A Maltese company that holds listed shares, ETFs and cash can bring foreign portfolio income down to about 5% net Malta tax, but only once it distributes its profits and the shareholder claims a refund. Gains on listed shares are exempt only when they’re capital in nature, so active dealing risks turning them into trading income. Whatever the shareholder receives is then taxed in the country where the shareholder lives.
How the Refund Works for Portfolio Income
Company tax in Malta is a flat 35%, according to PwC’s tax summary (reviewed 30 September 2026), and the company pays it up front. Malta uses full imputation, so a dividend carries a credit for the tax the company paid. The headline mechanics are in the guide to Malta’s 5% effective corporate tax rate. For a company that invests, the low rate comes entirely from the refund.
The shareholder claims that refund after the company distributes the profits and pays its tax. Per Forvis Mazars, refunds are paid within 14 days of the company’s tax payment once a valid claim is lodged, the company has settled its tax and its returns are filed. The rate depends on the type of income:
| Income type | Refund | Net Malta tax |
|---|---|---|
| Taxed business profits or foreign passive income, such as dividends from shares | 6/7 of the tax paid | About 5% |
| Taxed passive interest and royalties | 5/7 of the tax paid | About 10% |
| Foreign passive income where double-tax relief was claimed | 2/3 of the tax paid | Depends on the foreign tax credited |
| Income from a participating holding, as an alternative to the exemption | Full refund | Nil |
| Profits kept in the company | None | 35% |
A worked example
Take 100 of foreign dividend with no foreign withholding tax. The company pays 35 in Malta tax. When it distributes the profit, the shareholder claims 6/7 of that 35, which is 30, and net Malta tax is 5. The UK, for instance, withholds nothing on ordinary dividends, so there’s no foreign tax for Malta to credit or improve on.
The 6/7 rate covers foreign passive income as well as trading profits, so a company that only holds a portfolio can use it. The refund carries no domicile condition. Domicile governs how an individual’s foreign income is taxed under the remittance basis, which is a separate question from the company refund. The Mazars page sets no residence or domicile condition for any of the refunds.
The optional 15% regime
Since September 2025 a company can opt into FITWI, a final 15% tax without imputation that binds it for at least five years. A company that pays out its profits and claims refunds reaches about 5% through the 6/7 route, which is lower than 15%.
Dividends, Gains and the Trading Line
Dividends and the participation exemption
Dividends from foreign listed shares are foreign passive income and sit in the 6/7 row. The participation exemption can remove tax on dividends and gains from a qualifying holding. It needs a minimum percentage holding (sources differ between 5% and 10%, plus other tests) or a position of about EUR 1,164,000 held for 183 days or more, and anti-abuse conditions apply. A small listed portfolio won’t meet it, so the 35% and 6/7 route is the working assumption.
Gains on listed shares
Gains on shares listed on the Malta Stock Exchange are exempt, and PwC Malta notes that the exemption now also reaches shares on a foreign exchange recognized by the Commissioner for Revenue. Both versions carry the same condition: the gain has to be capital in nature. Gains from a trading activity in shares remain subject to income tax.
Capital or trading
The badges of trade decide whether a sale is capital or trading, and frequency of dealing is one of them, as a Malta Institute of Taxation lecture sets out. No published threshold sets how many trades count as safe. A company that buys and holds for years has the stronger case for capital treatment. One that turns its positions over repeatedly invites the trading label.
If a gain counts as trading income, it’s taxed at 35% and the 6/7 refund applies on distribution. That lands at the same 5% as a dividend, but through the refund process rather than as an exemption, and only after the cash is paid out. A capital gain under the exemption carries no Malta tax at all.
Fund units
Fund units are exempt only if the fund is a prescribed fund listed on a recognized exchange. Whether Irish UCITS ETFs qualify isn’t confirmed in the public guidance, so check each fund before relying on the exemption.
What the Shareholder Pays
The refund rules are identical for every shareholder. Where the shareholder lives decides what the payout finally costs.
Non-resident shareholder
A non-resident shareholder isn’t taxed in Malta on the dividend, so the refund is the main benefit. The dividend is then taxed in the country where the shareholder lives, under that country’s rules and rates. Malta’s 5% is the first layer and the home-country tax is the second.
Malta withholding on dividends to non-residents and Malta’s treaty network aren’t covered here, so check both against the shareholder’s own country.
Malta-resident shareholder
A Malta-resident individual is taxed on the gross dividend at personal rates from 0% to 35%, with a credit for the company’s tax. The credit means they never owe extra, and they get a refund only if their marginal rate is below 35%. The guide to moving to Malta covers the personal side of relocating.
Rules in the shareholder’s country
Controlled-foreign-company and passive-holding rules may apply in the shareholder’s country. A shareholder who lives outside Malta needs to check those rules before treating the Maltese result as the final one. The comparison of European tax structures sets Malta beside the alternatives.
When the 5% Falls Short
Retained profits
The refund follows a distribution, so profits the company keeps stay taxed at 35% with nothing refunded. A company that reinvests everything never reaches the 5%. Budget 2027, announced on 26 October 2026 and summarized by KPMG, proposes a 25% rate on retained or reinvested profits for companies with turnover up to EUR 1m. Distributed profits stay at 35%. It’s an announcement only, and scope and timing depend on the implementing rules.
Active dealing
Frequent trading puts the exemption on gains at risk. The gain then falls into the 35% and 6/7 route, so the tax is paid up front and comes back only once the company distributes. A company that wants the exemption has to deal like an investor.
No substance
The company has to be tax resident in Malta, meaning incorporated there or managed and controlled from there, and it needs real substance. Paper companies don’t qualify for the 5%.
Accountant check: the primary statute text isn’t in the public summaries behind these figures, so have a Maltese accountant confirm the treatment of your own income against current law before relying on any of it.
The Bottom Line
A Maltese holding company can turn 35% company tax into about 5% net on foreign portfolio income, provided it distributes profits and the shareholder claims the 6/7 refund. Gains on listed shares are exempt only while they stay capital in nature, so frequent dealing puts the exemption at risk. The payout is then taxed where the shareholder lives.
Frequently Asked Questions
Does the 6/7 refund apply to dividends from shares?
Yes. Portfolio dividends are foreign passive income, so once the company has paid 35% and distributes the profit, the shareholder claims 6/7 of that tax back. With no foreign withholding tax, net Malta tax is about 5%.
Are gains on listed shares tax-free in a Maltese company?
Gains on shares listed on the Malta Stock Exchange, or on a foreign exchange recognized by the Commissioner for Revenue, are exempt when they’re capital in nature. Gains from a trading activity are taxed at 35%, with the 6/7 refund on distribution. Fund units are exempt only for a prescribed fund listed on a recognized exchange.
Does the refund depend on where I live?
The refund rules are the same for residents and non-residents, and domicile plays no part. Where you live decides what you pay on the dividend you receive. A non-resident isn’t taxed in Malta on it and pays tax in the country where they live, while a Malta-resident individual is taxed at personal rates with a credit for the company’s tax.
Related
Leave a Reply