Tax Administration in Malta

General Overview

The Income Tax system in Malta is primarily a self-assessment system, whereby taxpayers are required to make their own tax assessment. This system was introduced in Malta from Year of Assessment (YA) 1999 and requires all taxpayers to make their own assessment in declaring income and taking the necessary deductions for tax purposes.

Income tax is assessed in tax calendars, or as are more commonly referred to as Years of Assessments. In the case of personal taxation, a YA refers to the prior calendar year, whereas in the case of corporate entities, the YA refers to the preceding financial year. For example, for individuals, YA2025 refers to calendar year 2024, whereas for companies, YA2025 covers the financial period for companies having a January to December 2024 year-end.

Malta has also adopted a Provisional Tax (PT) system whereby taxes for the relevant YAs are collected in instalments during the actual calendar/financial year i.e. in the same period in which income is earned. In accordance with tax terminology, this is referred to as the basis year. This system is relevant mostly to companies carrying on a trade in Malta but also extends to individuals whereby their main source of income is not solely employment income, but includes also income from a trade, business, profession or vocation.

PT payments are calculated on PT benchmarks which are based on past tax return submissions or on estimates issued by the Commissioner for Tax and Customs (CfTC). As the name implies, PTs are not final but merely payments made on account of the tax liability for the respective YA with an under/over payment becoming due/refundable at a later stage. PT payments are payable in three instalments: 30 April, 31 August and 21 December of the basis year.

Taxes for Individuals

Depending on an individual’s tax status, personal income is taxed at progressive rates ranging from 0% to 35%. The 35% tax bracket becomes applicable where the annual chargeable income of an individual exceeds €60,000.

Individuals who are liable to tax in Malta fall under either the Non-filer system or the Filer system.

The non-filer system does not require individuals to file a tax return since all relevant information relating to one’s income and deductions is already available to the CfTC. This system encapsulates primarily individuals that have all their income withheld at source. Very often, such income would be employment income whereby tax is withheld through the Final Settlement System (FSS), and any additional passive income which is subject to either a Final Withholding Tax (FWT), or to another Tax at source.

The FSS is a method of tax deduction whereby tax on employment income is withheld by the employer with every payment made to employees liable to tax in Malta. Tax is deducted at a predetermined rate specific to each employee, ensuring that no additional tax would be required following year-end.

Non-filers are typically served with a tax statement instead of tax return, and in the eventuality that the taxpayer disagrees with its contents, an adjustment form is submitted, and a new tax statement is eventually issued.

On the other hand, those individuals within the filer system are required to submit their tax return together with the settlement of any income tax by 30 June of the following calendar year.  Subject to the CfTC’s discretion, the deadline date for the submission of the tax return, together with the respective tax payment, is usually extended by a month in case of electronic submissions. However, the extension for the tax payment does not apply for manual tax return submissions.

Penalties for the late filing of tax returns and interest on the late payment of tax will ensue if taxpayers fail to meet the stipulated deadlines. In addition, such penalties and interest will be calculated with reference to the statutory deadline and not to the extended deadline.

Taxes for Companies

In Malta, companies are subject to income tax at a flat rate of 35%. All companies tax resident in Malta are required to prepare and submit a tax return. A company is deemed resident in Malta when it is incorporated in Malta, or else, when it has its effective management and control in Malta.

The tax return together with the settlement of any income tax is due on the later of nine months from the company year-end or 31 March following the YA. In certain cases where the company has foreign passive income or when the company’s business interests are situated primarily outside of Malta, different payment deadlines may apply. This would be possible following the obtainment of a Duty Exemption under article 47(3)(e) of the Duty on Documents and Transfers Act.

Subject to the CfTC’s discretion, the deadline date for the submission of the tax return is usually extended in case of electronic submissions. However, the said extension does not apply for tax payments.

Penalties for the late filing of tax returns and interest on the late payment of tax will ensue if taxpayers fail to meet the stipulated deadlines. In addition, such penalties and interest will be calculated with reference to the statutory deadline and not to the extended deadline.

How can we help?

At Zampa Partners, we can assist you or your organisation with a vast range of tax services ensuring all obligations and deadlines are met.

For more details on monthly Tax and FSS deadlines, please visit our detailed calendar on https://zampapartners.com/deadlines/.

For further assistance or information please get in touch with us on taxgroup@zampapartners.com.