Taxes in Malta 2026: Corporate Tax, Refunds, the 15% Option and Tax Residence
Malta taxes company profits at a nominal 35% – the highest rate in the EU. At the same time, hardly any EU state achieves such a low effective burden: thanks to the full imputation and refund system, it falls to around 5% for trading profits. Since September 2025 there has also been an elective flat tax of 15% without refunds. This guide reflects the 2026 position: how the refund system works, which rates apply to which income, how individuals are taxed, what Pillar Two means and what German and Swiss shareholders need to watch out for.
- ✛Corporate tax is 35%. After distribution, shareholders receive 6/7 back on trading profits – around 5% effective. Passive interest and royalties bear an effective rate of around 10%.
- ✛Since 2 September 2025 (Legal Notice 188 of 2025), companies can instead elect a final 15% tax without refunds (FITWI). The election is binding for five years.
- ✛Malta has deferred Pillar Two under Article 50 of the EU Directive: until the end of 2029 there is no IIR, no UTPR and no domestic top-up tax (QDMTT).
- ✛Residents not domiciled in Malta (non-doms) are taxed on foreign income only when remitted to Malta; foreign capital gains remain tax-free. From EUR 35,000 of foreign income a minimum tax of EUR 5,000 applies.
- ✛For German shareholders, an effective rate of 5% counts as low taxation: passive income is subject to CFC taxation, and management must actually be in Malta.
Malta as a tax location: an overview
Malta has been an EU member since 2004 and part of the eurozone since 2008. English is an official language and company law follows the British model. For international businesses, the tax system is the main attraction: it combines a high nominal rate with refunds to shareholders. It is complemented by a participation exemption, no withholding tax on dividends and around 80 double tax treaties.
| Tax | Rate 2026 | Note |
|---|---|---|
| Corporate tax | 35% | 5–10% effective after refund or 15% with FITWI |
| Personal income tax | 0–35% | single: tax-free up to EUR 12,000, 35% from EUR 60,001 |
| VAT | 18% | reduced 12%, 7%, 5% and 0% |
| Withholding tax on dividends | 0% | also on distributions to non-residents |
| Wealth and inheritance tax | none | but stamp duty on property and shares |
The ICAEW offers detailed overviews of the taxation of different groups of people in Malta. A comparison with other EU locations is in our article EU, Georgia and Cambodia compared.
Corporate tax and the refund system
A company is fully taxable in Malta if it is incorporated there or managed and controlled from there. It first pays 35% on its profit. When it distributes the profit, the shareholder receives part of this tax back on application. Malta calls this the full imputation system: the company's tax is fully credited to the shareholder, and no additional dividend tax is due.
Refund rates
| Type of income | Refund | Effective burden |
|---|---|---|
| Trading profits (active business) | 6/7 | 5% |
| Passive interest and royalties | 5/7 | 10% |
| Income for which foreign tax credit relief is claimed | 2/3 | around 6.25% (in addition to the foreign tax) |
| Dividends and gains from participating holdings (if not exempt) | full | 0% |
| Income from Maltese immovable property | none | 35% |
An example: a Maltese trading company earns a profit of EUR 100,000 and pays EUR 35,000 in tax. It distributes EUR 65,000. The shareholder claims 6/7 of the tax, i.e. EUR 30,000. The shareholder keeps EUR 95,000 net – an effective tax burden of 5%.
Requirements and procedure
- ✛The company must be registered in Malta, have paid its tax and filed its tax return.
- ✛The shareholder must be entered in the register of members and actually receive the dividend.
- ✛The claim is filed electronically with the Malta Tax and Customs Administration (MTCA). Payment must be made within 14 days once the claim is complete and the tax has been paid.
- ✛The refund is paid into the shareholder's bank account and is not taxable in Malta.
In practice, a two-tier structure is usually chosen: a Maltese holding company holds the operating company and receives the refund. Since 2019, parent and subsidiary can also form a fiscal unit under the Consolidated Group Rules. The group then pays the effective tax directly, without the detour of payment and refund.
New since 2025: the 15% FITWI option
With Legal Notice 188 of 2025 of 2 September 2025, Malta introduced the Final Income Tax Without Imputation (FITWI). Companies can elect to pay a final 15% on their chargeable income. There is then no refund and no credit at shareholder level.
- ✛Election: nobody is switched automatically. The company must actively opt in.
- ✛Lock-in: the election applies for at least five consecutive years.
- ✛Final Tax Account: profits taxed at 15% are allocated to a separate tax account. Distributions from it carry no refund entitlement.
- ✛Floor: tax under FITWI may not be lower than the effective tax under the refund system.
| Criterion | Refund system | FITWI 15% |
|---|---|---|
| Effective burden on trading profit | around 5% | 15% |
| Liquidity | 35% upfront, refund after distribution | only 15%, no pre-financing |
| Structure | usually two companies | one company is enough |
| Perception by foreign authorities and banks | needs explaining | easy to understand |
| CFC taxation in Germany (15% threshold) | usually triggered | burden reaches the threshold; case-by-case review |
For most entrepreneurs the classic refund system remains more tax-efficient. FITWI is mainly worthwhile for groups within the scope of Pillar Two and for shareholders whose country of residence penalises a burden below 15% with CFC taxation.
Pillar Two: what the global minimum tax means for Malta
The global minimum tax of 15% applies only to groups with consolidated revenue of at least EUR 750 million. Malta has used Article 50 of EU Directive 2022/2523 to defer the income inclusion rule and undertaxed profits rule (IIR and UTPR) for six years – at the latest until financial years beginning on 31 December 2029.
Malta has so far not introduced a domestic top-up tax (QDMTT). The often-repeated claim that Malta already levies a QDMTT is wrong. FITWI is not a QDMTT either. For groups with Maltese subsidiaries this means that other states can collect the difference to 15% through their own IIR or UTPR.
For small and medium-sized businesses, family holding companies and entrepreneurs with international structures, Pillar Two changes nothing. For them the effective burden of 5% remains. The effect of the minimum tax on IP and digital structures is explained in our article on Hong Kong, Pillar Two and digital income. The European Commission publishes regular analyses of the tax situation in member states, including Malta.
Participation exemption and holding structures
Dividends and capital gains from a participating holding are tax-exempt in Malta (participation exemption). Alternatively, the company can tax them and the shareholder receives a full refund.
When is a holding a participating holding?
- ✛at least 5% of the equity with rights to profits and liquidation proceeds
- ✛or an investment of at least EUR 1.164 million held for at least 183 days
- ✛or a right of first refusal, a right to board representation or a holding in furtherance of the company's own business
An anti-abuse rule also applies to dividends. The exemption applies only if the subsidiary is resident in the EU, is subject to tax of at least 15% or earns no more than 50% passive income. Otherwise the holding must not be a mere portfolio investment and the passive income must be taxed at at least 5%.
Malta levies no withholding tax on dividends to non-residents. Interest and royalties paid to non-residents are generally also free of withholding tax. How a Maltese holding differs from a German GmbH holding is shown in our article on GmbH taxes. We compare non-EU structures in UK LLP vs Hong Kong vs EU.
IP taxation: the patent box
Royalties are taxed at 35% in principle and, as passive income, receive a 5/7 refund. In addition, the Patent Box Regime (Deduction) Rules have applied since 2019. They follow the OECD's modified nexus approach.
- ✛qualifying assets are patents, utility models, copyright-protected software and certain similar rights
- ✛deduction of up to 95% of qualifying IP income, depending on the share of R&D costs borne by the company itself
- ✛effective burden as low as around 1.75%
- ✛trademarks do not qualify
Since Budget 2026 there has also been an enhanced deduction of 175% for qualifying research and innovation expenditure.
Tax residence of individuals
Malta distinguishes between residence and domicile. Domicile roughly corresponds to origin: anyone not born in Malta who does not regard it as their permanent home usually keeps their foreign domicile. The combination determines the scope of tax liability.
| Status | Maltese income | Foreign income | Foreign capital gains |
|---|---|---|---|
| Resident and domiciled | taxable | taxable (worldwide) | taxable |
| Resident, not domiciled (non-dom) | taxable | only when remitted to Malta | tax-free, even if remitted |
| Non-resident | taxable | not taxable | not taxable |
As a rule, a person is resident if they spend more than 183 days in Malta in a calendar year or live there with the intention of staying. There is, however, no rigid day count. The remittance principle plays a central role for non-doms.
Since 2018, resident non-doms with foreign income of at least EUR 35,000 pay a minimum tax of EUR 5,000 per year, even if they remit nothing to Malta. This does not apply to participants in special programmes such as the GRP.
Income tax rates 2026
| Chargeable income (single) | Rate |
|---|---|
| up to EUR 12,000 | 0% |
| EUR 12,001 – 16,000 | 15% |
| EUR 16,001 – 60,000 | 25% |
| above EUR 60,000 | 35% |
For married couples, the zero rate applies up to EUR 15,000. Since 2026 there have been new rates for parents with children: married couples with two or more children, for example, pay no income tax up to EUR 22,500. These bands will be raised further until 2028. Non-residents pay the top rate on Maltese income from EUR 7,801. The taxation of employees follows clear progressive bands starting with personal allowances.
Social security contributions of 10% each for employees and employers are added, subject to a weekly cap. Self-employed persons generally pay 15%, also with a maximum.
Residence programmes for new residents
Malta offers several programmes with flat-rate taxation. They target different groups and each requires a qualifying property (purchase or rental), health insurance and sufficient means.
| Programme | Target group | Tax | Minimum tax |
|---|---|---|---|
| Global Residence Programme (GRP) | non-EU citizens | 15% on foreign income remitted to Malta | EUR 15,000 per year |
| The Residence Programme (TRP) | citizens of the EU, EEA and Switzerland | 15% on foreign income remitted to Malta | EUR 15,000 per year |
| Malta Retirement Programme (MRP) | pensioners from the EU, EEA, Switzerland and third countries | 15% on remitted pension income | EUR 7,500 per year plus EUR 500 per dependant |
| Highly Qualified Persons | executives in certain sectors with high salaries | 15% flat on employment income | salary threshold adjusted annually |
| Nomad Residence Permit | third-country nationals with remote income from EUR 42,000 | tax-free for 12 months, then 10% on remote income | – |
The Malta Permanent Residence Programme (MPRP) grants a permanent right of residence but no special tax status. For the tax effect in the home country, it is decisive that the home and centre of life are actually moved. What applies when leaving Germany is explained in our articles on flag theory and perpetual travel. SWICOR supports the move under residency abroad.
VAT in Malta
The standard rate of Maltese VAT is 18%, one of the lowest in the EU.
| Rate | Application (selection) |
|---|---|
| 18% | standard rate for most goods and services, including digital services |
| 12% | management of securities and credit, hire of pleasure boats, certain healthcare services |
| 7% | hotel and holiday accommodation, sports facilities |
| 5% | electricity, medical equipment, books and e-books, confectionery, cultural events |
| 0% | food, medicines, exports, international transport |
Domestic businesses must register for VAT from annual turnover of EUR 35,000; lower thresholds apply to certain services. Non-resident businesses must register from their first taxable supply. Returns are generally filed quarterly. For distance sales to consumers in other EU states, the EU-wide threshold of EUR 10,000 with the One-Stop Shop (OSS) applies.
Double tax treaties
Malta has concluded around 80 double tax treaties, including with Germany (2001), Austria and Switzerland (2011). As Malta itself levies hardly any withholding taxes, the benefit lies mainly in payments to Malta: treaties and EU directives reduce withholding taxes on dividends, interest and royalties from abroad.
- ✛EU directives: Parent-Subsidiary Directive and Interest and Royalties Directive for payments within the EU
- ✛Principal purpose test: through the multilateral instrument (MLI), many treaties deny benefits if a main purpose is saving tax
- ✛Section 50d(3) EStG: Germany refunds withholding tax to a Maltese holding only if it has its own substance or its shareholders would themselves be entitled to relief
Substance, place of management and CFC rules
Malta has no general economic substance law like the BVI or the Cayman Islands. Substance still determines whether a structure works – because other countries check it. Three questions are key:
- 1Where is the company managed? If key decisions are taken in Germany or Switzerland, the company is fully taxable there (in Germany under section 10 AO).
- 2Do CFC rules apply? An effective rate of 5% is below the German threshold of 15%. Passive income – such as interest, royalties or certain services – is attributed to the German shareholder (sections 7–13 AStG). The Maltese refund is taken into account when calculating the burden.
- 3Is there a permanent establishment in the country of residence? If the shareholder works from home for the Maltese company, a permanent establishment or permanent representative may arise there.
| Criterion | Recommendation | Evidence |
|---|---|---|
| Management | at least one qualified director resident in Malta | employment contract, CV, remuneration |
| Office | own premises or a serviced office actually used | lease, running costs |
| Board meetings | regularly in Malta | minutes, travel records |
| Staff and expenses | appropriate to the scale of the business | payroll, accounts |
How quickly a foreign company becomes taxable in Germany is explained in our article on permanent representatives and CFC taxation. Anyone transferring assets from a German business to Malta must also consider German exit taxation. SWICOR provides a local director under board and director.
Maltese company with substance, director and accounting – from one source, remote and at fixed prices.
Company formation in Malta →Transfer pricing
Since 1 January 2024, Malta has had formal transfer pricing rules for the first time (Legal Notice 284 of 2023). Cross-border transactions between related parties must comply with the arm's length principle. The rules follow the OECD guidelines.
- ✛applies only to cross-border transactions; initially from financial year 2024 for new and from 2025 for existing arrangements
- ✛smaller transactions below set thresholds for revenue and capital are exempt
- ✛documentation must be provided at the MTCA's request; a master file and local file based on the OECD model are recommended but not generally required
- ✛country-by-country reporting has applied since 2016 to groups with revenue of EUR 750m or more
The shareholder's country of residence will also check whether services between the Maltese company and related persons are paid at arm's length.
Sector regimes: gaming, shipping and financial services
Gaming and iGaming
Malta is one of Europe's leading locations for online gaming. Licences are issued by the Malta Gaming Authority (MGA). B2C operators pay a gaming tax of 5% on gross gaming revenue from players resident in Malta, plus licence and compliance fees. The company's profits are subject to normal corporate tax with refunds.
Shipping and aviation
Malta has one of Europe's largest ship registers. Qualifying shipowners are subject to a tonnage tax approved by the European Commission instead of profit-based taxation. Aviation and leasing companies benefit from accelerated depreciation and special residence rules.
Financial services and funds
The Malta Financial Services Authority (MFSA) supervises banks, insurers, funds and crypto service providers. Since the end of 2024 the EU MiCA regulation for crypto service providers also applies in Malta. Which reporting obligations apply to crypto from 2026 is shown in our article on CARF and hardware wallets.
Legal forms and formation
- ✛Private limited company (Ltd): the usual legal form for international structures, minimum capital EUR 1,165, 20% paid up; fully integrated into the refund system
- ✛Public limited company (plc): for larger businesses and capital market access, minimum capital EUR 46,588
- ✛Partnerships: can be taxed as transparent or as a company, less common for international structures
- ✛Funds and trusts: for asset management and succession planning
Every company must prepare audited annual accounts and register its beneficial owners with the Malta Business Registry. A Maltese bank account is useful for refunds and ongoing payments, but opening one requires careful KYC preparation. The documents required are listed in our KYC checklist. SWICOR handles company formation in Malta as well as ongoing accounting and tax. We offer comprehensive advice on company formation in various international locations.
Compliance and deadlines
| Obligation | Deadline / rule |
|---|---|
| Company tax return | 9 months after financial year-end or 31 March of the following year – whichever is later |
| Tax payment | 9 months after financial year-end |
| Provisional tax | three instalments in April, August and December |
| Annual accounts | audit required for all companies, filing with the Malta Business Registry |
| VAT | generally quarterly returns |
| Interest on late payment | 0.6% per month since September 2022, capped at the tax due |
Late filing also attracts surcharges. Refunds paid late by the tax authority likewise bear interest at 0.6% per month.
Conclusion
Taxes in Malta remain attractive for international entrepreneurs in 2026: the refund system leads to an effective burden of 5 to 10%, the new FITWI option offers a simple 15% alternative, and Pillar Two is deferred until 2029. For individuals, non-dom status and the residence programmes are of interest. However, the success of a Maltese structure depends less on the tax rate than on genuine management in Malta and a review of CFC rules in the country of residence.
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Frequently asked questions
How high is corporate tax in Malta?
Nominally 35%. After the refund to shareholders, the effective burden is around 5% for trading profits and around 10% for passive interest and royalties. Since 2025, a final tax of 15% can be elected instead.
What is FITWI?
Final Income Tax Without Imputation is a flat 15% tax on profits without refunds, available by election since September 2025. The election binds the company for at least five years.
Does Pillar Two apply in Malta?
Malta has deferred implementation until the end of 2029 and has not introduced a domestic top-up tax. The minimum tax only affects groups with revenue of EUR 750m or more anyway.
How are non-doms taxed in Malta?
Foreign income is taxed only when remitted to Malta. Foreign capital gains are tax-free. From EUR 35,000 of foreign income, a minimum tax of EUR 5,000 per year applies.
Is a Maltese company worthwhile for German entrepreneurs?
Only with genuine management in Malta. If the company is run from Germany, it is taxable there. Passive income is also subject to CFC taxation because the burden is below 15%.
How high is VAT in Malta?
The standard rate is 18%. Reduced rates of 12%, 7%, 5% and 0% apply to certain goods and services.
Review a Malta structure for your business?
We analyse refund or FITWI, CFC rules and substance and form your Maltese company – remotely and at fixed prices.
This article is a general analysis and does not replace individual tax or legal advice. Regulations change; the information reflects the status at the date of publication.