Taxation

For tax purposes an individual is normally regarded as being resident in Malta for particular year if, in that year, his stay in Malta exceeds 183 days. As already noted, however, foreigners residing in Malta are not taxed on their worldwide income, but only on Maltese source income and capital gains and on foreign source income remitted to Malta. Foreign source capital gains are not taxed even if remitted to Malta. The basis of taxation is therefore identical to that of Residents Scheme permit holders.

The tax rate for residents opting for the 'Permanent Residence Scheme' is at a flat rate of 15% or an annual tax of €4,193.

Residence opting for the 'Temporary Residence Scheme' are taxed on what they remit to the island and are taxed at these rates;

Married Tax Rates Single Tax Rates
First €10,482
Next €8,153
Next €4,659
Remainder over €23,294
Nil
15%
25%
35%
First €10,482
Next €5,241
Next €2,912
Remainder over €15,723
Nil
15%
25%
35%


Other Provisions
Household effects originating from EU countries may be brought freely into Malta at any time. Goods originating from non-EU countries may be brought into Malta without the payment of VAT or Customs Duties by a person who intends to have his primary residence in Malta. Customs may ask for related proof.

Inheritance and capital transfer tax
There is no general inheritance tax system in Malta. However, upon the transfer or transmission (upon death) of:

  • Real estate or shares in a company owning mainly real estate a duty of 5% is payable;

  • Marketable securities (mainly shares in Maltese companies) a duty of 2% is payable.

Tax-related Incentives

  • A low flat rate of income tax of 15% with a minimum tax liability of €4,192 after double taxation relief per annum. The tax is calculated on income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted to Malta;
  • The holder of a Residents Scheme permit is not subject to tax on worldwide income. Foreign source income is taxed in Malta to the extent that it is received in or remitted to Malta;
  • Malta’s tax legislation provides for relief from double taxation, whether through negotiated double tax agreements with a substantial number of countries worldwide, or through unilateral provisions. Certain foreign income remitted to Malta qualifies for a reduced withholding rate of foreign tax (this applies typically to dividends, interest and royalties), or is exempt from foreign tax (this applies typically to private pensions and to certain capital gains). The provisions of each particular treaty entered into by Malta must, however, be consulted to determine the treatment of each item of income in each particular case.
  • There is no real estate tax in Malta. Tax on capital gains arising from the sale of real estate in Malta does exist but residents are exempt if they have used the property as their main residence for three consecutive years and the property is disposed of not later than one year of vacating it.

Duty, at 5%, is however chargeable on the purchase of real estate in Malta.

 

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