Rental Income

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In Malta, rental income from both residential and commercial properties is subject to tax. Taxpayers have the right to choose between a 15% flat tax rate or the regular tax rates that may be applicable, progressive for individuals or 35% for resident corporate entities. If the 15% flat rate is selected, a specific declaration must be filed which is known as the TA24. When opting for the ordinary tax rates, various expenses such as maintenance, repairs, and interest on loans may be deducted from the gross rental income to determine the final taxable amount. This income is to be declared within the annual tax return, with those opting for the 15% rate being required to submit the TA24 by the end of April following the end of the relevant tax period.

Dividend Income

Dividend income in Malta utilises the full imputation system, where the tax paid at the corporate level is credited against the tax liability on dividends. This system often results in no additional tax being payable by the shareholder.

Non-resident shareholders may be eligible for a refund of the tax paid at the corporate level, effectively reducing the overall tax burden. Additionally, dividends received from a participating holding may be exempt from income tax if certain conditions are met.

Investment Income

Investment income in Malta includes a wide array of income. Examples of this may include interest from local bank accounts, local bonds, and other local investment instruments. Income satisfying the definition of the Investment Income Provisions is subject to a final withholding tax of 15%. This final withholding tax means that the tax is deducted at source. However, no further tax is payable on such income in Malta.

Other forms of income derived from investments may include capital gains from the sale of securities listed on a “Recognised Stock Exchange”. These gains may be exempt from tax yet gains from the sale of other securities are typically subject to tax at the individual’s respective tax rate. For corporate entities, if a capital gain is derived from a participating holding, this would typically be exempt from capital gains tax in Malta.

Income from foreign investments, such as dividends, bond interest, and bank interest may also be subject to tax in Malta, with relief for foreign tax paid potentially available under Malta’s extensive network of double taxation treaties and unilateral framework.

The taxation of other income can be influenced by the taxpayer’s residency status. Residents are taxed on their worldwide income, while non-residents are taxed only on Maltese-source income. All individuals and entities receiving taxable income must file an annual tax return, with the deadline for individuals typically being the end of June and end of November for corporate entities.

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​Smarter Business starts with CSB Group. With over 35 years of industry experience, we are here to help navigate through the complexities which may arise when calculating your taxes. Contact us today to understand further how our tailored, one stop shop solutions may be the right decision for your needs.