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Useful information for businesses operating in Malta
This page covers the key aspects of business taxation in Malta for companies operating or relocating to the island. The standard 35% corporate tax rate can be reduced to an effective rate of around 5% through Malta's shareholder refund mechanism, alongside a network of over 80 Double Taxation Agreements, the Patent Box Deduction for qualifying IP income, R&D tax credits, and Investment Aid Tax Credits administered by Malta Enterprise. This is a general overview, not tax advice.
The standard corporate income tax rate in Malta is 35%. Malta operates a full imputation system, which is designed to eliminate the economic double taxation of company profits distributed as dividends. When a Maltese company distributes dividends from taxed profits, qualifying shareholders may be entitled to claim a refund of part of the tax paid by the company, depending on the nature of the underlying income and other applicable conditions.
For trading income, the most common refund is 6/7ths of the Malta tax paid, resulting in an effective tax rate of approximately 5% after the refund has been received. However, this effective rate is not automatic and depends on the company's activities, shareholder status, and compliance with Maltese tax legislation. Different refund rates apply to passive income and other categories of profits.
Malta also offers a range of tax incentives administered primarily by Malta Enterprise, subject to eligibility criteria and applicable State Aid rules. These incentives are periodically updated and include support for investment, research and development (R&D), innovation, digitalisation, and other strategic business activities.
Malta has an extensive network of more than 80 Double Taxation Agreements (DTAs) with countries worldwide. These agreements are designed to prevent the same income from being taxed twice and provide greater certainty for international investors. Depending on the relevant treaty, income earned in Malta may qualify for relief in the investor's country of residence through exemptions or foreign tax credits.
Malta operates a Patent Box Deduction Regime, which provides tax benefits for qualifying income derived from eligible intellectual property, including patents and certain copyright-protected software, provided the qualifying conditions are met.
The regime follows the OECD Modified Nexus Approach, ensuring that tax benefits are linked to genuine research and development activities undertaken by the taxpayer. Qualifying taxpayers may claim a deduction of up to 95% of qualifying IP income, potentially reducing the effective tax rate on qualifying income to as low as 1.75%, depending on the nexus calculation.
The objective of the regime is to encourage innovation, research, knowledge creation, and the commercialisation of intellectual property in Malta.
Malta continues to encourage investment in research and innovation through tax credits and grant schemes administered by Malta Enterprise.
Support is available for eligible enterprises carrying out Industrial Research and Experimental Development projects. Depending on the applicable scheme, company size, and project type, assistance may be provided through tax credits or cash grants covering a percentage of eligible expenditure.
Eligible costs may include:
The level of assistance depends on the applicable Malta Enterprise incentive guidelines in force at the time of application.
Investment Aid incentives support businesses undertaking new investment projects, expanding existing operations, or diversifying into new activities.
The schemes are administered by Malta Enterprise and are available to eligible businesses operating in a wide range of economic sectors, subject to EU State Aid rules and scheme-specific eligibility requirements.
Tax credits are generally calculated as a percentage of eligible expenditure, which may include:
Where permitted under the relevant scheme, unused tax credits may be carried forward and utilised against future tax liabilities, subject to the applicable rules and conditions.
Businesses considering investment in Malta should seek professional advice to determine which incentives are currently available, as Malta Enterprise schemes are reviewed and updated periodically.
This information is for general guidance only and does not constitute tax advice. Facts above correct as of July 2026 — businesses should seek professional tax advice for their specific circumstances, as rates, incentives, and schemes are reviewed and updated periodically.
The standard corporate income tax rate in Malta is 35%.
The 5% figure refers to the effective tax rate that may result after eligible shareholders claim a 6/7ths tax refund on distributed trading profits. It is not the statutory corporate tax rate.
No. Eligibility depends on factors including the type of income earned, shareholder status, dividend distribution, and compliance with Maltese tax rules.
Malta currently has more than 80 Double Taxation Agreements with countries around the world.
It is a tax incentive that allows qualifying taxpayers to claim up to a 95% deduction on eligible intellectual property income under the OECD Nexus Approach.
Eligible costs may include researcher salaries, equipment, research materials, subcontracted research, and certain intellectual property costs, depending on the applicable scheme.
Most investment and innovation incentives are administered by Malta Enterprise, subject to eligibility requirements and EU State Aid rules.
Yes. Under many Malta Enterprise schemes, unused tax credits may be carried forward to future years, subject to the conditions of the relevant incentive programme.
* Facts above correct as per July 2026.
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