Table of Contents Understanding Malta’s Tax System: The Essentials for Your Decision Taxing Income in Malta: How the System Works in Practice Malta vs Germany Taxes: A Direct Comparison with Concrete Examples Malta Tax Advantages for Different Life Situations The Most Common Pitfalls with Malta Taxes – and How to Avoid Them Malta Taxes 2025: What’s Changing and What It Means for You Malta Taxes FAQ I still vividly remember my first tax meeting in Malta. As I rode the elevator up to the Inland Revenue Department, I thought: This will be just like in Germany, only with less bureaucracy. Spoiler alert: It wasn’t. Malta has a completely independent tax system, fundamentally different from what you know from Germany, Austria, or Switzerland. That’s what makes it so fascinating — but also so confusing. After two years on the island and countless conversations with other expats, I can assure you: Malta’s taxes are neither the holy grail of tax optimization nor a bureaucratic horror story. They’re simply different. Once you understand how they work, you can make informed choices — whether you’re planning your next workation here or planning to settle down for good. Understanding Malta’s Tax System: The Essentials for Your Decision Before we dive into the details, let me make one thing clear: Malta operates on a territorial tax system. This means you generally only pay tax on income generated in Malta or remitted to Malta from abroad. Sounds simple? In theory, yes — in practice, there are a few catches. The Remittance-Based System Explained Malta uses what’s called the Remittance-Based System. In other words: Foreign income is only taxed if you actually transfer it to Malta. So, if you’re a digital nomad earning €5,000 a month from clients in Germany, you only pay tax in Malta if you transfer those €5,000 to your Maltese account. Here comes the first reality check: You still have to file a tax return and declare all your worldwide income — even earnings you don’t transfer to Malta. Transparency is key, even if no tax is due. Who Counts as a Maltese Tax Resident? Your tax residency in Malta is based on clear criteria, strictly checked by the Maltese tax office (Inland Revenue Department): The 183-Day Rule: You’re automatically tax resident if you spend more than 183 days a year in Malta Habitual Residence: Even if under 183 days, you can become tax resident if Malta is your center of life Domicile Status: More complex regulation for long-term residents with specific advantages What does this mean for you? If, like Anna, you’re only coming for a workation for ten days, you remain a German tax resident. If Luca plans a six-month test stay, things get more complicated — in this case, you should definitely seek professional advice. An Overview of Main Tax Types in Malta Type of Tax Tax Rate Special Features Income Tax 0% – 35% Progressive rate, top tax rate on earnings over €60,000 Corporate Tax 35% Rebate system: up to 6/7 refundable Value Added Tax 18% Lower than Germany’s 19% Social Security 10% Employees pay 10%, employers add 10% Taxing Income in Malta: How the System Works in Practice Now for the practical side. How do I actually pay tax on my income in Malta? Here are three typical scenarios I’ve seen often during my time here. Scenario 1: The Remote Employee Let’s take Luca, our Italian UX designer. He works remotely for a German company and has decided to live in Malta for six months. His German gross salary is €4,500 per month. How his tax is calculated: Luca transfers €3,000 each month to Malta (for rent, living, etc.) In Malta, he’s taxed only on this €36,000 (12 × €3,000) For this income, the tax rate is about 25% Malta tax liability: around €9,000 per year The trick: The remaining €1,500 per month left in his German account is tax-free in Malta. However, it still must be declared in the Maltese tax return. Scenario 2: The Independent Consultant Dr. Mara, our retired doctor, has moved to Malta and works as a consultant for German clinics. She earns €8,000 per month but only transfers €5,000 to Malta. Her tax calculation is different: Taxable income in Malta: €60,000 (5,000 × 12) Tax rate: 35% (top rate) But: Allowance of €9,100 Effective tax burden: approx. €17,000 The other €36,000 not transferred to Malta? Remains tax-free in Malta, but must still be reported. Scenario 3: The Crypto Trader This is where things get interesting. Malta takes a very liberal view towards crypto. Profits from trading cryptocurrencies are often capital gains tax-exempt — but only under certain conditions: No commercial trading (not run as a profession) Long-term investments (held for over a year) No frequent trading activity What does this mean for you? If you buy and sell bitcoin occasionally, your gains are likely tax-free. But if you do day trading, it’s considered a business and taxed normally. The Maltese Tax Return: Deadlines and Requirements Here’s a key fact nobody told me back then: The tax return must be filed by June 30 of the following year. Sounds relaxed? It is — if you’re prepared. You’ll need to collect the following documents: All income statements (even those not transferred to Malta) Receipts for remittances to Malta Statements for your Maltese accounts If self-employed: all business expense records Malta vs Germany Taxes: A Direct Comparison with Concrete Examples Now for the moment of truth. Is Malta really worth it from a tax perspective? Let me show you three concrete examples with real numbers. Example 1: Single with €60,000 Annual Income Country Gross Income Tax + Social Security Net Income Effective Burden Germany €60,000 €22,500 (approx.) €37,500 37.5% Malta (all remitted) €60,000 €17,000 (approx.) €43,000 28.3% Malta (50% remitted) €30,000 (taxable) €5,500 (approx.) €54,500 9.2% In the third scenario, you see the Malta bonus: If you only remit half your income to Malta, your tax savings are enormous. But beware: This only works if you can legally leave the rest outside Malta. Example 2: Self-Employed with €120,000 Annual Revenue This gets even more interesting. In Germany, if you’re self-employed with €120,000 annual revenue (after business expenses), you’d pay around €35,000 in tax and social security. In Malta, using the remittance system: If you remit all: Around €32,000 tax (similar to Germany) If you remit 60%: Around €18,000 tax (50% savings) If you remit 40%: Around €9,000 tax (75% savings) The catch: You have to realistically assess how much you can truly leave outside Malta. Living expenses, rent, leisure — it all adds up fast. The Hidden Costs: What Germany Offers That Malta Doesn’t Before you start celebrating, let me be honest. While Malta saves you taxes, there are other costs: Private health insurance: €100–€300 per month (Germany: state-covered) Higher living costs: Groceries are 20–30% more expensive than in Germany Tax advice: €2,000–€5,000 per year (more complex system) No pension rights: You don’t pay into the German pension fund What does this mean for you? Always consider the total cost. A €10,000 tax saving is worth nothing if your other costs rise by €8,000. Double Taxation Treaties: Your Protection Against Being Taxed Twice Malta has double taxation agreements (DTA) with Germany, Austria, and Switzerland. This means: You’ll never pay tax twice on the same income. If you pay tax in Malta, it’s credited in Germany — and vice versa. A practical example: You work remotely for a German company but are a Maltese tax resident. Normally, Germany would withhold wage tax. Thanks to the DTA and a certificate from the Maltese tax authority, you can avoid this withholding. Malta Tax Advantages for Different Life Situations Malta isn’t the tax solution for everyone. But for certain life situations, it can be exactly right. Let me show you when Malta shines — and when you’re better off staying away. Digital Nomads and Location-Independent Workers If, like Anna or Luca, you work remotely, Malta is a tax haven — under the right conditions: Malta works perfectly for you if: Your clients or employer are based outside Malta You can decide flexibly how much money you remit to Malta You’re prepared to spend at least 183 days a year in Malta You have no major ongoing expenses in Germany A practical example: Sarah, a software developer from Munich, earns €80,000 annually from US clients. She only transfers €40,000 to Malta (for living and rent), and pays about €8,000 in tax there. In Germany, she would’ve paid €28,000 in tax and social security. Savings: €20,000 per year. Pensioners and Retirees with Foreign Income This is where Malta gets really interesting. Many pensioners receive income from various countries — German pensions, Austrian retirement payments, Swiss capital income. In Malta, you’re only taxed on what you actually transfer in. Dr. Mara’s situation: German pension: €2,500/month Private retirement plan: €1,500/month Rental income in Germany: €1,200/month Remitted to Malta: Only €3,500/month Maltese tax burden: around €8,000 a year German tax would be: about €18,000 a year The €10,000 annual saving covers not just the higher living costs but also makes for a more comfortable life in the sun. Entrepreneurs and the Malta Setup Malta offers special structures for entrepreneurs. The most popular is the Maltese holding company with the 6/7 Refund System. Sounds complicated? It is, but here’s how it works: You set up a Maltese company It pays 35% corporate tax As a shareholder, you get 6/7 of the paid tax reimbursed Effective rate: 5% on distributed profits Reality check: This structure makes sense from about €200,000 annual profit and costs €10,000–€15,000 per year in administration. For smaller businesses, it’s usually not worth the hassle. Crypto Investors: Malta’s Liberal Approach Malta is one of Europe’s most crypto-friendly countries. Here are the main rules: Long-term investments: Tax-free gains after one-year holding period Mining: Treated as a business (35% corporation tax) Trading: Classified as business activity, normal tax rates apply DeFi and staking: Still not clearly regulated An example: Max bought bitcoin in 2020 for €50,000 and sold it in 2023 for €200,000. In Germany, he’d pay around €40,000 in tax on the €150,000 gain (capital gains tax plus solidarity surcharge). In Malta? €0 — because long-term crypto investments are tax-free here. The Most Common Pitfalls with Malta Taxes – and How to Avoid Them After two years in Malta, I know the classic mistakes expats make. Here are the biggest pitfalls — and the smart ways to steer clear. Pitfall 1: The Substance Trap The biggest mistake I see over and over: People think they can just rent a Maltese address yet spend 300 days a year in Germany. Doesn’t work. Malta strictly monitors your actual presence: Flight bookings are checked Credit card statements show where you really are Social media posts reveal more than you think If in doubt, proof is demanded My tip: Keep a detailed log of your whereabouts. Record every day, with supporting documents. In an audit, this is worth its weight in gold. Pitfall 2: Deregistration in Germany Many people believe: If I deregister in Germany, I’m automatically no longer a tax resident. Unfortunately, no. Germany checks your tax residency according to its own rules: Center of life: Where is your main place of living? Economic ties: Where does your income come from? Personal relationships: Family, friends, clubs Asset focus: Where is your wealth located? Deregistration alone is not enough. You must genuinely shift your center of life to Malta. Pitfall 3: The Non-Remittance Myth I often hear, I’ll just leave everything in my German account and pay no tax in Malta. That’s doubly wrong: You still have to declare all income in Malta If you live in Malta, you must also transfer money to Malta Unrealistic living expenses will raise suspicion Reality check: If you live in Malta, you need money for rent, food, transport. Pay everything in cash? Unrealistic. The Maltese tax office is not naïve. Pitfall 4: The Health Insurance Gap In Germany you’re covered automatically. Not so in Malta. Many forget to insure themselves promptly and end up facing high medical bills. Key deadlines: Take out private health insurance before arrival Cancel German insurance (allowing for a transition period) The EU health card is only for emergencies, not routine care My tip: Good health insurance in Malta costs €150–€400 per month, depending on age and coverage. Factor that into your tax savings. Pitfall 5: The Domicile Confusion Malta distinguishes between residency (right to stay) and domicile (tax home). Many people mix them up: Status Meaning Tax Implications Non-Resident Less than 183 days in Malta Only Maltese-source income is taxable Resident, Non-Domiciled Over 183 days, but not Maltese domiciled Remittance-based taxation applies Resident and Domiciled Maltese domicile Worldwide income fully taxable What does this mean for you? As a newcomer, you’re automatically non-domiciled and benefit from the remittance system. You only acquire Maltese domicile after many years of sustained residence. Malta Taxes 2025: What’s Changing and What It Means for You Malta is under pressure. The EU, OECD, and other international bodies are taking a closer look. Some changes are already decided, others are under discussion. Here’s my summary of the key developments. The New EU Directives and Their Effects From 2025, stricter EU rules on tax planning will apply. Malta will have to adapt: DAC 6 reporting: Aggressive tax planning schemes must be reported ATAD implementation: Anti-abuse rules are being tightened Substance requirements: Companies must prove real economic activity in Malta What does this mean for you? The “golden age” of extreme tax optimization is over. But for genuine residents with real substance, little will change. Changes to the 6/7 Refund System The popular refund system for companies is being reformed. Instead of automatic refunds, stricter scrutiny will now apply: Minimum tax rules: 15% effective minimum tax for large companies Substance requirements: Proof of actual business activity in Malta Economic substance test: Staff numbers, office space, and decision-making must demonstrably be in Malta My advice: If you use the 6/7 System, have your setup reviewed by a Maltese tax advisor. Shell companies won’t cut it any more. New Regulations for Digital Nomads Malta is working on a special “Digital Nomad Scheme” modelled on Estonia and Portugal. Planned features include: Simplified tax rules for short-term residents Flat-rate taxation for certain types of income Quicker residency processes for EU citizens As of today, these aren’t yet available. But Anna and other workation fans could soon benefit from easier options. Cryptocurrencies: Clarification or Tightening? Malta’s liberal crypto laws are under review. The EU is pushing for harmonization. Potential changes: Clearer definitions of private vs. commercial trading New reporting requirements for crypto investments Possible taxation of staking rewards My tip: If you’re heavily invested in crypto, keep a close eye on developments. The tax-free days may soon be over. What You Should Do Now With these changes on the horizon, keep three things in mind: Document everything: Keep meticulous records of stays, income, and remittances Stay flexible: Plan not just for today’s laws but for possible changes Get professional help: The days of DIY tax optimization are over What does this mean for you? Malta remains attractive, but the rulebook is getting stricter. Those who follow the rules and build real substance will continue to benefit. Malta Taxes FAQ Do I have to deregister in Germany to become a Maltese tax resident? Not necessarily, but it’s recommended. De-registering from Germany is an important step, but not enough on its own. You must genuinely move your center of life to Malta and spend at least 183 days there. Germany determines tax residency based on its own criteria, regardless of your registered address. As a German citizen, can I use Malta’s remittance system? Yes, your nationality doesn’t matter. What counts are your residency and domicile status in Malta. As an EU citizen, you have the right to freedom of movement and can settle in Malta. The remittance system applies to all non-domiciled residents, whatever their nationality. How long does it take to be recognized as a tax resident in Malta? Tax recognition usually happens automatically once you meet the 183-day rule. For the official residency card, it takes about 3–6 months as an EU citizen. Important: You can already be treated as tax resident even before you have the card, as long as you meet the criteria. Keep accurate records from the start. What happens to my German health insurance if I move to Malta? When you deregister from Germany, your statutory health insurance ends automatically. Private insurance can often be paused. In Malta, you have to get private coverage – costs: €150–€400 per month. Allow for a transition period to avoid coverage gaps. Is Malta only interesting for the wealthy, or is it worth it on a mid-range income? Malta can also pay off on a mid-level income—if the setup is right. From roughly €60,000 income onwards, the tax advantages become noticeable. The key is real flexibility when it comes to transferring money and building substance in Malta. Always weigh the total cost (higher living expenses, health insurance, tax advice) against your tax savings. Can I keep my German business and still benefit from Maltese tax advantages? This gets complicated. If you’re managing director of a German GmbH but become Maltese tax resident, this can affect your company’s tax situation (exit tax, CFC rules). You definitely need professional advice from experts in both countries here. How much does a professional tax advisor in Malta cost? Budget €2,000–€5,000 a year for good tax advice. More complex structures (holding companies, international business) cost €5,000–€15,000 per year. That sounds like a lot, but with the complex Maltese system, professional help is indispensable. If you save €10,000 tax and pay €3,000 for advice, you’re still €7,000 ahead. What happens if I leave Malta? Can I just move back to Germany? Generally, yes — as an EU citizen, you’re free to return. But: You need to re-register, arrange health insurance, and consider any lingering tax consequences. Malta doesn’t charge an “exit tax”, but Germany may inquire in certain cases. Most important: document your Malta stay thoroughly. Are bitcoin and other cryptocurrencies really tax-free in Malta? Long-term crypto investments (held over a year) are usually tax-free in Malta if not classified as business activity. But: Day trading, mining, or frequent trading are considered a business and taxed normally. The line between “investment” and “trading” is often blurry—consult a Maltese tax advisor. Can I live in Malta and still work for German clients? Yes, this is a classic use of the Maltese remittance system. You can work for German, Austrian, or other foreign clients. Only what you remit to Malta is taxable. But watch the substance rules: You must genuinely live and work in Malta, not just have a mailbox address.
