Taxes in Malta: A Complete Guide for Individuals

In Malta, individuals are taxed on income earned within a calendar year (known as the basis year), with tax assessments carried out in the following year (referred to as the year of assessment).

Those who are both domiciled and ordinarily resident in Malta are subject to tax on their worldwide income.

However, individuals who are ordinarily resident but not domiciled in Malta are taxed only on income earned in Malta and on any foreign income remitted to Malta. They are not taxed on foreign income that remains outside Malta, nor on capital gains arising abroad, regardless of whether these gains are brought into Malta.

For individuals married to someone who is ordinarily resident and domiciled in Malta, taxation applies on a worldwide basis, rather than the source and remittance system.

Meanwhile, non-residents are only taxed on income and chargeable gains that originate in Malta.

Personal Income Tax Rates in Malta

Malta applies graduated progressive tax rates on personal income, ranging from 0% to 35%. The highest rate of 35% applies to annual chargeable income exceeding €60,000.

Tax rates for the basis tax year are categorised into three groups:

• Married resident taxpayers
• Single resident taxpayers
• Parent rates

What Are Parent Tax Rates?

Individuals may qualify for parent tax rates, which offer more favourable tax bands compared to the standard single tax rates, if they:

Have custody of a child or pay maintenance for their child, and
The child is:

• Under 18 years old, or
• Between 18 and 23 years old, if in full-time education at a university, college, or other recognised educational institution.
• The child is not gainfully employed or, if working, earns less than €3,400 per year.

This system allows eligible parents to benefit from reduced tax liabilities.

Minimum Tax Requirement for Non-Domiciled Residents in Malta

Individuals who are ordinarily resident but not domiciled in Malta are subject to income tax on a source and remittance basis. This means they are taxed on:

• Income earned in Malta, and
• Foreign income remitted to Malta (but not on foreign income that remains outside Malta).

However, under Maltese tax laws, such individuals must also meet a minimum tax requirement if they:

• Are not subject to any other minimum tax threshold under Maltese law.
• Earned at least €35,000 (or equivalent) in foreign income not received in Malta during the previous calendar year.

In these cases, they are required to pay a minimum tax of €5,000 in Malta for that tax year.

When determining the minimum tax liability, any tax paid under Maltese income tax law whether through withholding or otherwise should be taken into account. However, this excludes any final tax paid on the transfer of immovable property in Malta. The minimum tax liability of €5,000 must be calculated before applying double tax relief.

As of 1 January 2024, individuals earning solely from employment excluding income from holding a directorship are exempt from Maltese income tax if their earnings do not exceed €11,620 (previously €10,535).

A reduced income tax rate of 7.5% applies to income earned by registered professional footballers, water polo players, athletes, and licensed coaches. From 2024 onwards, this benefit will be extended to other individuals involved in sports activities.

Since 1 January 2022, self-employed artists earning income from artistic activities (as defined) can opt for a flat 7.5% tax rate on their first €30,000 of turnover for 2022, increasing to €50,000 in subsequent years. Any additional income is combined with their main earnings and taxed at progressive rates. This tax is final, with no set-off or refunds applicable.

Individuals earning royalty income as authors of qualifying literary works can opt for a reduced tax rate of 7.5% (down from 15%) on the full gross amount. To qualify, the literary publication must be eligible for copyright under the Maltese Copyright Act. This tax is final, with no set-off or refunds, and must be paid by 30 April of the relevant assessment year.

Reduced Tax Rates for Part-Time Work & Overtime

Subject to meeting specific conditions, income from part-time work may qualify for a reduced tax rate of 10%, capped at €10,000 per year for part-time employment and €12,000 per year for part-time self-employment. Taxpayers may choose to forgo this rate and be taxed at standard rates instead.

For qualifying overtime earnings, the 15% tax rate remains applicable on the first €10,000, provided the basic weekly wage does not exceed €375. Any overtime earnings above this threshold are taxed at standard income tax rates.

Special Tax Rate for Work Performed Mainly Outside Malta

Employees who are subject to Maltese tax on earnings from employment contracts requiring them to work primarily outside Malta may opt for a flat 15% tax rate, provided they meet certain conditions:

• The employment contract must be for at least 12 months and must last a minimum of 12 months.
• The individual must not be in Malta for more than 30 days in total, excluding vacation leave, sick leave, and short transition periods before or after the contract.

Tax Rules for Nomad Residence Permit Holders

Third-country nationals holding a valid Nomad Residence Permit, allowing them to work remotely from Malta, are subject to a flat 10% tax rate on income from ‘authorised work,’ before applying any double tax relief. Generally, in the first year, such income is not subject to tax in Malta.

Pension Taxation & Exemptions

The non-taxable pension income threshold has increased from €14,968 to €16,220, with married individuals entitled to an additional €3,600 tax-free from other income sources. This is achieved through tax rebates applied after calculating tax on all income.

Additionally, pension income is gradually being excluded from taxable income over a five-year period:

• 2022: 20% tax-exempt (capped at €2,864)
• 2023: 40% tax-exempt (capped at €5,987)
• 2024: 60% tax-exempt (capped at €9,732)
• 2025: 80% tax-exempt (capped at €12,976)
• 2026 onwards: 100% tax-exempt (capped at €16,220)

As of 2024, widows’ and widowers’ pensions are no longer taxable for individuals under 61 years of age. Beneficiaries will continue to receive the same pension their late spouse would have been entitled to.

Tax Refunds for Employees

Employees earning under €60,000 will continue to receive tax refunds, ranging from €60 to €140, depending on their earnings.

Special Tax Programmes for Residents & Expats

The Global Residence Programme

Designed to attract non-EU nationals, this programme offers a flat 15% tax rate on foreign-source income remitted to Malta, subject to a minimum annual tax of €15,000. To qualify, individuals must:

• Purchase property in Malta for at least €275,000 (lower thresholds apply in specific areas).
• Alternatively, rent property for a minimum of €9,600 per year (lower thresholds apply in certain regions).

The Residence Programme Rules (RPR)

Replacing the High-Net-Worth Individual Rules, the RPR applies to EU, EEA, and Swiss nationals who are not permanent residents of Malta. The tax structure mirrors that of the Global Residence Programme, with a flat 15% tax rate on foreign income remitted to Malta and a €15,000 minimum annual tax.

Malta Retirement Programme

Pensioners receiving periodic pensions can benefit from a 15% tax rate, provided:

• At least 75% of their chargeable income comes from pension payments.
• The pension is received in Malta.

A minimum tax liability of €7,500 per year applies, with an additional €500 per dependant. As of 2024, this programme has been extended to third-country nationals.

Tax Benefits for Returned Migrants

Returned migrants may opt for taxation on a source and remittance basis rather than worldwide income. Foreign income remitted to Malta above €4,200 (single taxpayers) or €5,900 (married taxpayers) is taxed at a flat 15% rate, with a minimum annual tax of €2,325.

United Nations (UN) Pensions Programme

Aimed at retired UN pensioners, this programme offers tax exemptions and a flat 15% tax rate on other foreign income remitted to Malta. To qualify, applicants must:

• Own property in Malta worth at least €275,000 (or €220,000 in certain areas).
• Alternatively, rent property for at least €9,600 per year (or €8,750 in certain areas).
• Receive at least 40% of their UN pension or widow’s/widower’s benefit in Malta.

A minimum tax liability of €10,000 per year applies (€15,000 for couples receiving UN pensions).

Special Tax Rules for Highly Qualified Professionals

Highly Qualified Persons Rules (HQPR)

Designed for expatriates with ‘qualifying contracts of employment’, this scheme allows eligible individuals working in financial services, gaming, aviation, and reproductive technology to benefit from a 15% tax rate on income.

• The reduced tax rate applies for five years (EEA/Swiss nationals) or four years (third-country nationals).
• Extensions of five years (EEA/Swiss) or four years (third-country nationals) are possible, up to a maximum of 15 or 12 years, respectively.
• No new HQPR determinations will be issued after 31 December 2025, and benefits must commence by 31 December 2026, ceasing entirely by 31 December 2030.

Qualifying Employment in Aviation (Personal Tax) Rules

This scheme attracts professionals to Malta’s aviation sector, offering a flat 15% tax rate for those earning at least €45,000 per year. Eligible individuals can benefit for five years, with two possible five-year extensions (maximum 15 years).

Tax Benefits for Maritime & Offshore Industry Workers

Qualified professionals in maritime activities and offshore oil & gas servicing can opt for a flat 15% tax rate, provided their annual salary is at least €65,000 (excluding fringe benefits).

Tax Incentives for Innovation & Creativity Sectors

Professionals engaged in innovation and creativity under a qualifying employment contract can benefit from a flat 15% tax rate, provided they earn at least €52,000 per year.

This benefit applies for four consecutive years, with a possible five-year extension.

Looking Ahead: Tax Policy Changes

The 2025 Budget announced plans to revise and harmonise tax incentives for highly skilled professionals in alignment with Malta’s evolving economic needs. More details on these updates are expected in the near future.