Rental Income Tax in Malta 2026: The 15% Flat Rate Versus Progressive Rates

By the EGM Assurance Editorial Team · Last reviewed August 2026 · 15 min read

A person or company that lets immovable property in Malta has a genuine choice about how the rental income is taxed. The income can be taxed at a flat final rate of 15% on the gross rent, using Form TA24, or it can be declared in the annual tax return and taxed at the ordinary rates, being the progressive rates for individuals or the standard rate for companies, after allowable deductions. The 15% option is simple and predictable; the ordinary route allows deductions and can produce a lower bill where costs are high. The right answer depends on the numbers, and, helpfully, the choice is made afresh each year.

This guide explains both routes for directors, landlords and property owners. It covers how the 15% final tax under Article 31D of the Income Tax Act works and what it is charged on, how the ordinary route works and which deductions are allowed, and the conditions and exclusions that apply, including the important related-party exclusion. It also sets out the position for companies and non-residents, the filing mechanics and deadline, and worked examples comparing the two. One feature is worth holding onto throughout: the election is annual, and it applies to all your property in that year. It reflects the position in Malta as at August 2026, drawing on the Income Tax Act (Cap. 123), the relevant subsidiary legislation, and the guidance of the Malta Tax and Customs Administration.

One clarification at the outset, because it is the single most common misunderstanding: the 15% is charged on gross rent with no deductions, while the progressive route is charged on net income after deductions. Comparing 15% of gross against a marginal rate applied to net is the whole exercise, and the better option is often not the one landlords assume.

1. The two ways rental income is taxed

Maltese tax law gives a lessor two alternative bases for taxing rental income from immovable property situated in Malta:

• The 15% final withholding tax under Article 31D. The lessor pays 15% on the gross rental income for the year, using Form TA24. The tax is final: it is not declared in the annual income tax return, and no set-off or refund applies. No deductions are allowed, so the 15% is charged on the full rent received before any expenses.

• The ordinary route. The lessor declares the rental income in the annual tax return, deducts the allowable expenses, and is taxed on the net figure at the ordinary rates. For an individual these are the progressive rates up to 35%; for a company the standard rate applies. Deductions are allowed under this route, which is its main advantage.

Both routes are open to individuals and to companies, and to residents and non-residents alike. The choice between them is the subject of the rest of this guide, but the essential trade-off is straightforward: a low flat rate on a larger base (gross rent), against a higher rate on a smaller base (net income after deductions).

The comparison is always 15% of gross rent versus your marginal rate applied to net rent after deductions. For a landlord with a large mortgage and high allowable costs, the net figure can be much smaller than the gross, and the ordinary route can win despite the higher rate. For a landlord with a fully owned property and few costs, the gross and net figures are close, and the flat 15% usually wins on both tax and simplicity. Run the numbers before choosing.

2. The 15% final tax under Article 31D

The flat rate is imposed by Article 31D of the Income Tax Act. It allows a person in receipt of rental income to opt to pay tax at 15% on the gross amount of the rent, as a final tax.

What it applies to

The 15% rate applies to rental income from residential property (from basis year 2014) and from commercial property (from basis year 2017). Rent for these purposes includes ground rent. The rate is available whether the lessor is an individual or a company, and whether resident or non-resident in Malta. It does not, however, apply to rent from related parties, which is addressed in Section 4.

Charged on gross, and final

The defining features of the Article 31D route are that the 15% is charged on the gross rental income, with no deductions, and that it is a final tax. Being final means the income is not included in the annual tax return, the 15% cannot be set off against other tax or refunded, and it cannot later be reclaimed by switching to the ordinary route for that year. If a loss arises, it is not available for relief. The trade-off for this simplicity is that the tax is calculated on the full rent, so mortgage interest, repairs, agency fees and other costs give no relief under this route.

How companies allocate the income

The 15% applies to companies as well as individuals. Where a company resident in Malta pays the 15% final tax on rental income, it must allocate the distributable profits resulting from that income, after the 15% has been paid, to its final tax account under Malta’s tax accounting system. This is an accounting allocation the company’s accountant handles; it does not change the 15% charge itself, but it matters for how those profits are treated on a later distribution.

Because the 15% is final and charged on gross rent, it cannot be undone for the year once chosen, and it gives no credit for expenses. A landlord who pays 15% under TA24 and later realises the ordinary route would have been cheaper cannot reclaim the difference for that year. This is why the comparison needs to be made before filing, not after.

3. The ordinary route: progressive rates and deductions

If the lessor does not opt for the 15% final tax, the rental income is declared in the annual income tax return and taxed at the ordinary rates on the net income after allowable deductions. For an individual this means the progressive rates (up to 35%, depending on total income and status); for a company it means the standard rate.

Allowable deductions

Where the ordinary route is used for passive rental income, the deductions are specific and limited. A landlord may deduct:

• Interest on loans taken to acquire or improve the property, provided the interest relates to the property producing the income.

• Ground rent, rent, and similar burdens payable on the property.

• Licence fees payable under the Malta Travel and Tourism Services Act framework (the Guest Houses and Holiday Furnished Premises licensing regime), where applicable.

• A maintenance allowance equal to 20% of the rental income remaining after deducting the ground rent, rent and licence fees above. This 20% allowance is intended to cover all other expenses, such as repairs, insurance and management, so those actual costs are not separately deductible on top of it.

The structure matters: the 20% maintenance allowance is calculated on the net figure after the ground rent and licence-fee deductions, not on the gross rent, and it stands in place of claiming actual repair and running costs. It is not available against income from emphyteusis, nor against ground rents received. Each property is treated as a separate source, so deductions for one property cannot exceed the income of that property or be transferred to another. Where deductions exceed the rent from a property the result is treated as nil income: the loss cannot be set against another property, against other income, or carried forward.

When the ordinary route tends to win

The ordinary route becomes attractive when deductions are large relative to the rent, most commonly where there is significant loan interest on the property. A highly geared, recently financed property can produce a net figure well below the gross rent, and the marginal rate applied to that smaller base can come out below 15% of the gross. Conversely, for an unencumbered property with only the 20% allowance to claim, the net figure stays close to gross, and the flat 15% usually remains both cheaper and simpler.

The 20% maintenance allowance replaces actual expense claims; you cannot take the 20% and also deduct repairs, insurance or management fees. The genuinely large deduction in most cases is loan interest. As a rough rule of thumb, the ordinary route is worth modelling when interest and ground rent together are substantial relative to the rent; where the only real deduction is the 20% allowance, 15% of gross is usually the better and simpler outcome.

4. The related-party exclusion and other conditions

The 15% option is not available in every case. The main restriction, and the one directors most often overlook, is the related-party exclusion.

Related-party rent does not qualify

Rent received from a related party does not qualify for the 15% final tax. For this purpose, a body of persons is related to an individual if it is owned or controlled, directly or indirectly, as to more than twenty-five percent by that individual, and two bodies of persons are related if they are owned or controlled, directly or indirectly, as to more than twenty-five percent by the same persons. In practical terms, if you let property to a company you own or control above that threshold, or between companies under common control, the 15% route is closed and the rent must be declared under the ordinary route.

Why the exclusion exists

The exclusion prevents the 15% flat rate being used to move profit around a group or between connected persons at a preferential rate. For a director who both owns property personally and controls a trading company that occupies it, this is a live issue: rent charged by the individual to their own company will usually be related-party rent, taxed under the ordinary route rather than at 15%. The arrangement can still be perfectly proper, but the tax basis is the ordinary one.

Short lets and the tourism licence

The 15% long-let regime is distinct from short-term tourist accommodation. Where a property is let as licensed tourist accommodation under the Malta Travel and Tourism Services Act, the income is generally treated as trading income and taxed under the ordinary rules for a trade, with its own deduction profile, rather than as passive rental income under Article 31D. Short-term tourist lets also carry VAT consequences that ordinary residential letting does not. Directors operating holiday lets should treat that as a separate analysis from the long-let 15% regime described here.

The related-party exclusion is the trap most likely to catch a director. If you own property personally and lease it to your own company, or lease between companies you control, that rent generally cannot use the 15% route and must be declared under the ordinary route. Check the ownership and control position before assuming the flat rate is available.

5. Choosing between 15% and progressive each year

Two features of the election are important and frequently misunderstood.

Made afresh each year

The choice between the 15% final tax and the ordinary route is made annually. A landlord may use the 15% route one year and the ordinary route the next, according to which is better for that year’s figures. There is no lock-in: opting for 15% in one year does not bind the landlord to it in future years. This is genuinely useful, because it lets a landlord respond to changing circumstances, such as a year with heavy interest or major deductible costs.

All or nothing within the year

Within a given year, however, the choice is all or nothing. If the 15% option is exercised, it applies to the total rental income received in that year from all the tenements let out by that person that qualify for the rate. A landlord cannot put one property on the 15% route and another on the ordinary route in the same year. The comparison therefore has to be made across the whole qualifying portfolio for the year, not property by property.

Plan the choice at portfolio level, once a year. Because the 15% election covers all your qualifying properties for that year and cannot be mixed with the ordinary route, the right analysis aggregates the position across every property before deciding. A single heavily geared property can tip the whole portfolio toward the ordinary route, or not, depending on the totals.

6. Filing, payment and the TA24 deadline

The 15% final tax is paid using Form TA24. The form, together with the payment, must be submitted by not later than 30 April of the year following the year in which the rent was received. For rent received during 2025, for example, the TA24 and payment are due by 30 April 2026. TA24 can be completed and paid through the Malta Tax and Customs Administration’s online services.

If the ordinary route is used instead, the rental income is not on TA24 but is declared in the annual income tax return in the ordinary way, with the allowable deductions claimed there, and is taxed with the rest of the taxpayer’s income under the normal assessment and payment timelines.

Non-declaration

Rental income must be declared under one route or the other. Where rental income is not declared at all and is later established on investigation, the ability to use the 15% final rate for that income is lost. The income is then taxed under the normal rules: at 35% in the case of a company, and at the individual’s progressive rates in the case of an individual, together with interest and additional tax. The practical point for directors is simply that the 15% route is a benefit that has to be claimed correctly and on time; it is not a fallback available after the fact.

The TA24 and the 15% payment are due by 30 April of the following year. If instead you use the ordinary route, the rent goes in your annual return with the deductions claimed there. Either way the income must be declared: the 15% rate is available only if claimed properly, and undeclared rent later found on investigation is charged at 35% on gross with interest and additional tax. Decide the route and file on time.

7. A reduced 5% rate for qualifying long leases

Beyond the standard 15% and the ordinary route, a reduced final rate can apply to certain long residential leases registered under a Housing Authority scheme. Under Article 31E of the Income Tax Act, property rented to the same person for a period in excess of seven years on a continuous basis, under a scheme administered by the Housing Authority and registered as such, may benefit from a reduced final withholding rate of 5% on the gross rental income. Property falling within the scope of Article 31B is excluded. The 5% is a final tax and is not available as a credit or refund against other taxable income. Separately, rebates linked to the length of the registered lease and the number of bedrooms can further reduce the effective rate on qualifying leases.

Two related provisions sit alongside it. Under Article 31A, rental income from property let directly to the Housing Authority for a minimum period of not less than ten years is subject to a 5% final withholding tax, deducted at source. Under Article 31B, income from property let to individuals receiving rent subsidies under a Housing Authority scheme, where the property is approved by the Authority, is subject to a 10% final withholding tax. Both apply to individuals and companies. These incentives are aimed at encouraging longer, stable residential tenancies, and none of them is automatic: the lease has to be properly registered and the reduced rate or rebate claimed in the TA24 filing. A landlord holding long residential tenancies should check whether the registration and conditions are met, because the saving against the standard 15% can be significant.

The 5% rate and the long-lease rebates are claimed, not automatic, and depend on correct Housing Authority registration of the lease. If you hold long residential tenancies, confirm the registration and the qualifying conditions before assuming the standard 15% is the best you can do. The reduced rate can materially lower the effective tax on a qualifying long lease.

8. Worked examples: 15% versus progressive compared

Example A: Owned property, few costs

An individual owns an apartment outright and lets it long-term to an unrelated tenant for €12,000 a year, with no loan and only routine running costs. Under the 15% route, the tax is €1,800 (15% of €12,000), final, with a single TA24 filing. Under the ordinary route, the only real deduction is the 20% maintenance allowance, giving net income of about €9,600, which even at a middle marginal rate produces a broadly similar or higher figure, plus the need to declare it in the return. Here the flat 15% is usually both cheaper and simpler.

Example B: Recently financed property, high interest

An individual buys an apartment with a substantial loan and lets it for €14,000 a year, paying €9,000 of deductible loan interest. Under the 15% route, the tax is €2,100 (15% of €14,000), regardless of the interest. Under the ordinary route, the interest and the 20% allowance reduce the net income sharply, and the marginal rate applied to that much smaller net figure can produce a materially lower tax than €2,100. Here the ordinary route is likely to win, and is worth modelling carefully. The landlord can choose it for this year and revisit next year as the interest reduces.

Example C: Letting to your own company

A director owns premises personally and lets them to a trading company they control. Because the tenant is a related party (control above the twenty-five percent threshold), the 15% route is not available. The rent must be declared under the ordinary route, with the allowable deductions, and taxed at the ordinary rates. The arrangement is legitimate, but the related-party exclusion fixes the tax basis as the ordinary one.

9. Frequently asked questions

What is the tax rate on rental income in Malta?

There are two options. You can pay a flat 15% final tax on the gross rent using Form TA24, with no deductions, or you can declare the rent in your annual tax return and be taxed on the net income after allowable deductions at the ordinary rates (progressive rates up to 35% for individuals, the standard rate for companies). The 15% is optional, and you choose between the two each year.

Is the 15% charged on gross or net rent?

On gross rent. The 15% final tax under Article 31D is charged on the full rent received, before any deductions. That is the key difference from the ordinary route, which taxes the net income after deductions such as loan interest, ground rent and the 20% maintenance allowance. Comparing 15% of gross against your marginal rate on net is the whole decision.

Can I claim expenses if I use the 15% route?

No. The 15% final tax allows no deductions at all; it is charged on gross rent. If you want to deduct loan interest, ground rent, licence fees and the 20% maintenance allowance, you must use the ordinary route and declare the income in your annual tax return, where it is taxed at the ordinary rates on the net figure.

What deductions are allowed on the ordinary route?

For passive rental income the deductions are limited to interest on loans to acquire or improve the property, ground rent and similar burdens, licence fees where applicable, and a maintenance allowance of 20% of the rent remaining after the ground rent and licence-fee deductions. The 20% allowance replaces actual repair, insurance and management costs, which cannot be claimed separately on top of it.

Can I use the 15% rate for renting to my own company?

Generally no. Rent from a related party does not qualify for the 15% rate. A body of persons is related to an individual where it is owned or controlled, directly or indirectly, as to more than twenty-five percent by that individual, and two bodies are related where controlled above that threshold by the same persons. Letting to a company you control is therefore usually outside the 15% route, and the rent is declared under the ordinary route.

Is the 15% choice permanent?

No. The choice is made annually. You can pay 15% one year and use the ordinary route the next, depending on which is better for that year. However, within a single year the choice applies to all your qualifying rental properties; you cannot use the 15% route for one property and the ordinary route for another in the same year.

Does the 15% rate apply to companies and non-residents?

Yes. The 15% final tax is available to individuals and companies, and to residents and non-residents. A Maltese company that pays the 15% on rental income allocates the resulting distributable profits to its final tax account. A non-resident may also opt for the 15% on Maltese rental income instead of declaring it under the ordinary route.

When is the TA24 due?

Form TA24, together with the 15% payment, must be submitted by 30 April of the year following the year in which the rent was received. For rent received in 2025, the deadline is 30 April 2026. If you use the ordinary route instead, the income goes in your annual income tax return rather than on TA24.

What happens if I do not declare rental income?

Rental income must be declared. Where it is not, and is later established on investigation, the 15% final rate is lost for that income, and it is taxed under the normal rules instead: at 35% for a company, and at the individual’s progressive rates for an individual, with interest and additional tax. The 15% is a benefit that must be claimed correctly and on time, not a rate that can be applied retrospectively after non-declaration.

Can I get a lower rate than 15% on a long lease?

Possibly. Under Article 31E, property rented to the same person for a period in excess of seven years on a continuous basis, under a registered Housing Authority scheme, can attract a reduced final rate of 5% on gross rental income. Separately, where a lease is registered with the Housing Authority as a long private residential lease of two years or more, a tax rebate of between €200 and €500 is available under the Residential Leases (Tax Rebate) Rules (S.L. 123.201), depending on the lease duration and the number of bedrooms. These are not automatic: the lease must be properly registered and the reduced rate or rebate claimed in the TA24. It is worth checking if you hold long residential tenancies.

How do short-term tourist lets differ?

Short-term tourist accommodation licensed under the Malta Travel and Tourism Services Act is generally treated as trading income, taxed under the ordinary rules for a trade with its own deductions, rather than as passive rental income under the 15% Article 31D regime. Short lets also have VAT consequences that ordinary long-term residential letting does not. They are a separate analysis from the long-let regime in this guide.

Which law governs the 15% rental tax?

The 15% final tax on rental income is imposed by Article 31D of the Income Tax Act (Cap. 123), with the reduced long-lease rate under Article 31E and the long-lease rebate under the Residential Leases (Tax Rebate) Rules (S.L. 123.201). The allowable deductions on the ordinary route are governed by the Deductions (Expenses in Respect of Immovable Property) Rules, 1978 (L.N. 107 of 1978, as amended). Form TA24 and the 30 April deadline are administered by the Malta Tax and Customs Administration.

Related guides from EGM Assurance

• Malta Income Tax Rates 2026: A Complete Guide

• VAT Registration in Malta: Thresholds and Obligations

• Directors’ Fees and Taxes in Malta

• Fiscal Unity in Malta: Group Taxation Explained

• Setting Up a Company in Malta: Step-by-Step Guide

Authoritative references

• Income Tax Act (Cap. 123), Article 31D (tax on rental income) and Article 31E (reduced rate on qualifying long leases)

• Malta Tax and Customs Administration, Rental Income Taxed at 15% (Article 31D) FAQs

• Malta Tax and Customs Administration, Tax on Rental Income (TA24)

• Deductions (Expenses in Respect of Immovable Property) Rules, 1978 (L.N. 107 of 1978, as amended by L.N. 50 of 1983 and L.N. 100 of 1993)

• Private Residential Leases Act and Housing Authority long-lease registration framework

• Value Added Tax Act (Cap. 406), exemption for letting of immovable property and tourism-accommodation exceptions

Letting property in Malta and unsure which route is better?EGM Assurance helps landlords and companies compare the 15% final tax against the ordinary route on their actual figures, check the related-party and qualifying conditions, handle TA24 and the annual return, and claim any long-lease reduced rate. Model both options before you file.Get in touch →

This article is prepared by EGM Assurance for general informational purposes and reflects the legal and regulatory position in Malta as at August 2026, including Articles 31A, 31B, 31D and 31E of the Income Tax Act (Cap. 123), the Deductions (Expenses in Respect of Immovable Property) Rules, and the guidance of the Malta Tax and Customs Administration. It does not constitute legal or tax advice. The better of the two routes depends on the specific figures, the property, and the parties, and the qualifying conditions must be checked for each case. Always obtain specific professional advice before deciding how to tax rental income.