income tax for foreigners under the ordinary residence scheme in Malta

Persons who have ordinary residence permit scheme in Malta are subject to progressive income tax rates of no more than 35%. This tax is imposed on foreign source incomes remitted in Malta or any other local incomes paid in this country. For a better understanding of the income tax scheme in Malta, you should talk to one of our Maltese lawyers. They can also help you register for taxation in Malta, or start a company.

Taxation of companies in Malta

According to the Income Tax Act in Malta, 35% is the corporate income tax rate that needs to be paid by companies with establishments in Malta. Also, the same tax is applied to companies that are not registered in Malta, but they generate incomes in this country. This corporate income tax is applicable to limited liability companies, general and limited partnerships, and other business forms available in Malta. The tax structure must be entirely understood before starting a business in Malta. Therefore, the legal assistance and advice provided by a Maltese lawyer are required. 

Other tax facts in Malta

The insular state signed a series of double taxation agreements with countries worldwide, with the purpose of avoiding the taxation on income twice. These treaties comprise all the details about the taxation of incomes in Malta, plus information about the tax exemptions available. Still related to the tax regime in Malta, the interests, rentals, royalties, trading, and business profits are subject to taxation, according to the provisions of the Income Tax Act in Malta. You can talk to our specialists for more details about the taxation in Malta.

Tax minimization methods in Malta

Company owners who want to cut down the taxes that need to be paid in the company have the possibility of adopting a series of tax minimization instruments. These are important financial tools that can be implemented with a proper financial plan that can be created by one of our Maltese attorneys. Donations or advanced credit payments might be optimal solutions for companies in Malta. Plus, investing the profits in the company can be subject to low taxes or even exemptions, depending on the structure and activities. Make sure you ask for complete financial planning and let one of our lawyers in Malta tell you more about tax minimization methods.

We have gathered facts and figures about the Maltese economy that you might find it interesting:

• Approximately USD 206 million was the total FDI stock registered in Malta in 2019.
• There are more than 31,000 foreign companies established in Malta.
• The total FDI stock of Malta for 2019 represented the country’s GDP of around 1,425%.
• 88th represents Malta’s ranking among 190 economies in the world, according to the report issued by the World Bank.

Persons interested in more details about the income tax in Malta are invited to contact our law firm in Malta and talk to our specialists in taxation matters. Our team can also help you start a company in this country.