Taxation On Rental Income In Malta: Everything You Need To Know

Last updated: 01.09.2023

Do you own a rental property in Malta? Are you thinking of renting out your property? If so, you need to be aware of the tax implications. In this blog post, we will explain everything you need to know about the taxation of rental income in Malta. We will discuss the tax rates that apply and any deductions and exemptions that may be available. So if you are looking for information on how your rental income will be taxed in Malta, read on!

taxation on rental income

How Rental Taxation System Used To Work

Up until 31st December 2013, rental income was taxable either as trading or non-trading rental income. These two types of rental income came with different deductions – those receiving trading rental income could claim the most available deductions for trade activities, whereas those deriving from a non-trade activity were normally eligible to claim just a few very specific deductions.

Particularly noteworthy in this regard are the deductions made available for wear and tear of fixtures and fittings, repairs and refurbishment costs resulting from damages caused by fire, lightning strikes, or natural disasters. Although the disclosure of non-trading rental income is subject to an additional 2% assessment tax that is not applicable to trading rental income earnings, such citizens should nevertheless consider its tax advantages. Other deductions, such as interest payable on loans used to acquire the subject property or licence fees, are also included.

What’s The Situation Now?

The tax rate on income from rented properties has been slashed down to only 15%. This is applied to your gross income, which is the amount you are paid after any expenses have already been taken out. For those who choose this 15% rate, they don’t need to include it in their personal tax return as it’s filed separately.

Both individuals and businesses are entitled to use the 15% flat rate, which applies to income stemming from residential and commercial properties – even garages.  However, this rate does not pertain to rental properties owned by related parties. A qualifying ‘related party’ is anyone who owns 25% or more of said property.

Moreover, beginning with the tax year 2019, withholding taxes have been extended to income earned from ground rents and emphyteutical concessions of both urban and rural tenements. It is a final gross rental tax that cannot be offset against expenses or refunded in any way.

The Secret To Understanding  Rental Taxation In Malta

The best part about the rental taxation system in Malta is that the 15% tax rate is completely optional. This means that you can determine if it’s advantageous to your needs annually and submit an application accordingly. Instead of paying a higher tax rate, you can always decide to declare your net rental income in your tax return and be subject to the normal taxation rate.

For those of you or your company who have taken a bank loan to finance a property, several reimbursements are available, such as ground rent, MTA license fees, and loan interest, plus an additional 20% allowance for maintenance. This will substantially reduce the overall rental income, so it may be wiser to add this profit to your total earnings rather than paying out another 15% withholding tax.

property rental tax

The Benefits Of Consulting With A Professional

Making sure you pay the amount of tax that is legally due and not more can be a challenge, especially when taking into account the constantly changing rules and regulations. Weighing your options to take advantage of whatever perks are available is an important step to ensure you are taking full advantage of the 15% tax rate. But even deciding whether the 15% tax rate is right for you or your company in the first place can be difficult, which is where our expert team comes in! 

Our consultants can help you navigate complex taxation matters by preparing all related documents, filling out forms, as well as submitting them for approval. And if that wasn’t enough, we provide ongoing assistance for any rental-related matters! After all, neglecting to declare income from rent can be extremely costly, with a 35% tax rate and additional payments in the form of penalties and interest due upon investigation by taxation authorities. That’s no good, and we can help prevent that from happening!


Ana Coteneanu