Malta

Malta is a small island with a surprisingly big tax toolbox. The headline corporate rate is 35% – one of the highest in the EU on paper. In practice, foreign shareholders of a trading company can end up at around 5%. The trick is not a loophole but a refund system that has been part of Maltese law for decades and is fully compatible with EU membership.

Add English as an official language, the euro, Schengen, 300 days of sunshine and a remittance basis for people who aren’t domiciled on the island, and you see why Malta keeps showing up on shortlists. You’ll also see why it isn’t for everyone: the refund needs a clean structure, the island is crowded, and the banks take their time.

This guide walks you through how it all works, with numbers.

How the Maltese tax system works

Malta uses a full imputation system. The company pays tax on its profits, and when it distributes a dividend, the shareholder receives a credit for the tax the company already paid. On top of that sits the feature that made Malta famous: shareholders can claim back most of that corporate tax.

The refund mechanism

When a Maltese company distributes profits, the shareholder can claim a refund of part of the tax the company paid on those profits. How much depends on where the profit came from:

• 6/7 refund. The standard case for trading income – services, e-commerce, software, consulting. This is the route to roughly 5% total tax.
• 5/7 refund. Passive interest and royalties, which ends up at around 10%.
• 2/3 refund. Where the company claimed double tax relief on foreign income.
• Full refund. Profits from qualifying participations, if the company chooses not to use the participation exemption instead.

The refund is paid to the shareholder, not the company, and only after the dividend is actually paid out. Under the law, the tax authority has to pay it within 14 days of the claim being complete – in practice, allow for some administrative lag. The refund is designed for foreign shareholders. Malta-resident and domiciled individuals generally don’t get it and are taxed through the normal imputation system instead.

Worked example: €100,000 trading profit

Say your Maltese trading company makes €100,000 profit and distributes everything to a non-resident shareholder.

Two things this table doesn’t show. First, cash flow: the company pays the full 35% before the refund comes back, so you pre-finance the tax for a while. Second, your home country: 5% in Malta means nothing if the dividend or refund is taxed again where you live. More on that below.

A 15% alternative

Since 2025, Maltese companies can elect to pay a flat 15% instead of 35% on certain income, in exchange for giving up the refund system on those profits. That makes the numbers simpler and removes the cash-flow gap, but 15% is still three times the refund route for foreign shareholders. For some setups – especially where the refund would be taxed at shareholder level anyway – it can be the cleaner choice. The rules are new, so model both options with your accountant before you pick.

Other useful features

• Participation exemption. Dividends and capital gains from qualifying holdings are exempt at company level, which makes Malta a solid holding location.
• No withholding tax on outbound dividends. Dividends paid to non-residents leave Malta without deduction. Interest and royalties to non-residents are generally also free of withholding tax, subject to conditions.
• Tax treaties. Malta has a treaty network of more than 70 countries, which helps with foreign withholding taxes on income flowing into Malta.
• Notional interest deduction. Companies can deduct a deemed return on their equity, which lowers taxable profit for well-capitalized businesses.
• Minimum tax for large groups. The EU’s 15% global minimum tax only applies to groups with revenue of €750 million or more, and Malta has used the option to defer parts of it. For owner-managed businesses, this is not a factor.

Personal tax, domicile and the remittance basis

Maltese personal income tax runs from 0% to 35% on a progressive scale. What makes Malta interesting for internationally mobile people is the distinction between residence and domicile.

Resident vs domiciled

You become tax resident in Malta when you live there with the intention to stay – typically by spending more than 183 days a year on the island or making it your main home. Domicile is a separate, older concept: it’s your permanent home in the long run, usually the country you came from. Most people who move to Malta become resident but stay non-domiciled for many years.

How the remittance basis works

For residents who are not domiciled in Malta:

• Maltese-source income is taxed normally at 0–35%.
• Foreign income is only taxed if you bring it into Malta.
• Foreign capital gains are not taxed, even if you bring them into Malta.

So if you earn investment income abroad and leave it abroad, Malta doesn’t tax it. If you bring €40,000 of it to Malta to pay your rent and living costs, those €40,000 are taxable in Malta.

There is a catch. Non-domiciled residents with foreign income of €35,000 or more pay a minimum tax of €5,000 a year, even if they remit nothing. It’s a small price for the system, but it exists – budget for it.

Salary and director fees

The remittance basis is about foreign income. If you work in Malta – including as a director of your own Maltese company – that salary is Maltese-source income and taxed at the normal rates. Many founders pay themselves a modest salary for substance reasons and take the rest as dividends via the refund route. Social security contributions apply to Maltese employment and self-employment.

Residency options

Malta has several routes, depending on your passport, your income and how much you want to spend.

EU, EEA and Swiss citizens

If you hold an EU, EEA or Swiss passport, you can simply move. You register your residence with Identità, the government’s identity agency, and show that you have health insurance and enough resources (employment, self-employment or sufficient funds). No investment is required.

Once resident, you’re taxed on the remittance basis if you’re not domiciled in Malta. For many EU entrepreneurs this is the most straightforward way to use Malta – no special programme, no annual minimum beyond the €5,000 rule above.

EU citizens who want a flat-rate status similar to the Global Residence Programme can look at the Residence Programme (TRP), the EU version of the same idea.

Global Residence Programme (GRP)

The GRP is for non-EU nationals who want a special tax status:

• Foreign income remitted to Malta is taxed at a flat 15%.
• The minimum tax is €15,000 a year.
• You need to buy or rent a qualifying property. Thresholds depend on location – roughly €220,000–€275,000 for a purchase, or an annual rent from roughly €8,750–€9,600, with the lower figures for the south of Malta and Gozo.
• You must not spend more than 183 days a year in any other single country, and you need health insurance.
• Applications go through an authorized registered mandatory (a licensed local agent), and there are government fees.

The GRP suits people with significant foreign income who want certainty. If your remittances are modest, the €15,000 minimum can be more than you’d pay under the ordinary remittance basis.

Nomad Residence Permit

The Nomad Residence Permit is for non-EU remote workers who are employed by a foreign company, run their own foreign business or freelance for foreign clients. You need to show a minimum gross income (the threshold has been raised over time and is currently around €42,000 a year), health insurance and accommodation in Malta.

The permit is issued for one year and can be renewed. It gives you a legal base in Schengen, but it’s a residence permit, not a tax programme – tax treatment of nomad income has changed in recent budgets, so check the current rules for your situation.

Permanent residence

The Malta Permanent Residence Programme (MPRP) offers non-EU nationals permanent residence in exchange for a government contribution, a property purchase or lease, and a donation. It’s a residence route, not a tax status – you’re taxed under the normal rules unless you combine it with another regime.

What about citizenship?

Malta used to offer citizenship in exchange for investment. In April 2025, the Court of Justice of the European Union ruled that the scheme is contrary to EU law, because EU citizenship can’t be granted as a purely commercial transaction. Malta has since had to change its approach. We don’t recommend or arrange investor-citizenship, and we’d be cautious about anyone who still sells it as a product.

Setting up a company in Malta

The standard vehicle is the private limited liability company (Ltd).

The basics

• Share capital. Minimum €1,165, of which at least 20% must be paid up at incorporation.
• Shareholders and directors. One shareholder is enough; at least one director and a company secretary are required. Directors can be non-resident, but see substance below.
• Registration. Companies are registered with the Malta Business Registry. Once documents and due diligence are complete, incorporation itself is quick – days rather than weeks.
• Registered office. You need a Maltese address.
• Audit. Every Maltese company must have its annual accounts audited, regardless of size. Budget for it every year.
• VAT. Registration depends on your turnover and activity. Malta’s standard VAT rate is 18%.

Running costs – registered office, company secretary, accounting, audit and tax return – are higher than in Estonia or the UAE. Expect a few thousand euros a year for a small, simple company, and more for a two-tier structure or anything regulated. We give a fixed quote once we know the setup.

The bank account

This is the slow part. Maltese banks are conservative and their onboarding can take weeks or months, with detailed questions about your business model, source of funds and substance. Many companies start with a licensed e-money institution and add a traditional bank later. A clear business plan and real local presence help a lot.

Substance: the part people underestimate

Malta taxes companies that are incorporated there, but your home country may still claim the company if it’s effectively managed from elsewhere. If you sit in Munich or Vienna and make every decision from your kitchen table, your Maltese company can be treated as tax resident in Germany or Austria. At that point, the 5% has left the building.

Real substance usually means:

• Board meetings held in Malta, with qualified local directors who actually take decisions.
• An office (even a small one) and, depending on the business, local staff.
• Contracts signed and key decisions documented in Malta.
• Accounts, records and bank relationships that match that story.

The cleanest setup is often the simplest: you move to Malta yourself and run the business from there. See our guide on how to legitimize your presence in a tax haven for the broader picture.

Your home country still matters

Even with good substance, your country of residence may apply controlled foreign company (CFC) rules to low-taxed foreign companies. Under the EU’s anti-tax avoidance rules, every member state has some form of CFC regime. If you stay resident in, say, Germany and own a Maltese company that pays 5% effective tax, expect German tax on at least part of those profits.

In other words: the Malta refund works best for people who aren’t tax resident in a high-tax country – either because they live in Malta, or somewhere else with a friendly regime.

How we work on Malta setups

We don’t incorporate companies ourselves. We work with licensed local partners – corporate service providers, accountants and law firms in Malta. Where legally possible, you contract with us: one fixed quote, you pay us, the partner does the work, we check it, and only then do we pay the partner. Otherwise you contract the partner directly. Either way, one point of contact and far fewer surprises. More on the process on our company formation page.

Living in Malta: the honest version

Malta is lovely. It’s also small, busy and not as cheap as the postcards suggest.

The good

• English everywhere. English is an official language alongside Maltese. Contracts, courts, government forms and daily life all work in English.
• EU, euro and Schengen. Full market access, no currency risk against the euro and easy travel across Europe.
• Climate. Long summers, mild winters and the sea within reach almost anywhere.
• Connectivity. Frequent flights to most European cities, most of them within three hours.
• Safety. Crime rates are low compared to many European countries.
• Healthcare. A decent public system plus private options; many expats use private insurance.
• International crowd. A large community of entrepreneurs and professionals, particularly in iGaming, fintech and financial services.

The less good

• Cost of living in the hot spots. Rents in Sliema, St Julian’s, Gżira and Valletta are high by Southern European standards. Other parts of the island and Gozo are noticeably cheaper.
• Construction and noise. Malta has been building for years, and it shows. Check what’s being built next door before you sign a lease.
• Traffic. Distances are short, but traffic is heavy and public transport is limited. Many people rely on cars, ferries or scooters.
• Size. Some people love the village feel. Others get island fever after a year.
• Bureaucracy. Things get done, but paperwork is thorough and appointments take time.
• Summer heat. July and August are hot and humid. Air conditioning is not optional.

Reputation

Malta has worked hard on its reputation. It was placed on the FATF grey list in 2021 and removed a year later after strengthening its anti-money-laundering framework. Banks and regulators have been strict ever since, which is partly why onboarding takes longer. For you, that means paperwork – but also a jurisdiction that’s taken seriously. For the bigger picture on lists and labels, see avoiding the blacklisted and grey-listed tax haven traps.

Malta vs its neighbors

Malta’s closest competitor is Cyprus. Both are English-speaking EU islands with non-dom regimes, but they work differently:

Cyprus is easier to explain. Malta can be cheaper, but only when the structure is right. If your business is simple and you’re moving yourself, Cyprus often wins on simplicity; if you have foreign shareholders or significant foreign passive income, Malta can come out ahead. Put them side by side in the country comparison.

Who Malta suits – and who it doesn’t

Malta works well for

• Entrepreneurs who actually move to Malta and run a trading business from there – the refund plus the remittance basis is a strong combination.
• Non-domiciled residents with foreign investment income who can keep most of it outside Malta.
• Holding structures that benefit from the participation exemption and no withholding tax on dividends.
• Businesses in regulated sectors such as iGaming, fintech and funds, where Malta has an established regulator and ecosystem.
• Non-EU nationals who want an EU base in Schengen with a predictable tax bill through the GRP.

Malta is probably not for you if

• You want to stay resident in a high-tax country. CFC and management rules will likely undo most of the benefit.
• You want a simple, low-maintenance company. Between the refund, the two-tier structure and mandatory audits, Malta is not “set and forget”. Estonia or the UAE may be easier.
• You’re very cost-sensitive. Running costs and rents in popular areas add up.
• You dislike crowds and construction. The island is densely populated and building never seems to stop.

Not sure which country fits? The jurisdiction finder is a good starting point, and our guide to the best residency options covers the lifestyle side.

Getting started

A typical Malta project looks like this:

1. Model the numbers. Compare the refund route, the 15% election and alternatives such as Cyprus – including what your home country will tax.
2. Decide on residence. EU citizen registration, GRP or Nomad Residence Permit – or no move at all, which usually means rethinking Malta.
3. Design the structure. Single company or trading plus holding, with directors and management in Malta.
4. Incorporate and open accounts. Company registration, VAT, and a bank or e-money account.
5. Build substance and stay compliant. Office, board meetings, bookkeeping, audit, tax returns and refund claims every year.

Rates and rules in this guide were checked in September 2026 and change from time to time. This is general information, not tax or legal advice – get your specific setup reviewed by a qualified advisor before you act.

Ready to see what Malta would mean for you? Our services page shows how we can help.