Malta

Malta taxes individuals who are both domiciled and ordinarily resident in Malta on their worldwide income.

Any person who is ordinarily resident in Malta but not domiciled in Malta is taxable only on income arising in Malta and on any foreign income remitted to Malta (i.e. on income and chargeable gains arising in Malta and on income outside Malta that is received in Malta). Such persons are not taxable in Malta on income arising outside Malta, which is not received in Malta, and on capital gains arising outside Malta, regardless of whether they are received in Malta, or otherwise.

However, persons who are married to an individual ordinarily resident and domiciled in Malta are subject to a worldwide basis of taxation (and not on a source and remittance basis).

A non-resident individual is taxed only on income and chargeable gains arising in Malta.

Individuals are subject to tax on income arising in a calendar year (i.e. the basis year), which is assessed to tax in the year following the year in which it arises (i.e. the year of assessment).

Personal income tax rates

Income is taxable at graduated progressive rates, ranging from 0% to 35%. The 35% tax bracket is reached at annual chargeable income in excess of EUR 60,000.  

Basis year 2024

Tax rates for basis tax year 2024 are as follows:

Married resident taxpayers

Subject to certain conditions, the married rates also apply to single parents, widows/widowers, and separated parents.

Single resident taxpayers (or married couples opting for a separate computation)

Parent rates

The parent rates can be claimed by individuals who maintain under their custody a child, or pay maintenance in respect of their child, where:

• such child is less than 18 years of age (or between 18 and 23 years of age if attending full-time education at a university, college, or other educational establishment), and
• such child is not gainfully occupied, or, if gainfully employed, does not earn more than EUR 3,400 per annum.

The parent rates provide more preferential tax bands in lieu of single/separate tax rates.

Individuals who in terms of Maltese tax laws are:

• considered as ordinarily resident but not domiciled in Malta (and who therefore are subject to income tax in Malta on a source and remittance basis)
• are not subject to any other minimum tax threshold under Maltese law, and
• during the calendar year preceding the year of assessment derived (together with their spouse, in the case of couples married and living together) income arising outside Malta of at least EUR 35,000 or equivalent, which was not received in Malta in full,

should be subject to a minimum tax in Malta of EUR 5,000 for the said year.

In calculating such minimum tax liability, any tax paid in terms of Maltese income tax law, whether by withholding or otherwise, should be taken into account, unless it is a final tax paid on the transfer of immovable property situated in Malta. The said minimum tax liability of EUR 5,000 should be calculated before double tax relief.

As of 1 January 2024, taxpayers who only derive income from employment (other than income from the holding of an office of a director) that does not exceed EUR 11,620 (up from EUR 10,535) are not subject to Maltese income tax on their employment income.

A reduced income tax rate of 7.5% applies in respect of income derived by registered professional football or water polo players, athletes, or licensed coaches. As of 2024, this shall be extended to other persons engaged in sports activities. 

As of 1 January 2022, artists receiving income from artistic activities (as defined) conducted on a self-employed basis may opt to be taxed at a flat rate of 7.5% on the first EUR 30,000 turnover for calendar year 2022 and EUR 50,000 in the following years. When this option is applied, the rest of the income is to be added to the main income and taxed at the progressive tax rates. The tax is final and no set-off or refund shall be granted.

Recipients of royalty income derived by an individual in one's capacity as an author from qualifying literary works may opt to tax the full gross amount of such royalty income at a reduced rate of 7.5% (decreased from 15%). The literary publication must be eligible for copyright in terms of the Maltese Copyright Act. The tax is final, no set-off or refund shall be granted, and it is payable by 30 April of the relative year of assessment.

Subject to the satisfaction of a number of conditions, income derived from part-time work may qualify for a reduced tax rate of 10%, subject to a capping of EUR 10,000 per annum for part-time employment and EUR 12,000 per annum for part-time self-employment. Taxpayers may opt not to avail of this tax rate, in which case tax on such income should be charged at normal rates.

The income tax rate applicable on qualifying overtime emoluments remains 15% on the first EUR 10,000, provided that the basic weekly wage does not exceed EUR 375. Overtime emoluments exceeding this amount are taxable at the standard applicable rates of income tax.

Taxpayers subject to Maltese income tax on certain emoluments payable under a contract of employment requiring the performance of work or duties mainly outside Malta may opt to be subject to income tax at a flat rate of 15% if they satisfy certain conditions, including: (i) the said contract of employment should be for a period of at least 12 months and lasts at least 12 months, and (ii) the taxpayer should not be in Malta for a period that, in aggregate, is more than 30 days (disregarding vacation leave, sick leave, and period preceding commencement or following termination of contract).

Income tax rules have been issued in relation to third country nationals who hold a valid Nomad Residence Permit, which entitles the main applicant to work remotely from Malta. In terms of the said Rules, the main applicant is subject to income tax in Malta on income derived from ‘authorised work’ at a flat rate of 10%, before double tax relief (if applicable). Such income will be considered as the first part of the taxable income of the main applicant. Furthermore, generally, the main applicant is not subject to income tax in Malta on income arising from ‘authorised work’ in the first year. The maximum amount of non-taxable pension income increased from EUR 14,968 to EUR 16,220, with persons claiming married rates entitled to a further EUR 3,600 tax free in respect of income from other sources. These thresholds are available through the use of tax rebates on pension income after calculating the tax due using the normal rates on all income.

Certain pension income will gradually not be considered part of the taxable income, over a period of five years starting from 1 January 2022, as follows:

• Basis year 2022, 20% of pension income, subject to a capping of EUR 2,864.
• Basis year 2023, 40% of pension income, subject to a capping of EUR 5,987.
• Basis year 2024, 60% of pension income, subject to a capping of EUR 9,732.
• Basis year 2025, 80% of pension income, subject to a capping of EUR 12,976.
• Basis year 2026 and subsequent years, 100% of pension income, subject to a capping of EUR 16,220.

Moreover, for basis year 2024, tax rebate thresholds on pension income were increased as follows:

• From EUR 880 to EUR 1,068 with regards to persons on single rates.
• From EUR 670 to EUR 858 with regards to persons on parent rates.
• From EUR 340 to EUR 528 with regards to persons on married rates. 

As of 2024, widows’/widowers’/survivors' pension will no longer be taxable for individuals who have not attained 61 years of age. The beneficiaries will continue to be entitled to receive the pension income that would have been received by their spouse had they still been alive.

Employees earning less than EUR 60,000 should again be granted tax refunds in 2024 ranging between EUR 60 and EUR 140, depending on the amount of income earned.

Different types of programmes available for individuals

The Global Residence Programme is aimed at attracting more third country national individuals in taking up residence in Malta without taking up employment in Malta, with foreign-source income remitted to Malta by the beneficiary or its dependants being taxed at a flat rate of 15%, subject to a minimum tax of EUR 15,000 per annum. Beneficiaries should satisfy a number of qualifying criteria in order to be eligible for the beneficial tax treatment. In particular, applicants must hold immovable property in Malta for a purchase price of not less than EUR 275,000 (with lower thresholds applicable in the case of property situated in certain areas in Malta and/or Gozo). Alternatively, individuals may rent property in Malta for an annual rental payment of not less than EUR 9,600 (with lower thresholds applicable in the case of property situated in certain areas in Malta and/or Gozo).

The Residence Programme Rules 2014 (RPR) replaced the High Net Worth Individual Rules. The RPR reflects the same scheme as that provided under the Global Residence Program, but the former may be availed of by European Union (EU)/European Economic Area (EEA)/Swiss nationals who are not permanent residents of Malta. Under the RPR, similar to the position under the Global Residence Programme Rules, any foreign income derived by beneficiaries or their dependants and remitted to Malta is taxed at the reduced rate of 15% (flat rate), subject to a minimum tax of EUR 15,000 per annum.

A Malta Retirement Programme is applicable to pensioners in receipt of periodic pension income. Such pension income must constitute at least 75% of the pensioner's chargeable income in Malta, and such pension must be received in Malta. A number of other statutory conditions apply in order to be eligible for the said programme. Again, under this programme, foreign-source remitted income is taxed at 15%, subject to a minimum tax liability of EUR 7,500 per annum and an additional EUR 500 per each dependant, per annum. This Programme is now extended to third country nationals.

Subject to the satisfaction of a number of conditions, a returned migrant may elect to be taxed on a source and remittance basis (rather than on a world-wide basis). In this case, foreign-sourced income received in Malta exceeding the tax-free brackets of EUR 4,200 for single taxpayers and EUR 5,900 for married taxpayers should be subject to income tax at a flat rate of 15%, subject to a minimum tax liability of EUR 2,325 per annum.

The United Nations (UN) Pensions Programme Rules, 2015 are designed to attract foreign pensioners retiring from the United Nations. Similar to the Global Residence Programme and other programmes already in place, applicants must satisfy a number of conditions, including holding immovable property in Malta for a purchase price of not less than EUR 275,000, or EUR 220,000 for property situated in certain areas. Alternatively, individuals may rent property in Malta for an annual rental payment of not less than EUR 9,600, or EUR 8,750 for property situated in certain areas. A beneficiary who should receive at least 40% of the UN pension or a widow’s/widower’s benefit in Malta is not subject to income tax on such income in Malta. Other foreign-source remitted income should be taxed at a flat rate of 15%, subject to a minimum tax of EUR 10,000 (or EUR 15,000 where both spouses are in receipt of a UN Pension), after double tax relief.

The Highly Qualified Persons Rules cater to expatriates (i.e. individuals who are Maltese residents but not domiciled in Malta) in receipt of income payable in terms of a 'qualifying contract of employment' in respect of activities carried out in Malta. Subject to the satisfaction of a number of conditions, such expatriates may be subject to tax on such income at a beneficial flat rate of 15%. The beneficial rate may be availed of by individuals occupying an 'eligible office' in financial services or gaming sectors or in undertakings holding an air operators certificate. These Rules also cover specific positions of employment in the sphere related to assisted reproductive technology.

Beneficiaries of the said rules may benefit from the reduced tax rate for a period of five years in the case of EEA and Swiss nationals and for a period of four years in the case of third country nationals. Furthermore, any person who is eligible to fall under the said Rules (irrespective of whether one has opted to benefit from the provisions of the said rules or otherwise), upon submitting an application, shall be eligible for two further extensions for the qualifying period, five years with respect to EEA and Swiss nationals and four years with respect to third-country nationals. Such extensions are subject to the continued adherence to the other provisions of the Rules and provided that the maximum qualifying period shall not exceed a consecutive period of 15 or 12 years, as the case may be.

In terms of the current rules, no determinations in terms of the Highly Qualified Persons Rules shall be issued by the competent authorities after 31 December 2025, and any such determination issued must refer to an employment in respect of which the benefit provided by these rules commences by not later than 31 December 2026 and ceases to apply by 31 December 2030. However, in the budget speech for 2024, it was announced that the current fiscal incentives applicable to certain highly qualified persons will be revised and harmonised to cater for the skills required by the Maltese economy.

The Qualifying Employment in Aviation (Personal Tax) Rules were introduced with the aim of attracting EEA/Swiss and third country nationals not domiciled in Malta to hold an eligible office in the aviation sector in Malta. By virtue of these rules, eligible individuals may benefit from a beneficial tax rate of 15% on employment income from such activities, subject to receiving an annual income of at least EUR 45,000 and subject to the satisfaction of certain other conditions. The beneficiary may avail of this arrangement for five consecutive years from when one is first liable to income tax in Malta, with the possibility to apply for two extensions of five years each, provided that the eligibility under these rules should not exceed a consecutive period of 15 years.

Beneficiaries in receipt of employment income from a qualifying employment in maritime activities and the servicing of offshore oil and gas industry activities may, subject to the satisfaction of certain conditions, opt to be taxed on such income at a flat rate of 15%. The qualifying contract of employment should give rise to a minimum salary (excluding fringe benefits) of EUR 65,000 in respect of a year of assessment.

In terms of the Qualifying Employment in Innovation and Creativity Rules, beneficiaries in receipt of employment income from a qualifying contract under these Rules may opt to be taxed on such income at a flat rate of 15%. The qualifying contract of employment should give rise to a minimum salary (excluding fringe benefits) of EUR 52,000 in respect of a year of assessment. The beneficiary may avail of this arrangement for four consecutive years from when one is first liable to income tax in Malta, with the possibility to apply for an extension of five years.