Individual - Tax administration

Last reviewed - 09 July 2021

Taxable period

The tax returns are filed on a calendar-year basis.

Tax returns

Husband and wife (or two partners who have registered their partnership as a civil union) are jointly responsible for filing tax returns, and spouses must choose who between them is to be registered as the taxpayer. The election of a ‘responsible spouse’ remains effective for five years. The responsible spouse may elect to have the tax on the other spouse's earned income/pension income computed separately. If a separate computation is chosen, husband and wife (or partners as aforesaid) are assessed separately at single taxpayers' rates. Unearned income is taxable in the hands of the spouse/partner earning the higher level of income.

As from calendar year 2020, a couple that is married and living together may elect to receive a separate income tax return, if both spouses earn employment, self-employment (excluding directors fees) or pension income from past employment, or they have an agreement of separation of assets.

The tax return, together with a self-assessment, must be submitted by the end of June of the year following the basis tax year. In certain instances and subject to the discretion of the Commissioner for Revenue, an individual may not be required to file a tax return. In such instances, one should receive a statement from the Revenue outlining one's tax position; if one does not agree with the position outlined in the said statement, one may then request a tax return and file it accordingly. Penalties are incurred on late filing of returns. The self-assessment is deemed to represent the correct tax position, and an assessment should not be raised unless the Commissioner for Revenue disagrees with the self-assessment.

Payment of tax

In terms of the Final Settlement System (FSS) Rules, an employer is required to withhold income tax and social security contributions at source from the employees’ salaries (including taxable fringe benefits), which, in most cases, equals the individual's total tax liability. Such deductions of tax/social security should be forwarded by the employer to the Commissioner for Revenue within specific time frames.

Where income is not subject to the FSS (e.g. self-employed persons), the taxpayer is required to make three payments in the basis tax year under the provisional tax (PT) system. The PT payments are based on the last self-assessment filed by the individual, and the payments are divided into three instalments of 20%, 30%, and 50%, respectively. The tax liability that is still due at the tax return due date, after deducting all tax credits, must be settled immediately with the submission of the return. Interest at 0.54% per month is charged on any unpaid tax. The interest rate was reduced to 0.33% with effect from 1 January 2020.

Provisional tax is also payable at 7% on the selling price of certain assets disposed of on account of tax.

A final WHT of 15% is imposed on specified types of investment income (e.g. banking interest paid to Maltese residents), unless the taxpayer opts to be taxed at the tax rates applicable to him/her.