Malta’s 15% Corporate Tax Regime: A Mirage in the Mediterranean?

There’s a certain rhythm to Malta. The stone walls glow honey-gold in the late afternoon sun, fishing boats bob on the sea with their painted eyes staring into eternity, and the island’s lawyers and accountants sip espresso while waiting for the next EU directive to roll in like a storm.

And then it comes: Legal Notice 188 of 2025, announced on the 2nd of September. A new 15% corporate tax regime—final, elective, wrapped in the grand language of “global alignment.”

The blogosphere exploded. “Malta has killed the 5%!” cried the headlines. “The golden goose of Europe is cooked!” whispered the Telegram groups.

Let me stop you right there.

This is not the end of Malta’s famous full imputation and refund system, the very mechanism that has kept the island on the map for international entrepreneurs, family offices, and private equity funds. No—what we have here is something far more subtle, far more typically Maltese: an option, a mirage, a regulatory fig leaf waved at the OECD and Brussels.

The Heart of Malta’s Tax Story

For decades, Malta has played a clever game. The official corporate tax rate sits at a solid 35%, one of the highest in Europe. But through the imputation system—shareholder refunds of up to 6/7ths—foreign investors have long achieved an effective rate of 5% on trading income.

It is legal, it is tested, and it is fully backed by Maltese law. For the Germans, the Brits, the Italians looking south for sunshine and tax efficiency, it has been a dream.

And for years, critics said: this won’t last. Brussels will strike it down. The OECD will force compliance with their “Pillar Two” minimum 15% tax. Malta will bow and the 5% will be history.

Yet here we are in late 2025. Malta has not killed the system. Instead, it has offered something else: a shiny new regime for those who want simplicity, or who fear the long arm of global tax reform.

The New 15% Final Tax Regime

Here’s what the Final Income Tax Without Imputation Regulations, 2025 actually say.

• Elective Nature: Any Maltese entity may choose to pay a flat 15% final tax on chargeable income.

• Finality: This tax is not refundable. No imputation, no shareholder credit. What you pay is what you pay.

• Lock-in: Once you choose, you’re stuck for at least five years. If you switch back to imputation, you must stay there another five years before switching again.

• Exclusions: Certain dividend income and income already taxed under other final regimes cannot benefit.

• Safeguard Rule: You cannot pay less than you would have under the ordinary imputation system once refunds are accounted for.

So what does this mean?

It means Malta has built a parallel track:

• The old 35% headline, 5% effective system for those who like the dance of refunds.

• The new 15% straight tax for those who prefer to pay once and be done, or who need to demonstrate Pillar Two compliance.

Why Malta Did This

Context matters.

The world is reshaping corporate tax. The OECD’s Pillar Two rules—the “global minimum tax”—have become reality. Countries are scrambling to show they are in line, even as they carve out exceptions big enough to sail superyachts through.

Malta, small and clever, knows it cannot ignore the pressure. But it also knows that if it kills its competitive edge, its finance sector collapses.

Thus, the compromise:

• To the EU and the OECD, Malta can say: “Look, we have a final 15% system, clean and simple.”

• To investors and entrepreneurs, Malta can whisper: “Don’t worry, the refund system is still alive. The 5% effective rate is still here, untouched, if you want it.”

It is the most Maltese of solutions: both things are true, depending on what you need.

The Rumors and the Reality

Let’s be clear.

• Rumor: Malta’s effective tax rate is now 15%.

• Reality: Wrong. It is only 15% if you choose it. Otherwise, it remains 5% through refunds.

• Rumor: The refund system is dead.

• Reality: It is not dead. It is not even sick. It is simply sitting beside the new system, waiting for those who prefer it.

• Rumor: Every business must now pay more tax in Malta.

• Reality: Not true. The regime is elective. No one is forced into it.

How the 5% Really Works Today

In the old days, Malta’s refund system meant cash flows could get sticky. The OpCo paid its 35%, the HoldCo filed the refund application, and months later the tax authority sent back the difference. It worked, but you had to wait.

Not anymore.

Today, the structure is leaner, more elegant. The Operating Company and the Holding Company can file a consolidated return. The so-called “refund” is now just an accounting measure. You don’t wait. You don’t chase the tax office. You simply pay 5% net at the corporate level. That’s it.

Two paths, then:

• Traditional imputation (modernized) → OpCo + HoldCo structure, joint filing, and you’re effectively at 5%.

• The new final tax regime → One company, one return, flat 15% with no refunds or refunds-to-be.

Both are valid, both are alive. The choice is strategic.

Anatomy of the 5% Structure

But let’s be honest: nobody pays 5% in Malta by accident. You don’t just set up a Maltese Ltd and magically get the benefit. It requires structure, planning, and discipline.

Step 1: The Maltese Trading Company (OpCo / IP Co)

This is the engine of your business. It holds your intellectual property, invoices clients, and books income in Malta. On paper, it pays the full 35% corporate tax.

Step 2: The Maltese Holding Company (HoldCo)

Above the trading entity sits a Maltese holding company. It receives the dividends. Thanks to Malta’s full imputation system, the HoldCo and OpCo can file together. The “refund” is handled internally. Result? 5% effective tax.

Step 3: If You Live in Malta – The Foreign Holding Layer

Suppose you actually want to reside in Malta and enjoy the sun, the sea, and the espresso. Normally, dividends you pull from the Maltese HoldCo would be taxable to you personally. That’s where the Non-Dom regime comes in.

By inserting a foreign holding entity—often a Scottish LP or other transparent vehicle—between yourself and the Maltese HoldCo, you ensure that profits stay “foreign” for Maltese purposes. Under the remittance basis of the Non-Dom system, foreign income not remitted to Malta is not taxed in Malta.

The result? You, as a Maltese resident non-dom, can enjoy the effective 5% corporate tax on your Maltese profits without further Maltese personal tax—as long as you manage the structure correctly.

The Price of Sophistication

But let’s not sugarcoat it. This is not a zero-maintenance setup.

• You’ll need corporate administration in Malta.

• Proper tax filings for the OpCo and HoldCo.

• A reliable foreign LP vehicle (Scottish LP is popular).

• Legal, accounting, and audit fees.

Realistically, you should budget around €10,000 per year to maintain this structure at a professional minimum. For high-margin businesses, that is a small price to pay. For freelancers scraping by on €60k a year, it is not worth it.

Malta vs. Cyprus: A Tale of Two Islands

For years, Cyprus and Malta were the twin stars of Mediterranean tax planning. Both offered sunshine, English-speaking professionals, EU membership, and highly competitive regimes.

But change is coming. From 2026, Cyprus will also move to a 15% minimum corporate tax in line with global rules. That makes Malta’s continued flexibility even more important.

• In Cyprus, the 15% will be universal. No refunds, no dual paths.

• In Malta, you will still have the choice: 5% effective under the imputation system, or 15% flat under the new regime.

In other words: while Cyprus bows, Malta bends.

Story from the Ground

Imagine two entrepreneurs—let’s call them Anna and Marco.

Anna runs a consulting business in Malta, billing international clients. She has always loved the imputation system. She pays her 35%, files jointly, and lands neatly at 5%. Her investors are happy. Her accountants handle the paperwork. Business as usual.

Marco, on the other hand, has just raised capital from U.S. investors. They are nervous about Pillar Two reporting. They don’t want to explain Malta’s mechanics to their compliance committees. Marco looks at the new regime and says: “Fine, let’s pay 15% straight up. No refunds, no questions. It keeps the Americans calm.”

Two entrepreneurs. Two paths. Both legal. Both Maltese.

That is the beauty—and the cunning—of Malta’s approach.

Why This Matters for Global Entrepreneurs

Malta has always been a flag of convenience—not in shipping this time, but in taxation.

And entrepreneurs today need flexibility. A German IT consultant, a Swiss fund manager, an Italian designer—all face the same storm: higher taxes, stricter reporting, surveillance disguised as “transparency.”

Malta’s message is simple: You still have options here.

It is not “goodbye 5%.” It is “hello 15%, if you want it.”

A Lyrical Note

There’s something poetic in this.

While Berlin debates wealth taxes, while Paris tightens its grip, while Brussels dreams of digital IDs and common tax bases, little Malta hums its own tune. The bells of Valletta still ring, the sea still sparkles, and the island still whispers to those who seek both sun and sovereignty:

We have not abandoned you. We have given you another choice.

That is Malta’s genius. Not defiance, not surrender—adaptation.

A Warning

But let me also be fiery here:

Do not let the headlines fool you. If you are German, Austrian, or Swiss, and you think you can simply “hide” behind the Maltese 15% and ignore your home country’s CFC rules or Wegzugsbesteuerung—think again.

Malta offers tools. Whether you wield them well depends on your own tax residence, your own treaties, your own planning.

For those who plan badly, Malta can be a trap. For those who plan well, it remains a sanctuary.

Conclusion: Malta’s Double Game

The new 15% regime is not the death of Malta’s 5%. It is a parallel path, a concession to the global minimum tax, an olive branch to the OECD.

But for the entrepreneur, the investor, the expat who understands the dance—the old music still plays.

Malta remains Malta: clever, small, sun-drenched, and very much open for business.

Consultation

Thinking of using Malta—whether the 5% refund system or the new 15% flat tax? Don’t rely on rumors or forum chatter. The consequences of choosing the wrong path can be severe—five-year lock-ins, double taxation at home, compliance nightmares.

Book a consultation with me. We’ll cut through the noise, look at your global picture, and decide whether Malta’s old rhythm or its new song is right for you.