Table of Contents Malta Tax System: A Beginner’s Overview Malta’s Key Tax Forms Explained Step-by-Step: How to File Your Tax Return in Malta Deadlines: What’s Due When The 7 Most Common Malta Tax Return Mistakes Special Tips for International Entrepreneurs Useful Tools and Official Resources You know what still makes me smile after two years in Malta? The fact that I filed my very first Maltese tax return with a giant stack of forms—half of which I didn’t even need. Classic me—and classic Malta, where nobody tells you upfront which of the twelve different forms you actually have to complete. If you’ve moved to Malta as an international entrepreneur, or you’re planning to set up your business here, this will probably sound familiar. The good news? Malta has a relatively business-friendly tax system. The not-so-good news? The bureaucracy can still drive you crazy if you don’t know where to start. Today, I’ll explain the key tax forms for Malta—when you need them and how to file them without losing your mind. Promise: by the end of this article, you’ll know exactly what paperwork you truly need—and what you can safely ignore. Malta Tax System: A Beginner’s Overview Before we dive into forms, let’s briefly clarify what we’re dealing with. Malta uses what’s called the Full Imputation System—sounds complicated, but it’s actually pretty fair. In simple terms: profits are taxed at the company level, and when you distribute them as dividends, you’re credited for the tax already paid. The Three Tax Accounts in Malta Every Maltese company runs three notional accounts: Maltese Taxed Account (MTA): Profits from Maltese sources Foreign Income Account (FIA): Foreign income taxed in Malta Final Tax Account (FTA): Income that’s already been taxed elsewhere So what does this mean for you? Depending on which account your dividends are distributed from, your effective tax rate ranges from 0% to 35%. Pretty clever, right? Tax Liability for International Entrepreneurs As an entrepreneur in Malta, you’re liable to tax if: Your company is registered in Malta Management and control are exercised in Malta You operate as a sole trader who is resident in Malta Makes sense, but there are traps: Even if your holding company is based in the Netherlands, but you’re making decisions every day from your office in Valletta, Malta can claim taxes. A lesson some digital nomads have learned the hard way. Malta’s Key Tax Forms Explained Now let’s get specific. Here’s a walkthrough of the forms you, as an international entrepreneur, actually need. Spoiler: It’s fewer than you might think. Form IT (Individual Tax Return) – Your Personal Tax Return Form IT is your bread-and-butter form as an individual. Here you declare all your income—salary, dividends, rental income, or any other earnings. Section What Goes Here Who It Applies To Part I Personal details, residency status Everyone Part II Employment income Employees Part III Self-employed income Freelancers, Consultants Part IV Dividends and interest income Shareholders Part V Rental income Landlords Insider tip: Most international entrepreneurs trip over Part IV. If you receive dividends from your own Maltese company, you have to declare these here—even if you think the company has already dealt with it. Form CT (Company Tax Return) – The Corporate Tax Return Every Maltese Limited (or PLC) must file a Form CT. It’s much more comprehensive than the personal return, and ideally, a local tax advisor should handle it. The key sections: Schedule 1: Profit and loss statement Schedule 2: Balance sheet Schedule 3: Tax adjustments Schedule 4: Allocation to the three tax accounts Schedule 5: Distributions and tax credits Not widely known: Schedule 4 is the heart of Malta’s system. Here’s where it’s decided how much tax you’ll pay on future dividends. A mistake here can cost you thousands of euros. Form VAT (Value Added Tax Return) Malta requires VAT registration once you hit €30,000 in annual turnover. Sounds high, but it’s easy to reach—especially if you offer B2B services. The VAT return is filed quarterly or monthly, depending on turnover: Annual Turnover Submission Frequency Due Date Up to €150,000 Quarterly By the 15th of the following month Over €150,000 Monthly By the 15th of the following month Based on my experience: Don’t underestimate the effort for the VAT return. Especially for cross-border services, things get complicated fast. Form HR (Provisional Tax Return) – Tax Prepayment Malta requires advance payments on expected tax liabilities. Form HR must be filed by April 30, estimating your tax for the current year. Rule of thumb: If your tax bill will exceed €1,800, you must pay in advance. There are three installments: 1st installment: By April 30 (20% of estimated liability) 2nd installment: By August 31 (30%) 3rd installment: By December 21 (50%) What does this mean for you? Plan your cash flow accordingly—nothing worse than running out of money in September for your tax prepayment. Form CIT (Certificate of Income Tax) – Your Tax Certificate Form CIT isn’t something you fill out yourself—it’s a certificate you request from the Inland Revenue Department. You’ll need it for: Visa applications in other countries Bank account openings Double taxation treaty proofs Real estate purchases Processing usually takes 2–3 weeks. Order it well in advance if you need it for important appointments. Step-by-Step: How to File Your Tax Return in Malta Finally—the practical part. Here’s the exact process, so you don’t spend hours at the office or have to resubmit your documents three times. Step 1: Gather and Sort Your Documents Before you touch a single form, you’ll need all relevant documents. Here’s my checklist: All payslips or FS3 forms Statements for all Maltese and foreign bank accounts Dividend certificates Rental agreements and utilities bills (if you’re a landlord) Receipts for deductible expenses Proof of foreign taxes paid Pro tip: Keep an Excel spreadsheet with all tax-related income and expenses throughout the year—it’ll save you hours of searching later. Step 2: Set Up an Online Account with the Inland Revenue Department In 2019, Malta finally launched an online portal—welcome to the 21st century! You’ll find it at servizz.gov.mt. The registration process is a bit clunky, but once it’s done, you’ll save yourself trips to government offices for good. You’ll need for registration: Your Maltese ID number A valid email address A Maltese mobile number If you don’t have a Maltese mobile number yet: GO and Vodafone have desks in nearly every shopping mall. A prepaid SIM is more than enough. Step 3: Complete Forms—in the Correct Order This is where you can make things easy or complicated, depending on your approach. My recommended order: Start with the corporate tax return (Form CT)—if you have a company Then your personal tax return (Form IT) Finish with the advance payment (Form HR) Why this order? Your company return determines which dividends you need to report on your personal return. If you reverse it, you’ll end up tangled. Step 4: Submission—Online or Offline You have two options: Method Advantages Disadvantages Online Portal Available 24/7, instant confirmation Sometimes unstable, PDF upload only In Person/Post Personal advice possible Waiting times, limited opening hours From my experience: The online portal now works quite reliably. I only go in person for very complex cases. Step 5: Archive Your Documents Malta requires you to keep all tax-relevant documents for at least 6 years. Digital is fine, but back up everything. I use a mix of cloud storage and an external hard drive. What does this mean for you? Develop a system you’ll still understand in five years. Folder structures like Tax2024Malta are your friend. Deadlines: What’s Due When Nothing’s more frustrating than missing a deadline and getting a penalty. Malta is not particularly lenient when it comes to late submissions—I speak from experience. The Malta Tax Calendar for International Entrepreneurs Due Date What’s Due Who Late Penalty January 15 VAT Return Q4 VAT-registered businesses €50 + 0.33% per month April 30 Form IT (personal tax return) All taxpayers €10 + 1% per month April 30 Form HR (advance payment) Tax liability >€1,800 €10 + 1% per month December 31 Form CT (corporate tax return) All Maltese companies €25 + 1% per month August 31 2nd installment advance payment Tax liability >€1,800 Interest from September 1 December 21 3rd installment advance payment Tax liability >€1,800 Interest from December 22 Special Deadlines for New Companies If you founded your company partway through the year, other deadlines apply: Founded Jan–Sep: Normal deadlines Founded Oct–Dec: Extension to June 30 the following year for your first return Important: You have to apply for this extension—it’s not automatic. Special VAT Deadlines for Seasonal Businesses If your business is seasonal (typical for tourism-related services), you can request a customized VAT period. Worth it if you’re only active from, say, May to October. What does this mean for you? Plan ahead and set reminders. Missing a deadline can get expensive fast. The 7 Most Common Malta Tax Return Mistakes In two years, I’ve made every beginner’s mistake you can imagine. Here are the biggest pitfalls—so you don’t fall into the same traps: Mistake 1: Not Declaring Foreign Income Many believe that income from Germany or other EU countries doesn’t need to be declared in Malta. Wrong! As a Maltese tax resident, you’re required to declare all worldwide income. The reality: Malta often doesn’t fully tax foreign income, but you still need to declare it. Otherwise, you risk a tax audit. Mistake 2: Incorrectly Calculating Dividend Credits Malta’s tax credit system is complex. Many people miscalculate credits on dividends, losing money or—worse yet—unintentionally committing tax evasion. My tip: Let a local tax advisor handle your first year or two. The cost (usually €500–1,500) quickly pays for itself through avoided mistakes. Mistake 3: Missing the VAT Reverse-Charge Mechanism For B2B services provided to the EU, the reverse-charge mechanism often applies. This means: you don’t charge Maltese VAT, but you still have to report the service on your VAT return. Typical scenario: You consult for a German company online. No VAT on the invoice—but you still have to declare it on your Maltese VAT return. Mistake 4: Incomplete Recordkeeping Malta accepts many expenses as business costs, but only if you have proper receipts. WhatsApp screenshots of your Uber ride won’t cut it. What counts as a valid receipt: Official invoices with VAT number Receipts showing date and amount Bank statements for online payments Contracts for recurring expenses Mistake 5: Misapplying Double Taxation Agreements Malta has double taxation agreements with over 70 countries. Many people misapply these and either pay double tax or miss out on benefits. Important: A DTA doesn’t automatically free you from tax liability; it just determines which country has the taxing right. Mistake 6: Ignoring Dividend Timing When you distribute dividends can have a huge tax impact. A payout on December 31 is taxed differently from the same payout on January 2. Rule of thumb: Plan dividend timing strategically, especially for larger amounts. Mistake 7: Ignoring Correspondence in Maltese Malta is bilingual, and sometimes official letters come in Maltese. Ignoring them because you don’t understand can get expensive. Solution: Get a reliable translator or ask a Maltese friend to help. What does this mean for you? Be methodical, keep proper records, and don’t hesitate to get professional help if needed. Special Tips for International Entrepreneurs As an international entrepreneur in Malta, you face special challenges—but also certain advantages most people don’t know about. Tax Planning with the Remittance-Based System For residents without permanent ordinary residence, Malta applies a remittance-based system: Foreign income is only taxable if it’s remitted to Malta. Foreign income that stays abroad is tax-free. Practical example: You own a German company that earns €100,000 in profits. As long as these €100,000 remain in the German business account, you don’t pay Malta tax on them. The rules in detail: Foreign income remitted to Malta is taxable Foreign capital gains remain tax-free—even if remitted Making the Most of Holding Structures Malta is a popular base for holding companies, especially for entrepreneurs with multiple international participations. The advantages: Type of Income Effective Tax Rate Conditions Dividends from EU subsidiaries 0% Qualifying participation under Maltese tax law Capital gains 0% On qualifying participations Royalties 0% With the right structure Meeting Substance Requirements Malta has introduced stricter substance rules. Your company must demonstrate real operational activity in Malta. Minimum requirements for real substance: Management meets regularly in Malta Key decisions are made in Malta Adequate number of qualified staff in Malta Appropriate business expenses in Malta Practical tip: Carefully document all board meetings and key business decisions. This can be crucial in an audit. Transfer Pricing for International Transactions If your Maltese company does business with related companies abroad, you must apply arm’s length (market) pricing. What this means: If you charge your German subsidiary €50,000 for consulting, you must be able to prove that a third party would pay the same. Tax Deductibility of Home Office Costs Many international entrepreneurs work partly from home. Malta allows you to deduct a proportionate share of home office costs—if done correctly: Separation: Dedicated workspace, used exclusively for business Documentation: Calculate and record the proportional area Reasonableness: Expenses must suit the business purpose What does this mean for you? Malta offers many opportunities for international entrepreneurs, but you need to know—and follow—the rules. Useful Tools and Official Resources Finally, here are my go-to tools and resources—they’ve saved me a lot of time and stress in recent years. Official Websites and Portals servizz.gov.mt: The central government portal for all official procedures ird.gov.mt: Inland Revenue Department’s website with all forms vat.gov.mt: Specifically for VAT matters mfsa.gov.mt: Malta Financial Services Authority for financial matters Bookkeeping Software Recommendations Software Price/Month Best For Malta-specific Features Sage Business Cloud €35–85 SMEs with complex structures Malta VAT handling, multi-currency QuickBooks €15–40 Small businesses, freelancers Basic Malta compliance Xero €13–47 International businesses Excellent multi-currency support Apps on the Go I regularly use these apps for tax-related tasks: CamScanner: To digitize receipts—the free version is fine Mileage Tracker: Automatically logs business trips Toshl Finance: Expense tracking with tax categories Recommended Tax Advisors in Malta If you need professional help, here are three firms I had good experiences with: PKF Malta: International Outlook, specializes in holding structures Ganado Advocates: Very strong with complex international cases WH Partners: Good value for money for SMEs Networking and Sharing Experiences Malta is small—use that for networking: Malta Business Network: Monthly events for entrepreneurs Digital Nomads Malta (Facebook): Active community with lots of tax discussions Chamber of Commerce Malta: Official networking events What does this mean for you? There’s no need to reinvent the wheel. Leverage proven tools and connect with other international entrepreneurs. Frequently Asked Questions (FAQ) Do I need to apply for a residence permit as an EU citizen before becoming liable for tax? No, tax liability arises through your actual stay (more than 183 days) or shifting your center of life to Malta. You don’t need a formal residence permit as an EU citizen, but you do have to register with the police. Can I keep my German tax ID if I move to Malta? If you move your residence to Malta, you become subject to limited tax liability in Germany. German income may still be taxed in Germany, but your unlimited tax liability in Germany ends. How long does it take to process a Maltese tax return? Usually 4–8 weeks for online filing, up to 12 weeks for paper submissions. In the case of queries or complex situations, it may take longer. What happens if I use the remittance system and later transfer foreign funds to Malta? These amounts become taxable in the year of transfer. You’ll need to file an amended return and pay the tax plus any interest due. Do I need a Maltese tax advisor, or can I do it myself? For simple cases (only salary, no company), you can handle it yourself. For dividends, international structures, or companies, I highly recommend a local tax advisor, at least for the first few years. What about social security if I move to Malta? As an EU citizen, you must pay Maltese social security as soon as you work or have income there. Contributions are much lower than in Germany (around 10% vs. 20%), but so are the benefits. Can I submit my Maltese tax return in German? No, Malta only accepts English or Maltese. All documents must be translated; notarized translations aren’t usually required but are recommended for important documents. What are the biggest cost traps in Malta tax? Late payment penalties (very high), incorrectly calculated dividend credits, missed VAT obligations, and undocumented business expenses. Good preparation can save you thousands of euros.
