The tax system in Malta 2025 combines three things that are increasingly rare in today’s world: legality, efficiency, and privacy. It’s not a disguised tax haven, nor is it a trap disguised as an opportunity. It’s a European Union country that still allows you to play smart… if you know how to move.
But don’t look for shortcuts. This is not for those who believe that with just two clicks they’ll have a company with minimal taxation. Malta demands structure, strategy, and full clarity about what you’re doing.
For years, many have sold empty promises using phrases like “Is Malta tax-free for foreigners?” But no one told you the most important part: this isn’t about paying nothing—it’s about paying less and better. Within the law. And without landing your name on a blacklist.
In this blog, we’ll show you how the Malta taxation system really works, why it’s still possible to legally pay just 5% in Europe, and what mistakes could cost you if you don’t understand the rules of the game. So you don’t leave it to chance—but win with a plan.
Indice del artículo
How does the tax system in Malta work in 2025?
Malta taxation system: current legal and fiscal framework
The Malta taxation system does not operate with a flat rate or generic formulas. It works under a full imputation model, where companies pay a 35% corporate income tax on net profits. But here’s where it gets interesting: if you distribute those profits as dividends, you can recover up to 30% through a legal refund mechanism. This reduces your effective tax burden to 5%.
In other words: you pay upfront… but if your structure is solid, you get a refund. And you do it without breaking any European regulations. That system — seemingly complex — is exactly what makes it one of the most powerful and underestimated strategies in the region. That’s why you won’t see Malta featured in mainstream rankings.
Malta corporate income tax rate and actual refunds
Nomad, it’s important to know that the 30% refund is not immediate. While the law sets a 14-day deadline, in practice, it can take 8 to 14 months. And in 2025, that time gap is something you need to manage. For many, the key is choosing between two paths: waiting for the refund… or activating a fiscal unit. This is a legal alternative to avoid the wait — and we’ll explain how it works further below.
Is Malta tax-free for foreigners? Myth or strategy?
The phrase “Is Malta tax-free for foreigners?” is one of those headlines that sound appealing… until you look closely. Malta is not a tax haven. It’s not a country that “forgives” or gives away anything. It’s an EU member state, with strict regulations, clear obligations, and information exchange agreements with over 70 countries.
That said — there’s room to maneuver. For those who understand how to structure a company, how to manage dividends, and from which country they operate, Malta does offer real advantages.
Real requirements to access the tax system in Malta
Capital, incorporation, and minimum corporate structure
To access the tax system in Malta and its benefits, the island requires meeting a clear legal foundation from the outset. Incorporating a Maltese company requires a minimum share capital of €1,165, but the key is that only 20% must be paid upfront at registration about €233. That’s your entry point.
However, real control begins after that. The law requires the appointment of a corporate secretary, who must be a natural person (not a legal entity), although they can reside anywhere in the world. If the company director is also a natural person, only one shareholder is needed. But if the director is a legal entity, at least two shareholders are required.
Economic substance: office, staff, and effective control in Malta
Since 2024, Malta has tightened its internal controls in line with the ATAD and OECD recommendations. The result? Opening a company is no longer enough, you must prove it has real activity. This is known as economic substance.
The company must have a registered office, dedicated contact channels, and at least one director or officer with real decision-making authority. It is also advisable to have local staff, even a small team, and show operational expenses in Malta. If the company’s effective management does not take place in Malta, your structure may be deemed artificial. And if that happens, you could lose access to the refund mechanism and double taxation treaties.
In short, if you want the Malta taxation system to work in your favor, you must first meet the conditions that make it legally valid.
Fiscal unit: pay 5% from day one without waiting for a refund
For those who prefer to avoid refund delays, there’s a little-known but powerful option: the fiscal unit. This is a legal structure that allows companies in Malta to consolidate and pay 5% from day one, without waiting 8 to 14 months for a refund.
However, not everyone qualifies. To access a fiscal unit, the majority shareholder of the Maltese company must be a legal entity, not an individual. That entity may be incorporated in another country, as long as it has a real structure and is not a shell. It must also show significant control, meaning real operational oversight over the Maltese company.
Tax residency is also key. This structure works especially well when you reside in territorial taxation jurisdictions without aggressive CFC rules or strict control over foreign entities. Countries like Paraguay, El Salvador, or the United Arab Emirates are common examples. On the other hand, if you reside in countries like Spain, France, or Germany, you will need much more refined planning to ensure the structure works without triggering indirect taxation.
Privacy, transparency, and legal compliance in Malta
The tax system in Malta operates within the regulatory framework of the European Union and complies with international standards for fiscal transparency and anti-money laundering. That’s why information about the directors and shareholders of any company registered in the country is public and accessible through the Maltese Business Registry.
However, there is one key exception: the identity of the Ultimate Beneficial Owner (UBO) is not disclosed in the public registry. It can only be revealed by court order or at the formal request of a competent authority. This restriction on public access was upheld by a 2022 ruling from the Court of Justice of the European Union, which recognized the right to privacy of beneficial owners.
For this reason, in Malta it is legally possible to structure a company using intermediate entities or nominee shareholders, as long as reporting obligations to the local regulator are fulfilled. This is not about hiding ownership, but rather protecting it within the legal limits. In 2025, it remains a valid tool for strategic tax planning, especially for those seeking efficiency without giving up legality.
Malta Non Dom regime: limitations and false expectations
The Malta Non Dom regime applies only to individuals who reside in the country, generate foreign income, and do not remit that income to Malta. Once the funds are remitted, they are automatically subject to local taxation. And if your annual income exceeds €35,000, the system imposes a mandatory minimum tax of €5,000 — even if the funds never enter Malta physically.
Capital gains are only exempt if they are kept separate from other types of income. One poorly structured account and the benefit is lost. The takeaway? The Malta Non Dom is not suitable for active operations based on the island. It may work in very specific cases, but it’s ineffective for business activity.
Risks of poor structuring and minimum mandatory taxation
If the authorities detect abuse of the system, they will apply the minimum mandatory tax. And if you reside in a country with CFC rules, you could face indirect taxation, penalties, or even double taxation. What looks like a tax advantage can turn into a costly mistake if not done properly.
The Malta taxation system rewards strategy. If you’re going to use it, make sure you have a legal structure, demonstrable substance, and a plan that can withstand scrutiny.
Malta vs Cyprus in 2025: which one fits your strategy better?
At first glance, Malta and Cyprus seem to compete on the same playing field: both are part of the European Union, offer attractive tax regimes, and have been used by digital nomads, entrepreneurs, and investors to optimize their tax burdens. But when you analyze the Maltese tax system compared to Cyprus’s in detail, the differences become clear.
Cyprus: simplified structure and flexible Non-Dom regime
- The Cyprus Non-Dom regime allows you to live, operate, and invoice locally, while keeping a low tax burden for up to 17 years.
- It exempts dividends and interest income if minimum residency and substance conditions are met.
- Lower entry costs, fewer structural requirements, and more straightforward management.
- Ideal for those looking to settle in one place with a clear and functional system.
Malta: stricter setup, but higher long-term potential
- The tax system in Malta does not allow you to operate actively from the island without becoming a tax resident.
- It is designed for those residing in territorial tax jurisdictions like Paraguay, El Salvador, or the UAE.
- It requires a real structure, economic substance, and often a fiscal unit (see above).
- While more complex, it offers tools for corporate consolidation, holding operations, and group tax optimization.
Which one is right for you?
Cyprus wins in terms of simplicity and ease of access, but it may become risky if the Non-Dom regime is reformed. Malta, on the other hand, demands more from the start, but allows for a stronger, scalable, and long-term defendable structure.
If you’re looking to operate from a single location, Cyprus can be a practical option. But if you prefer to structure from abroad with a solid strategy inside the EU legal framework, Malta remains a highly competitive jurisdiction in 2025.
International regulations impacting the Maltese tax system
Malta under EU and OECD scrutiny
The tax system in Malta has so far withstood the regulatory pressure that dismantled similar regimes in other European jurisdictions. But pressure is mounting. Since 2024, Malta has been under the radar of both the European Union and the OECD, which are pushing to eliminate regimes considered “too attractive” for foreign capital.
While Malta has avoided formal sanctions, recent EU Council reports highlight the need to “align tax incentives with the principles of good tax governance.” In simple terms: the margin for maneuver is narrowing year by year.
Recent adjustments and consequences for users
In response, Malta has introduced gradual reforms: stricter substance requirements, tighter oversight, enhanced reporting, and restrictions on passive structures. These changes haven’t eliminated the benefits of the Maltese tax system, but they have raised the bar for those wishing to use it.
Mistakes come at a high price: loss of refund rights, high-risk listings, and banking restrictions that affect your operations. What used to be fertile ground for any structure now requires proper advice and flawless compliance.
The tax system in Malta is not for everyone… but it might be for you.
The easy route is to follow the buzz on forums: “Malta taxes at 5%,” “you don’t need to live there,” “it’s all legal and fast.” But if you’ve read this far, you already know that the tax system in Malta has precise rules, real advantages, and serious risks.
It’s a tool. And like any powerful tool, misusing it can work against you. The difference between an efficient structure and a fiscal nightmare lies in the details nobody talks about and the strategy almost no one applies.
If you’re looking for a European jurisdiction that combines low taxation, legality, and real banking access, Malta is still on the map.
Want to know if Malta is the right fit for you – or if another option better suits your profile?
Book a 1:1 consultation with our international tax experts at Nomad Tax.
We’ll design a tailor-made strategy just for you.
