Malta: Personal Income Tax Returns 2015

Last Updated: 7 June 2016
Article by ECOVIS Malta

The Inland Revenue Department is currently sending out the tax returns for basis year 2015 to individuals' resident in Malta. The tax return must be submitted together with payment by 30th June 2016 in order to avoid fines and penalties. A number of areas of interest have been highlighted hereunder:

  • Employment income is to be declared even though tax would have been deducted by the employer. The gross amount and tax deducted must match the FS3 details provided by the employer.
  • Business income and expenditure must be recorded on the provided profit and loss account. The net profit is to be declared in the tax return.
  • Pensions are to be declared and added to any other earned income in arriving at the tax due for the year.
  • Income earned outside Malta must be declared and the taxpayer has the option to deduct tax at a flat rate of 15%.
  • Local interest is to be declared in the case that no withholding tax has been applied.
  • Local dividends, with tax deducted at source may be still included in the tax return as this could result in a refund of tax in certain instances. In cases of taxpayers with other income totalling less than €19,500 [when opting for single rates], €21,200 [when opting for parent rates] and €28,700 [when opting for married rates], dividends may be included up to said amounts and a refund will be given on the additional tax suffered at source.
  • Rental income is to be declared either in the tax return or in form TA24. Rental income declared in the tax return will be added [less the applicable deductions] to any other income earned by the taxpayer and taxed at the set progressive rates, whereas rental income declared in Form TA24 will be taxed at 15% on the Gross Rent Received.
  • A number of deductions are allowed in order to reduce the taxable income of the taxpayer. These include private schools' children fees, facilitator fees, child-care fees, approved sport-related activities fees, elderly people's home fees, tertiary education fees, creative and cultural course fees and school transport fees. These must all be approved fees.
  • Women returning to work are granted a tax credit as long as a number of criteria are satisfied. Such credit can amount to up to €5,000 depending on a case by case basis.
  • Married women returning to work, given that they had been absent from work for at least 5 years, are over 40 years old and such income does not exceed €9,200 shall be exempt from tax for a period of 5 years and not added to the husband's income when computing the tax payable.
  • Taxpayers established in a field of excellence who have returned to Malta after an absence of 10 consecutive years having an eligible contract of employment may be taxed at 15% provided that their remuneration exceeds €75,000.
  • Expatriates holding a qualifying contract of employment in specified senior employment positions with companies licensed by the MFSA, MGA and TM may have their income taxed at a flat rate of 15%, provided that such income is more than €81,457. In the case of incomes exceeding €5 Million, the excess is exempt from tax.
  • Tax credits granted to the taxpayer on one of the various available schemes may be deducted against tax due if applicable. In the case of the Micro Tax Credit, such credit may amount to a maximum of €30,000 or €50,000 and must be in possession of the certificate awarded by Malta Enterprise.
  • Taxpayers investing in a personal retirement scheme or long term insurance policies may claim a tax credit equivalent to the lower of, 15% of the contributions made or €300.
  • In the case of income which suffered foreign tax, there is the option to deduct the credit for the double taxation relief. In certain cases, only part of the foreign tax incurred would be deducted depending on whether the average tax rate on the foreign income is higher than the average Malta tax on the total income.
  • Income from part time work may be taxed at a flat rate of 15%. The maximum capping for this type of income is €10,000 in the case of part time employment and €12,000 in the case of part time self-employment. Income falling within these categories must not be declared in the income tax return. Income from part time self-employment income must be declared on form TA22 and filed with the Inland Revenue department by 30th June 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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