It doesn’t matter if you were born there or decided to move later in life, a country’s tax system can be difficult to navigate. The same is true for Malta. Understanding taxes in Malta can be overwhelming, and you might wonder if you’re paying out accordingly. But, you’re not alone. If you’re curious about income tax in Malta and how it works, then you’ve come to the right place. 

In this article, we’re covering everything you need to know about paying taxes in Malta. We’ll be breaking down the tax system by the details and then sharing why the tax system here is so attractive. Finally, we’ll give you the best ways to begin preparing to file your taxes now.

A Breakdown of the Taxes in Malta

Like most countries, Malta does have an income tax. To make things easier and fairer though, the tax system is progressive and depends entirely on the amount of money that you’re making. This means that the higher your income is, the higher your taxes will be. And, the best way to pay these taxes is by one of three methods: the Provisional Tax system, the Final Settlement System (FSS), or Self-Assessment. The method you choose will be based on the type of job you hold. 

What You Need to Know about Income Tax in Malta

As mentioned above, the amount of tax you pay is completely dependent on the amount of money that you earn. When it comes down to income tax in Malta, the rates range from 0-35%, and anyone who is a resident of Malta for more than 183 days in a year will be taxed on their income. Weekly social security contributions are also required, and these add up to about 10% of your income.

Residents of Malta can take advantage of one of the three residential rates, depending on their family setup. These rates include:

• Single *

Incomes between 0-9,100 EUR will be taxed at 0%

Incomes between 9,101-14,500 EUR will be taxed at 15%

Incomes between 14,501-60,000 EUR will be taxed at 25%

Incomes over 60,000 EUR will be taxed at 35%

 

• Married *

Incomes between 0-12,700 EUR will be taxed at 0%

Incomes between 12,701-21,200 EUR will be taxed at 15%

Incomes between 21,201-60,000 EUR will be taxed at 25%

Incomes over 60,000 EUR will be taxed at 35%

 

• Parent *

Incomes between 0-10,500 EUR will be taxed at 0%

Incomes between 10,501-15,800 EUR will be taxed at 15%

Incomes between 15,801-60,000 EUR will be taxed at 25%

Incomes over 60,000 EUR will be taxed at 35%

*please note that the above tax brackets are subject to change over time

Why are Taxes in Malta so Attractive?

The progressive tax rates of Malta are incredibly beneficial for many people. But, the tax deductions available are what makes Maltese tax rates so attractive. This country already lacks taxes on inheritance, wealth, and many instances of property, so navigating income taxes in Malta is the only real requirement. The tax deductions available to you depend on your marital status, and whether or not you have children. For example, parents who make more than 60,000 EUR annually are eligible for a deduction of €9,050. 

Various other deductions are also available, depending on different situations in your life. If you pay alimony, for example, these paid funds are deductible. Loan interest that you pay throughout the year can also be deducted, as well as school fees, tuition costs, and childcare. It can be extremely helpful to familiarize yourself with all the deduction potentials to help you make the most of your income tax in Malta. 

Another benefit of Maltese taxes is that you can claim tax residency without having to spend 183 days in the country. This is advantageous for people who spend time in countries with exceptionally high Value-Added Tax (VAT) rates. As one of only six European countries with VAT rates that sit below 20%, Malta’s taxes seem quite attractive. This is especially true for people from countries like Hungary and Sweden with VAT rates higher than 25%. 

What’s the Best Way to Prepare to Pay Income Tax

Filing your income tax in Malta is not a difficult process, but everyone must have them completed by the end of June. For married couples filing joint tax returns, they need to choose one person to act as the ‘responsible spouse.’ If both partners earn income, however, it could be more beneficial to file your taxes separately. 

Tax returns are handled by the Inland Revenue Department (IRD), and they are happy to assist anyone having an issue with filing their taxes. Some people have been classified as “non-filers” by the IRD, and will not have to file their tax returns. This most commonly happens when your income is already reported by your employer. You can not choose to act as a non-filer, as this is something that can only be decided by the IRD. Those filing taxes in Malta now also have the opportunity to file their taxes digitally via the Office of the Commissioner for Revenue. If you choose to file taxes this way, you are granted an extension and can wait until the last day of July to file your return. 

Should I Use a Tax Calculator?

A tax calculator can be extremely beneficial, especially for people looking to change their positions and/or career. It can help determine how your tax status might change, while also indicating how much tax you might get back. Tax calculators should only be used for general advice though, as they don’t consider your personal situation. Additional tax deductions could be available to you, which is why it’s always important to take advantage of a tax professional. If you’d like a general idea of the taxes you might be responsible for when considering a potential opportunity, the Malta Salary Calculator can help. This free online tool allows you to estimate your weekly, monthly, and yearly tax responsibility based on your income.