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Malta Investment Income Guide 2026

Malta does not impose withholding tax on dividends or interest paid to shareholders and bondholders. The full imputation system ensures that corporate profits are taxed once at the corporate level, with shareholders receiving tax credits and refunds on dividend distributions. Foreign investment income may be taxable but relief is available under double taxation treaties or the unilateral credit system.

Overview — Investment Income in Malta

Malta has one of the most favourable tax regimes for investment income in Europe. There is no withholding tax (WHT) on dividends, interest, or royalties paid to residents or non-residents. The full imputation system integrates corporate and personal taxation, ensuring that company profits are taxed only once. This makes Malta an attractive jurisdiction for investment holding companies and individual investors.

Dividends — 0% WHT and Full Imputation

Dividends paid by a Maltese company to its shareholders are not subject to withholding tax (0% WHT). Under the full imputation system:

  • The company pays 35% CIT on its profits
  • When dividends are distributed, the shareholder receives a tax credit (Malta Tax Credit) for the corporate tax paid on those profits
  • Non-resident shareholders may also claim a refund of a portion of the corporate tax (5/7 for trading companies, 6/7 for passive/holding, 2/3 for investment companies)
  • The effective tax rate on distributed profits can be as low as 1.5% (for passive/holding companies) or 11.7% (for trading companies)

Interest — 0% WHT

Interest paid by Maltese companies or the Maltese government to lenders and bondholders is not subject to withholding tax (0% WHT). This applies to both residents and non-residents. Interest income received by individuals is aggregated with other income and taxed at progressive IIT rates (0-35%). Corporate recipients of interest income are subject to CIT at 35%, with the imputation system applying upon distribution.

Royalties — 0% WHT (EU Directive)

Royalties paid to non-residents are generally subject to 0% WHT when the beneficial owner is a resident of an EU member state (under the EU Interest and Royalties Directive) or a treaty partner. In other cases, royalties may be subject to withholding tax at rates up to 15%, depending on the applicable double taxation treaty. Malta has over 70 DTTs, many of which provide reduced rates on royalties.

Foreign Investment Income

Tax residents of Malta are subject to tax on their worldwide income, including foreign investment income. However, relief from double taxation is available through:

  • Double Taxation Treaties (DTTs): Malta has over 70 treaties that provide reduced rates on foreign dividends, interest, and royalties
  • Unilateral tax credit: Where no treaty exists, a unilateral foreign tax credit may be available against Maltese tax on the same income
  • Participation exemption: Qualifying dividends and capital gains from foreign participations may be exempt from Maltese tax

FAQs

Are foreign dividends taxable in Malta?

Yes, foreign dividends received by Maltese tax residents are generally subject to tax. However, the participation exemption may apply to exempt qualifying dividends, and foreign tax credits are available to relieve double taxation. The effective rate after imputation and refunds can be very low.

Do I need to declare foreign investment income?

Yes, all foreign investment income must be declared on the annual tax return. Tax residents are subject to tax on worldwide income. Failure to declare foreign income may result in penalties and interest.

Disclaimer

This guide provides general information about the taxation of investment income in Malta for the 2026 tax year. Tax laws may change. Always consult with a qualified Maltese tax advisor or the CFR directly for advice specific to your situation. InvestmentKit does not provide tax advice.