How Much Income Tax Do Employees Pay in Malta?

At Dr. Werner & Partners, we primarily advise entrepreneurs who are either moving an existing business to Malta or looking to set up a new Malta Limited. However, through our relocation services for private individuals, we also work with plenty of people who are moving here as employees. Anyone who has moved abroad knows that a new country always brings new systems to learn. That is why I want to focus today's post on how employment income is actually taxed here.

Income tax in Malta is calculated differently than in the UK or Germany

Malta's income tax system differs from what you might be used to in Central Europe or the UK. While we distinguish between different statuses—Single, Married, and Parent—the differences aren't necessarily huge compared to the complex tax classes you might find in Germany, for instance.

The main things that change based on your status are the tax-free allowance and the specific thresholds for the tax bands. For example, on a gross salary of €60,000, the difference in tax payable between a single person without children and a single parent is roughly €1,000.

Malta uses a progressive tax system

There isn't a single flat tax rate for everyone. Instead, the taxation is split into four tiers. There is a tax-free allowance (currently ranging roughly between €12,000 and €15,000 depending on your status), followed by bands taxed at 15%, 25%, and a top rate of 35%.

The size of these bands depends on your family status, but as a rule of thumb, the ratios look something like this: 10k - 10k - 40k.

Roughly speaking:

• The first €10,000 is tax-free.
• The next €10,000 is taxed at 15%.
• The next €40,000 is taxed at 25%.
• Anything above that is taxed at 35%.

This means that for the first €60,000 of income, your effective tax rate usually hovers around 19%—though as I mentioned, this varies depending on your family situation and income source (this calculation is based solely on employment income).

If you want to crunch the numbers yourself to see exactly what you would pay, you can check the official tax rates on the Malta Tax and Customs Administration website.

Tip: If you receive your salary from abroad, you might be able to utilise the Global Residence Programme.