What You Need to Know About Malta Corporate Tax

Malta's corporate tax headline of 35% looks steep on paper, but the island's unique shareholder refund mechanism can bring your effective rate down to roughly 5%, making it one of the most tax-efficient jurisdictions in the EU. No special incentive scheme is required; the refund system is built into Malta's general tax law and has been upheld by the European Commission. Below, you will find how the refund works, what the newer FITWI 15% flat-rate alternative offers, and how to file correctly.

1. What is corporate tax?

Corporate tax in Malta is a tax on the profits of companies and other legal entities. The headline rate is 35%, one of the highest in Europe on paper. However, Malta operates a unique imputation and refund system that can reduce the effective tax rate to as low as 5% for shareholders.

Here is how the refund system works. A Maltese company pays 35% tax on its profits. When it distributes dividends to shareholders, those shareholders can claim a refund of 6/7ths of the tax paid. This brings the effective rate down to roughly 5%. The system is fully compliant with EU law and has been in place for decades.

Since 2025, Malta also offers the Final Income Tax Without Imputation (FITWI) regime, which provides an alternative flat 15% corporate tax rate. Companies must elect between the traditional refund system and the FITWI regime.

2. Who does it apply to?

This usually applies to:

Companies incorporated in Malta
Foreign companies with a branch or permanent establishment in Malta
Holding companies registered in Malta
Partnerships treated as companies for tax purposes
Any entity earning taxable income in Malta

3. Why does it matter?

Understanding corporate tax helps you:

Stay compliant with Maltese tax laws
Avoid penalties and late fees from the Commissioner for Revenue
Keep proper records of income, expenses, and tax payments
File and pay correctly within the statutory deadline
Plan your cash flow better by understanding the refund timeline

4. How does it work?

Here is the basic process:

Calculate your company's taxable profits for the financial year
Deduct allowable business expenses, capital allowances, and any tax credits
Apply the 35% corporate tax rate to the net taxable income
File the corporate income tax return with the Commissioner for Revenue
Pay the 35% tax by the statutory deadline (9 months after your financial year-end)
Distribute dividends to shareholders
Shareholders submit a refund claim to the International Corporate Tax Unit (ICTU)
Receive the 6/7ths refund, typically within 2 to 4 months of a valid claim

Alternatively, if you elected the FITWI regime:

Calculate taxable profits
Apply the flat 15% rate
File and pay. No refund mechanism applies under FITWI

5. What forms are involved?

Corporate Income Tax Return - Filed electronically with the Commissioner for Revenue. Includes a full income statement, balance sheet, and tax computation
Tax Information and Financial Data (TIFD) - Supporting schedules submitted alongside the tax return with detailed financial breakdowns
Shareholder Refund Claim - Submitted to the ICTU after dividends are distributed. Required to trigger the 6/7ths refund under the traditional system
Provisional Tax (PT) Forms - Some companies must make provisional tax payments during the year based on estimated profits

6. What information do you need?

Before handling corporate tax, make sure you have:

Audited financial statements (required for most Maltese companies)
Full income and expense records for the financial year
Capital allowance schedules for depreciable assets
Details of any tax credits or incentives claimed
Dividend distribution records
Shareholder details for refund claims
Transfer pricing documentation (if applicable)
Prior year tax returns and assessments

7. Important deadlines

Filing frequency: Annually
Payment deadline: Corporate tax is due within 9 months of the financial year-end. For a company with a December year-end, the deadline is 30 September of the following year
Electronic filing extension: Companies filing electronically may receive an extension to 31 July for year-ends between January and June
Year-end requirements: Audited accounts must be filed with the Malta Business Registry. The tax return and TIFD must be submitted to the CFR

8. Common mistakes to avoid

Assuming the effective tax rate is always 5% without understanding the refund conditions
Missing the 9-month filing and payment deadline
Not distributing dividends before claiming the shareholder refund
Failing to submit the TIFD alongside the tax return
Overlooking the FITWI election deadline if you prefer the flat 15% rate
Not maintaining proper transfer pricing documentation for related-party transactions
Forgetting that the refund is available to shareholders, not to the company itself
Mixing up the refund fractions (6/7ths for trading income, 5/7ths for passive interest and royalties, 2/3rds for certain other income)

9. Simple example

Traditional refund system:

Your Maltese company earns EUR 100,000 in taxable profits in 2026.

Step 1: Company pays corporate tax EUR 100,000 x 35% = EUR 35,000 paid to the CFR

Step 2: Company distributes dividends After-tax profits: EUR 100,000 - EUR 35,000 = EUR 65,000 The company distributes EUR 65,000 as dividends to its shareholders.

Step 3: Shareholders claim refund Refund amount: 6/7 x EUR 35,000 = EUR 30,000

Effective tax retained by Malta: EUR 35,000 - EUR 30,000 = EUR 5,000

Effective tax rate: EUR 5,000 / EUR 100,000 = 5%

FITWI alternative:

The same company under FITWI would simply pay: EUR 100,000 x 15% = EUR 15,000

No refund mechanism applies. The choice between the two systems depends on your company's structure and shareholder profile.

10. FAQ

Q: Is the 5% effective rate guaranteed? A: The 6/7ths refund applies to trading income and is well established. However, different refund fractions apply to passive income (5/7ths) and other categories (2/3rds). Your effective rate depends on your income type.

Q: How long does the refund take? A: By law, refunds must be processed within 14 days of the month following a valid claim. In practice, expect 2 to 4 months from claim submission to receipt.

Q: Can a single-shareholder company claim the refund? A: Yes. There is no restriction on the number of shareholders. A sole shareholder can claim the refund after receiving dividends from the company.

Q: Does Malta's corporate tax system comply with EU rules? A: Yes. The imputation and refund system has been reviewed by the EU and confirmed as compliant. It is not a special regime but part of Malta's general tax law.

Q: What is the difference between the traditional system and FITWI? A: The traditional system charges 35% at the company level and provides a refund to shareholders. FITWI charges a flat 15% with no refund. FITWI is simpler but may result in a higher effective rate for some structures.

11. Final takeaway

Malta charges 35% corporate tax with a shareholder refund system that can bring the effective rate to around 5%, or you can elect the FITWI flat 15% rate introduced in 2025.

Caption

What you need to know about Malta Corporate Tax: The headline rate is 35%, but the shareholder refund system reduces the effective rate to approximately 5%. File within 9 months of your year-end.

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