15% Tax Rate on Rental Income

An optional 15% flat rate of taxation is available for rental income arising from immovable property rented out for residential and commercial purposes.

Do you Rent Immovable Property?

If you do, then there is the option to tax such income arising from the rental of immovable property at a flat rate of 15%.

For the income arising in 2023, the flat rate applies on rental income arising from both immovable properties that are rented out for residential purposes as well as immovable property which is rented out for commercial purposes. The 15% can be used by both individual taxpayers as well as companies.

How is 15% calculated?

The 15% rate is calculated on the gross income, hence without deducting any expenses.

What do you need to do in order to apply for the 15%?

The 15% tax rate is optional and if you or your company wish to use this reduced rate, you need to fill in and file a prescribed form as provided by the Malta Tax & Customs Administration. In such form, you should include the details about the property being rented out, the gross income received in respect of each property and details about yourself or your company as the taxpayer.  Such form needs to be signed and submitted to the Commissioner for Tax & Customs in original by not later than 30 April 2024.

Should you or your company opt to tax the rental income at 15%, will you or your company be bound to the 15% final tax regime forever?

No. The decision whether the 15% tax rate will be used or not can be taken annually, as is beneficial to you or your company.

How can we help you?

We can help you in assessing if the 15% tax rate is more beneficial as well as providing assistance with the submission of the compliance documentation required. We can also assist you to prepare the annual income tax return as well as to prepare the prescribed form through which you can utilise the 15% tax regime.

Should you require any further assistance or require any further information about the reduced rate of tax, do not hesitate to contact us so that we may assist you.

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