Malta Summary Guide

Taxation of Business People in Malta

The rules governing residence for tax purposes in Malta are complex, as the concepts of domicile (generally defined as where a person is born, although domicile can be changed), residence (having a habitual presence in the country), and ordinary residence (being present in the ordinary course of their life) have traditionally come into play. A Social Security number and tax card will need to be obtained by tax residents.

Usually, where a person is both domiciled and ordinarily resident in Malta they will pay tax on their worldwide and Maltese-sourced income. Non-Maltese domiciled persons resident for tax purposes have traditionally only paid tax on income derived from Malta, as have non-residents.

From 2004, the New Residents Scheme has permitted permanent residence, with a flat rate of 15% tax payable, subject to certain conditions and restrictions (including the payment of a guaranteed minimum annual tax amount, proof of income or capital outside of Malta, and restrictions on the ability to work in the country).

Personal income tax for ordinary residents (as opposed to ‘permanent’ residents under the scheme mentioned above) is payable at rates of up to 35%, depending on earnings and marital status. There is zero income tax on earnings up to EUR11,900 (married) and EUR8500 (single). Upper income thresholds are EUR28,701 and EUR19,501 respectively. Self-employed individuals pay tax at 15% on net profits and must make three equal advance payments based on the previous year’s income.

A flat rate of 15% also applies to those granted Permanent Residence status, as previously stated.

Incorporated companies will pay 35% Corporate Income Tax on chargeable income. Incentives by way of reduced corporation tax rates or tax holidays are available where businesses are active in certain sectors (eg production, manufacturing, tourism and catering). Companies licensed under the Malta Freeports Act may also qualify for these incentives. Allowable expenditure that can be deducted from gross revenue before the calculation of tax includes repairs and maintenance, capital allowances and interest of loans.

Individuals doing business on their own account, as a sole proprietor are likely to be treated as self-employed, and taxed under the personal income tax system, benefiting from the 15% rate applicable to the majority of such income.

Withholding tax does not apply to the distribution of profits or dividends by a company to non-resident shareholders, or to non-resident interest and royalty transactions.

VAT is levied at the standard rate of 18% and there is a reduced rate for certain supplies of 5%. All traders above the registration threshold in Malta (between EUR24,000 and EUR35,000, depending on whether services or goods are being sold) must register for VAT.

Malta Summary Guide Contents

Malta Summary

Malta Summary Chart

Malta Residence

Taxation of Business People in Malta

Living and Doing Business in Malta

Business Forms in Malta

Latest Comments

Expat Brit

Hi,

I am facing a dilemma and would like to invite any reader to advise me.

I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.

In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.

However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?

If anyone has pertinent advice on these points, I’d be grateful to hear them.

TJM @ Eindhoven, NL

T. Dog

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Jersey vs. Malta??

Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary

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Purchasing investment-link insurance for my staff

Would that count as income tax to my staff? And would that count as expense to my company?Michael

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Irish crisis - effects on small business?

Hi all,

Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.

Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...

Thanks,Kate

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Living in France contracting to Australian company

I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD.
Do I pay tax in France or Australia or both ?
Any help or guidance would be much appreciated.France move

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