Considerations on Taxation and National Insurance in Malta

Who is taxable in Malta?

Individuals who are both domiciled and ordinarily resident in Malta are taxed on their worldwide income. Spouses of such individuals are also taxed on a worldwide basis, whether domiciled or ordinarily resident in Malta.

Any person who is ordinarily resident in Malta but not domiciled there, is taxed only on income earned in Malta and any foreign income remitted to Malta (i.e. on income and chargeable gains arising in Malta and on income outside Malta that is received in Malta). Such individuals are neither taxable in Malta on income earned outside of Malta that is not received in Malta, nor on capital gains earned outside of Malta, regardless of whether they are received in Malta or not.

On the other hand, a non-resident is only taxed on income and chargeable gains earned in Malta.

Regarding employees and/or employers whose employees' contracts of employment require them to perform work or duties primarily outside of Malta, individuals deriving employment income under such contracts may opt of paying a 15% tax rate on employment income. These special rules are not applicable to service on board a ship, airplane, or road vehicle chartered or leased by a Maltese firm, as well as any service for the Maltese Government. The 15% does not apply to emoluments payable under a contract of employment for a period of less than 12 months or that lasts less than 12 months, nor does it apply if the individual was present in Malta for more than 30 days in the year preceding the year of assessment.

How is tax collected?

Individuals are taxed on income earned in a calendar year (the basis year), which is assessed in the year following the year during which it is earned (i.e. the year of assessment).

Persons residing and working in Malta are charged income tax on their salary received in Malta. Malta adopts a graduated progressive income tax rate ranging from 0% to 35% i.e. the higher an individual’s income, the higher the tax paid. The 35% tax bracket is reached at annual chargeable income in excess of €60,000.

Tax rates (for basis year 2022) are available on https://cfr.gov.mt/en/rates/Pages/TaxRates/Tax-Rates-2022.aspx

Self-employed individuals must make provisional tax payments on 30 April, the 31 August and the 21 December. Each year, the total provisional tax payable is equal to the amount of the tax chargeable based on the self-assessment for the previous basis year. The provisional tax payments are credited against their tax liability on their annual income.

In Malta, national insurance, also known as social security, combines health insurance and contributions to the government pension. In case of employment, the employer will deduct national insurance contributions directly from the employee’s salary. Employee and employer each pay half of the contributions. The contributions rate varies depending on your income which is capped according to law.

On the other hand, self-employed persons must pay for their own national insurance contributions.