Malta’s integration into the European Union Single Market enhances its appeal as a business hub, supported by a growing regulatory framework aligned with EU and OECD standards.
In Malta, understanding tax residency and the taxation system is significant for individuals.
Taxation depends on residency status, domicile, and income source, with rates ranging from 0% to 35%.
This article sheds light on Malta’s tax residency rules, Personal Income Tax brackets, benefits like the non-domiciled regime, and its competitive tax rates, offering insights for effective tax planning and business establishment in the Mediterranean region with the experts at TaxMove.
Malta’s Tax Residency
In Malta, tax residency is determined by the length of stay within a calendar year. Generally, individuals spending more than 183 days in Malta are considered tax residents.
However, residency can also be established through habitual residence and strong personal ties.
Criteria for Determining Tax Residency
To qualify as a tax resident in Malta, you must:
- Spend at least 183 days in Malta within a calendar year.
- Maintain habitual residence or strong personal and economic ties to Malta.
Personal Income Tax Rates in Malta
For Single Persons:
| Annual Chargeable Income | Tax Rate | Subtract |
|---|---|---|
|
Up to €9,100 |
0% |
€0 |
|
€9,101—€14,500 |
15% |
€1,365 |
|
€14,501—€19,500 |
25% |
€2,815 |
|
€19,501—€60,000 |
25% |
€2,725 |
|
€60,001+ |
35% |
€8,725 |
For Married Couples:
| Annual Chargeable Income | Tax Rate | Subtract |
|---|---|---|
|
Up to €12,700 |
0% |
€0 |
|
€12,701—€21,200 |
15% |
€1,905 |
|
€21,201—€28,700 |
25% |
€4,025 |
|
€28,701—€60,000 |
25% |
€3,905 |
|
€60,001+ |
35% |
€9,905 |
For Parents:
| Annual Chargeable Income | Tax Rate | Subtract |
|---|---|---|
|
Up to €10,500 |
0% |
€0 |
|
€10,501—€15,800 |
15% |
€1,575 |
|
€15,801—€21,200 |
25% |
€3,155 |
|
€21,201—€60,000 |
25% |
€3,050 |
|
€60,001+ |
35% |
€9,050 |
Parental income tax rates are applicable when a taxpayer has custody of a child under 18. This age limit extends to under 22 years old if the child is a full-time student at a university in Malta.
Malta Income Tax Brackets for Non-Residents
| Annual Chargeable Income | Tax Rate |
|---|---|
|
Up to €700 |
0% |
|
€701—€3,100 |
20% |
|
€3,101—€7,800 |
30% |
|
€7,801+ |
35% |
Non-residents are only taxed on income generated within Malta, regardless of their marital status. The above rates may be reduced for individuals living in the European Union.
Malta Non-Dom Status
The non-domiciled (Non-Dom) regime allows individuals who are not domiciled in Malta to benefit from favorable tax treatment, paying tax only on income and capital gains arising in Malta or remitted to Malta rather than paying taxes on worldwide income.
Minimum tax of €5,000 if they have foreign income over €35,000 not transferred to Malta.
Benefits for Non-Domiciled Residents
- Significant tax savings.
- Exemption from worldwide income tax.
- Reduced tax burden on foreign income.
Eligibility Criteria
To qualify, one must:
- Be a non-domiciled resident in Malta.
- Declare any foreign income remitted to Malta.
Global Residence Program
The original Malta High Net Worth Individual (HNWI) program has been discontinued and replaced by the Global Residence Program (GRP). The GRP is tailored for non-EU/EEA/Swiss nationals, offering them tax advantages and residency in Malta. To qualify, applicants must either purchase property in Malta valued at a minimum of €275,000 or rent a property with an annual rent of at least €9,600. Additionally, they need to maintain health insurance and demonstrate a stable income.
Under this program, participants must pay a minimum annual tax of €15,000 and cannot reside in or be considered tax residents of another country for more than 183 days in a year. Foreign income received in Malta is taxed at a flat rate of 15%, while income earned abroad but not remitted to Malta remains untaxed. Moreover, capital gains made outside Malta are not taxed, even if brought into the country.
Applicants to the GRP must meet certain financial criteria, including a minimum annual income of €100,000 and a net worth of at least €300,000. They are also required to have a residential property in Malta, which must be available to them at all times, either through purchase or rental, but it cannot be sublet. Once the application is approved, the property requirement must be fulfilled.
The Residence Program
The Residence Program (TRP) is identical in all aspects to the GRP except that the TRP is for EU nationals and GRP is for non-EU nationals.
This makes Malta one of the most attractive countries in Europe to become a resident for non-EU nationals.
Malta Permanent Residence Programme
The Malta Permanent Residence Programme (MPRP) offers non-EU nationals the opportunity to obtain residency in Malta, subject to thorough Due Diligence checks and a financial investment in the country. To qualify, applicants must either purchase or rent property in Malta, with minimum values depending on the location. For property purchases, the required minimum value is €350,000 in Malta or €300,000 in Gozo or the South of Malta. If renting, the annual lease must be at least €12,000 in Malta or €10,000 in Gozo or the South. Additionally, applicants must make a Government Contribution, which varies based on whether the property is rented or purchased, and a €2,000 donation to a local NGO.
To be eligible for the programme, applicants must also demonstrate a minimum net wealth of €500,000, with at least €150,000 held in liquid assets such as cash, stocks, or bonds. The required Government Contribution differs depending on the type of property investment: €28,000 for purchased properties or €58,000 for rented ones, with an additional €7,500 for each parent or grandparent included in the application. This programme allows non-EU nationals to gain Maltese residency through a combination of property investment, financial contributions, and charitable donations.
Controlled Foreign Company (CFC) Rules and Exit Tax
Malta has implemented Controlled Foreign Company (CFC) rules. However, CFC Companies and Permanent Establishments are excluded from the application of these rules if: (i) their accounting profit does not exceed EUR 750,000 and non-trading income does not exceed EUR 75,000; or (ii) accounting profits amount to no more than 10% of operating costs for the tax period.
Furthermore, CFC rules are not applicable when the CFC entity is resident in the European Economic Area.
Moreover, Malta has implemented Exit Tax rules according to ATAD 1.
In this regard, exit tax rules will be triggered where (i) a taxpayer transfers assets from the head office or a permanent establishment in Malta to a permanent establishment or a head office outside Malta; (b) a taxpayer becomes tax resident in another state, provided that their assets will not be effectively connected to a permanent establishment in Malta; (iii) a taxpayer transfers the business carried on by its permanent establishment from Malta to another state.
Tax Payments can generally be deferred when relocating to third countries that are party to the European Economic Area Agreement if they have concluded an agreement with the Member State of the taxpayer or with the Union on the mutual assistance for the recovery of tax claims, equivalent to the mutual assistance provided for in Directive 2010/24/EU.
Double Tax Treaties:
Malta has signed 81 Double Tax Treaties (DTTs) with different jurisdictions across the globe.
These DTTs provide mechanisms for the elimination or reduction of double taxation on various types of income including, dividends, interests, and royalties making Malta an attractive jurisdiction for international tax planning strategies.
Social Security Contributions
Malta Social Security Rates
Social security contributions in Malta are mandatory for both employers and employees, ensuring a robust social security system that provides various benefits, including healthcare and pensions.
Contributions to Employees and Employers
Employees contribute 10% of their gross earnings, while employers also contribute 10% of the employee’s gross earnings. These contributions enhance the sustainability of Malta’s social security system.
Self-Employed Contributions
Self-employed individuals are also required to contribute to social security at varying rates, typically around 15% of their declared income.
How Can We Help You?
Malta’s favorable tax rates, coupled with its comprehensive legal framework and strategic location, have contributed to its reputation as a tax haven. This is because together with Cyprus, Malta along with Spain and Cyprus offers one of the best special tax regimes for individuals in the European Union.
Furthermore, Malta’s exemption from inheritance tax makes it highly favorable for estate planning, appealing to those aiming to safeguard wealth for future generations. Although no inheritance tax exists, minimal duties like stamp duty may apply in certain cases, especially for real estate transactions.
For expert help with understanding Malta’s tax residency and taxation rules and to improve your tax planning strategies, you can contact TaxMove.
Our experts emphasize strategic tax planning and compliance with local regulations to maximize benefits and minimize risks.
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What are the personal income tax rates in Malta?
How is tax residency determined in Malta?
Tax residency in Malta is determined by spending at least 183 days in the country within a calendar year. Residency can also be established through habitual residence and strong personal or economic ties to Malta.
