The main categories
How you pay tax depends on how you work:
| Category | How you pay income tax |
|---|---|
| Employee | Your employer takes tax from your salary each month (FSS). See the Salary Calculator. |
| Full-time self-employed (sole trader) | Normal tax rates on your profit. You pay during the year (provisional tax) and file a tax return. |
| Part-time self-employed | Normal rates, or you may choose a flat 15% on the first €12,000 of profit, if you meet the conditions. |
| Contractor | If you are truly independent, you are self-employed. If not, you may count as an employee (see below). |
| Partnership | Each partner pays tax on their share of the profit. |
| Limited company | The company pays company tax. You pay tax on salary or dividends you take out. |
Sole traders and freelancers
- You pay tax on your profit: your income minus allowed business costs (for example, equipment, software, a work phone, part of your rent if you work from home).
- The tax rates are the same as for employees. A single person pays 0% on the first €12,000, then 15%, 25% and 35%. Try the Income Tax Calculator.
- You pay provisional tax in three parts during the year, based on last year's tax. Then you file a tax return by 30 June of the next year and pay any balance.
- In your first year you usually do not pay provisional tax, so save money for the tax bill in the second year.
Contractors - self-employed or employee?
Many people in Malta work as "contractors" for one company. Jobsplus uses 8 questions to check if you are really self-employed. If 5 or more are true, you are treated as an employee:
- You work for one client for most of your income.
- The client decides your working hours.
- The client gives you your tools and equipment.
- The client decides how you do the work.
- You work at the client's place.
- You are paid by the hour, week or month.
- You cannot send someone else to do the work.
- The work is part of the client's normal business.
If you are treated as an employee, the client must register you and pay employer social security. Check this before you sign a contract.
Limited companies
- Company profit is taxed at 35%.
- When the company pays a dividend, shareholders can usually claim back most of this tax. For trading profits, the final tax can come down to about 5% overall.
- Since 2025, companies can also choose a final 15% tax in some cases, instead of the refund system.
- A company has more costs: a yearly audit, an accountant, and a yearly return to the Malta Business Registry.
A company is usually worth it only when your profit is high. Ask an accountant to compare a sole trader and a company for you.
How to register a business
| Type | Where to register | Main points |
|---|---|---|
| Sole trader | Jobsplus + VAT with the MTCA | Quick and cheap. You are personally liable for debts. See Being Self-Employed. |
| Partnership | Malta Business Registry (MBR) | Signed partnership deed. In a general partnership, all partners are liable for debts. |
| Limited company (Ltd) | Malta Business Registry (MBR) | Minimum share capital €1,164.69 (20% paid in). Needs a director, a company secretary and an office address in Malta. |
Steps for a company: choose a name, write the Memorandum and Articles of Association, pay in the share capital at a bank, and register with the MBR. Then register for VAT and, if you hire staff, as an employer. Most people use a lawyer or company service provider.
Business First is the government's free help desk for new businesses.
Good to know
This guide is general information, not tax advice. Rules and rates change each year. For your own situation, talk to a warranted accountant or tax adviser.