Malta Tax Rates For Foreign Investors

Malta is one of those European countries that comes with favorable tax rates and incentives, which creates an attractive environment for investors. By learning about these incentives, individuals can benefit from a significant reduction in tax rates.

In this article, we’ll cover Malta's tax rates for foreigners and highlight the key programs available to maximize financial advantages.

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Key Takeaways 

• The main taxes for foreigners residing in Malta are corporate tax, income tax, capital gains, property tax, and VAT.
• Malta tax rates can be reduced by tax incentives such as investment aid, VAT refunds, or special tax programs like GRP (Global Residency Program), TRP (Residence Programme), MRP (Malta Retirement Programme), MRVP (Malta Permanent Residence Programme), or HQP (Highly Qualified Persons).

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Taxation System in Malta

Malta's tax system is considered as one of the most favorable across Europe for investors. Here’s an overview of the taxes applicable to foreigners.

• Corporate Income Tax։ A non-Maltese incorporated company that is considered a resident in Malta due to its management or control is a subject of corporate income tax. Malta's corporate tax rate is 35%.
• Personal Income Tax: Non-residents are only taxed on income and capital gains arising in Malta. Income tax in Malta for foreigners varies from 0% to 35%.
• VAT (Value Added Tax): The standard VAT rate in Malta is 18%. However, certain goods and services may be subject to reduced rates (e.g. for hotels and accommodations the rate is 7%, for the supply of electricity, medical accessories, and clothing the rate is 5%, for food, exports, and international public transport it’s 0%.)
• Capital Gains Tax: Non-residents are taxed only on the capital gains that were earned in Malta. The rate may vary from 15% to 35%
• Stamp Duty: Stamp duty is a tax that’s paid after buying an immutable property. The rate is usually 5%

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Income Tax in Malta for Foreigners

Non-residents pay personal income taxes in Malta if they have gained their income inside the country. Depending on the amount of annual chargeable income, the rate may be different.

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Malta income tax rates may be decreased through various programs and incentives such as GRP (Global Residence Program), TRP (Residence Programme), and MRP (Malta Retirement Programme).

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Corporate Tax Rates

The standard corporate or company tax rate in Malta is 35%. It’s applicable for both resident and non-resident companies that gain their income in Malta. As a shareholder, you can have significant tax refunds. The existing refunds are:

• 2/3rd Refund: Applicable if the company claims for relief from double taxation.
• 5/7th Refund: Available for passive interest and royalties.
• 6/7th Refund: For the companies that gain their income from commerce.
• Full Refund: Available for the companies whose profit was gained from a participating holding.

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Capital Gains Tax

Capital gains tax is the tax on profits gained on the sale of a non-inventory asset. Here is the list of the assets that are subject to taxation in Malta:

• Immovable property (e.g. real estate)
• Shares and securities
• Income on intellectual property rights (copyright, trademark…)
• Interests in partnerships or trusts located in Malta

Malta tax rates are 15-35%. There’s an exemption for the property that has been owned and used as the primary residence for at least three years before the sale. This is done in order to encourage long-term investments.

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Property Taxes

Before buying a property in Malta, make sure you’ve considered all the taxes and fees that should be paid. General costs and taxes include:

• Stamp Duty: 5% of the property’s purchase price. It can be reduced to 3.5% for the first €150,000 of the property’s price for buyers who have EU citizenship and have been continuously residing in Malta for 5 years.
• Notary Fees: 1-3% of the property’s purchase price.
• AIP (Acquisition of Immovable Property) Permit Fee: The Maltese government has stated a fee of €233 in order to get AIP. Another requirement is that the minimum amount of the property should be €143,410 for a flat or maisonette and €247,701 for other types of immutable property.
• Property Transfer Tax: Malta property tax rates are 8% for the properties that have been purchased after January 1, 2004. The real estate bought before is subject to 10% taxation.

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Tax Incentives and Benefits for Investors

Malta has a wide range of incentives and benefits for investors. Due to these incentives, Malta's tax rates can be lower than usual. The most famous measures include:

• Reduction of the Corporate Tax Rates: As we’ve already mentioned before, the company tax rate in Malta is 35%. Due to Malta’s imputation system, you can apply for refunds and get even a full refund. This system encourages reinvestment and enhances Malta's attractiveness for international business.
• Investment Aid: Malta offers support to businesses through different types of aid such as tax credits, grants, loan interest subsidies, and loan guarantees. Eligible sectors include manufacturing, IT, R&D, and environmental solutions. Depending on the size and location of the company, tax credits or grants range from 10% to 35% of the qualifying expenditure.
• Double Taxation Conventions: Malta has signed double taxation agreements with many countries worldwide, which prevents investors from being taxed twice on the same income.
• Startup Incentives: Malta supports startups through various measures including financial aid, mentorship programs, and reduced tax rates. 
• VAT Refunds: The standard VAT rate in Malta is 18%. For hotels and accommodations, the rate is 7%, for the supply of electricity, medical accessories, and clothing the rate is 5%, for food, exports, and international public transport it’s 0%.
• Special Tax Programs: Malta’s tax rates may be decreased if you apply for one of these programs:some text
  • GRP (Global Residency Program): Designed for non-EU/EEA/Swiss citizens, this program offers a flat rate of 15% on foreign income remitted to Malta, with a minimum tax of €15,000 per year. 
  • TRP (Residence Programme): The program is very similar to GRP and has the same flat rate of 15%, but is designed for EU/EEA/Swiss citizens.
  • MRP (Malta Retirement Programme): This program comes with a 15% flat rate on foreign pension income received in Malta, with a minimum tax of €7,500 per year.
  • MRVP (Malta Permanent Residence Programme): This program is also similar to GRP and has the same flat rate of 15%. MRVP provides permanent residency.
  • HQP (Highly Qualified Persons): This program is designed for those working in specific industries such as financial services, aviation, or gaming. The flat tax rate is 15% on income up to €5 million annually.

If you want to learn more about these programs and apply for one, Mirabello Consultancy is ready to help you make the application process effortless and more efficient.

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FAQ

Is Malta tax-free for foreigners?

No, Malta isn’t tax-free for foreigners. Non-residents are taxed on income that they have gained in the country.

Is Malta a tax haven country?

Malta's tax rates are very favorable, especially for foreign investors, the tax system is transparent and complies with EU regulations, but it isn’t considered as a tax haven.

Is healthcare free in Malta?

For residents, Malta’s healthcare is free. For travelers from other EU countries, healthcare can be free if they show a valid European Health Insurance Card. UK and Australian citizens can also benefit from the free healthcare system as their countries have a Reciprocal Health Care Agreement with Malta. As for the rest of the third-country travelers (the rest of the countries), they don’t have access to Malta’s free healthcare system. In order to get treatment, they should get a private healthcare plan.

Conclusion

In this article, we’ve talked about Malta’s tax rates for foreigners, highlighting the numerous programs and incentives offered by the Maltese government for substantial reductions. Special programs like GRP, TRP, and MRP create an attractive environment for investors. To optimize your investment strategy and maximize the financial advantages, our specialists are ready to assist you and streamline the application process.