What is the 15% FITWI election in Malta?
FITWI is an election, from year of assessment 2025, to pay a flat 15% final tax on chargeable income instead of the 35% system with shareholder refunds. The tax is final, and the election locks in for 5 consecutive years.
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Detailed Explanation
## What it is
The Final Income Tax Without Imputation (FITWI) was introduced by L.N. 188 of 2025. A company may elect to pay a flat 15% final tax on chargeable income, in place of the 35% tax and shareholder refunds.
## Key features
The tax is final, with no credit, no refund and no set-off. The election locks in for 5 consecutive years. An anti-arbitrage floor stops the election from undercutting the 35%-minus-refunds outcome.
## Pillar Two context
Malta transposed the EU Minimum Tax Directive but deferred the income inclusion rule and UTPR, and it has no domestic top-up tax. The election is the voluntary route for in-scope groups to reach a 15% effective rate in Malta. Re-check this position before the 2027 tax year.
## Comparing the two routes
For a trading company, the 35% system with 6/7ths refunds gives about 5% effective Malta tax. The 15% election is therefore not always the lower figure. The right choice depends on the profits, the shareholders and the group.
## What Finn does
Finn models the election where it has been made and flags it as a planning conversation. The decision belongs with a licensed practitioner.
Source: https://legislation.mt/eli/ln/2025/188/eng
Real-World Examples
Elected company
A company with €100,000 of chargeable income that has elected FITWI pays €15,000, final.
Large group
A group in scope of Pillar Two uses the election to reach a 15% effective rate in Malta.
Lock-in
A company elects and then wants to leave after two years. The 5-year lock-in applies.
Common Mistakes to Avoid
- Assuming 15% is always lower than the after-refund position
- Forgetting the 5-year lock-in
- Expecting credits or refunds against the final tax
- Electing without modelling the shareholder position
Frequently Asked Questions
When did FITWI start?
From year of assessment 2025.
Is the 15% tax final?
Yes. There is no credit, refund or set-off.
How long is the lock-in?
5 consecutive years.
Does Malta apply a Pillar Two top-up tax?
Malta deferred the IIR and UTPR and has no domestic top-up tax. Re-check before the 2027 tax year.
Who decides whether to elect?
You, with advice from a licensed practitioner.
Practical Tips
- Model both routes before electing
- Note the 5-year lock-in in the planning file
- Re-check Pillar Two before 2027
- Ask a practitioner about the anti-arbitrage floor
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