Guide, not advice
Dividend tax in Malta: who can claim the corporate tax refund
Updated
The fractions are the easy part. Eligibility turns on who holds the shares, whether they are registered, what the dividend certificate says, and whether the claim is in on time.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- The company rate is 35 cents on every euro of chargeable income for every company and body corporate, article 56(6) of the Income Tax Act (Cap. 123). There is no reduced Maltese company rate; the relief is entirely at shareholder level.
- The refund fractions are those in article 48(4) and 48(4A) of the Income Tax Management Act (Cap. 372). Six-sevenths of the Advance Company Income Tax applies on a dividend from the Maltese taxed account or the foreign income account.
- Five-sevenths where the profits are passive interest or royalties, or dividends from a participating holding that fails the article 12(1)(u) conditions. Two-thirds of the Malta tax where the dividend comes from the foreign income account and the company claimed relief of double taxation. A full refund where foreign income account profits derive from a participating holding or its disposal.
- The calculator applies the fraction to the tax pertaining to the profits actually distributed. Retained profits generate no refund until they are distributed, which is why the distribution percentage changes the answer.
- A statutory cap applies in both sub-articles: the refund shall in no case exceed the amount of tax actually paid by the company to the Commissioner on the distributed profits. Where double taxation relief reduced the tax paid, this tool's two-thirds figure can overstate the entitlement. Treat the 2/3rds line as an upper bound; have it computed on real numbers.
- The refund is a shareholder entitlement, claimable only by a person registered for the purpose in the prescribed manner. The Commissioner pays it not later than the fourteenth day after it becomes due. That can be extended by twelve months where further due diligence verification is required (article 48(8)).
- Not modelled: the company's own tax computation, allocation of profits between the five tax accounts, and tax accounted for under the investment income provisions. Nor the tax the shareholder pays in their own country of residence, or the EU global minimum tax for large groups. This tool computes a statutory fraction; not whether you qualify for it.
How dividend tax works in Malta
Malta taxes the company, not the dividend a second time. The Malta Tax and Customs Administration states that Maltese companies are subject to corporate tax at 35% on their worldwide income and capital gains.
When companies are taxed at that standard rate, shareholders are entitled on the distribution of dividends to a refund of part or all of the tax the company paid. It calls this an imputation system to eliminate double taxation on the distribution, so company profits are only taxed at corporate level.
What a dividend finally costs a shareholder therefore turns on the refund below, and on the tax of the country where the shareholder lives.
Who can claim the Malta corporate tax refund
- Under article 48(4A), a person in receipt of a dividend from a company registered in Malta paid from the Maltese taxed account or the foreign income account, provided that person is registered for the purpose in the prescribed manner. Registration is a precondition, not a formality that follows the claim.
- Under article 48(4), a person receiving a dividend from foreign income account profits who is either not resident in Malta and not owned, controlled by or acting on behalf of a person ordinarily resident and domiciled in Malta, or a company resident in Malta wholly owned by such non-residents. Those conditions do not apply to a recipient shareholder registered for the purposes of article 48(4) or 48(4A).
- For the full refund on a participating holding, article 48(4)(b) adds anti-abuse conditions on the underlying body of persons: EU residence or incorporation, or foreign tax of at least 15%, or not more than 50% of income from passive interest or royalties. Failing all three, the holding must not be a portfolio investment and the passive income must have borne foreign tax of at least 5%.
The paperwork that has to exist first
- Shareholder registration in the manner prescribed, before the claim.
- An actual dividend, paid out of an account that supports a refund.
- A dividend certificate under article 59(5) of the Income Tax Act, showing the profits distributed, the tax paid, the net dividend, and where double taxation relief has affected the tax, the net Malta rate.
- The claim itself, made not later than four years from the date from which the amount of tax is eligible for refund, under article 48(5).
When the money arrives
Article 48(8) makes a refund a debt due by the Commissioner, payable not later than the fourteenth day after it becomes due. That period can be extended by a further twelve months where the Commissioner needs further verifications for due diligence purposes. Stress-test any cash-flow model that assumes a fortnight against the twelve months.
The downside risks the Act spells out
- Claiming when not entitled: a penalty equal to the amount of the refund claimed, plus repayment of anything actually paid with additional tax of 7% per month or part of a month (article 48(10)).
- Receiving a refund not due: repayment within thirty days, with interest under article 44 if late (article 48(9)).
- Double relief blocked: once a claim is made on a parcel of distributed profits, no further refund is available on the same profits under any provision of the Income Tax Acts (article 48(7)(a)), and the tax deducted from the dividend can be set off only against the tax charged on that dividend (article 48(7)(b)).
The question this site cannot answer
None of the above tells you what happens where the shareholder is resident. Controlled foreign company rules, dividend taxation, tests of where a company is effectively managed and, for large groups, the EU global minimum tax sit outside the Maltese Acts. They frequently change the overall outcome. Two jurisdictions need advice, not one.
Looking for an individual's income tax refund or a duty refund on property rather than the shareholder refund? The Malta tax rebate guide sets out which refund is which and when each is paid.
Every figure and rule on this page is taken from the Income Tax Act and the Income Tax Management Act as published on legislation.mt at the updated date above. Confirm the current position with the Malta Tax and Customs Administration and a licensed practitioner before acting.