For those thinking about moving to Malta, you need to understand how taxes work in the country. Whether you’re planning to live, work, or retire there, knowing the basics of taxation can make a big difference in your financial planning.
This guide aims to explain Malta’s tax system in simple terms, covering everything from who is subject to personal income tax rates in Malta and how global income is taxed to special tax rules.
A guide for anyone considering making Malta their new home.
Who is Subject to Personal Income Tax Rates in Malta?
Important Note: Individuals are taxed on income earned in a calendar year, which is assessed in the following year (the year of assessment).
Malta’s tax system for individuals operates on principles that take into account residency, domicile, and various sources of income. Here’s an informative breakdown of how it works:
- Residents who are both domiciled and ordinarily resident in Malta are taxed on their global income.
- Ordinarily resident individuals, not domiciled in Malta, are taxed on income earned in Malta and any foreign income remitted to Malta.
- Married individuals residing with a spouse domiciled in Malta are subject to global taxation.
- Non-residents are taxed only on income earned in Malta.
What is the Personal Income Tax Rate in Malta?
Malta operates a progressive tax system, with rates ranging from 0% to 35%. The highest tax bracket kicks in for annual chargeable income exceeding EUR 60,000.
Tax rates for basis tax year are splatted to:
- Married resident taxpayers.
- Single resident taxpayers
- 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.
Tax Programmes and Schemes for Expatriates
In Malta, there are several tax options tailored to welcome and support expatriates. These options offer advantageous tax treatments for income earned abroad, though they come with certain requirements like owning or renting property in Malta. Here are some highlights:
- Tax Benefits for Athletes and Licenced Coaches: 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.
- Simplified Taxation for Artists and Authors: 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 €30,000 turnover for calendar year 2022 and €50,000 on the following years. When this option is applied, the rest of the income is 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.
- Advantages for Part-Time Workers: 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.
- Special Arrangements for Retirees: As of 2024, widows’/widowers’ 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 which would have been received by their spouse had they still been alive.
- Tax Refunds for Lower Income Employees: 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.
Key Notes: Expatriates should be aware of various rules and exemptions that can impact their tax liabilities in Malta. For instance, as of 1 January 2024, individuals deriving income solely from employment below EUR 11,620 are exempt from Maltese income tax. Additionally, special tax rates apply to specific professions like professional athletes and artists engaged in artistic activities.
Too Complicated? We Can Help You!
Malta’s tax system undergoes periodic revisions and updates to align with economic needs. Future changes may include revisions to fiscal incentives and adjustments to cater to evolving skill requirements.
But if this seems too complicated for you, don’t worry, we’ll break it down for you. Whether you’re a digital nomad thinking about moving to Malta or a retiree planning your move, our team is ready to assist you. Get in touch with us today for a smooth transition and stress-free relocation to Malta.
