Malta Double Taxation Treaty Guide 2026

2. Malta's Treaty Network: 80+ Countries

Malta has one of the most extensive tax treaty networks for a country of its size. As of 2026, Malta has concluded over 80 bilateral tax agreements with countries across every continent. The majority of these treaties are based on the OECD Model Tax Convention on Income and Capital.

Complete List of Malta DTA Partner Countries

Source: Commissioner for Revenue (CFR) - Double Taxation Agreements in Force

3. How Does Malta Eliminate Double Taxation?

Malta's Income Tax Act provides four distinct mechanisms to eliminate double taxation of foreign-source income. These are set out in Articles 74 to 95 of Chapter 123:

These mechanisms ensure that virtually all foreign income earned by Malta residents can benefit from some form of relief, whether or not a bilateral tax agreement exists with the source country.

4. Treaty Relief (Ordinary Credit Method)

When Malta has a DTA with the country where your income originates, you are entitled to treaty relief. Malta generally applies the ordinary credit method for eliminating double taxation.

How the Ordinary Credit Method Works

1. Gross-up the income: The foreign income (after foreign tax) is "grossed up" by adding back the foreign tax suffered, so the full amount is included in Malta taxable income.
2. Calculate Malta tax: Malta income tax is calculated on the total income (including the grossed-up foreign income) at the applicable Malta tax rates.
3. Apply the credit: The foreign tax paid is credited against the Malta tax liability. However, the credit is limited to the amount of Malta tax attributable to the foreign income.

What Income Types Are Covered?

Most DTAs cover the following categories of income:

• Employment income - Salaries and wages earned in the treaty partner country
• Business profits - Trading income from a permanent establishment abroad
• Dividends - Distributions from foreign companies
• Interest - Income from foreign deposits, bonds, and loans
• Royalties - Payments for intellectual property usage
• Rental income - Income from immovable property abroad
• Capital gains - Profits from disposal of foreign assets
• Pensions - Retirement income from foreign schemes

5. Unilateral Relief for Non-Treaty Countries

One of the most taxpayer-friendly aspects of Malta's tax system is the availability of unilateral relief. Even when Malta does not have a DTA with a particular country, Malta residents can still claim a credit for foreign tax paid on income that is also taxable in Malta.

This mechanism is provided under Articles 79-88 of the Income Tax Act and mirrors the treaty relief provisions. In practice, unilateral relief works almost identically to treaty relief—the foreign income is grossed up and included in Malta taxable income, and a credit is given for the foreign tax suffered.

Who Can Claim Unilateral Relief?

• Individuals who are resident in Malta
• Companies registered in Malta (including non-resident companies with Malta-source income)

Requirements

• The income must arise outside Malta
• The foreign tax must be of a nature similar to Malta income tax (not customs duties, VAT, etc.)
• The taxpayer must prove to the CFR that foreign tax was actually paid and provide documentation of the amount
• The credit cannot exceed the Malta tax payable on the same income

6. Flat Rate Foreign Tax Credit (FRFTC)

The Flat Rate Foreign Tax Credit (Articles 92-95 of the Income Tax Act) is a special mechanism available to Malta-registered companies that receive foreign-source income. It is particularly attractive for international holding companies and businesses with global operations.

How the FRFTC Works

Instead of claiming actual foreign tax paid as a credit, the company can elect to use the FRFTC, which provides a notional credit equal to 25% of the net foreign income (before the credit itself). This is equivalent to grossing up the foreign income at an effective rate of 33.33%.

Key Conditions for the FRFTC

• The company must be registered in Malta
• The income must be foreign-source (not derived from Malta)
• The company must maintain proper documentation proving the foreign nature of the income
• The FRFTC is an alternative to actual treaty or unilateral relief—the company chooses the more favourable option

7. Withholding Tax Rates Under Malta DTAs

One of the most significant benefits of Malta's treaty network is the reduction of withholding taxes on cross-border payments. Malta's full-imputation system means that dividends from Malta companies are generally not subject to withholding tax. For inbound income, the DTA withholding rates vary by treaty partner.

Source: Chetcuti Cauchi Advocates - Malta Double Tax Treaties and PwC Malta - Withholding Taxes

8. Malta's Full-Imputation System & Tax Refunds

Malta operates a full-imputation system for corporate taxation, which is one of the most attractive features of its tax framework for international investors and businesses.

How the Imputation System Works

Companies registered in Malta pay corporate tax at 35% on their taxable income. When the company distributes dividends, shareholders receive a tax credit for the corporate tax already paid. This eliminates economic double taxation between the company and its shareholders.

Foreign shareholders of Malta companies can claim tax refunds of 6/7ths (for trading income) or 5/7ths (for passive income) of the Malta tax paid, reducing the effective Malta corporate tax rate to as low as 5%.

This system, combined with Malta's DTA network, makes Malta an efficient jurisdiction for routing international investments—without any of the secrecy or "tax haven" stigma, as Malta is EU-compliant and on no international blacklists.

9. Practical Examples: How DTA Relief Works

Example 1: Malta Resident with UK Rental Income

Example 2: Malta Resident with German Dividend Income

Example 3: Unilateral Relief (No Treaty Country)

10. How to Claim Double Taxation Relief

To claim DTA relief or unilateral relief in Malta, you need to follow these steps when filing your annual tax return (Form TA24):

Step-by-Step Process

1. Declare worldwide income: Include all foreign income (grossed up) on your Malta tax return
2. Identify the applicable treaty: Check if Malta has a DTA with the source country on the CFR website
3. Gather documentation: Obtain certificates of tax paid, withholding tax receipts, or official tax assessments from the foreign country
4. Calculate the credit: Compute the lower of (a) the foreign tax actually paid, and (b) the Malta tax attributable to the foreign income
5. Claim on your return: Apply the foreign tax credit in the relevant section of your TA24 form

Required Documentation

• Certificate of tax residence from Malta (if required by the other country)
• Foreign tax certificate or withholding tax receipt proving tax was paid abroad
• Official tax assessment from the foreign jurisdiction (if available)
• Income statements (employment contracts, invoices, dividend vouchers)

For employees receiving foreign-source income, your employer may handle some of the treaty relief through the Final Settlement System (FSS). However, if you have additional foreign income not covered by FSS, you must declare it on your annual return. Use our Malta Salary Calculator to estimate your total tax position including foreign income.