Tax on Rental Income in Malta

Rental income in Malta is taxable, but the country offers a relatively simple and attractive system for landlords. Property owners can choose between two different taxation methods depending on their situation.

1. The 15% Final Withholding Tax (Most Common).

Most landlords in Malta choose the 15% final withholding tax (FWT) on rental income.

Key features:

• Tax rate: 15%

• Applied on: Gross rental income (before expenses)

• Final tax: No additional tax is due afterward

• No deductions allowed

• Applies to both residential and commercial property

• Available to individuals, companies, residents, and non-residents 

Example:

Monthly Rent	Annual Rent	Tax (15%)
€1,000	€12,000	€1,800

This option is popular because it is simple and predictable, especially when property expenses are low.

Filing Requirements

To use this scheme, landlords must:

• Submit Form TA24

• Pay the tax by 30 April of the following year 

If you pay this tax, the rental income does not need to be declared in your normal tax return.

2. Taxed as Normal Income (Progressive Rates)

Instead of the flat 15% tax, landlords may declare rental income as part of their annual income tax return.

In this case:

• Income is taxed using Malta’s progressive tax rates (up to 35%).

• Certain deductions are allowed, including:

  • Interest on loans used to buy or improve the property

  • Ground rent or licence fees

  • A 20% maintenance allowance 

    
    

This option may be beneficial when expenses are high, reducing the taxable profit.

Example:

Annual Rent	Expenses	Taxable Income
€15,000	€5,000	€10,000

That €10,000 is then taxed at normal income tax rates.

3. Special Reduced Rental Tax Rates

Malta offers some reduced tax schemes to encourage certain types of housing.

5% Final Withholding Tax

Applies in specific cases such as:

• Renting to tenants receiving government rent subsidies

• Certain restored properties

• Some properties registered with the Housing Authority

These schemes are designed to promote affordable housing and urban regeneration.

4. VAT on Rental Income

For most long-term residential rentals:

• No VAT is charged

• Rental income is generally VAT-exempt 

  
  

However, short-term tourist rentals (such as holiday apartments) may be subject to VAT and tourism regulations.

5. Key Rules for Landlords

Important compliance rules include:

• Rental income must be declared annually (or taxed via the 15% scheme).

• The same taxation method must apply to all rental properties in that year.

• The 15% rate cannot apply to rent received from related parties.

6. Why Malta’s Rental Tax Is Attractive

Malta’s rental tax regime is considered relatively investor-friendly because:

• Simple flat 15% tax option

• No complicated deductions required

• Lower than many EU property tax systems

• Flexible choice between flat tax or progressive tax

  
  

Quick summary

Option	Tax Rate	Deductions	Complexity
Final Withholding Tax	15%	No	Very simple
Income Tax Method	Up to 35%	Yes	More complex