TAXATION

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A Maltese company is taxed at 35% on its profits, with the remaining 65% distributed as net dividends to shareholders. Shareholders must declare the gross dividend (net dividend plus tax paid) in their tax return. However, since tax is paid at the company level, no additional tax is usually due on the dividend.

Importantly, Malta’s tax system allows shareholders to claim a refund on the tax paid, often up to 6/7ths, reducing the effective tax rate to as low as 5%. This makes Malta highly attractive for international investors, tax-efficient structures, and holding companies.

Promethean offers the following services

Income Tax Consultancy & Compliance

Need Help with Income Tax? - Consultancy & Compliance

Promethean’s tax practice has grown exponentially over the last 20 years. The firm actively assists foreign investors in structuring their expansion into Malta, particularly in areas such as withholding taxes, corporate tax residency, double tax treaty interpretation, and the formation and management of international groups. We also advise private clients seeking to establish Malta as their state of residence or as a hub for holding and trading activities. Where appropriate, this is achieved through the use of trusts and foundations, areas in which our tax professionals are highly experienced.

At Promethean, we specialize in Corporate Tax Malta services, providing a comprehensive solution for business taxation, corporation tax compliance, and VAT matters. Through our international network, we also support clients with cross-border tax issues. We deliver tailored consultancy services to organizations of all sizes across tax planning, tax compliance, tax efficiency, VAT, international taxation, personal taxation, and all aspects of Corporate Tax Malta.

We provide practical and effective tax advice and compliance services to businesses operating in Malta and internationally. Our deep understanding of commercial realities enables us to deliver results-driven solutions while considering the interaction between corporate tax, VAT, and other taxes affecting business operations. We also recognize the impact of tax planning on treasury and accounting functions.

Our approach is to treat tax as an integral part of the business rather than a standalone function. By working closely with all areas of a company, we ensure that Corporate Tax Malta considerations align with wider business objectives, helping clients achieve optimal tax efficiency and long-term success. This integrated approach to Corporate Tax Malta enables us to provide practical, commercially focused advice that supports sustainable growth.

VAT Advisory and Compliance

VAT Queries? - Advisory and Compliance Services

At Promethean, we provide Value Added Tax (“VAT”) consultancy and VAT compliance Malta services. Over the years, VAT has become increasingly complex, impacting the day-to-day operations of businesses more than many other taxes. As an indirect tax, it can easily lead to unforeseen costs and significantly affect cash flow. Through practical application and deep understanding of VAT matters, we draw on nearly 20 years of experience working within business environments to help clients minimize the operational impact of VAT.

We understand that meeting VAT compliance Malta requirements is not always straightforward. Once a business becomes subject to the VAT penalty regime, issues can quickly escalate. We support our clients in avoiding such penalties by ensuring the smooth and efficient handling of VAT compliance within their operations. We also advise on the VAT implications of trading outside Malta as part of an international structure.

For businesses new to Malta, VAT can be a relatively unfamiliar concept. We provide clear guidance on VAT legislation, explaining the implications for your operations while supporting full VAT compliance Malta obligations. With our practical knowledge of how businesses function, we deliver straightforward, efficient, and commercially focused solutions tailored to your needs.

Malta’s Jurisdiction to Tax

Understanding Malta's Tax Rules? - Jurisdiction Explained

Malta tax is payable on income under the Malta tax liability system in the following situations:

  • Income that arises in Malta, where the territorial source is Malta, is subject to Malta tax liability rules;

  • Income that arises abroad but is derived by individuals who are both ordinarily resident and domiciled in Malta is taxable on a worldwide basis under Malta tax liability provisions. In this case, individuals are liable to tax in Malta on all income, wherever it arises;

  • Income that arises abroad but is received in Malta by individuals who are either ordinarily resident or domiciled in Malta is taxed under the remittance basis within the Malta tax liability framework. In this case, foreign income is taxable only when received in Malta.

As a result, individuals who are both ordinarily resident and domiciled in Malta are subject to full or unlimited taxation under Malta tax liability, meaning they are taxable on worldwide income.

 

Individuals who are either ordinarily resident or domiciled in Malta (but not both) fall under a limited Malta tax liability regime. They are only subject to tax on income arising in Malta and on foreign-source income received in Malta

Individual Taxation

Do You Have Questions About Individual Taxation?

To be deemed an individual with Malta tax residency, a person is generally expected to spend more than six months in Malta under Maltese income tax legislation. However, in certain cases, an individual may still qualify for Malta tax residency even if they do not physically spend more than 183 days in Malta during a calendar year.

 

Ordinary residence involves more than simple physical presence. It implies living in Malta with a degree of continuity, where residence forms part of an individual’s everyday life. While case law often applies a 183-day physical presence test, determining Malta tax residency also requires a broader facts-and-circumstances assessment.

 

Ordinary residence for Malta tax residency purposes may therefore be established over time and may include:

  • a regular physical presence in Malta;

  • residence with continuity;

  • voluntary establishment of living arrangements.

An individual is generally considered a resident where they live in Malta, subject to temporary absences. Tax residency is often assessed based on the number of days spent in a country, typically 183 days within a year. An individual may also be considered a Malta ordinary resident if they maintain a consistent presence year to year. As such, dual residency can arise, and Malta’s Double Tax Treaty network plays an important role in resolving Malta tax residency conflicts.

 

Domicile refers to a person’s permanent home. It requires both physical connection and an intention to reside permanently. A person can only have one domicile at any time, and no individual can be without one. At birth, individuals acquire a domicile of origin, typically from their father, which may later be replaced by a domicile of choice if they permanently relocate to another country with no intention of returning.

 

In addition, individuals in Malta are subject to different tax rate systems depending on their circumstances under Malta tax residency rules, including:

  • Married rates (joint computation)
  • Single rates (separate computation)

To qualify for the child tax allowance, a parent must satisfy the following conditions:

  • The parent must have maintained a child under their custody or paid maintenance (established or authorised by the courts) in respect of that child, as required for the child tax allowance;

  • The child must not be over 18 years of age, or not over 21 years if receiving full-time instruction at a tertiary education institution, in line with child tax allowance rules;

  • The child must not have earned income exceeding €2,400 from gainful occupation, which is a key condition of the child tax allowance.

Individuals who stay in Malta for less than six months are considered to be subject to non-resident tax Malta rules and are taxed as non-residents. Under non-resident tax Malta, applicable tax rates are uniform and apply consistently to all non-resident individuals.

Unlike residents, individuals under non-resident tax Malta rules do not have the right to use joint tax computations.

Corporate Taxation

Confused About Corporate Tax? Let's Clarify

Malta companies (or other bodies of persons) incorporated in Malta on or after 1st July 1994 are considered resident in Malta under the Malta company tax residency incorporation test.

 

Malta companies incorporated before 1st July 1994 are also treated as resident under Malta company tax residency rules if they are managed and controlled in Malta, based on the management and control test. Similarly, companies registered outside Malta after 1995 are regarded as resident if they are managed and controlled from Malta.

 

Malta companies may have more than one ordinary residence under Malta company tax residency principles. However, bodies of persons are generally domiciled in the country of incorporation, although re-domiciliation may be possible for companies. Partnerships, in contrast, cannot change domicile.

 

A company incorporated in Malta is ordinarily considered both resident and domiciled in Malta for tax purposes, meaning it is subject to Malta company tax residency rules on its worldwide income at the standard corporate tax rate of 35%. Conversely, a company incorporated outside Malta is only considered resident to the extent that its management and control are exercised in Malta, and foreign tax suffered may generally be credited against Malta tax liabilities under Malta company tax residency provisions.

Malta operates a complete Malta imputation system of taxation concerning dividends. Under the Malta imputation system, tax suffered by a Malta company on profits distributed as dividends to shareholders is credited in full against the Malta tax liability of those shareholders.

 

Given that the 35% tax rate applicable to companies corresponds to the maximum progressive rate of tax applicable to individuals, dividend distributions under the Malta imputation system typically result in no further tax being payable at shareholder level. This effectively eliminates any form of double economic taxation.

Since 2025, Maltese companies may instead elect the Final Income Tax Without Imputation (FITWI) regime — a flat 15% final tax with no shareholder refund.

 

This election is irrevocable for a minimum period and excludes certain dividend income; companies must choose between the traditional imputation system and FITWI based on their structure and shareholder profile.

For Malta tax accounts purposes, a company registered in Malta is required to allocate its distributable profits to five separate taxed accounts, depending on the source and nature of the income.

  • Final Tax Account (“FTA”) – Under Malta tax accounts, this includes tax-exempt profits (where the exemption is retained at shareholder level upon distribution) and profits subject to a final tax.
  • Immovable Property Account (“IPA”) – Under Malta tax accounts, this includes profits subject to Malta tax derived directly or indirectly from immovable property situated in Malta.
  • Foreign Income Account (“FIA”) – Under Malta tax accounts, this includes income subject to Malta tax derived mainly from investments situated outside Malta.
  • Maltese Taxed Account (“MTA”) – Under Malta tax accounts, this includes income subject to tax that is not allocated to the FTA, IPA, or FIA.
  • Untaxed Account (“UA”) – Under Malta tax accounts, this represents the difference between total distributable profits (or accumulated losses) and amounts allocated to the other taxed accounts.

A shareholder receiving a dividend from a Malta company out of profits allocated to the MTA or FIA may be entitled to a refund under the Malta tax refund system, provided the shareholder is duly registered for Malta tax purposes. The entitlement under the Malta tax refund system depends primarily on the nature of the underlying profits and how those profits are allocated within the company’s tax accounts, as well as whether any double taxation relief has been applied.

Under the standard Malta tax refund system, a registered shareholder is generally entitled to a refund of 6/7ths of the Malta tax suffered by the company on the distributed profits.

However, the Malta tax refund system provides certain exceptions:

  • Where profits consist of passive interest or royalties (but not dividends), the refund is reduced to 5/7ths of the Malta tax suffered.

  • Where profits are allocated to the FIA and benefit from double taxation relief, the applicable refund is reduced to 2/3rds of the Malta tax suffered on those profits.

In the case of Participating Holdings (PH), the Malta tax refund system allows a choice between:

  • applying the participation exemption, in which case the income or gains are exempt from Malta tax; or

  • including the income or gains in taxable income, which entitles the shareholder to a 100% refund of the Malta tax paid on those profits.

Under the Malta tax refund system, valid refund claims submitted by registered shareholders are typically processed and paid by the Malta tax authorities within fourteen days of submission.

Under the Malta double tax relief provisions of the Income Tax Act, a person may apply for relief from double taxation provided certain conditions are met.

To qualify for Malta double tax relief, the applicant must satisfy the following requirements:

  • the applicant must be a Malta resident in the year immediately preceding the year of assessment

  • tax paid abroad must be comparable to Malta income tax;

  • a double tax treaty must be in force with the relevant state, and the foreign-source income must have been taxed in that country;

  • the applicant must provide evidence of foreign tax paid;

  • the income for which relief is claimed must be taxable in Malta.

Under Malta double tax relief, the credit for foreign tax paid cannot exceed the Malta tax payable on the relevant income. In addition, no refund arises from the application of double taxation relief.

Where Malta does not have a double taxation treaty in force with a particular country, Malta unilateral tax relief applies to eliminate the risk of double taxation through domestic tax legislation. Under Malta unilateral tax relief, a credit for foreign tax paid is granted on a purely unilateral basis, even in the absence of a treaty.

From a computational perspective, Malta unilateral tax relief is calculated in the same manner as double tax treaty relief. The taxpayer must also satisfy the same conditions applicable under treaty relief, with the only difference being that no double tax treaty is required.

The Malta unilateral tax relief system also includes a beneficial mechanism allowing taxpayers to claim relief for underlying tax suffered at company level on foreign dividends (credit for underlying tax). This ensures that relief may be granted not only for foreign income remitted to Malta, but also for tax already paid by the distributing company.

In practice, Malta unilateral tax relief helps mitigate double taxation that arises because dividends are often taxed twice internationally, once at company level and again at shareholder level—since many jurisdictions do not operate a full imputation system.

Malta tax legislation provides a unique unilateral mechanism to eliminate double taxation known as the Malta flat rate foreign tax credit (“FRFTC”). Unlike double tax treaty relief or standard unilateral relief, the Malta flat rate foreign tax credit allows a deemed credit based on a fixed foreign tax rate of 25%, rather than requiring proof of actual tax paid abroad.

To qualify for the Malta flat rate foreign tax credit, the following conditions must be met:

  • the income must be allocated to the Foreign Income Account, meaning the Malta flat rate foreign tax credit applies only to Malta companies;

  • the recipient must be a Malta-registered company in the year of assessment in which the income is earned;

  • the company must be specifically empowered to claim the Malta flat rate foreign tax credit and have income allocated to the Foreign Income Account;

  • the recipient must retain documentary evidence confirming that the gain is properly allocated to the Foreign Income Account for Malta flat rate foreign tax credit purposes.

The Malta participation exemption is an advantageous tax exemption that allows companies registered in Malta to be exempt from tax on income derived from a “participating holding” (such as dividends) or from the transfer of such a holding. The exemption also applies where the holding is in a Malta-resident company; however, in such cases the Malta participation exemption applies only to gains derived from the transfer of the holding.

The Malta participation exemption is available exclusively to companies registered in Malta and is therefore limited to such taxpayers. It is an optional regime, meaning a company may choose to waive the Malta participation exemption by declaring the otherwise exempt income or gains in its tax return and paying tax in the normal manner.

A “participating holding” typically arises where:

  • a company holds directly at least 5% of the equity shares of another company and is entitled to at least 5% of voting rights, profits available for distribution, or assets on winding-up, forming the basis for the Malta participation exemption:

  • a company holds an equity investment with a value of at least €1,164,000 (or equivalent in foreign currency) and maintains that holding for an uninterrupted period of at least 183 days, qualifying it for the Malta participation exemption;

  • other qualifying scenarios may also give rise to a participating holding under the Malta participation exemption rules

The application of the Malta participation exemption is subject to anti-abuse provisions under Maltese tax legislation, which ensure that the exemption is applied in accordance with its intended purpose.

The Malta participation exemption also applies in certain cases where a holding is not in the share capital of a company but is instead in a body of persons constituted, incorporated, or registered outside Malta, and not resident in Malta, provided it is of a nature similar to a partnership en commandite whose capital is not divided into shares. In such cases, the holding may qualify as a participating holding under the Malta participation exemption if it falls within any of the qualifying scenarios.

A holding in a limited partnership incorporated outside Malta may also qualify under the Malta participation exemption, provided its nature is sufficiently similar to a qualifying corporate holding. In all cases, the holding must be of an equity nature as defined in Maltese tax legislation.

The Commissioner for Revenue may also determine that an equity holding exists for Malta participation exemption purposes even where there is no traditional share capital holding, provided the shareholder can demonstrate entitlement in substance to at least two of the following rights:

  • a right to vote;

  • a right to profits available for distribution to shareholders; and

  • a right to assets available for distribution on a winding up of that Company.

Following recent amendments, the Malta participation exemption regime has been broadened to include additional qualifying structures. These include:

  • Partnerships en commandite whose capital is not divided into shares (excluding property partnerships); or

  • Foreign bodies of persons not resident in Malta that are similar in nature to such partnerships (excluding property partnerships); or

  • Collective investment vehicles established outside Malta where investor liability is limited to the amount invested, provided they meet the relevant qualifying conditions.

In addition, the Malta participation exemption has been extended to cover branch profits. Accordingly, it applies to income or gains derived by a Malta-registered company attributable to a permanent establishment (including a branch) situated outside Malta, or to the transfer of such a permanent establishment. This applies whether the permanent establishment is held directly or indirectly, including through other entities or arrangements. For Malta participation exemption purposes, the relevant profits or gains are calculated as if the permanent establishment were an independent enterprise operating under arm’s length conditions.

International and EU Tax

Navigating International Tax? - EU and Cross-Border Expertise

As of 1 January 2026, Malta applies a Qualified Domestic Minimum Top-up Tax (QDMTT) under the EU’s Pillar Two framework, ensuring multinational groups with consolidated annual revenues exceeding €750 million pay a minimum effective tax rate of 15% in Malta. This applies alongside — not instead of — Malta’s standard corporate tax and refund system for qualifying large groups.

Over the past 40 years, Malta has actively expanded its Malta double tax treaties network to support economic growth and the development of its financial services sector. Today, the Malta double tax treaties network comprises agreements with 81 jurisdictions, with recent treaties coming into force with countries such as Andorra, Armenia, Botswana, Kosovo, Monaco, and Ukraine.


Most of Malta’s treaties follow the OECD Model Convention, forming the basis of the Malta double tax treaties framework. However, some earlier treaties include notable variations, particularly those designed to attract foreign investment in manufacturing and business operations in Malta. These provisions often included reduced tax rates on dividends and tax sparing clauses under the Malta double tax treaties regime.


Tax sparing allows the taxpayer to benefit from tax incentives granted in Malta, rather than losing them through taxation in the other contracting state. Under Malta double tax treaties, the other state may grant credit for tax that would have been paid in Malta, even if that tax was reduced or exempted, ensuring the benefit of Malta’s domestic incentives is preserved.


Maltese domestic law also provides for exemptions for non-residents on interest and royalties arising in Malta, which may override treaty withholding tax provisions in certain cases. In addition, under the Malta double tax treaties framework and domestic law, no tax is generally imposed on non-residents on capital gains from the transfer of shares or securities, except where such gains relate to companies whose assets consist mainly of immovable property situated in Malta.

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