Malta Accounting & Tax Glossary

Article 11 is the VAT registration for small enterprises, with a unified domestic threshold of €35,000 annual turnover from 1 January 2025. There is no input VAT recovery and VAT periods follow the calendar year.

Maltese corporate income tax is 35% on the worldwide income and capital gains of Maltese companies. Under the full imputation system, shareholders can reclaim part of it on distribution, so the effective rate is often far lower.

A Maltese parent may form a fiscal unit with subsidiaries in which it holds at least 95%. The unit files one consolidated return and achieves the shareholder-refund benefit at source.

From year of assessment 2025, a Maltese company may elect the Final Income Tax Without Imputation, a flat 15% final tax on chargeable income instead of the 35% tax and shareholder refunds.

Under full imputation, shareholders receiving a dividend can claim a refund of part of the Malta tax paid by the company. The refund is 6/7ths on trading profits, 5/7ths on passive interest or royalties, 2/3rds on foreign-income-account profits and 100% on participating holding profits.

Income and gains of a Maltese company from a participating holding, or its transfer, are exempt from tax. A participating holding generally needs at least 5% of the equity.

Provisional tax is paid during the basis year in three instalments of 20%, 30% and 50%, on 30 April, 31 August and 21 December.

Maltese VAT has an 18% standard rate, reduced rates of 12%, 7% and 5%, and a 0% rate described as exempt with credit, which covers food for human consumption and pharmaceuticals.

Class 1 social security for employees is 10% from the employee and 10% from the employer of basic weekly wage, capped at €55.93 a week each for people born from 1962 in 2026. Employers also pay a 0.3% Maternity Fund contribution.

The Final Settlement System is how Maltese employers report and pay payroll tax and social security. Employers hold a PE number and file FS5 monthly, then FS7 and FS3 by 15 February.

The annual return is filed with the Malta Business Registry, made up to each anniversary of registration and filed within 42 days, with a fee from €85 electronically.

The Maltese private limited company has a minimum share capital of €1,164.69 with at least 20% paid up. It is the standard SME company form, identified by an MBR C-number.