Malta capital gains tax: what is actually inside the charge, and what never was

People search for "Malta capital gains tax rate" and expect a number. There isn't one, and that is the single most useful thing to know about the subject. Malta has no separate capital gains tax. Gains sit inside the income tax, at the same progressive rates that apply to salary, topping out at 35%. What makes Malta interesting is not a rate at all. It is the list of what falls inside the charge and the list of what falls outside it, and the second list is long.

The charge is closed, not open

Most tax systems tax any gain unless something exempts it. Malta works the other way round: the Income Tax Act names the assets whose disposal is taxable, and anything not on that list produces a gain that is simply not income.

Inside the charge:

• immovable property, and rights over it;
• securities — shares, stocks, debentures, bonds and units in collective investment schemes;
• a business, its goodwill, permits and copyright;
• intellectual property — patents, trademarks and trade names;
• a beneficial interest in a trust.

Outside it, and therefore untaxed: a car, a boat, a watch collection, gold, art, cryptocurrency held as an investment rather than traded, and any other movable asset that is not a security. This is not a loophole and it is not aggressive planning. It is the structure of the statute, and it is why the question "what is the rate" has no answer without first asking "on what".

Our Malta tax profile carries the rest of the rate card and the sources.

Property is the exception that swallows the rule

Since 2015 a transfer of Maltese immovable property has not been taxed on the gain at all. It is taxed on the transfer value — the price — as a final withholding tax, collected by the notary at the deed. You do not compute a base cost, you do not deduct improvements, and you cannot set a loss against it.

The default is 8%. The variations that matter in practice:

• 2% where the property was the transferor's sole ordinary residence, owned and occupied as such for at least three consecutive years, and disposed of within twelve months of vacating it. In most cases this transfer is exempt outright rather than taxed at 2%.
• 5% for property acquired before 2004, and for certain transfers made within five years of acquisition.
• 10% for property acquired before 1 January 2004 outside the restructuring rules.
• 12% in some restructuring and promise-of-sale scenarios.

The practical consequence is counter-intuitive. A seller who bought badly and sells at a loss still pays, because the tax is on the price, not the profit. A seller who bought thirty years ago pays a rate that has nothing to do with the size of the gain. Anyone modelling a Maltese property exit on a percentage-of-gain assumption is modelling the wrong tax.

There is no annual property tax in Malta, and no inheritance tax; property passing on death carries a 5% stamp duty instead.

Shares: who is selling matters more than what is sold

A gain on securities is taxable income for a Maltese resident. For a non-resident it usually is not. The exemption for non-residents on transfers of shares in Maltese companies applies where the company's assets do not consist principally of Maltese immovable property, and where the beneficial owner is not itself owned or controlled by a Maltese resident. That last condition is the one that catches people who thought a foreign holding company solved the problem.

Transfers of shares between group companies, and transfers on a genuine restructuring, generally fall outside the charge as well.

The non-dom rule is the real answer for most readers

Malta taxes on residence and domicile, and the two are different things. A person who becomes resident in Malta but keeps a foreign domicile — which is the position of essentially every foreigner who moves there — is taxed on Maltese income and gains in full, on foreign income only when it is remitted to Malta, and on foreign capital gains not at all.

Read that last clause again, because it is unusual. Foreign gains of a Maltese-resident non-dom are outside the charge even if the money is brought into Malta. Foreign income remitted is taxed; foreign gains remitted are not. The distinction between an income receipt and a capital receipt therefore does real work in Malta that it does not do in most of Europe, and the paperwork that evidences which is which is worth keeping.

The Global Residence Programme sits on top of this, taxing remitted foreign income at a flat 15% with a minimum annual charge, and leaving the capital-gains position untouched.

Where the number people search for actually comes from

The "35%" that circulates as Malta's capital gains rate is the top marginal income tax rate, reached above roughly EUR 60,000 of chargeable income. It applies to a taxable gain only when the seller is Maltese-resident, the asset is on the statutory list, and the asset is not Maltese immovable property. That is a narrower set of facts than the phrase suggests.

For companies, the headline is 35% as well, and the 6/7ths shareholder refund brings the effective burden on distributed trading profits down to around 5%.

Verdict

If you are moving to Malta and your wealth is a portfolio, the capital-gains position is close to the best in the European Union — foreign gains are outside the charge entirely, remitted or not, for as long as you remain non-domiciled. That is the reason to look at Malta, and it is rarely the reason people give.

If your wealth is Maltese property, model the tax as a transaction cost on the price, not as a share of the profit. Eight percent of the sale price is the working assumption, the exemptions are narrow and evidence-based, and a loss does not help you.

If you are already Maltese-domiciled, none of the above applies to you, and the ordinary income tax rates do. Domicile is sticky and hard to acquire by accident, but it is also hard to shed; anyone whose family has been in Malta for a generation should take advice before assuming the non-dom position.