MALTA
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MALTA

MALTA

TAX PLANNING JURISDICTION

The Republic of Malta consists of the islands of Malta & Gozo and is located south of Italy and north of Libya. It gained its independence from the UK in 1964. Notwithstanding its limited resources and very high population density, it has successfully developed itself as a holiday destination, financial and shipping centre. However, its corporate tax and imputation systems are relatively complex leading to higher accountancy and administrative costs than one would perhaps expect compared to similar jurisdictions such as Cyprus.

 

Population: 574,250 (2025)

 

Size: 316 sq.km.

 

Capital: Valetta

 

Economy: Malta has one of the most successful Mediterranean economies driven by robust economic consumption, tourism and a well administrated financial services sector. At the time of writing, the per capita GDP was US$43,500 with a real PPP of almost US$70,000.00 making it a beacon of prosperity in the region.

MALTESE COMPANIES WHY & FOR WHOM?

Why? At first glance the Maltese corporate tax rate of 35% does not seem to offer much by way of incentives to foreign investors. However, the local tax imputation system in effect means that distributions made to companies with an interest/participation in a Maltese company can claim back (in most cases) 6/7thof the initial amount of corporate tax paid or in simple terms, the final amount of corporate tax can be as low as 5%. The complexity of this system and the need for overhead and tax efficient legal entities may seem invasive until one takes note of the reasons why this system was set-up in the first place. The reason being primarily to circumvent the anti-avoidance provisions of countries such as Germany where in general withholding taxes can only be avoided if the recipient country will tax its legal entities at, at least, 2/3rds of the applicable German tax rate. In précis, Malta has established itself as a premium tax planning centre not quite at the level of much larger countries such as Ireland or the Netherlands but nonetheless certainly as the most stable and prestigious tax planning centre in southern Europe.

TAX PLANNING BENEFITS

  • Malta is an EU member state – Malta is a full member of the EU benefiting from EU Directives and Regulations such as the Parent Subsidiary Directive 90/435, which allows dividends to be paid from one EU country to another EU country without withholding taxes whilst under EU Directive 03/49 Maltese companies can also issue loans and receive interest without the normal application withholding taxes;
  • Extensive Double Taxation Treaty Network – Maltese limited companies that are locally managed and controlled will benefit from some 60 double taxation treaties that Malta has with other countries.
  • Malta is part of the Euro Zone – The local currency is the Euro and unlike Cyprus, Greece or Portugal it hasn’t had to have a financial bailout.
  • Excellent reputation – Malta has an excellent reputation and has had few of the negative associations that other countries may have had regarding money laundering and/or tax evasion which is primarily because most of its corporate formation clients are West European.
  • Gaming, Shipping and Aircraft Registrations – Malta offers a very attractive regulatory and registration regime for gaming, shipping and aircraft registration.
  • International banks located in Malta – There is a comprehensive range of international and local banks available in Malta.
  • Well educated professionals – Malta has well educated professionals mostly educated at UK universities.
  • English is the business language – English is the dominant language in commerce throughout Malta and is spoken by almost everyone as a first language.
  • The legal system is mostly common law based – The company formation legal system in Malta is common law based and very much influenced by that of England and Wales.

DOUBLE TAXATION TREATY NETWORK

The Maltese double taxation treaty network is extensive and fully benefits from being a member of the European Union and applicable EU directives and regulations.

Ratings

Corporate registration efficiency
$4
Cost
$4
Confidentiality
$5
Local Banking facilities
$5
Legal system
$5
Political stability
$5
Reputation
$5

TAX PLANNING CREDENTIALS

Companies Benefits
  • Full member of the EU
  • Extensive Double Taxation Treaty Network – Maltese limited companies that are locally managed and controlled will benefit from some 63 double taxation treaties that it has with other countries.
  • Excellent reputation – Malta has an excellent reputation and has had few of the negative associations that other countries may have had regarding money laundering and/or tax evasion.
  • Gaming, Shipping and Aircraft Registrations – Malta offers a very attractive regulatory and registration regime for gaming, shipping and aircraft registration.
  • International banks located in Malta – There is a comprehensive range of international and local banks available.
  • Well educated professionals – Malta has a well-educated professional mostly educated at UK universities.
  • English is the business language – English is the dominant language in commerce throughout Malta.
  • The commercial and regulatory legal system is mostly common law whilst personal civil affairs are influenced by the continental civil law system.

MALTESE MANAGED COMPANIES

BASIC FACTS: In synopsis, the corporate tax rate for 2026 for Maltese companies is as follows:

STANDARD COMPANY RATES OF TAX

THE STANDARD CORPORATE TAX RATE FOR MALTA IS 35% AND IS GENERALLY BASED ON WORLDWIDE INCOME. HOWEVER, THE EFFECTIVE RATE IS ONLY 5%!

The application of the participation exemption/EU Directive 90/435, full imputation system and a full refund system typically results in an effective Maltese corporate tax rate – after the distribution of dividends – of around 6/7th’s of 35% being approximately 5% but it should be noted that the cost of setting up external holding companies plus the extra accountancy costs do slightly push this above the 5% rate.

THE OPTIONAL 15% FINAL INCOME TAX WITHOUT IMPUTATION REGIME (FITWI)

From the 2nd of September 2025, companies were granted the right to opt for a final 15% corporate tax rate. This was introduced to satisfy the OECD Pillar Two (GloBE) rules, which require large multi-national corporations – considered to be firms with a turnover of over $750m per annum – to pay a minimum 15% corporate tax no matter where they are trading. It should be noted however that once adopted then a company must remain within the FITWI scheme for at least 5 years before seeking to revert to the normal imputation system. The reason for this is to prevent large multi-nationals from trying to minimise taxation on a year-to-year basis.