In short
- The refund follows the profit behind the dividend: 6/7 on trading profit, 5/7 on passive interest and royalties, 2/3 after double taxation relief, all of it on a participating holding.
- On €100,000 of trading profit paid out, Malta keeps €5,000 after the refund and €15,000 under the final tax.
- The final tax needs no dividend and no claim, so profit kept in the company bears 15% where it would bear 35%.
- The election is made in the tax return by the online deadline, 27 November 2026 for a year ended 31 December 2025.
In this guide
How the Malta tax refund system works: 35% first, the refund after a dividend
Malta taxes a company registered there at 35% on its worldwide income and capital gains, under article 56(6) of the Income Tax Act. When the company distributes its profit, the shareholder who receives the dividend claims part or all of that tax back from the Commissioner for Tax and Customs. The Malta Tax and Customs Administration calls this the imputation system: the profit bears tax once, at the level of the company.
The refund follows three events: the company pays its tax, pays a dividend with a dividend certificate, and the shareholder files the claim. Profit kept in the company brings no refund, and its 35% stays with the Commissioner until a dividend distributes it.
We keep the books, file the return and prepare each shareholder's claim with accounting in Malta.
The five tax accounts of a Malta company, and which of them refund
Every Malta company allocates its distributable profits to five tax accounts, defined in article 2 of the Income Tax Act. The account decides whether a dividend carries a refund. Article 48(4A) of the Income Tax Management Act pays the 6/7 and 5/7 refunds only from the Maltese taxed account and the foreign income account.
| Tax account | What it holds | Refund on a dividend |
|---|---|---|
| Final tax account | Profits taxed at a final rate, those under the 15% election included | None, and no further tax |
| Immovable property account | Taxed profits the rules on tax accounts place there | None |
| Foreign income account | Income from investments outside Malta and the profit of a branch abroad | 6/7, 5/7, 2/3 or all of it |
| Maltese taxed account | Every other taxed profit, most trading profit included | 6/7 or 5/7 |
| Untaxed account | Profits that bore no Malta tax | None |
Profits go to the final tax account first and to the immovable property account next, and a dividend comes out of the immovable property account before the Maltese taxed account (article 68(3)). The dividend certificate names the account behind each euro paid out.
Malta tax refund rates: 6/7, 5/7, 2/3 and the full refund
Each line gives the refund under article 48 of the Income Tax Management Act and the Malta tax left on €100 of profit taxed at 35%.
| Profit behind the dividend | Refund | Malta tax left on €100 |
|---|---|---|
| Trading profit | 6/7: €30 | €5 |
| Passive interest or royalties | 5/7: €25 | €10 |
| Foreign income relieved from double taxation | 2/3 of the Malta tax, counted with the relief | A third of the tax, or less |
| Income from a participating holding that passes the tests below, and gains on its sale | All of it | €0 |
Passive interest or royalties are interest or royalties that do not come from a trade or business and bore foreign tax below 5%. Interest and royalties earned in the company's trade refund at 6/7.
The 2/3 refund goes to a shareholder resident outside Malta, or to a Malta company wholly owned by such shareholders. Neither may be owned and controlled by persons ordinarily resident and domiciled in Malta, and a shareholder registered for the refund qualifies in every case. No refund exceeds the tax the company paid on the profit.
Malta participation exemption: holding income with no tax to refund
A Malta company may leave the dividends from a participating holding and the gain on its sale out of its chargeable income, under article 12(1)(u) of the Income Tax Act. If it reports the income from a holding outside Malta instead, the shareholder claims all of the Malta tax back under article 48(4)(b). Both routes end at 0% in Malta. We register a holding company with company formation in Malta.
A holding is participating from 5% of the equity shares that carry 5% of any two of the votes, the profits for distribution and the assets on a winding up. Article 2 adds other cases, among them a seat on the board, a right to buy the remaining shares, and €1,164,000 invested and held for 183 days.
For a dividend the company paying it passes one of three tests. It is resident or incorporated in the EU, or it bears foreign tax of at least 15%, or passive interest or royalties make up half of its income or less. Failing all three, it qualifies when the holding is not a portfolio investment and the company or its passive income bore foreign tax of at least 5%. The exemption is lost on a company resident for three months of the year before in a jurisdiction on the EU list of non-cooperative jurisdictions. It stands only if the company has people and functions there to match its activity. A dividend that fails refunds at 5/7.
How the shareholder claims the Malta tax refund, and when it is paid
The shareholder claims after registering with the Commissioner for the purpose, and a person or a company may register. The claim rests on the dividend certificate that the company issues under article 59(5) of the Income Tax Act. It shows the profit distributed from each tax account and the tax paid on it.
- Time to claim: 4 years from the date the tax becomes eligible for refund (article 48(5)).
- Payment: by the 14th day after the refund falls due, which the Commissioner may extend by 12 months for due diligence checks (article 48(8)).
- Tax on the refund: none in Malta (article 48(6)).
- A claim without the right to it: a penalty equal to the refund, repayment and additional tax of 7% a month (article 48(10)).
The cost of the refund system is cash. The company pays the 35% with its return, due 9 months after its year end, and the 30 points come back to the shareholder only after the dividend and the claim.
We do this for you Accounting services in Malta books, returns and the refund claim
The 15% final tax: what the regulations of 2025 say
The Final Income Tax Without Imputation Regulations, Legal Notice 188 of 2025, took effect on 2 September 2025 as Subsidiary Legislation 123.217, under article 22B of the Income Tax Act. They let an entity pay 15 cents on every euro of its chargeable income in place of the 35% of article 56(6).
- Who may elect: a company, a body of persons treated as a company, and a trust that applies article 27D(1).
- What is taxed: the whole chargeable income, except dividends from profits outside the final tax account of another Malta company, and income already taxed at a final rate.
- From when: income of the fiscal year before the year of assessment 2025, which for a calendar year is 2024.
- No refund: the 15% is no one's credit or refund, the profits move to the final tax account, and their dividends bear no further Malta tax (article 68(1)(c)).
- Floor: the 15% is never lower than the 35% tax less the refunds all the shareholders could claim on the same profits.
The floor decides where the election saves tax. On trading profit the refund route leaves 5%, so the 15% applies in full. On a profit that carries no refund for any shareholder, the floor is the 35% itself.
How to elect the 15% final tax, the deadline in 2026 and the five-year lock
The Malta Tax and Customs Administration took the election for the year of assessment 2025 on a form, due by 28 November 2025. Its notice of 27 March 2026 moved the election into the income tax return: the company answers its questions there by the online filing deadline. For a year ended on 31 December 2025 that deadline is 27 November 2026.
The election runs from the year of assessment in which it is made. The company may give notice to return only after five years from the start of the first year taxed at 15%. A company that returns stays under the 35% and the refund for at least five years. For a calendar year, an election for the year of assessment 2026 covers the profits of 2025 to 2029.
6/7 refund or 15% final tax: a worked example on €100,000 a year
A Malta company earns €100,000 of trading profit a year, and its owner lives abroad.
| Case | 35% and the 6/7 refund | 15% final tax |
|---|---|---|
| Year 1, all profit paid out | €35,000 paid, €30,000 back: €5,000 stays in Malta, €95,000 reaches the owner | €15,000 paid: €85,000 reaches the owner |
| Year 1, all profit kept | €35,000 paid, nothing back: the company keeps €65,000 | €15,000 paid: the company keeps €85,000 |
| Kept four years, all paid out in year 5 | €175,000 paid, €150,000 back after the dividend: €25,000 stays in Malta | €75,000 paid, nothing back: €75,000 stays in Malta |
Paid out every year, the refund route costs €10,000 a year less. Over five years it leaves €50,000 less in Malta, while the final tax keeps €100,000 more in the company until year 5.
A company that distributes most of what it earns keeps more with the refund, and one that reinvests for years compares the 15%.
Malta tax on €100 of profit, by the share paid out
Per €100 of profit the refund route leaves €35 less the refund rate times €35 times the share paid out; at 6/7, €35 less €30 times the share. The final tax leaves €15 whatever is paid out. The two meet at a share of two-thirds at 6/7, and of 80% at 5/7.
| Share of the year's profit paid out | Refund route at 6/7 | Refund route at 5/7 | 15% final tax |
|---|---|---|---|
| 0% | €35 | €35 | €15 |
| 25% | €27.50 | €28.75 | €15 |
| 50% | €20 | €22.50 | €15 |
| Two-thirds | €15 | €18.33 | €15 |
| 80% | €11 | €15 | €15 |
| 100% | €5 | €10 | €15 |
Tax on profit kept under the refund route comes back with the dividend that later distributes it. Because the lock runs five years, we run the formula on each year of your plan before the election.
We file the return, the dividend certificates and every claim with accounting in Malta. Its VAT is in our guide to Malta VAT.
