Basic Principles of the Tax System in Malta
Malta offers a competitive tax system that attracts investors. Taxes in Malta are considered a uniform system without double taxation. Malta is a member of the European Union, which means additional tax benefits. The basic tax system is based on tax residency.
Income Tax Rates
Income tax in Malta is based on a progressive scale. Individuals earning less pay lower rates. Income up to 9,100 EUR is tax-free for residents. The highest tax rate is 35% for income exceeding 60,000 EUR. Non-resident individuals are subject to different rates.
| Income Category | Tax for Residents | Tax for Non-Residents |
|---|---|---|
| up to 9,100 EUR | 0% | 0% |
| up to 14,500 EUR | 15% | 20% |
| up to 60,000 EUR | 25% | 30% |
| above 60,000 EUR | 35% | 35% |
Corporate Tax
The corporate tax in Malta is a standard 35%. However, the system offers many tax benefits for companies. Malta provides a 6/7 refund for dividends paid to foreign owners. Ultimately, the effective tax rate for companies can be as low as 5%. The refund is possible thanks to Malta’s compliance status with EU standards.
VAT in Malta
The VAT rate in Malta is 18%. However, there are reduced VAT rates for certain products and services. For example, hotel services are taxed at a rate of 7%. Medicinal products and certain food items are exempt from VAT. The VAT system is harmonized with other EU countries.
Property Tax
Malta does not impose property tax. However, purchasing property involves a one-time stamp duty. This fee is typically around 5% of the property’s value. This makes real estate investments in Malta more attractive. There are also additional fees associated with purchasing and managing properties.
Inheritance and Gift Tax
Malta does not charge inheritance or gift tax. This makes it attractive for individuals planning to transfer wealth. It is important to manage this process correctly. It is worth seeking advice from estate planning specialists.
Pros and Cons of Malta’s Tax System
Malta’s tax system has many advantages, including the lack of property tax. The effective rate for businesses can be extremely low due to refunds. However, the system requires understanding and can be complex for newcomers. It is recommended to collaborate with local advisors to maximize tax benefits.
