The tax treatment of income and capital gains in Malta for individuals is subject to several rules and regulations that set out the general and detailed framework applicable to such income and capital gains. Malta asserts taxing rights over income and capital gains derived by individuals based on several connecting factors, including territoriality, residence, domicile and remittance, that is, receipt in Malta. The applicable rules can be complex, and this article aims to provide a practical overview of the general principles behind the remittance basis of taxation for individuals in Malta.
2026 update
The core remittance-based principles for individuals remain aligned with current Malta Tax and Customs Administration guidance. In general, Malta-source income is taxable in Malta, foreign-source income is taxable in Malta only if received in Malta, and foreign-source capital gains remain outside the scope of Maltese tax even if remitted to Malta. However, the 2026 Budget introduced changes to personal income tax bands, particularly for qualifying families with children. These changes may affect the taxation of Malta-source income and foreign income that is taxable in Malta under ordinary progressive rates.
For the latest information on Malta’s 2026 personal income tax bands, you may also refer to our article: Malta Personal Income Tax 2026: Updated Tax Structure.
Taxation for Residents and Domiciled Individuals
Persons who are both ordinarily resident and domiciled in Malta are subject to tax on a worldwide basis, i.e., both income and capital gains arising in Malta and outside Malta are subject to tax in Malta regardless of where such income or capital gains are paid, received, etc.
Persons holding status as long-term residents in Malta (including holders of permanent residence certificates or cards) are also subject to tax in Malta on a worldwide basis, and the same applies to persons who are married to a person who is ordinarily resident and domiciled in Malta.
Certain income and capital gains deemed to be arising in Malta may be subject to tax in Malta, regardless of the residence and domicile status of the recipient of such income. Examples include rental income or capital gains derived from immovable property situated in Malta and income from services where the activity of such services is physically provided in Malta.
The Remittance Basis of Taxation
The remittance basis of taxation applies to persons who are either not domiciled or not ordinarily resident in Malta (typically a Malta resident but not a Malta-domiciled person). The remittance basis may also apply, under certain conditions, to returned migrants.
Under the remittance basis of taxation:
- Income arising in Malta is subject to tax in Malta, regardless of where such income is received.
- Income arising outside Malta is subject to tax in Malta only if and to the extent that it is received in Malta; and
- Capital gains arising outside Malta are not subject to tax in Malta, even if such gains are received in Malta.
Persons to whom the remittance basis of taxation applies may be subject to special rules providing for a minimum annual tax liability. The application of these general principles depends on some basic terms and concepts, such as residence and ordinary residence, domicile, income, capital gains arising in Malta, and income received in Malta.
Key Concepts: Residence, Ordinary Residence, and Domicile
Residence
The concept of residence does not depend on nationality or any other civil status but is often referred to as a “question of fact.” A person may be deemed to be resident in more than one country, and this is where double tax treaties may help in establishing which country should be deemed the residence country.
A physical presence in Malta for more than 183 days in a particular calendar year generally establishes residence in Malta for Maltese tax purposes for that year, regardless of the purpose or nature of the individual’s stay. An individual who comes to Malta with the intention of establishing residence in Malta may become resident from the date of arrival, even if the 183-day threshold has not yet been reached in that year.
Ordinary Residence
A person who lives in Malta on a permanent or indefinite basis is considered ordinarily resident in Malta. A person who is in Malta for a temporary purpose may also become ordinarily resident in certain circumstances. This may apply, for example, to individuals who are present in Malta for more than 183 days in each year over a long period, such as three consecutive years. It may also apply to individuals who do not spend more than 183 days in Malta in any single year but who come to Malta regularly over a period of years and establish personal and economic ties with Malta.
An ordinary resident may lose residence status if they leave Malta permanently or indefinitely. If the absence from Malta is temporary, the individual may continue to be considered resident in Malta unless the absence becomes inconsistent with residence status. This depends on the circumstances of each case, particularly the personal and economic ties retained with Malta.
Domicile
Again, the concept of domicile does not depend on nationality, and every individual acquires a domicile at birth (i.e., “domicile of origin”). A domicile of origin is normally the domicile of the parents of the individual at the time of birth.
Domicile is more than just residence; it is also a question of intent (to live permanently in a country) and where the individual considers “home” to be.
A person can only be domiciled in one place at a time, but it is possible to change domicile by acquiring a “domicile of choice.” A person taking up residence in a country with the intention of making the country his or her permanent home may claim to have acquired a new domicile. However, it is possible to take up residence in a country for a very long time without acquiring a new domicile if the intention is someday to return to the person’s country of domicile (or somewhere else).
Since intent plays an important role in establishing a domicile, it is normally up to the individual to claim a change in domicile.
Income and Capital Gains Arising in Malta
Income derived from employment or the carrying out of a profession or business in Malta is deemed to arise in Malta if the activities resulting in such income are performed in Malta.
Passive types of income, including dividends, rents, and interest, are normally deemed to arise where the source of the income is situated (i.e., the company paying the dividend, the property rented out, or the bank deposit or debtor resulting in interest payment).
Capital gains arise in Malta if the asset being transferred is situated in Malta.
Income Received in Malta
Income is deemed received in Malta if paid to the recipient in Malta, e.g., to a bank account held in Malta. This also applies to income that was paid into an account held outside Malta if it is then subsequently remitted to Malta.
Remittances through the use of credit cards, payments directly to a third party’s account from a foreign account, etc., for ordinary expenses such as living expenses, rent, etc., are presumed to be remittances of income to Malta unless the person can prove otherwise.
Proceeds of a capital nature, such as an inheritance or proceeds from the sale of capital assets situated outside Malta, are not income. Therefore, the receipt in Malta of such capital funds is not captured under the remittance basis, provided that the individual can show that the funds are capital in nature. Where remittances are made for a capital purpose, such as the purchase of property in Malta, and the individual can demonstrate that the funds originate from capital held abroad, those remittances may be treated as remittances of capital rather than income.
Minimum tax liability for non-domiciled persons
A minimum tax liability of €5,000 per annum applies to ordinarily resident, but not domiciled, persons if such persons have income anywhere in the world of €35,000 or more in any year (regardless of whether such income is remitted to Malta). Double taxation relief may be claimed on tax paid outside Malta against the minimum tax liability if the income in question has been remitted to Malta.
The minimum tax liability does not apply to individuals whose foreign income is less than €35,000. In the case of a married couple, the €35,000 threshold is calculated by reference to the total income of the couple, and the €5,000 minimum tax applies to the couple. An individual may opt to be taxed on a worldwide basis instead of the remittance basis if their tax liability on a worldwide basis would be lower than the minimum tax liability.
Different minimum tax liabilities apply to individuals who are beneficiaries under a special tax status regime, such as the Global Residence Programme, the Residence Programme, the Malta Retirement Programme, etc. Individuals benefiting from such regimes should refer to the specific rules governing their programme.
2026 Personal Tax Context
The remittance basis determines the scope of Maltese taxation for individuals who are not domiciled or not ordinarily resident in Malta. However, once income is taxable in Malta, for example, Malta-source income or foreign income remitted to Malta, the applicable tax treatment may depend on ordinary Maltese personal tax rates or on a special tax status regime, depending on the individual’s circumstances.
For the basis year 2026, Malta introduced revised personal income tax bands for qualifying families with children. These include new categories for married couples with one child, married couples with two or more children, parents with one child, and parents with two or more children. The revised bands apply where the relevant conditions are satisfied, including where the child is under 18 years of age or under 23 years of age while receiving full-time education. These 2026 changes do not alter the core principles of the remittance basis itself. Instead, they may affect the amount of Maltese tax payable on income that is taxable in Malta under ordinary personal tax computations.
Special Tax Status Programmes
Malta also offers a number of residence and special tax status programmes that may be relevant to individuals relocating to Malta. These programmes may provide specific tax treatment, including a 15% tax rate on qualifying foreign-source income remitted to Malta, subject to the conditions and minimum tax requirements of the relevant programme. Examples include the Global Residence Programme (GRP), the Residence Programme (TRP) and the Malta Retirement Programme (MRP). Under such programmes, foreign-source income that is not remitted to Malta is generally not taxed in Malta, while foreign-source capital gains may remain outside the scope of Maltese tax even if remitted, subject to the applicable programme rules and the individual’s particular facts.
Because the conditions, minimum tax liabilities and compliance obligations differ from one programme to another, professional advice should always be obtained before applying for or relying on a special tax status programme.
Finally
The remittance basis of taxation remains an important feature of Malta’s personal tax system for individuals who are resident but not domiciled in Malta, or who are otherwise eligible to be taxed on that basis. In general terms, persons taxable on the remittance basis are subject to Maltese tax on Malta-source income and on foreign-source income received in Malta, while foreign-source capital gains are not subject to Maltese tax even if remitted to Malta. However, the outcome in any particular case depends heavily on the individual’s residence, ordinary residence, domicile, source of income, remittance patterns, applicable double taxation treaties and any special tax status that may apply.
The above is intended as a general overview of the rules applicable in Malta and should not be construed as tax advice on a particular set of circumstances. As the saying goes, “the devil is in the details”, and a person’s specific facts may have a significant bearing on their Maltese tax obligations.
If you are considering taking up residence in Malta, applying for a Maltese residence programme, or reviewing your tax position under the remittance basis, contact our team, and we will arrange a residence planning consultation to discuss your circumstances in more detail.
