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%. For year of assessment 2021 (year of income 2020), in the case of single individuals (including married individuals opting for separate computation) there is a tax liability of EUR 12,275 on the first EUR 60,000 of income (individuals earning up to EUR 19,500 should save up to EUR 90 tax per annum). Married individuals should be liable for EUR 11,095 tax on the first EUR 60,000 of income (couples earning up to EUR 28,700 should save up to EUR 120 tax per annum). For amounts exceeding these thresholds, the tax rate is 35% for both single and married individuals. Subject to certain conditions, the married rates also apply to single parents, widows/widowers, and separated parents.
Basis year 2020 and 2021
Tax rates for basis tax year 2020 and 2021 are as follows:
Married resident taxpayers
|Taxable income (EUR)||Rate (%)||Deduct (EUR)|
Single resident taxpayers (or married couples opting for a separate computation)
|Taxable income (EUR)||Rate (%)||Deduct (EUR)|
|Taxable income (EUR)||Rate (%)||Deduct (EUR)|
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.
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.
Recipients of royalty income derived by an individual in his capacity as author from qualifying literary works on or after 1 January 2021 may opt to tax the full gross amount of such royalty income at a reduced rate of 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 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 15%, 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.
With effect from 1 January 2020, qualifying overtime income may be subject to income tax at the reduced rate of 15%, subject to a capping. Qualifying overtime refers to overtime performed by a full-time employee who does not occupy a managerial post (as defined) and whose basic weekly wage does not exceed EUR 375 per week. The employee may elect to opt out and be subject to tax on such income at the progressive tax rates applicable to the employee.
Tax rebates for pensioners ensure that pensioners whose pension income exceeds the tax-free bracket should have an increased amount of their pension income that is not subject to income tax. This benefit applies to individuals who are in receipt of income from any pension, including social security pensions, treasury pensions, as well as other local and foreign pensions, and who are at least 61 years of age in the year when such pension is received. Tax rebates should not give rise to any refunds of tax nor can these be carried forward if not fully utilised.
As of 2021, the maximum amount of exempt pension income should be increased to €14,058, with persons claiming married rates entitled to a further €3,600 tax free in respect of income from other sources.
Employees earning less than €60,000 should again be granted tax refunds in 2021 ranging between €45 and €95, 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 dependent, 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 for 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 5 years, in the case of EEA and Swiss nationals and for a period of 4 years, in the case of third country nationals. Furthermore any person who is eligible to fall under the said Rules (irrespective of whether he 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 fifteen or twelve years, as the case may be.
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 a one-time extension of five years, provided that the eligibility under these rules should not exceed a consecutive period of ten 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 contact 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.