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Taxes in Malta: Which should I pay?
Here are the key taxes in Malta for individuals and businesses. Live in the country while fulfilling your tax obligations!
Malta is a small archipelago located in the centre of the Mediterranean, making it a popular destination for tourists, students, workers, and those wanting to reside in the country for a while. It boasts a warm climate, popular beaches, historical monuments, fortresses, and an affordable cost of living compared to other European countries. For this reason, it’s a recommended place to start a new life project, but do you know about taxes in Malta?
This country has a tax system that offers attractive benefits for residents and businesses, as well as tax obligations that are essential to understand. At Holafly, we bring you an article about the main taxes in Malta with practical examples and updated rates for 2025. This way, you’ll know exactly how much you’ll need to pay based on your personal situation. Let’s dive into the world of taxes!
Taxes for individuals in Malta
What is an individual? This legal term is used to define a unique and independent human being who has rights and obligations under the law. An individual could be a student, an employee, a freelancer, a digital nomad, or a pensioner, for example. This group has certain tax obligations, as well as benefits depending on their personal situation. The taxes in Malta for individuals include both direct and indirect taxes. Here are the main ones:
1. Income Tax
The income tax taxes the annual income of individuals residing in Malta: Salaries, rental income, investment returns, and any other income sources. The country applies a progressive tax system based on income levels and marital status:
| Single | Rate | Married | Rate |
|---|---|---|---|
| Up to €9,100 ($9,475) | 0% | Up to €12,700 (up to $13,200) | 0% |
| €9,101 to €14,500 (up to $15,100) | 15% | €12,701 to €21,200 (up to $22,075) | 15% |
| €14,501 to €60,000 (up to $62,400) | 25% | €21,201 to €60,000 (up to $62,400) | 25% |
| Over €60,000 (over $62,400) | 35% | Over €60,000 (over $62,400) | 35% |
For example, for a single person with an annual income of €25,000.00 ($27,200.00), no tax would be paid on the first €9,100.00 ($9,900.00); from €9,101.00 to €14,500.00, the rate would be 15% = €810.00 ($880.00); and from €14,501.00 to €25,000.00, the rate would be 25% = €2,625.00 ($2,860.00). Total: €3,435 in tax ($3,575).
2. Social security contributions
Another tax in Malta is the social security contributions that all employees are required to make. This helps the government fund services such as healthcare and pensions. These would be their rates, differentiating between employees and the self-employed:
- Employees: 0 % of monthly salary, maximum €50.93 per week ($53.03), in 2025.
- Self-employed: Between 15% and 23% of annual net income, depending on declared profits.
- Practical example: An employee earning €2,000 per month ($2,082) would contribute €200 per month ($208) to social security.
3. Value Added Tax (VAT)
VAT is an indirect tax in Malta applied to the consumption of goods and services. When purchasing a product or hiring a professional service, individuals must pay the price of the good plus an added percentage. It’s a way of raising money through the consumer actions of citizens. Compared to other countries, Malta’s VAT rate is lower. Here are the existing rates:
- General rate: 18% (clothing, electronics, furniture, etc.).
- Reduced rate: 7% (tourist accommodation).
- Super-reduced rate: 5% (pharmaceutical products and books).
- Exemptions: Essential goods, exports, and certain medications.
- Practical example: When purchasing an item such as a coat for €100 ($104), the final price will be €118 ($123), with €18 ($18.75) for VAT.
4. Capital Gains Tax
Taxes in Malta also apply to capital gains from individuals. If you sell a property or assets in the country and make a profit, you’ll need to declare this to the Maltese tax system. The main rates are as follows:
- Rates: A rate between 8% and 12% is applied on the sale value of real estate.
- Other assets: 15%, such as stocks.
- Practical example: If you sell a house for €200,000 ($208,242) at an 8% rate, you’d pay €16,000 ($16,660) in tax.
5. Stamp Duty
This tax is applied to individuals transferring real estate and negotiable securities. There are some variations, like in Gozo, where the general rate is lower at 2%, but in general, the taxes applied across the country are:
- General rate: 5% on the purchase price of property.
- Reduced rate: For first-time homes and low-value properties.
- Practical example: If you buy a home for €150,000 ($156,180), the stamp duty will be €7,500 ($7,800).
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Corporate Taxes in Malta
In addition to individual taxes, businesses in Malta also face tax obligations. However, these taxes are highly competitive compared to other European countries as the government encourages international talent through business development.
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1. Corporate Income Tax
All registered companies in Malta must pay corporate income tax, which applies to their worldwide income if they are domiciled in the country. Foreign companies only pay tax on income generated in Malta.
- Rate: The general corporate tax rate is 35% on company profits. However, a tax refund system for shareholders can significantly reduce this tax burden.
- Example: A company with an annual profit of €100,000 ($104,100) would pay €35,000 ($36,440) in tax, but could receive a refund of up to 30%, leaving an effective tax burden of just €5,000 ($5,200).
2. VAT (Value Added Tax)
For businesses based in Malta that engage in commercial activities in the country, they are required to register for VAT if their annual turnover exceeds €30,000 ($31,235). They also need to register if they import goods or services subject to VAT. Here are the applicable rates:
- Standard rate: 18% for most goods and services.
- Reduced rate: 7% for tourist services, hotels, and accommodation.
- Exemptions: Essential goods, exports, and certain medicines.
- Example: If a company sells goods worth €50,000 ($52,000) in a year, they will pay €9,000 ($9,370) in VAT to the government (18%).
3. Payroll Taxes and Social Security Contributions
Taxes in Malta for businesses also apply to payroll taxes, which are deducted from employee salaries and contribute to social security. This ensures workers benefit from social security and pension systems, among others. Here’s how it works:
- Rate of 10% to 25%: Payroll tax on employee income, depending on salary levels.
- 10% of gross salary: Contribution to social security, split equally between employer and employee.
- Example: For an employee earning €2,000 ($2,082) per month, the company would pay €100 ($104) to social security and deduct between €200 and €500 ($208 to $520) in taxes.
4. Tax on Transfers and Capital Gains
Just like individuals, businesses selling properties, shares, or assets must declare the gains made and pay the corresponding tax. The rate depends on the type of asset and its location:
- Rate: Between 5% and 12%, depending on the type of asset and location.
- Example: A company selling a property valued at €500,000 ($520,605) would pay up to €60,000 ($62,470) in taxes.
Tax Benefits in Malta
Although taxes in Malta are not too high, with reduced rates compared to neighbouring countries, the government has implemented measures to lower the tax burden for individuals and businesses. This encourages foreign investment in the country, which helps create job opportunities. Additionally, these tax benefits allow the state to continue collecting revenue in a fair and equitable manner. Would you like to know what these benefits are?
| Benefit | Description | Rate |
|---|---|---|
| Tax Refund for Shareholders | Shareholders in companies in Malta can claim a refund on the corporate tax paid by the company. | Up to 5%. |
| Fiscal Residence Programmes | The Global Residence Programme or the Malta Permanent Residence Programme (MPRP), offer reduced rates for foreigners on income generated outside the country. | 15% on income remitted to Malta. |
| R&D Investment Incentives | Malta encourages innovation and research through tax credits. Companies developing projects in these areas will receive certain grants. | Up to 25% additional deduction. |
| Tax Exemptions for Startups | During the first three years of activity, new technology and creative businesses can benefit from partial tax exemptions. | Up to 50% of the tax burden for annual profits of less than €100,000 ($104,120). |
Frequently asked questions about taxes in Malta
It depends on each person’s income level. The rate ranges between 0% and 35%. For example, if your income is less than €9,100 ($9,475), you are exempt from this tax. However, for incomes over €60,000 ($62,472), the maximum rate of 35% applies.
All companies must pay a corporate tax of 35% on their profits. However, various tax benefits can reduce this burden to as low as 5% if the conditions are met.
Yes, Malta has specific programmes for foreigners such as the Global Residence Programme and the Malta Permanent Residence Programme (MPRP), which allow foreigners to be taxed at 15% on income remitted to the country, provided they meet the requirements.
Yes, the Maltese government helps startups in research and technology during their first three years of operation. This tax advantage offers a reduction of up to 50%, which is a great relief if you are thinking of starting a business in this area.
If you buy property in Malta, you will have to pay a stamp duty of 5% on the property’s value, but you can benefit from reductions if it is your first home.
Malta balances competitive rates with many tax benefits. For example, the general VAT rate of 18% is in line with the European average, lower than countries like Sweden (25%) and higher than others like Luxembourg (17%).
