Company Formation & Tax in Malta
An English-speaking EU holding centre with an unusual tax mechanism — a 35% headline rate that, via the refund system, can fall to an effective 5%.
Malta is an English-speaking EU and eurozone member with a long-standing reputation as a holding and trading centre. Its corporate tax framework is unusual and frequently misunderstood: the headline rate is a high 35%, but a full-imputation refund system can bring the effective rate down to around 5% — with important caveats that have grown sharper under recent EU rules.
Choosing an entity
The standard vehicle is the private Ltd (limited liability company). The usual minimum share capital is about €1,165, of which 20% is paid up. Registration is with the Malta Business Registry (MBR), and the company registers with the Commissioner for Revenue (CFR) within 30 days of commencing activity. Annual compliance has three pillars: the annual return to the MBR, VAT returns, and a mandatory annual audit. Owners and directors can be non-residents.
How the tax system actually works
| Tax | Rate |
|---|---|
| Corporate income tax (headline) | 35% |
| Effective after 6/7ths refund (trading) | ~5% |
| Alternative final-tax option | 15% (no refund) |
| VAT (standard) | 18% |
A Maltese company pays corporate tax at 35% on its profits. When it distributes a dividend, non-resident (or non-domiciled) shareholders can claim a refund of 6/7ths of the tax on trading income, leaving an effective rate of about 5% (different fractions apply to passive income — 5/7ths, giving ~10%). Crucially, the company must pay the full 35% first and the refund follows on distribution, so there is a real cash-flow timing gap; a fiscal-unit / tax-consolidation election can deliver the net 5% directly and avoid that lag. From 2025–2026 Malta also introduced a 15% final-tax option (no refund) and a Pillar Two domestic minimum top-up tax for large groups. VAT is 18%, among the EU's lowest, with registration thresholds of €35,000 (services) / €70,000 (goods).
Frequently asked questions
What is the corporate tax rate in Malta?
The headline rate is 35%, but the 6/7ths shareholder refund on trading income brings the effective rate to about 5%; a 15% final-tax option (without refund) also now exists.
Is the 5% effective rate guaranteed?
No. It depends on correct filing, the type of income (different refund fractions apply), shareholder profile, and how foreign CFC rules treat the structure. It needs proper advice.
What is the Maltese VAT rate?
18% standard — among the lowest in the EU — with registration thresholds of €35,000 for services and €70,000 for goods.
Official sources
This guide is general information prepared by ARM Management and is current as at June 2026. It is not legal or tax advice; Malta's refund system is complex and increasingly scrutinised under EU and CFC rules. Confirm against the Commissioner for Revenue, or with an advisor, before acting.
Set up in Malta with confidence.
ARM Management advises international companies on Maltese holding and trading structures, the refund system and tax compliance, alongside wider EU and GCC structuring. Begin with a confidential conversation.