Malta

The following are some of the more recent significant developments that were introduced in Maltese tax law:

• In terms of the European Minimum Tax Directive, Malta applied the derogation provided by the EU and hence the application of the Income Inclusion Rule and the Undertaxed Profit Rule is deferred by up to six years. The said Directive was transposed into Maltese law by means of the European Union Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups Regulations, 2024, published in February 2024.
• Pursuant to the Final Income Tax Without Imputation Regulations published in September 2025, Maltese entities may, in respect of income accruing to or derived in the fiscal year preceding the year of assessment 2025 and subsequent years, elect to apply a rate of tax of 15% on their chargeable income calculated on the basis of the standard Maltese income tax rules.
• In January 2026, Malta introduced a consolidated framework aimed at attracting and retaining highly skilled professionals across key industries. The Tax Treatment of Highly Skilled Individuals Rules, consolidates earlier legislation into a unified 15% flat‑tax regime, creating greater consistency across sectors and supporting longer‑term workforce planning through 31 December 2040.
• Transfer Pricing Rules apply for basis years commencing on or after 1st January 2024.
• The possibility of setting up protected/segregated/recognised incorporated cell companies remains an option under Maltese law. Such cell companies allow for the possibility of segregating assets (e.g. vessles or aicraft portfolios) within the same corporate entity, thus segregating the risks and benefits attributable to the particular cell, without affecting the risks and benefits attributable to other cells within the same cell company.
• Further tax incentives for occupational pension schemes are available.
• The minimum shareholding requirement of a ‘participating holding’ under the Maltese Income Tax Act is 5%. This enables Maltese companies holding at least 5% of the equity shares, to claim a participation exemption (subject to the satisfaction of other conditions) on dividend income and gains derived by a Maltese company from a qualifying ‘participating holding’ or from the disposal of such holding (apart from this 5% minimum equity holding, there may be other alternative conditions to qualify for the participation exemption).
• By virtue of a number of schemes, such as the Start-up Finance (2024) Regulations and a number of Research and Development schemes, undertakings operating in various industries may qualify for assistance by the Malta Enterprise.
• Recent VAT regulations require payment service providers to keep records of payments made and to submit such information to the VAT Commissioner in accordance with the provisions of Council Directive (EU) 2020/284 of 18 February 2020 amending Directive 2006/112/EC.
• With effect from 1 January 2025, the special scheme for VAT purposes applicable to Small Undertakings was amended to take into account various EU-wide changes (such as widening this scheme so as to include certain cross border transactions).
• The EU’s VAT in the Digital Age (ViDA) initiative, as approved in March 2025, introduces sweeping reforms which inter alia include mandatory e-invoicing, real-time digital reporting, and an expansion of the One Stop shop regime. We expect the Maltese VAT Authorities to transpose the necessary provisions into local legislation over the coming months.
• As of April 2025, the Maltese Commissioner for Tax and Customs has issued updated guidelines with respect to the implementation and interpretation of DAC2 and CRS. The Guidelines now classify entities with investment-related income as Reporting Financial Institutions under FATCA and CRS, regardless of shareholder count, and clarify when accounts are considered undocumented — these must still be reported until proper documentation is provided.
• In 2025, a mechanism was introduced allowing taxpayers and the Commissioner for Tax and Customs to resolve tax disputes without resorting to litigation, offering a faster alternative to court proceedings. These settlements typically apply to disputes involving Maltese tax (income tax, VAT, social security tax or duty taxes). The process involves a formal request by the taxpayer, negotiation between both parties, and a binding agreement specifying revised liabilities and potential penalty reductions.