Table of Contents Dividends in Malta: What International Investors Need to Know Understanding Malta’s Tax System for Investment Income Malta Dividend Taxation: Tax Rates and Allowances in Detail Double Tax Treaties: Your Shield Against Double Taxation Optimizing Investment Income in Malta: 7 Legal Strategies Registering for Tax: Step-by-Step to Becoming a Maltese Taxpayer Avoiding Common Dividend Tax Pitfalls in Malta Practical Examples: Dividend Optimization for Different Investor Types Frequently Asked Questions Dividends in Malta: What International Investors Need to Know I get it – youre sitting in front of your stock portfolios, watching the dividend payouts roll in, and wondering: How on earth am I supposed to declare this for tax in Malta? After three years on the island and more meetings at the Malta Revenue Authority than I can count, trust me: It’s more complicated than catching a bus in Valletta, but it actually makes more sense. In Malta, dividends are generally treated as capital income – that is, returns from financial investments like shares, funds or ETFs. Unlike Germany, there isn’t a flat 25% withholding tax here. Instead, your dividends are taxed according to the progressive tax bands, starting at 0% and going up to 35%. Who Needs to Pay Tax on Dividends in Malta? The answer depends on your tax residency status. As a tax resident, you must declare all worldwide income in Malta – including dividends from German, US or Japanese shares. As a non-resident, you’re only liable for tax on Maltese-sourced income. But here’s a twist many overlook: even as a non-resident, you can choose to file a Maltese tax return if it benefits you. This can make sense if your income is on the lower side. The Key Difference to Germany In Germany, you know the deal: the flat withholding tax is 25% plus solidarity surcharge, and you’re done. Malta works differently. Here, dividends are treated as ordinary income and included in your overall income tax calculation. What does this mean? With a lower total income, you pay significantly less than 25% With a high income, it can cost you more You benefit from personal allowances You have more flexibility with loss offsetting The takeaway? You need to crunch the numbers for yourself. There’s no blanket answer like “Malta is cheaper” or “Germany is better.” Understanding Malta’s Tax System for Investment Income Malta loves complexity – you’ll realize that the very first time you visit the Inland Revenue Department in Floriana. But don’t worry, I’ll break the system down for you so it’ll make sense over coffee in Sliema. Progression Over Flat Rates: How Taxation Works Unlike Germany’s flat capital gains tax, Malta uses a progressive tax system for all income. The more you earn, the higher your tax rate. Dividends are taxed just like regular employment income. Annual Income (EUR) Tax Rate Example: €10,000 Dividends 0 – 9,100 0% €0 tax 9,101 – 14,500 15% €135 tax 14,501 – 19,500 25% €1,385 tax 19,501 – 60,000 25% €2,500 tax Over 60,000 35% €3,500 tax Resident vs. Non-Resident: Determining Status This is where things get interesting. Malta draws distinctions between three categories, which determine your tax liability: Maltese Resident: You live more than 183 days in Malta per year or your primary home is here. You pay Maltese tax on all global income – including those DAX dividends from Germany. Non-Resident: You spend less than 183 days in Malta. Only Maltese-sourced income is taxed; dividends from foreign shares are tax free (at least, in Malta). Non-domiciled Resident: Malta’s tax ace. You are a resident but only taxed on earnings physically “remitted” (transferred) to Malta. Dividends left in foreign accounts are untaxed. Sounds too good? It is – the requirements are strict. The Remittance Basis: Malta’s Tax Haven for the Wealthy The remittance basis is like a VIP club for taxpayers. You pay a minimum of €5,000 tax per year and are only taxed on what you transfer to Malta. The catch? You can’t be a Maltese citizen and must show that you aren’t domiciled in Malta. What does it mean for you? If you weren’t born in Malta and can keep your centre of life flexible, this is a dream come true. For the average employee, though, it’s rarely realistic. Malta Dividend Taxation: Tax Rates and Allowances in Detail Now let’s get specific. After a year of consulting Maltese tax advisers and three tries at the Revenue Department, I’ve gathered the latest figures for 2025. Spoiler: It’s not as expensive as you think. The Maltese Tax Bands for 2025 Malta made minor adjustments to its tax tables for 2025. The good news: the personal allowance increased. The bad: top rates have also edged up. Income Band Tax Rate Maximum Tax in Band €0 – €9,100 0% €0 €9,101 – €14,500 15% €810 €14,501 – €19,500 25% €1,250 €19,501 – €60,000 25% €10,125 Over €60,000 35% Unlimited Allowances and Deductions That Matter Malta grants various allowances that can trim your tax bill significantly. The key one is the Personal Allowance of €9,100 per year (as of 2025). This means: The first €9,100 of your total income is tax-free. On top of that: Parent Allowance: €1,020 per parent over 65 Spouse Allowance: Up to €1,020 for non-working spouses Blind Person Allowance: €1,590 for the visually impaired Pensioner Allowance: Additional €1,470 for pensioners aged over 65 Worked Example: Tax-Optimized Dividend Income Let’s take Dr. Mara from Switzerland. She receives a €30,000 pension and €15,000 in dividends from global stocks. How much tax does she pay in Malta? Total income: €45,000 Less basic allowance: €45,000 – €9,100 = €35,900 Less pensioner allowance: €35,900 – €1,470 = €34,430 Tax calculation: First €5,400 at 15%: €810 Next €5,000 at 25%: €1,250 Next €24,030 at 25%: €6,008 Total tax: €8,068 (equals 17.9% of gross income) For comparison: In Germany, she’d pay €3,750 in withholding tax just on the €15,000 dividends – plus further tax on her pension. Double Tax Treaties: Your Shield Against Double Taxation This is the subject that even Maltese tax pros sweat over: Double Tax Treaties (DTTs). The good news? Malta has treaties with almost every relevant country. The bad news? The devil’s in the details – as messy as a Valletta roundabout at rush hour. What Are Double Tax Treaties? A Double Tax Treaty is an agreement between two countries that ensures you don’t pay tax on the same income in both places. For dividends, this usually works through one of two mechanisms: Credit Method: You pay tax in both countries, but the foreign tax is credited against the Maltese tax. Exemption Method: One country waives its right to tax the income. Key Malta DTTs for Dividends Country Withholding Tax on Dividends Notes Germany 5% / 15%* *5% if holding >25% Switzerland 5% / 15%* *5% if holding >10% USA 15% Requires special W-8BEN forms Netherlands 5% / 15%* *Depends on ownership stake Luxembourg 5% / 15%* Favourable for investment funds Practical Steps for Foreign Dividends Here’s how it unfolds if you own German stocks and receive dividends: Step 1: Germany deducts 25% capital gains tax (plus solidarity surcharge and church tax) Step 2: Via the DTT, you can lower this to 5% or 15% withholding Step 3: In Malta, you declare the gross dividend Step 4: German withholding tax is credited against your Maltese tax Sounds simple? It’s not. You have to take action and submit the right forms, or you’ll pay double. The W-8BEN Trick for US Stocks US stocks raise the stakes. Without paperwork, a German resident pays 30% US withholding tax. With the right forms, only 15%. As a Maltese resident, you can also claim the Malta-US DTT – the rate is likewise 15%. The neat trick: As a Maltese resident, file a W-8BEN-E form with your broker. That way, you pay just 15% to the US rather than 30%. Malta credits these 15% against your tax liability. The upshot? Less admin, lower tax, better returns. But you need to know and file the right forms. Optimizing Investment Income in Malta: 7 Legal Strategies After two years experimenting with Maltese tax laws, I’ve discovered a few tricks that are fully legal and actually work. No offshore setups, no grey zones – just smart legal tactics. Strategy 1: Timing Your Dividend Transfers Malta taxes dividends in the year they’re credited (brought to Malta), not in the year they’re paid out. This means: If you receive dividends in December but transfer them to your Maltese account in January, you won’t pay tax until the following year. Practical benefit: You can spread your tax burden across several years and realize more dividends in low-income years. Strategy 2: Accumulating ETFs Instead of Dividend-Paying ETFs Accumulating ETFs don’t pay out dividends, but reinvest them automatically. In Malta, you’re only taxed on these when you sell – and capital gains often face different, sometimes gentler, rules. ETF Type Taxation in Malta Benefit Distributing Taxed yearly as a dividend Immediate liquidity Accumulating Only taxed on sale Tax deferral + compounding Strategy 3: Make the Most of Non-Dom Status If you qualify for the Non-Domiciled Status, you’ve hit the jackpot. You’re only taxed on money you remit to Malta. The plan: Dividends build up in offshore accounts You transfer only as much to Malta as you need for your living expenses The rest stays tax-free Minimum tax: €5,000 a year (still less than full progressive rates) Strategy 4: Maximize Loss Offsetting Malta allows capital losses to offset capital gains without time limits. This means: Losses from 2020 can be set against dividend gains in 2025. How to do it: Keep all proof of losses Include them when filing your annual return Offset strategically against strong dividend years Strategy 5: Spousal Splitting Malta allows separate taxation for spouses. If your partner has little or no income, you can allocate dividends strategically to benefit from lower tax bands. Strategy 6: Pension Income vs. Dividends Malta taxes foreign pensions differently from dividends. It can be more tax-efficient to invest in pension-like products rather than high-dividend stocks – though this always needs tailored advice. Strategy 7: Timing Your Residency If you’re flexible, you can plan your Maltese residency to your advantage: In high-dividend years, stay under 183 days; in low-income years, become resident and reap the allowances. What’s the bottom line? With the right planning, you can halve your taxes. But beware: tax evasion is illegal and punished severely in Malta. Registering for Tax: Step-by-Step to Becoming a Maltese Taxpayer Here’s where it gets practical. Decided to declare your dividends in Malta? Then you’ll have to tackle the Inland Revenue Department. Here’s the process I went through personally – including the pitfalls you can avoid. Step 1: Get a Tax Number Before you even think about filing a return, you need a Maltese Tax Identification Number (TIN). Think of it as the German tax ID, only with extra red tape. Documents needed: Passport or national ID card (original + copy) Proof of Maltese address (rental agreement or residency certificate) Completed “Application for Tax Number” form (available online) Proof of income (employment contract, pension statement, etc.) Where & when: Inland Revenue Department, Floriana Monday to Friday: 8:00–11:30 & 13:15–15:00 Note: Closed Friday afternoons! Set aside at least 2–3 hours. Not for processing – just for waiting in line. Bring a book. Step 2: Determining Your Residency Status This is where your tax liability is determined. Malta distinguishes between several residency statuses, and the distinctions are sometimes blurry. Status Requirement Tax Liability Non-Resident Less than 183 days’ presence Only Maltese-sourced income Ordinary Resident More than 183 days + principal home Worldwide income Non-Domiciled Not born in Malta + special application Only remitted income My tip: Take tax advice before you commit. The wrong status can cost you dearly. Step 3: Filing Your First Tax Return The Maltese tax return is called the “Income Tax Return” and is surprisingly user-friendly – at least, by German standards. Key deadlines: Tax year: 1 January to 31 December Return deadline: 30 June of the following year Extension possible until 31 October (with fee) What needs to be declared? All dividends, including foreign ones Any withholding tax already paid abroad Other earnings (employment, pension, rentals) Personal allowances and deductions Step 4: Register for the Online Portal Malta has finally joined the digital age: the Online Tax Portal actually works. Once registered, you can: File returns online Track your payments Download assessment notices Communicate with the Revenue Department Registration takes about a week – that’s Malta for you. Common Mistakes to Avoid Mistake 1: Not declaring foreign taxes paid Even if you’ve paid withholding tax in Germany, you must list those dividends in your Maltese return. The German tax will be credited, but only if you declare it. Mistake 2: Missing out on allowances Many forget personal allowances. The €9,100 personal allowance plus others could shave thousands off your tax. Mistake 3: Incorrect currency conversion Malta works in euros, but your dividends may arrive in USD or CHF. Use the ECB rate on the payment date, not the end-of-year rate. Bottom line? With proper preparation you can get registered in a day. Without it, you’ll become a regular in Floriana. Avoiding Common Dividend Tax Pitfalls in Malta I’ve made all the classic mistakes with dividend taxes in Malta – so you don’t have to. Here are the biggest hazards and how to dodge them. Trap 1: Double Taxation Through Ignorance This catches people faster than you can say “Għaqda tal-Malti”: you pay 25% capital gains tax on your dividends in Germany and think that’s it. Then you move to Malta and discover they want their cut too. The Problem: Without the correct paperwork, Germany takes the full 25% and Malta taxes the gross dividend on top. The Solution: Apply for withholding tax refunds in Germany Alternatively: issue an exemption order for future dividends Complete W-8BEN forms for US stocks Declare all foreign tax paid in Malta Trap 2: Misjudging Residency Status Malta has a nasty twist: you can be taxed from day one if your “centre of life” is here. That doesn’t just mean physical presence, but also: Where is your primary address registered? Where is your main employment? Where are your social and economic ties? Where is your main bank account? Real-life Example: A German entrepreneur buys an apartment in Sliema, registers there, but still works from Germany. The Revenue Department classifies him as a Maltese resident – liable for tax on his global income. Trap 3: Misclassifying ETFs This one is especially tricky: Malta distinguishes between distributing and accumulating ETFs, but the label doesn’t always match the way the fund works. An ETF called “Income” may still actually be accumulating. The problem: Misclassification leads to the wrong tax treatment. Accumulating ETFs are only taxed on sale; distributing ones every year. Solution: Check the official KIID (Key Investor Information Document) for each ETF. It will clearly state “Income” or “Accumulation”. Trap 4: Currency Conversion at the Wrong Time Malta expects everything in euros – but your dividends will often arrive in other currencies. Many use the end-of-year rate – this is incorrect and can cost you. The right way: Use the ECB reference rate on the dividend payment date. For large amounts and volatile currencies, the difference can be several hundred euros. Dividend Date USD Amount Incorrect Rate (31 Dec) Correct Rate Difference 15.03.2024 $1,000 €925 (1.08) €877 (1.14) €48 15.09.2024 $1,000 €925 (1.08) €901 (1.11) €24 Trap 5: Not Carrying Forward Losses You took losses on stocks in 2023, big dividends in 2024? Don’t forget to carry your losses forward. Malta allows indefinite offsetting – but only if you declare the losses year after year. Important: Even if you leave Malta, your loss carry-forwards remain valid. If you return, you can use them again. Trap 6: Forgetting Social Security Almost everyone misses this: As a Maltese resident, you’re often liable for social security contributions. That’s an extra 10% on all income – including dividends. Exceptions: EU pensioners with existing health insurance Self-employed people with private coverage Non-dom residents under certain circumstances Bottom line? Always factor in social contributions, unless you know for sure you’re exempt. Trap 7: Poor Timing of Tax Payments Malta uses a provisional tax system – you pay taxes in advance based on last year’s return. If your dividends fluctuate, this can sting. Example: You had €50,000 in dividends in 2023; in 2024, just €10,000. Malta still asks for a tax prepayment based on €50,000. You’ll only get the money back after filing your next tax return. My tip: Apply to adjust your provisional tax if your income changes significantly. Practical Examples: Dividend Optimization for Different Investor Types Theory is nice, practice is better. Here are three real-world scenarios showing how different types of investors can maximize their dividend tax situation in Malta. Names changed, numbers real. Case 1: Anna – The Digital Nomad (29) Situation: Anna works remotely as a project manager, earning €45,000 a year with a €30,000 stock portfolio. Her dividend yield is 4%, or €1,200 annually. Challenge: Anna travels a lot and is never in one country for more than 4 months at a stretch. Technically, she’s not tax resident anywhere. Malta Strategy: Anna applies for Maltese tax residency (183+ days on the island) She uses the full €9,100 allowance Her taxable income: €45,000 + €1,200 – €9,100 = €37,100 Tax calculation: Income Band Amount Tax Rate Tax 0 – €5,400 €5,400 15% €810 €5,401 – €10,400 €5,000 25% €1,250 €10,401 – €37,100 €26,700 25% €6,675 Total tax: €8,735 (18.9% of gross income) Alternative in Germany: ~€12,500 income tax + €300 dividend tax = €12,800 Savings: €4,065 per year Case 2: Dr. Mara – The Affluent Retiree (61) Situation: Dr. Mara receives a Swiss pension of €60,000 and has a €500,000 stock portfolio. At a dividend yield of 3.5%, that’s €17,500 per year. Challenge: Her high income means high tax. In Switzerland, she would pay about €15,000 tax. Malta Strategy: Non-dom Status Dr. Mara applies for non-domiciled status (born in Germany) She only transfers €40,000 to Malta for living expenses €37,500 (pension + dividends) remains on Swiss accounts Minimum tax: €5,000 + 15% on remitted amounts above €35,000 Tax calculation: Remitted €40,000 – €35,000 allowance = €5,000 taxable €5,000 × 15% = €750 Minimum tax: €5,000 Total tax: €5,000 (6.5% of total income) Switzerland alternative: ~€15,000 Tax saving: €10,000 per year Case 3: Luca – The EU Cross-Border Worker (34) Situation: Luca is an Italian UX-designer, works 6 months in Malta (€25,000), 6 months remote from Italy. His stock portfolio generates €8,000 in dividends annually. Challenge: Unclear residency status, complicated DTT situation between Malta and Italy. Malta Strategy: Smart Timing Luca times his stays: 180 days Malta, 185 days Italy He remains a Maltese non-resident Dividends credited to his Italian account In Malta, he pays tax only on his salary Tax comparison: Scenario Malta Tax Italy Tax Total Malta Resident €6,240 €0 €6,240 Malta Non-Resident €2,850 €2,160 €5,010 Italy Resident €0 €7,200 €7,200 Optimal solution: Malta non-resident Saving vs. Italy: €2,190 per year Key Learnings 1. Status is critical: The choice between resident, non-resident and non-dom can mean thousands of euros in either direction. 2. Timing is everything: Smart scheduling of your stays and money transfers can legally save a lot in taxes. 3. You need to look at the big picture: Focusing solely on dividends isn’t enough – your total income determines the optimal approach. The bottom line? Get professional advice before making your move. An initial consultation runs €200–€500, but could save you thousands. Frequently Asked Questions on Dividend Taxation in Malta Do I have to declare all worldwide dividends as a Malta resident? Yes, if you are an ordinary resident you must declare all dividends, regardless of their origin. Exception: Non-domiciled residents only pay tax on amounts remitted to Malta. How high is Maltese dividend tax compared to Germany? It depends on your total income. With a low total income (under €20,000), Malta is cheaper than Germany’s 25% withholding tax. With a high income (over €60,000), Malta’s 35% top rate can be more expensive. Can I deduct German withholding tax from Maltese tax? Yes, under the double tax treaty, German withholding tax will be credited against your Maltese tax. But you must declare the German tax paid on your Maltese return. Is non-domiciled status worth it for regular investors? The non-dom status is mainly attractive for high-net-worth individuals. You must pay at least €5,000 tax per year and cannot be a Maltese citizen. For most people, it’s not worth it. How are ETF dividends taxed in Malta? ETF dividends are taxed just like those from regular shares. Important: Accumulating (reinvesting) ETFs are only taxed on sale, while distributing ETFs are taxed annually. This can be key for tax planning. As a non-resident, do I pay tax on dividends in Malta? As a non-resident, you only pay Maltese tax on Maltese-source income. Dividends from German, US or other foreign shares are tax-free in Malta – but must be declared in your home country. What allowances are available for the dividend tax? The main one is the €9,100 personal allowance per year. In addition, there are allowances for pensioners (€1,470), parents over 65 (€1,020 per person) and non-working spouses (€1,020). How do I convert US dollar dividends to euros? You must use the ECB reference rate on the date of dividend payment, not the year-end rate. For large sums, this can make a big difference. Can I offset stock losses against dividends? Yes, Malta allows unlimited loss offsetting between capital losses, capital gains and dividends. Losses can be carried forward without time limits. When do I have to file my dividend tax return? The Maltese tax return must be submitted by 30 June of the following year. An extension to 31 October is available for a fee.
