Banks & Finances Malta

Malta has a developed banking system, featuring both local and international banks, many of which provide services to foreign clients.

Bank of Valletta (BOV): One of the largest and oldest banks in Malta, offering a wide range of services for both personal and corporate clients; actively works with foreign clients, providing account opening and lending services; has an extensive network of branches and ATMs across the country, ensuring convenient access to services.

HSBC Bank Malta: An international bank with a presence in Malta, offering a variety of banking products and services; known for its openness to foreign clients, providing account opening and financial management services; offers international banking services, which is convenient for clients with global financial needs.

FIMBank: Specializes in trade finance and provides services to corporate clients; actively works with foreign companies, offering specialized financial solutions; has experience in international markets, making it attractive to foreign entrepreneurs.

Sparkasse Bank Malta: Provides services to both personal and corporate clients, including asset management and custody services; serves foreign clients, offering tailored capital management solutions.

MeDirect Bank: Specializes in investment and savings products for individuals; offers services to foreign clients, including account opening and investment products; provides competitive deposit rates and investment opportunities.

Personal account: Intended for daily financial operations, such as receiving salary, paying bills, and personal savings.

Process of opening a personal account

Personal visit: Most Maltese banks require a physical presence when opening an account. However, some banks allow starting the process online followed by a visit to sign documents.

Required documents

Identification: Valid passport or residence permit card.

Proof of residential address: Proof of registration at the place of residence, rental agreement, or utility bills from the last four months.

Employment confirmation: Document on the company’s letterhead confirming employment.

Taxpayer identification number: If applicable.

Proof of legal source of funds: Documents confirming the source of income.

Using ATMs

Availability: ATMs that accept international cards are widely available in Malta, especially in tourist areas and cities. Major banks like HSBC and Bank of Valletta have an extensive network of ATMs across the country.

Accepted cards: Most ATMs in Malta support Visa and Mastercard systems. However, UnionPay cards may not be accepted at all ATMs, so it is recommended to look for devices with the UnionPay logo or check in advance the possibility of using such cards.

Fees and charges

Bank fees: Cash withdrawals with a foreign card may incur fees both from your bank and the bank that owns the ATM. The fee amount depends on your bank's terms and may include a fixed amount or a percentage of the withdrawn sum.

Exchange rate: When withdrawing euros from a card denominated in another currency, conversion occurs at your bank's rate, which may differ from the market rate.

Withdrawal limits

Bank restrictions: Your bank may set daily or weekly withdrawal limits abroad. It is recommended to find out these restrictions in advance to avoid inconvenience.

ATM limits: Some ATMs in Malta may have their own limits on the maximum amount of one-time withdrawal.

Recommendations

Choosing an ATM: To minimize fees, it is recommended to use ATMs of major banks such as HSBC or BOV, as they may offer more favorable terms. Avoid ATMs located in tourist places or hotels as they often charge higher fees.

Preference for Local Currency: When withdrawing cash, choose the option to receive funds in the local currency (euro) to avoid additional conversion fees.

Bank Notification: Before traveling to Malta, it is advisable to notify your bank about the planned use of your card abroad to avoid potential transaction blocks due to suspected fraud.

Checking Fees: Check with your bank about the fees for cash withdrawals abroad and the conditions for currency conversion.

Bank Transfers (SWIFT)

Description: A traditional method of transferring funds between bank accounts in different countries via the SWIFT system.

Advantages:

High reliability and transaction security.

Ability to send large sums.

Disadvantages:

High transfer fees that may be charged by both the sending and receiving banks.

Long processing time – from several days to a week.

Online Money Transfer Services

Wise: Provides international transfers with low fees and real exchange rates. Supports over 50 currencies and allows sending money to more than 80 countries.

TransferGo: Focuses on fast and inexpensive transfers, offering fixed fees and competitive exchange rates. Available in several countries and supports transfers in various currencies.

Revolut: A mobile app that allows making international transfers with minimal fees. Offers multi-currency accounts and favorable exchange rates.

Advantages:

Fast transfer processing — from a few minutes to one business day.

Lower fees compared to traditional bank transfers.

Transparent exchange rates without hidden markups.

Disadvantages:

Not all services are available for sending funds to certain countries due to sanctions and regulatory restrictions.

Registration and identity verification are required, which may take additional time.

International Payment Systems

Western Union and MoneyGram: Allow sending money in cash or from a bank account, with the ability to receive funds in cash at service points around the world.

Advantages:

Wide network of service points, convenient for recipients without a bank account.

Possibility of quick receipt of funds – sometimes within a few minutes.

Disadvantages:

High fees, especially when sending small amounts.

Less favorable exchange rates compared to online services.

Cryptocurrency Transfers

Description: Using cryptocurrencies such as Bitcoin or Ethereum to transfer funds between countries.

Advantages:

Fast transactions regardless of geographical location.

Low fees compared to traditional methods.

Disadvantages:

High volatility of cryptocurrencies can lead to changes in transfer value.

Need for knowledge and understanding of working with cryptocurrencies.

Regulatory restrictions in some countries.

Foreign nationals in Malta have the opportunity to obtain loans and mortgages, but the conditions and availability of such services depend on several factors.

Mortgages for Foreigners

Availability: Maltese banks provide mortgages to foreign nationals, including non-residents. However, conditions may vary depending on the applicant's status and the type of property being acquired.

Conditions:

Loan amount: Typically up to 70% of the property's value being purchased.

Interest rates: Mortgage rates in Malta are relatively low – up to 4.75% per annum.

Loan term: Up to 40 years, allowing to reduce monthly payments and lessen the borrower's financial burden.

Down payment: The minimum deposit is about 30% of the property value.

Borrower's Requirements:

Creditworthiness: Banks assess the applicant's financial condition, including income and credit history.

Documents: Passport, proof of income, property purchase documents, and others, depending on the specific bank's requirements.

Consumer Loans for Foreigners

Availability: Foreign nationals can apply for consumer loans, but banks have strict requirements for borrowers.

Conditions:

Loan Amount: Depends on the applicant's income and creditworthiness.

Interest Rates: Vary depending on the bank and loan product.

Loan Term: Usually up to 5–7 years.

Borrower Requirements:

Residency Permit: Possession of a valid residency permit in Malta.

Employment: Permanent job in Malta with verified income.

Credit History: A positive credit history with international or local credit bureaus.

Recommendations

Before applying for a loan or mortgage, it is recommended to consult with financial advisors or lawyers specializing in working with foreign nationals in Malta.

Malta has strict restrictions on the use of cash for large purchases, such as real estate or cars. According to the law, the maximum amount of cash payment is limited to €10,000. Exceeding this limit results in fines of at least 40% of the amount exceeding the established limit.

Payment for Large Purchases

Cashless Payment: For purchasing real estate, vehicles, and other expensive items, it is recommended to use bank transfers or other cashless payment methods. This ensures transaction transparency and complies with anti-money laundering regulations.

Bank Transfers: The most common way to pay for large purchases in Malta. Bank transfers allow the tracking of funds' origin and confirm the transaction's legality.

Recommendations

Consultation with Professionals: Before making a large purchase, it is recommended to consult with lawyers or financial advisors familiar with local legislation to ensure compliance with all legal norms.

Document Preparation: Ensure that all necessary documents confirming the source of funds and legality of the transaction are prepared and submitted to the relevant authorities.

Bank Deposits

Savings Accounts: Local banks such as Bank of Valletta and HSBC Malta offer savings accounts with fixed and floating interest rates. However, the average deposit rates in Malta are less than 1% per annum, which may be below the inflation rate.

Deposit Certificates: Some banks provide deposit certificates with fixed terms and interest rates, allowing for planned income from savings.

Investment Funds

Alternative Investment Funds: As of June 2022, Malta had 483 licensed investment funds with a total net asset value of €21.2 billion. The largest share accounts for AIF – 70.5%. With the introduction of notified alternative investment funds that expedite fund creation, this rate continues to grow.

Mutual Funds: These funds are regulated by EU directives and offer investors the opportunity to invest in diversified portfolios of stocks and bonds.

Stocks and Bonds

Malta Stock Exchange: The MSE offers stocks from local and international companies as well as government and corporate bonds. Investors can acquire securities directly or through brokerage firms.

Government Bonds: The Government of Malta periodically issues bonds with various maturities and interest rates, providing investors with a reliable tool for saving funds.

Real Estate

Real Estate Investments: Buying real estate in Malta is a popular way to preserve and increase capital. The real estate market shows steady growth, and acquiring properties in tourist areas can provide additional rental income.

Investment Citizenship Programs

Citizenship by Investment: Malta offers a citizenship program through investments, requiring significant contributions to the country’s economy, including real estate purchase and a contribution to the National Development Fund.

Recommendations for Investors:

Before making investment decisions, it is recommended to consult with licensed financial advisors familiar with the local market and legislation.

The tax obligations of foreign citizens in Malta depend on their tax status - resident or non-resident, and on the source and nature of the income received.

Tax Status

Tax Resident: A person residing in Malta for more than 183 days a year or having their center of vital interests in the country. Tax residents are taxed on income earned in Malta as well as on foreign income remitted to the country. Capital gains from foreign sources, even when transferred to Malta, are not taxed.

Non-Resident: A person residing in Malta for less than 183 days a year. Non-residents are taxed only on income obtained from sources within Malta.

Income Tax

Rates for residents: Progressive tax scale with a maximum rate of 35%. The amount of tax deductions depends on marital status and other factors.

Rates for non-residents: Progressive tax scale with a maximum rate of 35%, applied to income earned in Malta.

Capital Gains Tax

Residents: Taxed on capital gains earned in Malta and from foreign sources if the funds are transferred into the country. Rates vary from 15% to 35%.

Non-residents: Taxed only on capital gains obtained in Malta.

Real Estate Tax

Stamp Duty: When purchasing real estate, a stamp duty of 5% of the property's value is levied.

Value Added Tax (VAT)

Rate: The standard VAT rate in Malta is 18%, which is below the average for the European Union.

Social Contributions

Employees: Required to make contributions to the social security system. The amount depends on the level of income and employment status.

Taxes absent in Malta

Gift and Inheritance Tax: There are no gift and inheritance taxes in Malta.

Property Tax: There is no property tax, except for stamp duty on property transfer.

Double Taxation Avoidance Agreements

Malta has agreements with a number of countries to prevent double taxation, allowing foreign citizens to avoid being taxed twice on the same income.

Recommendations:

Contact tax consultants familiar with Maltese legislation to optimize tax obligations.

Foreign citizens residing or working in Malta are required to comply with local tax requirements, including registration with tax authorities and annual income declaration.

Registration as a Taxpayer

Who needs to register: All foreign citizens earning income in Malta or transferring taxable income into the country from abroad must register as taxpayers.

Registration Process:

- Form Filling: An online "Expatriates Taxpayer Registration Form" must be completed on the portal servizz.gov.mt.

- Providing Documents: A copy of the passport, proof of residence in Malta, and, if necessary, an employment contract or other documents confirming the source of income must be provided.

- Receiving Tax Number: After processing the application, a unique tax number is issued, necessary for further interaction with tax authorities.

Filing a Tax Return:

Who is required to file: All tax residents of Malta are required to file an annual tax return, reflecting all income earned both within the country and abroad if it was remitted to Malta.

Filing Deadlines:

Annual Period: The tax year in Malta coincides with the calendar year and runs from January 1 to December 31.

Deadline: The return must be filed by June 30 of the year following the reporting year.

Ways to File:

Online: Through the official portal of the Maltese tax service cfr.gov.mt.

In Person or by Mail: Completed paper forms can be submitted in person or sent by mail to the appropriate tax office.

Withholding Tax at Source:

Salary: Employers in Malta are required to withhold income tax from employees' salaries and remit it to the tax authorities.

Other Income: Depending on the type of income (e.g., dividends, interest), tax may be withheld at the source or be subject to declaration by the taxpayer themselves.

Tax Rates:

Progressive scale: Income tax rates in Malta range from 0% to 35%, depending on the level of income and marital status.

Compliance Responsibility:

Penalties and Fines: Late filing of a declaration or tax payment can lead to fines and interest charges.

Recommendations:

It is recommended to consult tax advisors familiar with Maltese legislation to properly fulfill all obligations.

Registration and Legal Status

Registration as self-employed: Individuals planning to conduct independent activities must register with the Maltese tax authorities. This requires submitting the appropriate form to the Commissioner for Revenue.

Licensing: Depending on the nature of the services provided, a special license or permit may be required. For example, certain professional fields, such as medicine or law, require appropriate professional accreditation.

Tax Obligations

Income tax: Self-employed individuals are taxed on a progressive scale, similar to employees. Tax rates vary depending on income level and marital status.

Value-added tax: If the annual turnover exceeds the established threshold (currently €30,000 for services), self-employed individuals must register as VAT payers and charge tax on the services provided.

Social Contributions

Contributions to the social security system: Self-employed individuals must pay contributions to National Insurance. The amount of contributions depends on the income level and is set annually.

Accounting and Reporting

Record keeping: Self-employed individuals must keep detailed records of their income and expenses, retaining the relevant documents for potential audits.

Annual reporting: An annual tax return must be filed reflecting all income received and expenses incurred.

Benefits and Support

Tax deductions: Self-employed individuals can take advantage of certain tax deductions, such as expenses for professional training, equipment purchase, and others related to business activities.

Government support programs: The Maltese government periodically offers programs and grants to support small businesses and self-employed individuals, aimed at entrepreneurship development and skill enhancement.

Recommendations

Before starting activities, it is recommended to consult tax advisors or lawyers specializing in local legislation to ensure compliance with all requirements.