Tax Guide

Malta Self-Employed Tax Guide 2025

The Tax Compass Team

July 17, 2025

12 min read

Introduction

Being self-employed in Malta comes with specific tax obligations that can seem overwhelming at first. Whether you're a freelancer, consultant, or running your own business, understanding Malta's tax system is crucial for compliance and financial planning. This comprehensive guide covers everything you need to know about Malta's self-employed tax requirements for 2025.

Who is Considered Self-Employed in Malta?

According to Malta's tax legislation, you are considered self-employed if you carry on an economic activity. An economic activity includes:

• Any trade or business
• Any profession or vocation and the provision of personal services
• The exploitation of tangible or intangible property for obtaining income on a continuing basis
• The provision by a club, association or organisation of facilities or advantages to members for consideration
• The admission of persons to any premises for consideration

Malta Income Tax Rates for 2025

Malta operates a progressive tax system. The rates vary based on your filing status: Single, Married, or Parent. The table below shows the Single rates for 2025:

Social Security Contributions (Class 2)

Self-employed individuals in Malta must pay Class 2 Social Security contributions. The rate is 15% of your annual net income from the previous year.

For 2025, contributions are capped at a maximum annual income of €28,303.35 (for those born from 1st Jan 1962 onwards). This means the maximum annual Social Security contribution is €4,245.50. If your income exceeds this ceiling, you still only pay contributions on the maximum amount.

VAT Registration Requirements

VAT registration becomes mandatory when your annual turnover exceeds certain thresholds. For 2025, the main thresholds are:

• €35,000 - the domestic threshold for supplies made within Malta (for persons established in Malta)
• €30,000 for economic threshold for distance sales in certain circumstances
• €10,000 for intra-Community acquisitions (acquisitions threshold)

You can also register under article 11 (exemption for small enterprises) if your domestic annual turnover is below €35,000. This means you don't charge VAT but also cannot claim it back on your expenses.

Benefits of VAT Registration:

• Ability to reclaim VAT on business expenses
• Enhanced credibility with business clients
• Compliance with client requirements (many businesses prefer VAT-registered suppliers)

VAT Rates in Malta:

• Standard Rate: 18%
• Reduced Rate: 12% (e.g., hiring of pleasure boats)
• Reduced Rate: 7% (e.g., use of sporting facilities, accommodation)
• Reduced Rate: 5% (e.g., electricity, confectionery, printed matter)
• Zero Rate: 0% (e.g., exports, food for human consumption, pharmaceutical goods)

Key Tax Filings

VAT Returns

For persons registered under article 10, VAT returns must be submitted quarterly by the 15th day of the second month following the end of the tax period. The return includes:

• Output tax for the period
• Input tax credits claimed
• Net VAT payable or refundable
• Supporting declarations and particulars

Income Tax and Social Security Payments

You must make advance payments for your income tax and social security liabilities for the current year. These are due in three installments: April 30th, August 31st, and December 15th.

Allowable Business Expenses

As a self-employed individual, you can deduct legitimate business expenses from your taxable income:

• Office rent and utilities
• Professional equipment and software
• Marketing and advertising costs
• Professional development and training
• Business insurance
• Travel expenses for business purposes
• Professional fees (accounting, legal)
• Telecommunications expenses

Key Deadlines for 2025

Penalties for Non-Compliance

The Malta Tax and Customs Administration imposes penalties for late submissions and non-compliance:

• Late VAT Returns: Administrative penalty ranging from €20 minimum to varying amounts based on tax due
• Late Payments: Interest at 0.6% per month on unpaid tax
• Incorrect Returns: 20% penalty on understated output tax or overstated deductions (10% if corrected voluntarily)
• Late Registration: Penalties based on the tax due for the first period

Tips for Self-Employed Tax Management

Conclusion

Understanding Malta's self-employed tax obligations is crucial for compliance and financial success. While the system may seem complex, proper planning and record-keeping can make tax management straightforward. Consider using tax management software like TaxPlanner to automate calculations, track deadlines, and ensure compliance with Commissioner requirements.