If my income is under €10,000 and the bank did not deduct 15%, do I pay 15% on my interest?

No. The 15% is a final withholding tax that the bank deducts at source. If you received the interest gross (no 15% deducted), you declare it in your tax return and it is taxed at the normal progressive rates instead of a flat 15%. With total income under the €12,000 single tax-free band, the tax on that interest is €0.

Can I reclaim 15% the bank already withheld?

No. The 15% withholding tax on bank interest is a final tax. Once it is deducted at source it cannot be refunded, even if your income is below the tax-free threshold. To get progressive treatment you must ask the bank to pay you gross before the interest is paid.

Do I still need to declare interest I received gross?

Yes. Interest paid to you gross is not final-taxed, so it must be reported in your annual income tax return under investment income — even though the resulting tax may be €0 if you are within the tax-free band.

When is the 15% withholding tax the better choice?

When your other income already pushes you into the 25% or 35% tax band. Then declaring interest gross would tax it at that higher marginal rate, so letting the bank take a flat 15% is cheaper. For low and middle earners in the 0% band, declaring gross wins.

Banking June 2026 8 min read

Malta Bank Interest Tax 2026: 15% Withholding or Declare Gross?

One of the most common questions we get: “My Maltese bank paid me interest without taking the 15% tax — do I now owe 15% when I file my return?” The short answer is usually no. Here is exactly how it works.

The short answer

The 15% is a final withholding tax that the bank normally deducts at source. If your bank did not deduct it, your interest is “gross” and you must declare it — but it is then taxed at the normal progressive rates, not a flat 15%. If your total income is under the tax-free band (€12,000 for a single person), the tax on that interest is €0.

How Malta taxes local bank interest

Under the Investment Income Provisions of the Income Tax Act (Cap. 123), interest paid by a Maltese bank to a resident individual is treated as investment income. The standard route is a 15% final withholding tax (FWT):

The bank deducts 15% at source before paying you the interest.
It is a final tax — it settles your full liability on that interest, so you do not declare it in your return.
It is not refundable and cannot be claimed back later.

Crucially, this 15% route is optional. A resident can instead elect to receive the interest gross — which is exactly what happens when your bank pays you without deducting anything.

What changes when the bank does not deduct the 15%

When interest is received gross, the treatment flips:

You must declare it in your annual return (under “Investment, Capital Gains and Other income”).
It is added to your other income and taxed at the normal progressive rates (0%–35%) — not at a flat 15%.
There is no option to tick a flat 15% inside the return for interest you received gross. It is either withheld by the bank at source, or declared at progressive rates.

The two options compared

Option	Rate	Declared?	Best for
15% Withholding (bank deducts)	15% flat	No	Higher earners (25%–35% band)
Declare gross (progressive)	0%–35%	Yes	Low / middle earners (0% band)

The 2026 single tax bands start with a 0% band on the first €12,000 (€15,000 married, €13,000 parent). That zero band is the whole reason declaring can beat 15%.

Worked examples (€1,000 of bank interest)

Example 1 — Low earner (single, €9,000 salary)

• 15% withholding: €1,000 × 15% = €150
• Declare gross: total income €10,000, still inside the €12,000 0% band = €0

Declaring gross saves €150. This is the typical “income under €10,000” case.

Example 2 — Middle earner near the threshold (single, €11,500)

• 15% withholding: €150
• Declare gross: only the slice above €12,000 is taxed at 15% = €75

Declaring still wins because part of the interest sits in the 0% band.

Example 3 — Higher earner (single, €50,000 salary)

• 15% withholding: €150
• Declare gross: taxed at the 25% marginal rate = €250

Here the flat 15% withholding is cheaper — let the bank deduct it.

Important: gross interest must still be declared

Because the bank did not deduct the tax, gross interest is not “final-taxed.” It is legally required to be reported in your income tax return. Even when the result is €0 tax, leaving it off the return would be an under-declaration. Declare it, and the tax simply computes to zero if you are within the tax-free band.

A few caveats worth knowing: the figures above assume the amounts are your total chargeable income. Other income (a second job, pension, rental, or foreign income) can push you over the threshold so that part of the interest becomes taxable. Foreign bank interest follows different rules. And if your income rises above the tax-free band in future, the 15% withholding route may become the better default again.

This guide is general information, not formal tax advice. Your outcome depends on your residence, domicile, marital status and all sources of income. Confirm your position with the Malta Tax & Customs Administration (MTCA/CFR) or a qualified tax practitioner before filing.

Malta Calculator Editorial Team

Financial Content Specialists | Malta Tax & Employment Experts

Our team specializes in Maltese tax law, social security contributions, and employment regulations. All content is reviewed against official sources from the Malta Commissioner for Revenue and the Department of Social Security.

Published: 13 June 2026

Official Sources

Data verified as of 13 June 2026. Rates and thresholds are subject to change based on Malta government budget announcements.

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