Malta's 35% is a headline almost nobody pays

Malta publishes a top rate of income tax of 35% and a rate of corporation tax of 35%. Read that on a comparison table and you would file the island somewhere between France and Spain, and move on. Then you meet somebody who actually lives there. The number attached to their trading company is about 5%. The number attached to the capital gain they made selling a business abroad is nothing at all.

Both figures are correct. Malta's headline rate is entirely real, and Maltese-source income genuinely pays it. It is also, for most of the people the island is built to attract, decorative. The distance between 35% and what a well-organised foreign resident actually hands over is not a loophole waiting to be shut. That distance is the product.

The rates, without the marketing

The numbers people search for, in one place. Currency is the euro.

Three lines in that table carry the entire proposition: the effective corporate rate, the treatment of a non-dom's foreign gains, and the social security cap. Everything else is ordinary European tax.

The 6/7 refund, explained without the accountancy

Malta operates a full-imputation system. The company pays tax on its profits at 35%. When profits are distributed, the shareholder claims a refund of six sevenths of the tax the company paid on trading income. What survives the round trip is an effective rate of roughly 5%.

Notice what Malta has done here. It has not cut its corporate rate. The statutory rate stays at 35%, which is what appears in international comparisons, in bank onboarding files and in the correspondence of foreign tax authorities. The relief happens one level up, at the shareholder. My view is that the headline is not an accident of drafting. It is a shield, and it has served Malta better than a published 5% rate ever would have.

Two practical warnings. The refund runs through the shareholder rather than netting off inside the company, so model the working capital before you plan around 5%. And the 6/7 refund is built for trading income. Not every stream that lands inside a Maltese company is trading income, and the classification is exactly where the arguments happen.

This is a residence and domicile system, not a territorial one

Get this wrong and the rest will not make sense. Malta taxes worldwide income. It is not Panama, it is not Paraguay, and there is no territorial exemption sitting behind the scenes. What Malta offers instead is the older British idea: residence decides whether you are in the net, domicile decides how wide the net is.

A resident non-domiciled individual is taxed on the remittance basis. Foreign income is taxed only when it is brought into Malta. And then comes the line that matters more than any other in Maltese tax:

Foreign capital gains of a non-dom are not taxed. Not when they arise. Not when they are remitted.

Read it twice. Most remittance-basis systems tax you the moment the money crosses the border. Malta taxes remitted foreign income, but leaves remitted foreign gains alone. For somebody who has just sold a company, that is the difference between a structure and a spreadsheet.

That is the asymmetry. A founder living in Malta on the proceeds of an exit and a founder living in Malta on a foreign dividend stream are in two completely different tax positions, despite identical passports, identical addresses and identical lifestyles.

There is also the Global Residence Programme, which taxes remitted foreign income at a flat 15%. It suits people who want a defined rate and a defined status rather than the general progressive scale. It does not suit everyone. If your money arrives mostly as capital gains, the ordinary non-dom position is already better than 15%, and paying for certainty you do not need is a common and expensive mistake.

What Malta declines to tax at all

No wealth tax. No inheritance tax, although a 5% stamp duty applies to property transferred on death. No annual property tax. Withholding tax on outbound dividends, interest and royalties is 0% across the board, which is why so much European group financing quietly touches the island.

The social security cap deserves a mention it never gets. Contributions run at 10% from the employee and 10% from the employer, but each side is capped at roughly EUR 58 a week. On a senior salary that cap turns a percentage into a rounding error. For a founder paying themselves properly, Maltese payroll is one of the cheapest in the European Union.

The offsetting cost is VAT at 18%, which lands on everything you consume locally, and 8% on property transfers, which lands every time you move house.

Here is the uncomfortable part

Malta is not a hiding place, and anybody selling it as one is selling you a decade-old brochure.

CFC rules apply. Income parked in a controlled foreign company that does very little can be pulled back and taxed in Malta. The structure has to be real.

Malta is a CRS participant. Your account data moves automatically. The remittance basis is a rule about what is taxable, not a rule about what is visible, and confusing the two is how people end up with correspondence they did not expect.

Non-dom status rests on domicile, which is a legal concept with its own tests, not a box you tick on arrival. It is the one component of this arrangement that money cannot simply buy, and it deserves proper advice rather than an agent's assurance.

And then the event that reshaped the market. In April 2025 the EU Court of Justice struck down Malta's investor-citizenship scheme. Selling European Union citizenship outright is finished for member states, and it is not coming back through a side entrance. A great many people concluded from the headlines that Malta was closed.

They were reading the wrong page. The citizenship scheme died. The tax residence offering did not. They were always separate products bought by separate people, and the one that survived is, for anyone whose real interest was the tax position rather than a second passport, the more useful of the two. The details sit in our full Malta tax profile.

The verdict

Malta is not cheap. Malta is asymmetric, which is a different and more interesting thing.

If your income arises in Malta, you will pay Maltese rates, up to 35%, like everybody else, and you will wonder what the fuss was about. If your income arises abroad and stays abroad, or arrives as a capital gain, Malta is one of the most efficient positions available inside the European Union, with the added benefit of looking thoroughly conventional on paper.

So the honest summary is this. Malta sells respectability at the front and arithmetic at the back. The 35% keeps the neighbours calm. The 6/7 refund and the remittance basis do the work. Come for the second effect, do the structuring properly, and accept that CFC rules and CRS have made improvisation obsolete. Come expecting a passport, or a territorial system, and you have misread the offer entirely.