Individuals who are both domiciled and ordinarily resident in Malta are taxed on their worldwide income. Spouses of such individuals are also taxed on a worldwide basis, whether domiciled or ordinarily resident in Malta.
Any person who is ordinarily resident in Malta but not domiciled there, is taxed only on income earned in Malta and any foreign income remitted to Malta (i.e. on income and chargeable gains arising in Malta and on income outside Malta that is received in Malta). Such individuals are neither taxable in Malta on income earned outside of Malta that is not received in Malta, nor on capital gains earned outside of Malta, regardless of whether they are received in Malta or not.
On the other hand, a non-resident is only taxed on income and chargeable gains earned in Malta.
Regarding employees and/or employers whose employees’ contracts of employment require them to perform work or duties primarily outside of Malta, individuals deriving employment income under such contracts may opt of paying a 15% tax rate on employment income. These special rules are not applicable to service on board a ship, airplane, or road vehicle chartered or leased by a Maltese firm, as well as any service for the Maltese Government. The 15% does not apply to emoluments payable under a contract of employment for a period of less than 12 months or that lasts less than 12 months, nor does it apply if the individual was present in Malta for more than 30 days in the year preceding the year of assessment.
Individuals are taxed on income earned in a calendar year (the basis year), which is assessed in the year following the year during which it is earned (i.e. the year of assessment).
Persons residing and working in Malta are charged income tax on their salary received in Malta. Malta adopts a graduated progressive income tax rate ranging from 0% to 35% i.e. the higher an individual’s income, the higher the tax paid. The 35% tax bracket is reached at annual chargeable income in excess of €60,000.
Tax rates (for basis year 2022) are available on https://cfr.gov.mt/en/rates/Pages/TaxRates/Tax-Rates-2022.aspx
Self-employed individuals must make provisional tax payments on 30 April, the 31 August and the 21 December. Each year, the total provisional tax payable is equal to the amount of the tax chargeable based on the self-assessment for the previous basis year. The provisional tax payments are credited against their tax liability on their annual income.
In Malta, national insurance, also known as social security, combines health insurance and contributions to the government pension. In case of employment, the employer will deduct national insurance contributions directly from the employee’s salary. Employee and employer each pay half of the contributions. The contributions rate varies depending on your income which is capped according to law.
On the other hand, self-employed persons must pay for their own national insurance contributions.
Any tax-related question can be answered by our network of tax lawyers and legal professionals.
You may get in touch with us here to request an initial free legal consultation in relation to any of the matters outlined above.
Mariella graduated from the University of Malta with a doctorate in law in 2005. She completed a master’s degree in ‘European Private Law’ from the La Sapienza, University of Rome, and was admitted to the bar in Malta in 2006.
Mariella is a people person – and it is this attribute which has really characterised and shaped her career.
Over the years, she headed the legal departments of several corporate services firms. Due to her skillset, she was also entrusted with managing and overseeing operations and human resources, where she gained technical and practical experience in various corporate, commercial and employment matters.
Her practical hands-on experience and insight perfectly complement Mariella’s technical knowledge of employment law, thus placing her in an ideal position to understand and advise employers and employees alike on various matters that may arise at the workplace.
Mariella is passionate about employment law matters and provides her clients with the highest-quality legal service to achieve the best possible outcome and resolve any employment law related issues and concerns.
Bradley graduated Doctor of Laws from the University of Malta in 2005 and was admitted to the Bar in Malta in 2006. He advises clients on various corporate, commercial, employment and regulatory matters, with particular focus on company and financial services law.
He has assisted clients in various corporate and commercial matters by providing company law advice and assisting in the implementation of corporate finance, restructuring, mergers and acquisitions and similar transactions.
Bradley has also advised and assisted investment funds, fund managers and other investment services providers, banks and financial institutions, on various legal and regulatory matters relating to the setting up, authorisation and ongoing conduct of their activities in Malta.
His practice also covers general employment law matters. Bradley’s experience in company and financial services law enables him to focus on various corporate and regulatory aspects of employment relationships. In particular, he advises organisations on the implementation of employee share option and participation schemes, the implications of business transfers on employment relationships, as well as relations with senior employees.
Karl graduated Doctor of Laws from the University of Malta in 2005 and was admitted to the Bar in Malta in 2006.
Karl has gained considerable expertise in technology law and regularly assists clients in relation to intellectual property issues, commercial contracts and ways to ensure compliance with the General Data Protection Regulation (GDPR) and privacy laws. Whilst such matters used to be only given incidental importance when dealing with employment matters, they are now widely acknowledged to be vital in all employment relationships.
He is also regularly engaged by C-level executives to assist in negotiating employment contracts and settlement agreements.
Karl advises across a multitude of industries including technology; marketing; adtech; financial services; gaming; esports; consumer products; and media and telecommunications.