How Much Tax Do Companies Pay in Malta
Malta's headline corporate tax rate is 35%, but very few active businesses end up paying that. This guide breaks down the actual tax companies pay in Malta, including refunds, exemptions and how the system works in practice.
The headline rate: 35%
Maltese resident companies are taxed on their worldwide income at 35%. Non-resident companies are taxed only on Malta-source income.
If nothing else happens, that's the rate paid. The system is designed for the next step, distribution to shareholders, to bring the effective rate down.
The refund system: how the rate drops
When profits are distributed as dividends, shareholders can claim a refund of part of the tax already paid by the company. The refund depends on the type of income:
6/7 refund, active trading income. Effective rate around 5%.
5/7 refund, passive interest and royalties. Effective rate around 10%.
2/3 refund, when double-tax relief was claimed.
100% refund, qualifying participating holdings.
Participation exemption
Dividends and capital gains from qualifying shareholdings can be fully exempt. Used correctly, foreign income can flow through Malta with no additional tax, useful for holding and IP companies.
What most businesses actually pay
An active Malta trading company distributing profits to its shareholders typically settles around 5% effective tax overall.
A Malta holding company receiving qualifying dividends and capital gains can pay 0% on that income.
Passive interest and royalties typically settle around 10%.
Other taxes companies face
VAT, standard rate 18%, with reduced rates for specific sectors.
Employer social security contributions, payable monthly via FSS.
Stamp duty, on certain property and share transfers.
Withholding tax, on certain payments to non-residents (often reduced by treaty).
When the low rate doesn't apply
If profits are not distributed, the refund isn't triggered. If tax-account allocation is wrong, the refund can be denied. If the underlying business has no real substance in Malta, the position can be challenged.
The low effective rate is real, it just isn't automatic.
FAQ
Is Malta a tax haven?+
No. Malta is a fully EU-compliant jurisdiction with public registers, transfer pricing rules and standard reporting. The low effective rate comes from a published refund system, not secrecy.
How long does the refund take?+
Usually a few weeks after the dividend is paid and the refund claim is filed correctly.
Do shareholders need to be in Malta?+
No. Refunds are available to shareholders wherever they are tax resident, though local rules in their country may affect how the refund is treated.
Does the 5% effective rate apply to all companies?+
No. It applies to active trading income that is properly allocated and distributed. Passive income, holding income and certain other categories follow different rates.
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