IGA Group provides its clients with personalized tax advice on all tax aspects, with major focus on Corporate Tax, Personal (Income) Tax, VAT and Gaming Taxes. Whatever your business needs, we can give expert advice and assist your business, making sure it remains in constant compliance with the ongoing changes in tax regulations, both at a local, EU and international level.
Malta’s EU membership has made the country a competitive jurisdiction for tax planning and corporate structures. Companies registered in Malta are subject to a tax rate of 35% on their total income and capital gains, however with professional tax advice and adequate planning, corporate tax can go down to an effective rate of 5% for non-resident shareholders. This process is called tax optimisation, and non-resident shareholders of a Maltese company are, upon the distribution of profits, entitled to claim a tax refund of 6/7 of the relevant tax paid in respect of trading income. This effectively reduces the effective corporate tax rate from 35% to just 5%.
This, coupled with other tax incentives, and an extensive tax treaty network which includes over 70 agreements for the avoidance of double taxation, makes Malta the ideal please where to set up your business.
Personal Income Tax
The general basis of personal taxation in Malta is that if, you are domiciled and ordinarily resident in Malta you should declare all your income (including that of your spouse and dependent children) from whatever source. If you are either not domiciled or not ordinarily resident in Malta you should declare all income accruing to you in Malta or derived from Malta (including that of your spouse and dependent children), as well as any income which was remitted to Malta.
In Malta the taxation of an individual's income is progressive; i.e. the higher an individual's income, the higher the tax paid. Payment of personal tax is mainly effected either through the Provisional Tax system, the FSS (Final Settlement System) or by means of the Self-Assessment. In the case of the Provisional Tax, the tax due for a particular year is collected during the same period in which income is earned. It applies mostly to persons whose sources of income include trade, business, profession or vocation. The FSS (Final Settlement System) which mainly caters for employees and pensioners is designed to produce accurate tax deductions from emoluments. This methodology ensures that the correct amount of tax is deducted from gross emoluments as they are received, thus reducing the incidence of large refunds or tax claims. Any tax due not collected by these two systems is to be paid by the tax-settlement due date i.e the 30th June of the year following the year in which income was earned by means of the Self-Assessment.
There are mainly three types of tax rates: Single Rates, Married Rates & Parent Rates. Married individuals can opt to file a single tax computation or a joint tax computation, depending on the most beneficial tax rate. Each tax rate includes 5 different tax brackets starting from 0%, and going up to a maximum rate of 35%.
In Malta, laws state that a company or a person performing an economic activity must become VAT-registered within 30 days from the commencement of the same economic activity.
An economic activity is the activity carried on by a person, who is not an employee, and consisting of any one or more of the following:
The standard applicable VAT rate in Malta is that of 18% on the taxable value of every taxable supply of goods, services, or importation. This said, a number of sector specific VAT rates apply, whilst some other services are also considered VAT exempt.
For a detailed and thorough explanation on the VAT in Malta and the different rates according to the type of business, get in touch with IGA Group. Our team of qualified professionals can assist clients in all aspects of VAT registration, ensuring compliance with all VAT regulations and acting as a liaison with the relevant Tax authorities.
On Gaming Revenue generated from Malta based players a 5% Gaming Tax rate is applied. Determination of taxability is whether the player is established, has his permanent address and/or usually resides in Malta. Other fees and contributions apply. Click here for more details.
Over a number of years, Malta has established itself as an excellent stepping-stone for doing business with Europe and the rest of the world, with a Government which welcomes foreign investors.
Taxes in Malta are very advantageous, with specific fiscal incentives aimed at making the jurisdiction attractive for foreign direct investment (FDI). Employment tax credits, R&D tax credits, soft loan financing and bank guarantees are amongst the most beneficial Government incentives offered in Malta, with the possibility to lower corporate tax to an effective tax rate of just 5%, considered to be a key differentiator.
Malta’s strategic geographic location situated exactly at the centre of the Mediterranean, with just a couple of hours’ flights from major European cities, coupled with a highly skilled and international workforce, make Malta the ideal place to run your business.