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Save taxes in Malta?

What is the 6/7 tax system?

There are many questions around the topic of taxes, especially in connection with Malta as a tax haven. Is it really possible to save tax in Malta? The tax system in Malta offers companies the opportunity to significantly reduce their tax burden compared to other countries. The fast-growing financial services sector in Malta can compete with established economies, which is a consequence of the favourable tax environment.

However, to get the most out of the tax system in Malta, it is important to understand how the taxation of a Malta Limited works.

In this context, we would like to provide you with a brief and understandable explanation of company taxation in Malta.

Company Tax in Malta

Malta offers enormous incentives to the business community, including those based abroad, as the taxation of companies is one of the most generous in Europe or the European Union. There is no trade tax, as in Germany. The corporate tax rate is 35%, which is one of the highest in the EU for the time being. However, the tax usually be reduces to 5 % or in some cases to 0 %. This is due to an efficient tax refund system. A 35% tax on company profits is due and paid to the Maltese tax office. After an average of 14 working days, the Maltese tax authorities pay a refund of 6/7 of the corporate tax received.

The 6/7 tax refund is a very attractive system for companies as it allows them to save significantly on taxes. This system works for companies within a certain holding structure:

tax structure in malta grafic

From 2020, companies eligible for the 6/7 tax refund can now register as a “fiscal unit”, which means that they will directly pay 5% tax without waiting for the refund.

The tax system in Malta is also very attractive for foreign companies.

By having a registered office or a business location in Malta, you can already benefit from the favourable tax rates and the possibility of a tax refund.

However, some important rules apply here to counteract money laundering and tax evasion. The basis for being considered for the tax refund is a certain company substance in Malta. This includes at least:

  • a website
  • Office space
  • a business infrastructure
  • a local bank account
  • and a managing director or employee in Malta

There are, of course, other rules and regulations that need to be met, which we would be happy to explain to you in a personal meeting.

The problem of double taxation

Double taxation agreements are concluded in order to avoid double tax payments and to reduce the tax burden for the taxpayer as much as possible. The aim is to facilitate investment between the two countries.

Malta has double taxation agreements with 70 countries, including Germany, Australia and Canada. This makes it an interesting location for companies operating internationally.

 Overall, the Maltese tax system offers many advantages to companies that are based in Malta or wish to do business there. With the possibility of a 6/7 tax rebate and a 0% business tax, Malta effectively pays only 5% tax on company profits, making it a very attractive location for businesses.

If you are planning to do business in Malta, please feel free to contact us and we will check whether you can save tax in Malta.

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