Question 1

Do I pay 15% tax on Maltese bank interest if the bank did not deduct it?

Accepted Answer

Not necessarily. The 15% is a final withholding tax that the bank normally deducts at source. If you received the interest gross (no 15% deducted), you do not pay a flat 15% — instead you must declare the interest in your income tax return, where it is taxed at the normal progressive rates (0% to 35%). If your total income is below the tax-free threshold (€12,000 for a single person in 2025 and 2026), the tax on that interest can be €0.

Question 2

Is it better to let the bank withhold 15% or to declare interest gross?

Accepted Answer

It depends on your marginal tax rate. If your total income falls within the 0% band, declaring the interest gross results in 0% tax, which beats the irrecoverable 15% withholding. If you are a higher earner whose interest would fall in the 25% or 35% band, the 15% final withholding tax is cheaper. The breakeven is roughly the 15% income tax band.

Question 3

Can I reclaim the 15% withholding tax the bank already deducted?

Accepted Answer

No. The 15% withholding tax on bank interest is a final tax. Once the bank deducts it at source, it satisfies your liability and cannot be claimed back, even if your income is below the tax-free threshold. To benefit from progressive rates you must ask the bank to pay the interest gross before it is paid, then declare it yourself.

Question 4

Do I still have to declare interest I received gross?

Accepted Answer

Yes. If the bank did not deduct the 15% final withholding tax, the interest is not 'final-taxed' and must be reported in your annual income tax return under investment income. Even if the resulting tax works out to €0 because you are within the tax-free band, the interest should still be declared.

Question 5

Which bank interest is subject to the 15% withholding tax in Malta?

Accepted Answer

The 15% final withholding tax applies to interest paid by Maltese banks and certain other local payors to resident individuals, under the Investment Income Provisions of the Income Tax Act. Interest from some instruments, such as Malta Government Stock, can be received gross. Foreign-source interest follows different rules and may need to be declared.

Bank Interest Tax Calculator

Malta Bank Interest Tax Guide 2026