Personal income tax in Malta is calculated based on a progressive tax rate system. These are based on the Income Tax Act (Chapter 123 of the Laws of Malta) and the Ministry for Finance, Malta. The steps involved in the calculation process include:
- Determining the individual's total taxable income for the year.
- Applying the applicable tax rates to different income brackets.
- Deducting any available tax credits or allowances.
- Calculating the total tax liability.
The tax rates for different categories of taxpayers, such as married, single, and parents, vary. For single taxpayers, see below.
| Taxable Income (EUR) | Tax Rate |
|---|---|
| Up to 9,100 | 0% |
| 9,101 - 14,500 | 15% |
| 14,501 - 19,500 | 25% |
| 19,501 and above | 35% |
Taxable income in Malta includes various types of income, such as:
- Employment income
- Rental income
- Investment income
- Self-employment income
- Pension income
- Capital gains
These income categories are subject to specific rules and regulations regarding their taxation.
Some types of income are exempt from taxation in Malta. Examples include:
- Income from certain government securities
- Certain scholarships, bursaries, or grants
- Proceeds from life insurance policies
- Certain social benefits and allowances
The legal basis for these exemptions can be found in the Income Tax Act, specifically in Articles 4 and 5.
The personal income tax system in Malta is primarily governed by the Income Tax Act (Chapter 123 of the Laws of Malta). Specific articles and sections relevant to tax rates, taxable income, and exemptions include:
- Article 4: Defines chargeable income and taxable income.
- Article 5: Provides for exemptions from tax on certain types of income.
- Article 56: Establishes the tax rates applicable to different income brackets.
- Article 57: Outlines tax credits and deductions available to taxpayers.
