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Taxation in Malta
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Taxation in Malta

Business Taxation

Resident companies are taxed on worldwide income; non-resident companies are taxed only on Maltese-source income. Residence is determined by the place of effective management and control, but any company incorporated in Malta is regarded as resident. Tax is charged at 35%. Branches are taxed at the same rate of income tax as domestic companies. A number of incentives and concessional rates have been available for companies in Malta, but as a result of EU entry some incentives are being phased out.

Malta tax law applies an imputation tax system whereby the tax paid by a company is credited in full to the shareholder upon the payment of a dividend. Refunds of the applicable tax credit are available to both resident and non-resident shareholders in respect of profit distributions by all companies resident in Malta and registered on or after January 1st 2007 out of all sources of income (with the exception of profits derived from immovable property situated in Malta) and provided the tax-compliance requirements have been fully adhered to.

Personal Taxation

Resident individuals are taxed on their worldwide income; non-residents are taxed only on Maltese-source income. There is no strict definition of residence, but residence will be based on where a person effectively lives and has a home. Staying in Malta for six months in a year would imply residence. Tax is charged at progressive rates to 35%. There is a favourable expatriate tax regime available to employees of investment services or insurance companies.

Capital Gains

Capital gains of companies and individuals are generally taxed as income. Gains on securities listed on the Malta Stock Exchange are exempt.

Indirect Taxation

Value-added tax (VAT) applies to most transactions. The standard rate is 18% and a 5% rate applies to the supply of holiday accommodation, electricity, printed matter and confectionery. Zero rating applies to exports, international transport, domestic passenger transport, food, pharmaceuticals, and the supply and repair of ships and aircraft. Exemptions from VAT include the sale and leasing of immovable property, banking and insurance services, health, education and broadcasting.

Registration is compulsory for suppliers of goods with annual turnover over MTL 12,000 and suppliers of services with turnover above MTL 8,000.

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