Corporate income tax in Malta: 35%, 5% or 15%? How it really works in 2026

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You run a business from your laptop and Malta keeps coming up as a place to incorporate. By the end of this guide you will know how 35%, 5% and 15% fit together, which legal form suits you, and where the structure breaks if you run it from abroad.

Malta corporate income tax in 2026: the key figures

Is this guide for you?

Read on if you…

• run or plan to run a company that could be incorporated in Malta;
• want to know what the "5% effective rate" really means before an adviser sells it to you;
• live outside Malta and wonder whether a Maltese company works when managed remotely.

Probably not your case if you…

• are a freelancer invoicing as an individual. Start with business forms and professional statuses in Malta instead;
• only hold passive investments personally. Capital gains taxation in Malta is the better read.

How does Malta's 35% rate turn into 5%?

Malta runs a full imputation system. In plain words: the tax a company pays is treated as a prepayment of the shareholder's own tax. When profits are distributed, the shareholder claims part of it back.

1. The company pays 35% on its chargeable income (profits after deductible expenses).
2. The company distributes a dividend out of the taxed profits.
3. The shareholder files a refund claim with the Commissioner for Tax and Customs.
4. The refund is paid within 14 days of the company's tax being settled and the claim being complete.

The refund fraction depends on the type of profit:

• 6/7 for most active trading profits. 35% minus 6/7 of 35% leaves 5%.
• 5/7 for passive interest and royalties. Effective rate 10%.
• 2/3 where the company already claimed relief for foreign tax on the same income.
• 100% on profits from a qualifying participating holding that did not use the participation exemption.

Most owner-managed structures add a Maltese holding company above the trading company. It receives the dividend and the refund, and Malta does not tax the refund in its hands. The catch is your own country of residence: if you live in Spain or Portugal, the refund is usually taxed there as a dividend. Compare with corporate income tax in Spain and corporate income taxes in Portugal before you decide.

Other deductions that lower the bill

• Notional interest deduction (NID). A deduction for a notional return on equity, capped at 90% of chargeable income.
• Participation exemption. Dividends and gains from a holding of at least 5% in a qualifying company are exempt.
• Losses carry forward indefinitely. Expenses must be wholly and exclusively incurred in producing the income. See business expenses in Malta.

What is the new 15% option and who should take it?

In September 2025 Malta published regulations creating an elective final tax at 15%, known as the FITWI option (Final Income Tax Without Imputation). The key features:

• The company pays 15% on chargeable income and that is the end of it. No refund, no credit, nothing flows to the shareholder.
• Once you elect, you stay in for at least five consecutive years.
• Any eligible Maltese entity can opt in. It is not restricted to large groups.

Why? The OECD Pillar Two rules impose a 15% global minimum tax on groups with consolidated revenue of EUR 750 million or more. For them, a Maltese company at 5% triggers top-up tax elsewhere, so paying 15% in Malta is simpler. Malta itself has deferred applying the Pillar Two charging rules under the EU's six-year transitional option.

Honestly? For a stand-alone company owned by one or two founders, the refund route is still cheaper at 5%. The 15% option makes sense when:

• you are part of a Pillar Two group;
• your home country taxes the refund harshly, for example as income the moment it is paid;
• you prefer one clean payment over a refund cycle and its paperwork.

Which legal form should your business take?

Corporate income tax only applies to companies. Sole traders and transparent partnerships report profits on their personal return instead. The table compares the main forms under the Companies Act (Chapter 386).

For almost every location-independent founder, the private limited company is the realistic choice. One director and one company secretary are enough. All companies file audited accounts every year, whatever their size. Budget for that.

The management-and-control trap

Here's the catch for remote founders. A company incorporated in Malta is Maltese resident. But if you take every real decision from your sofa in Lisbon, Portugal can claim the company is also resident there, because its place of effective management is in Portugal. Treaties usually settle that in favour of where management actually happens. See tax treaties of Malta.

Even without that conflict, working regularly for the company from another country can create a permanent establishment there: a taxable presence, basically a branch in that country's eyes. Profits linked to your work are then taxed where you sit.

Substance is the answer: board meetings in Malta, a Malta-resident director with real authority, local books and bank accounts, documented decisions. If that is unrealistic, a Maltese company may not be the right tool. A review of your business setup is cheap compared with a residence dispute.

How and when does a Maltese company pay its tax?

For a company with a 31 December year end:

1. Provisional tax is paid in three instalments, on 30 April, 31 August and 21 December, based on the previous year's tax.
2. The tax return and the balance of tax are due nine months after year end, so 30 September. Electronic filers usually get a short extension announced each year.
3. Refund claims follow the dividend. The shareholder must be registered with the Commissioner for Tax and Customs first.
4. Audited accounts and the annual return go to the Malta Business Registry.

Dividends, interest and royalties paid out of Malta carry no withholding tax in almost every case.

Common mistakes (and what they cost)

• Managing a Maltese company entirely from abroad. Your home country taxes it as its own resident, often at 20–30%, and you still pay Maltese compliance costs.
• Skipping the holding company. The refund lands in your personal hands and may be taxed as income where you live.
• Assuming the 5% rate is automatic. Without a dividend and a formal claim, you have paid 35% and nothing comes back.
• Electing the 15% rate without modelling five years. You cannot leave the regime early if your profits or your residence change.
• Forgetting the audit. Every Maltese company needs audited accounts, even a one-person consultancy. Late filing means registry penalties.

Frequently asked questions

What is the corporate tax rate in Malta in 2026?

The standard rate is 35% of chargeable income. Malta's full imputation system then lets shareholders claim back part of that tax when profits are distributed, typically 6/7 on trading income, so the combined Maltese tax falls to about 5%. Since September 2025, eligible companies can instead elect a final 15% rate, binding for five years.

How long does the Maltese tax refund take?

The Commissioner for Tax and Customs pays refunds within 14 days of the later of two events: the company settling its tax for the year and the shareholder filing a complete claim. In practice, companies time distributions and tax payments together so the cash is back within a few weeks of the dividend.

Does Malta charge withholding tax on dividends paid abroad?

Generally no. Malta does not withhold tax on dividends, interest or royalties paid to non-residents, with or without a tax treaty. The recipient's own country may still tax the income. If you live in Spain or Portugal, check how your home country treats both the dividend and any Maltese refund.

Can I run a Maltese company while living in another country?

You can, but the company must be genuinely managed from Malta to stay solely Maltese resident. If strategic decisions are taken where you live, that country can treat the company as resident there or tax a permanent establishment. A Malta-based director with real authority, local board meetings and local records are the minimum.

What is the minimum share capital for a Maltese Ltd?

The minimum share capital for a private limited company is EUR 1,164.69, of which at least 20% must be paid up on incorporation, so EUR 232.94. Public limited companies need EUR 46,587.47 with 25% paid up. The Malta Business Registry handles registration, usually within one to two weeks.

Related guides

• Business forms and independent professional statuses in Malta
• Business expenses you can deduct in Malta
• Tax treaties of Malta and how they protect your company
• Capital gains taxation in Malta
• Corporate income tax in Spain
• Corporate income taxes in Portugal
• Your complete tax guide to Malta
• All country tax guides

Sources

• Commissioner for Tax and Customs, Malta
• Income Tax Act, Chapter 123 of the Laws of Malta (legislation.mt)
• Companies Act, Chapter 386 of the Laws of Malta (legislation.mt)
• Malta Business Registry
• OECD, Global minimum tax (Pillar Two)
• PwC Worldwide Tax Summaries, Malta: taxes on corporate income (cross-check)

This guide is general information, not personalised tax advice. See how we research and review.