Taxation in Malta

Tax system

Under Maltese tax law, a company may use different tax accounts depending on the source of income:

• final tax (Final Tax Account, FTA);
• tax on income from real estate (Immovable Property Account, IPA);
• foreign income (Foreign Income Account, FIA);
• Maltese taxable income analogue (Maltese Taxed Account (MTA);
• tax-free income (Untaxed Account, UA).

The distribution of income tax to different tax accounts is a very important feature of Maltese companies. It is according to it that the amount of compensation to shareholders of Maltese companies is determined during the distribution of profits.

Corporate tax:

In Malta it is 35%. But the shareholders of a Maltese company are entitled to a tax refund in the amount of:

• 6/7 of the total active tax paid, i.e. the effective rate of tax paid in Malta will be 5%.
• 5/7 of the total amount of passive tax paid, as a result, the maximum rate of tax paid in Malta is 10%.

Passive income - the company's income from interest or royalties is no more than 50% of profits.

Malta Corporate Law