Malta’s Individual Tax Programme is a special tax regime for qualifying individuals who establish tax residence in Malta.
From 1 January 2027, eligible beneficiaries can generally benefit from a 15% tax rate on foreign-source income remitted to Malta, subject to a minimum annual tax liability and various residence, property and eligibility requirements.
Malta Individual Tax Programme at a Glance
- The Malta Individual Tax Programme replaces the old tax programmes from 1 January 2027
- You pay 15% tax on foreign-source income remitted back into Malta
- Foreign-source income kept outside of Malta remains tax free
- You pay 35% tax on Malta-source income
- A minimum tax applies of which the amount depends on the category you fall in
Malta’s Tax Programmes Are Changing in 2027
As from 2027 is unifying various tax programmes it offers. This means quite some changes are coming.
What Happens To The Existing Programmes?
This existing programmes will no longer accept applications for the future while providing for some transitional measures for people already qualifying.
Till 2027 Malta offers various tax programmes to attract new tax residents:
- Residence Programme
- Global Residence Programme
- Malta Retirement Programme
- UN Pension Programme
All these tax regimes offer tax incentives for individuals who move their tax residency to Malta. In most cases, they’ll exempt certain foreign income from tax.
What Replaces Them?
All these individuals tax regimes will be replaced by the new Malta Individual Tax Programme (ITP) that consolidates the various regimes.
Nevertheless, the new tax regime will still have different categories similar to the old tax programmes. This means that depending on your situation, you’ll have to see in which category you fall and what the tax consequences are.
When Does The New Regime Start?
The new Malta Individual Tax Programme starts on 1 January 2027.
As from 2027, you won’t be able to apply for the old programmes anymore.
What Happens If I Apply in 2026?
If you apply in 2026 you can still benefit from the old programmes.
You’ll be able to keep benefitting from the old rules up to 31 December 2031 at the latest. After that date, the old programmes disappear.
How Does the Malta 15% Tax Regime Work?
In general, foreign source income that is brought into Malta is subject to 15% tax. Income kept abroad remains tax free. Malta source income is subject to 35% tax.
In order to understand how the Malta 15% tax regime works we need to distinguish between different types of income and their origin.
Foreign-Source Income Received in Malta
Foreign-source income received in Malta by an ITP beneficiary is taxed at a flat rate of 15%.
However, you also need to take into account the minimum tax which we’ll discuss later.
Foreign-Source Income Kept Outside Malta
Malta applies taxation on a remittance basis for people under the Individual Tax Programme.
This means that any foreign-source income that you keep outside of Malta remains untaxed.
So, if the income comes from a foreign source and remains abroad, it stays tax free.
Malta-Source Income
Qualifying for the tax programme doesn’t mean all of your income benefits from the lower rate of 15%. Malta-source income is taxed at a flat rate of 35%.
For example, if you receive income from local employment or rental income, you’ll pay this higher rate.
Foreign Capital Gains
Foreign capital gains are the most interesting part of this regime. They remain untaxed even if you remit them back into Malta.
That’s important because if you can support your lifestyle in Malta with bringing in foreign capital gains you won’t have to pay tax on this income. Nevertheless, you’ll still have to pay the minimum tax.
Dividends
Beneficiaries of the ITP pay a flat tax of 15% on dividends brought back into Malta. If the dividend remains outside of Malta, it stays tax free.
However, for such foreign dividends you also need to consider foreign withholding tax. Most countries apply a withholding tax on dividends.
Accordingly, you’ll need to assess the provisions of the double tax treaty to see how Malta accounts for this. In most cases, Malta will give a credit for the foreign withholding tax.
This means you only have to pay dividend tax if the tax rate in Malta is higher than the withholding tax and you only pay the difference.
Let’s put this into an example:
- US dividend (gross): 100
- US withholding tax (15%): 15
- Malta dividend tax (15%): 15
- Actual tax in Malta (15 Malta tax minus 15 US tax): 0 because you already paid the same amount of tax in the US which is deductible
Nevertheless, although the foreign tax credit can neutralize the Maltese tax it doesn’t affect the minimum tax.
Interest
Beneficiaries of the Individual Tax Programme in Malta pay a fixed rate of 15% on interest remitted back into Malta.
Similar like for dividends you need to account for foreign withholding taxes.
Rental Income
Individuals qualifying for the ITP in Malta pay 15% of tax on foreign rental income brought back to Malta.
However, the foreign rental income will in first instance be taxed in the country where the property is located.
Malta can only tax the income on a secondary level and needs to take into account the articles of the double tax treaty.
In most cases, this will result in a similar outcome like for dividends and interest. You only pay actual taxes in Malta if the tax you have to pay abroad is less than 15%.
Nevertheless, as long as you just keep the rental income abroad you don’t have to pay tax on it in Malta and you only have to concern yourself with the minimum tax.
If you have rental income from a property in Malta, this income is subject to the 35% rate.
Employment Income
For employment income the source principle and whether or not the money was remitted becomes important again.
If you work for a Maltese employer, you’ll pay the higher tax rate of 35%.
However, if you work for a foreign employer the situation becomes more complex:
- If you perform your work from within Malta even if it is for a foreign employer you’ll pay 35% in taxes. Irrespective if you bring the money back into Malta.
- When you perform your work outside of Malta and you remit the money to Malta you pay the flat rate of 15%.
- When you perform your work outside of Malta and you keep the money outside of Malta the income remains tax free.
Business / Self-Employment Income
For business income the source income and remittance principle are relevant as well.
If you operate a local business in Malta you’re obviously subject to the local taxes. This means 35% of personal income tax.
However, if you operate a foreign business things get complicated again. The fact that you have a business abroad or just work fore non-Maltese clients doesn’t mean you automatically benefit from the lower tax rate.
These are the possible scenarios:
- Revenue generated by work perfomed while you’re in Malta is subject to the higher rate of 35%.
- Income from work performed abroad but brought back into Malta is subject to 15% tax.
- Income from work performed abroad and kept outside of Malta remains tax free.
Cryptocurrency
If you invest in cryptocurrencies for the long term and realise a capital gain you don’t pay tax on this gain.
However, if you trade actively this could be seen as a business activity and the principles set out above apply. This could mean anything from not paying any tax to paying up to 35%.
What Income Is Taxed at 35% in Malta?
Any income that is from Maltese source is taxed at 35%.
This sounds simple at first but it can get complicated for professional income.
For any passive income (e.g. dividends, rent) the principles are rather straightforward:
- Maltese income is subject to 35%
- Foreign income is subject to 15% when remitted back into Malta
- Foreign income remains tax free if kept abroad
However, for professional income we also have to take into account where you perform your work. Merely looking at the fact that you work for a foreign employer or client isn’t sufficient.
- If you work for a Maltese company or client you pay 35% tax
- Working for a foreign company or client is also subject to 35% tax if you perform the work in Malta
- Income from working for a foreign company or client which is performed abroad is taxed at 15% when remitted back into Malta
- Income from working for a foreign company or client which is performed abroad is tax free if the income remains abroad
Therefore, unlike what many people think, merely working for a foreign employer or client isn’t sufficient to benefit from the lower tax rates.
Who Can Qualify for Malta’s Individual Tax Programme?
Although Malta’s individual tax programme replaces the old regimes, it still uses different categories similar to those for the old programmes.
Apart from the general eligibility criteria, each of these categories link the tax status to a particular condition to qualify.
An important remark is that individuals with Maltese nationality or permanent residency can’t qualify.
EU, EEA and Swiss Resident Status
If you have an EU, EEA or Swiss passport you can qualify under this category.
Merely having one of these nationalities is sufficient, you don’t have to move to Malta from any of those countries.
That also means that if you want to move to Malta from one of those countries but you don’t hold its nationality, you won’t qualify under this category. In that case you need to apply trough another category.
Global Resident Status
The Global Resident Status allows people with any other nationality than mentioned above apply.
There won’t be any difference from a tax perspective but you’ll have to take some additional steps to obtain the correct visa in order to move to Malta
Retired Pensioner Status
There is a separate category for pensioners, irrespective of their nationality.
This category aims for people who receive regular pension income while the previous programmes are more tailored towards professionally active individuals.
Your pension income should be at least 75% of your taxable income in Malta. So, you can still have other income but you should mainly live of pension income.
UN Pensioner Status
For individuals receiving a pension from the United Nations there is separate category.
This regime is slightly more beneficial than the general pensioner status.
You should receive a pension of the UN and remit at least 40% of that pension back into Malta to cover your local expenses.
General Eligibility Requirements
In order to qualify for the ITP in Malta you need to meet certain eligibility requirements:
- Qualifying property: invest at least €700.000 in a property or rent a place with a minimum annual rental price of €14.000
- Financial resources: have sufficient income to sustain yourself and your dependents
- Health insurance: valid sickness insurance for yourself and any dependents valid in the whole European Union
- Domicile: do not have your domicile in Malta at application or while benefiting from the regime
- Valid travel document: you need to have a valid passport
- Fit & proper: be a fit and proper person which can be checked through a background check in order to avoid applicants with a questionable background
- Language requirement: speak English or Maltese
- Minimum stay: there is no minimum stay requirement in Malta but you’re not allowed to spend more than 183 days in any one other country
If you stop meeting any of these requirements, you’ll stop benefiting from the regime with immediate effect.
Malta Individual Tax Programme Property Requirements
One of the eligibility requirements is that you need to have proper housing available in Malta. In this section we’ll discuss the different options and attention points specifically linked to this condition.
Buying Property
If you want to qualify via investing in a property in Malta the purchase price of the property should be at least €700.000.
In the past, some of the programmes distinguished between the area of Malta you would invest in but that is no longer the case.
Renting Property
When you rent a property as a qualifying property the annual rent needs to be at least €14.000.
In the past, some of the programmes distinguished between the area of Malta you would rent in but the new regime changed this.
Does The Property Have To Be in Malta or Gozo?
It does not matter in which part of Malta is located as long as it meets the minimum investment / rent criteria.
The old programmes would offer lower investment / rental thresholds for properties situated in Gozo but that’s no longer the case.
Can I Rent Rather Than Buy?
You can rent a property instead of buying in order to limit your upfront investment.
In the case of renting a property, you need to rent a property with an annual rent of at least €14.000.
Can I Rent Out The Qualifying Property?
You cannot rent out the qualifying property as it needs to remain available to you as your primary residence.
So, if you buy a property, you shouldn’t see it as an investment property that will bring you rental income.
The same applies when you rent a place yourself as a qualifying property, it’s not allowed to sublet the property.
Are Family Members Allowed To Live in The Property?
Yes, family members are allowed to live in the property.
Moreover, even only dependents and household staff are allowed to live in the property. This to avoid that you would try to rent it out in a hidden way.
What Happens If I Sell The Property?
If you sell the property without investing in another qualifying property you will lose the benefits of the tax programme with immediate effect.
So, if you plan to make a transaction with regard to the property you used to qualify for the regime I encourage you to check the impact from a tax perspective.
The Minimum Tax: What Does It Mean?
Even if your actual tax burden is under a certain threshold, you still have to pay a fixed minimum amount of taxes.
The exact amount depends on the category you fall under:
- EU, EEA and Swiss Resident: €35.000
- Global Residence: €35.000
- Retired Pensioner: €20.000
- UN Pension: €15.000
So, if the calculation of your taxes would come up with a lower amount, you will have to pay the minimum amount. If the calculations show a higher number, you’ll still have to pay the higher number.
The full amount of the minimum tax is due for the year you apply and the year the regime ends even if it doesn’t cover the full year.
The minimum tax needs to be paid before 30 April of the income year. If you apply for the regime in the first year after this date then you have to pay the minimum tax before the special tax status is granted.
Can I Claim Foreign Tax Credits Under the Malta Individual Tax Programme?
Yes, you can claim foreign tax credits under the Malta Individual Tax Programme.
The ITP offers a beneficial rate of 15% for foreign-source income. However, because the income is foreign source, the income can be subject to tax in the country where the income originates.
This potentially can lead to the situation where you first pay tax in the country of origin and than later again in Malta when remitting the income.
In order to avoid this double taxation, Malta offers you a tax credit for the tax you already paid abroad.
Accordingly, you can deduct the foreign tax from your tax liability in Malta and only pay the difference in Malta. If the tax you paid abroad is higher than the tax due in Malta, it completely cancels out your tax liability in Malta. However, you won’t get a refund.
Do note that the tax credit does not eliminate the minimum tax you have to pay each year.
So, although it is a way to potentially limit your tax exposure in Malta, it will never take it away fully. In the best case, you’ll just pay the minimum tax but nothing more.
How Much Tax Do I Actually Pay Under the Malta Individual Tax Programme?
How much tax you actually pay under the Malta Individual Tax Programme will depend on the type of income you receive.
Let’s look at some examples.
Example 1:
- EU, EEA and Swiss Resident Status
- Freelancer who works from Malta for foreign clients
- Annual professional income: €100.000
- Tax rate: 35% (the work is performed in Malta so considered Maltese source income)
- Tax calculation: €35.000 (plus social contributions)
- Minimum tax: €35.000 – because your tax burden based on the actual tax calculation is already equal to the minimum tax it doesn’t apply
Example 2:
- EU, EEA and Swiss Resident Status
- Freelancer who works from Malta for foreign clients
- Annual professional income: €50.000
- Tax rate: 35% (the work is performed in Malta so considered Maltese source income)
- Tax calculation: €17.500 (plus social contributions)
- Minimum tax: €35.000 – because your tax burden based on the calculation is less than the threshold, you’ll still have to pay €35.000 in total
Example 3:
- EU, EEA and Swiss Resident Status
- Living of investments
- Dividends (remitted into Malta): €100.000
- Tax rate: 15%
- Tax calculation: €15.000
- Minimum tax: €35.000 – because your tax burden based on the calculation is less than the threshold, you’ll still have to pay €35.000 in total
Example 3:
- Retired Pensioner Status
- Living of pension
- Pension income (remitted into Malta): €150.000
- Tax rate: 15%
- Tax calculation: €22.500
- Minimum tax: €20.000 – because your tax burden based on the actual tax calculation is already above the minimum tax it doesn’t apply
So, for each situation you need to calculate your actual tax burden and then compare it to the minimum tax to check if it applies.
Moreover, if you already paid taxes abroad this could further impact the calculation.
Application Process for the Malta Individual Tax Programme
The application process for the Malta Individual Tax Programme consists of a few steps.
Step 1 — Determine Eligibility
First you need to make sure you will be able to meet the eligibility criteria.
If you already know you won’t meet the conditions, you can save yourself the time and costs of applying.
This step includes deciding under which category of the program you want to apply as this will impact the exact criteria that apply to you.
Step 2 – Appoint Authorised Registered Representative
You need to work together with an Authorised Registered Mandatory who will assist you with preparing and filing the application.
Therefore, you can’t submit the application on your own.
The representative will ensure you meet all the eligibility criteria so you’re almost certain upfront that your application will be successful.
Step 3 — Choose Qualifying Property
You need to decide which will be your qualifying property.
This will be important as you’ll have to decide whether you want to qualify through a property purchase or if you rather rent a place.
In both cases, you need to be aware of a minimum investment:
- Property purchase: minimum investment of €700.000
- Rental: minimum annual rental price of €14.000
Step 4 – Obtain Health Insurance
You also need to obtain health insurance that covers you in Malta and the European Union.
The health insurance should provide a cover at least similar to the coverage of the Maltese public system.
Step 5 – Prepare Documentation
Together with your representative you will put together a file with documents that show you meet the eligibility criteria to apply for the regime.
You’ll have to fill out the specific application form which still need to be published by the authorities.
Step 6 – Submit Application & Pay Application Fee
Your representative will submit the application on your behalf. At the time of the submission you’ll also have to pay the application fee of €8.500.
The application fee is non-refundable. Therefore, it’s important to work with a representative who can ensure your application is complete and you meet all the criteria in order not to waste any money.
Step 7 – Obtain Special Tax Status
The Commissioner for Tax and Customs (MTCA) will review your application.
As part of the review process, they will also look into your background in order to avoid approving any individuals with a questionable reputation.
If everything checks out, you’ll receive confirmation that you qualify for the special tax status.
Note that this is merely an approval of the tax regime. You’ll still have to take care of the necessary requirements from an immigration point of view in order to be able to live in Malta.
Step 8 – Maintain Annual Compliance
The work doesn’t end with getting the approval.
You’ll still have to stay on top of the annual compliance.
Most importantly you need to make sure to pay the minimum tax before 30 April for that particular year.
In addition, you’ll also have to file an annual tax return after the end of the tax year to see if any additional taxes are due based on the money remitted back into Malta.
Finally, you need to make sure you keep meeting the eligibility criteria. In case your situation changes, you need to inform your representative and the authorities of this change.
Step 9 – Extension
The initial approval is valid for five years as long as you keep meeting the requirements.
After five years you have the option to apply for an extension for another five years.
There is an application fee of €2.500 for the extension.
Cost of the Malta Individual Tax Programme
Apart from the actual income tax you pay, you also have to budget for other expenses.
You should budget for at least the following expenses:
- Initial application fee: €8.500
- Renewal fee (after five years): €2.500
- Rent (if you don’t buy a property): at least €14.000/year
- Health insurance premiums: depends on your personal situation
- Compliance expenses: depending on your personal situation
How Long Does Malta Individual Tax Programme Status Last?
The Malta Individual Tax Programme Status only lasts for five years.
You do have the option to extend for another five years though. This brings the total to ten years.
Is Malta’s Individual Tax Programme Worth It?
In my opinion the Malta Individual Tax Programme is not the best option for the average digital nomad.
The minimum tax and costs involved will not make it worth for most nomad with an average income.
However, if you run a big business or have significant investments, it could be worth it.
Nevertheless, even in that case there might be other alternatives you can consider.
Reach out if you want to discuss which options are best for your particular situation.
Malta Individual Tax Programme FAQ
Let’s now have a look at some Frequently Asked Questions about the Malta ITP.
What Is The Malta Individual Tax Programme?
The Malta Individual Tax Programme is a special tax benefit for individuals who move to Malta that allow you to pay a fixed rate of 15% on foreign income.
However, you need to meet certain conditions (e.g. hold a qualifying property) and have to pay a minimum tax which depends on the category you fall under.
If you keep your foreign income outside Malta, it even remains fully tax exempt.
Is Malta Really a 15% Tax Country?
Malta is really a 15% tax country as long as you only bring foreign income into Malta.
However, apart from the 15% rate you need to take into the account the mimimum tax which will depend on the category you fall into.
So, merely looking at the 15% tax rate doesn’t tell the whole story.
Who Qualifies for Malta’s Individual Tax Programme?
You can qualify for Malta’s Individual Tax Programme under different categories:
- EU, EEA, Swiss Resident Status
- Global Residence Status
- Retired Pensioner Status
- UN Pensioner Status
Each of these categories will come with slightly different conditions you need to meet. Furthermore, the minimum tax you have to pay differs for these categories.
Does Malta Tax Foreign Capital Gains?
Malta does not tax foreign capital gains.
Even if you bring back the capital gains into Malta, they remain untaxed.
This is interesting because Malta-source income will be subject to a fixed tax rate of 35%, while you pay 15% tax on foreign-source income brought back into Malta.
Does Malta Tax Foreign Dividends?
Malta does not tax foreign dividends as long as you keep them outside of Malta.
If you bring the dividends into Malta under the Individual Tax Programme, you pay a flat tax of 15%. In this case, you can also get a tax credit for the foreign withholding tax.
How Long Does The Malta Tax Programme Last?
The Malta Tax Programme initially lasts for five years.
After those five years you can apply for a renewal for another five years. This brings the total duration to ten years.
Subsequently, you fall back under the standard tax rules in Malta.
Can Digital Nomads Use Malta’s Tax Programme?
Yes, digital nomads can use Malta’s tax programme as long as they meet the application conditions.
Which category you need to apply for will depend on your person situation.
However, in reality, Malta’s tax programme won’t be interesting for most digital nomads because of the high minimum tax and costs involved.