Malta charges corporate income tax at the standard rate of 35 percent on a company's profits. What makes the Maltese tax system distinctive is the full imputation system: when the company distributes dividends to its shareholders, they can claim a refund of the tax paid at company level. For trading income this refund amounts to 6/7 of the tax paid, resulting in an effective tax rate of around 5 percent. For passive income and interest the refund is 5/7.
The imputation system is not a tax break in the narrow sense but an EU-compliant mechanism for avoiding economic double taxation. The tax is first paid in full at company level; the refund is claimed by the shareholders from the Commissioner for Revenue. Refunds are normally paid out within 14 working days of filing. The European Commission has reviewed the system several times and confirmed that it does not constitute state aid.
Important: the refund is only available to shareholders who are not tax resident in Malta. Maltese tax residents receive no refund; instead the corporate tax already paid is credited against the tax due on their dividend (imputation credit). Since September 2025, individuals relocating to Malta can alternatively opt for the FITWI regime, which provides a flat tax on employment income and investment income.
