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In Malta The taxation of an individual's income is progressive.

In other words, the higher an individual's income, the higher the tax he pays. The rates of tax for an individual in 2010 are 15% - 35%. There are reduced rates of taxes for certain income earners. The rate of corporate tax in 2010 is fixed at 35%. There are reduced rates for certain companies.

Malta Income Tax for an Individual

An individual who is a Maltese Resident pays tax on his income as a wage earner or as a selfemployed person. A person who meets the criteria of a "permanent resident" (usually, a stay of more than 183 days a year) will be taxed on his income in Malta and overseas. A foreign resident who is employed in Malta pays tax only on the income he earns in Malta. An employer is obligated to deduct at source, each month the amount of tax payable on a wage. Certain payments are deductible from the taxable income of an individual that are allowable for tax purposes. Separate calculations - A couple each with separate sources of income may report separately on their income, however one of the couple must be nominated as "the representative partner" for the purposes of the tax authorities. Passive income, such as rental of an asset, is attributed to the one of the couple having the higher income.

Malta individual income tax rates 2010 (single resident):

Tax base (EUR) % 8,500 8,501-14,500 14,501-19,500 0% 15% 25%

19,501 and over 35%

Reporting Dates for an Individual in Malta

The tax year is the calendar year ending on December 31. The date for filing an annual return is August 30.

During the year, a self-employed person must make 3 equal advance payments on April 30, August 31 and December 31. The advance payment is based on the taxable income for the previous year. Should there still be tax payable, it should be paid by the August 31 following the end of the tax year. An employed person whose employer has deducted monthly tax from his salary is not bound to file an annual return. Nevertheless, an employed person must submit a declaration by June 15. A similar declaration must be filed by an individual in respect of his income from a pension, dividend from a local corporation, and income from an investment in respect of which tax of 15% was deducted at source.

Reporting and Payment Dates for a Limited Company in Malta

The date for submitting a report is June 30. In practice, a report may be submitted up until September 30. Advance payments for a company are on the dates and in the amounts specified for an individual. Annual tax differentials must be paid by September 30.

Malta Corporate Tax

Malta Corporate tax in 2010 is 35% A company is resident if incorporated in Malta. Companies not incorporated in Malta but having their business management in Malta are regarded as resident too. There is no obligation to deduct tax at source from a dividend paid to foreign residents. There is zero withholding tax on interest and royalties paid to foreign residents. Passive or capital income from a "participation holding" have participation exemption. "Participation Holding" is defined in general for holding of 10% or more in a non-resident entity, subject to some alternative tests.

Malta Deduction of Tax at Source (non-residents)

Malta tax rates for deduction at source: Dividends- 0%. Interest- 0%. Royalties- 0%.

The tax system in Malta allows the deduction of expenses that are directly connected with the creation of income. This allowance includes, as well, payments to affiliated bodies while strictly checking that the amount of the expense is reasonable in relation to the accepted market prices.

Bad debts - Provision for bad and doubtful debts is not allowable expenditure. A bad debt is recognized only in the year in which documents are presented to show beyond any doubt that the debt is not collectable. Insurance - In general, an insurance premium is fully allowable as an expense. The subject of insurance of key personnel is particularly problematic. Royalties - Royalties of a capital nature are not fully allowable in the tax year during which they were paid. The royalties are allowed in relation to the economic useful life of the source in respect of which the royalties are paid. Offsetting Losses - A business loss may be offset forward without limit in the number of years. It is not possible to offset tax retrospectively on any amount. Thin Capitalisation - There are no thin capitalisation rules in Malta.

Depreciation of Fives Assets in Malta

The accepted method of depreciation in Malta is the straight line method. (Depreciation is not allowed on the value of the land). Oil and shipping companies have special rates of depreciation. In the first year of purchase, depreciation in allowed for the entire year even when the purchase was made during the course of the year and not at its start. On the sale of fixed assets, when a capital gain is created, the profit may be set against the cost of purchasing an alternative asset. Depreciation expenses that may not be deducted in the current year, as a result of current business losses, may be offset in the coming years against income from that asset only.

Rates of Depreciation in Malta

Class of Asset Industrial Building Machinery and Equipment Electrical Equipment Furniture Vehicles Computers and Software Aircrafts Type of Tax % 2 6.67-16.67 6.67 10 20 (subject to a limit) 25 8.33 %

Value Added Tax Stamp duty Social security: Employer Employee Self Employed Social Security
Single Rates

Standard -18, Reduced rate-5 V.A.T is paid quarterly. 2%-5% 10 10 15% Weekly payment.
Married Rates
Chargeable Income Deduct

Chargeable Income




0 -8,500


0 -11,900


8,501 -14,500



11,901 -21,200



14,501 -19,500



21,201 -28,700



19,501 &over



28,701 &over



Social Security Weekly rate of contributions Rate Minimum Maximum Employed persons - deductible from emoluments 10% 15.237 32.91 - payable by employer 10% 15.23 32.91 Self-occupied and self-employed persons 15% 26.37 49.37 No. of contributions April August December due in 2010 17 18 17 Maximum two-thirds social security pension (pensions commencing in 2010) 219.43 per week 7 Or if the employee chooses, 10% of the weekly wage.