Malta’s value-added tax (VAT) rules shape how businesses price, sell, and grow in the country’s roughly $24 billion economy. These rules—including VAT rates, reduced VAT categories, registration thresholds, compliance obligations, refunds, and VAT numbers—directly affect cash flow and cross-border operations. Below, we’ll explain how the Malta VAT rate works, including the registration rules, compliance requirements, and refund processes.

What’s in this article?

• How much is the Malta VAT rate?
  
• What are the different VAT rates in Malta?
  
• Who needs to register for VAT in Malta?
  
• How does VAT compliance work in Malta?
  
• How do VAT refunds work for businesses in Malta?
  
• What is a Malta VAT number and why is it important?
  
• How Stripe Tax can help
  

How much is the Malta VAT rate?

Malta’s standard VAT rate is 18%. This default rate applies to most goods and services unless the law assigns a specific reduced rate, a zero rate, or an exemption.

What are the different VAT rates in Malta?

Malta applies several VAT rates depending on the goods or services sold and their use. Many businesses will work with more than one rate over time.

Here are the rates and categories:

• Standard rate (18%): This applies to most goods and services, including professional services, consumer products, electronics, furniture, and general commercial activity where no reduced rate is specified.

• Reduced rate (7%): This rate is primarily used for tourist accommodations and access to sports and fitness facilities. It supports Malta’s tourism and leisure sectors.

• Reduced rate (5%): This lower rate applies to socially important goods and services, including domestic electricity, printed and digital books and periodicals, certain food items, medical equipment and aids for people with disabilities, and admission to cultural venues and events.

• Special rate (12%): This rate is used for a narrow set of supplies, including certain financial services and qualifying short-term yacht charters. The scope is limited so it should be used with care.

• Zero-rated supplies (0%): These supplies are taxable but charged at 0%, which allows businesses to reclaim input VAT. Common examples include exports outside the EU, intra-EU B2B supplies of goods, basic food staples, feminine hygiene products, some medical accessories, and prescription medicines.

• Exempt supplies: Exempt transactions don’t carry VAT or permit input VAT recovery. Typical examples include healthcare, education, insurance, most financial services, and long-term residential property rentals.

Who needs to register for VAT in Malta?

Whether VAT registration is required depends on where your business is established, what you sell, and your turnover. Once a VAT obligation arises, you must register within 30 days of the first taxable sale. Late registration can lead to penalties and backdated VAT liabilities.

Here are the registration rules:

• Maltese-established businesses above the threshold: As of 2025, businesses established in Malta must register once annual turnover exceeds €35,000, calculated on a rolling 12-month basis.

• Maltese small businesses below the threshold: Businesses that make below this amount can register under the small undertaking scheme, which allows them to operate without charging VAT and prevents them from reclaiming VAT on their expenses.

• Nonresident businesses selling in Malta: Foreign businesses that make taxable supplies in Malta must register from their first transactions, as Malta doesn’t apply a VAT registration threshold to nonresident businesses.

• Businesses storing or fulfilling goods in Malta: Holding inventory or fulfilling orders locally, including through third-party logistics providers, typically creates a VAT obligation regardless of where the business is established.

• EU cross-border B2C sellers: EU B2C businesses that sell to Maltese customers need to register for Maltese VAT or use the EU’s One Stop Shop (OSS) once the €10,000 distance selling threshold is met.

• Businesses making EU acquisitions and reverse charge services: Even businesses that aren’t otherwise registered for VAT need to register if they acquire EU goods that total over €10,000 yearly, or receive certain cross-border services.

Some businesses choose to register before they reach the threshold, often to reclaim input VAT, signal credibility to customers, or prepare for expected growth.

How does VAT compliance work in Malta?

VAT compliance hinges on consistency rather than individual actions. Staying compliant means handling several ongoing obligations correctly and on time.

Keep the following in mind:

• Charge VAT correctly: Businesses must apply the correct VAT rate based on the supply, customer, and place of taxation, including when zero rate or reverse charge rules apply.

• Issue compliant VAT invoices: Invoices must include details such as the VAT number, a unique invoice number, dates, a clear description of the supply, the VAT rate, and the VAT amount. In most cases, VAT invoices must be issued by the 15th day of the month following the charge.

• File VAT returns: Most businesses file VAT returns quarterly in Malta, which show VAT charged on sales and VAT paid on expenses. Returns and payments are generally due 1 month and 15 days after the reporting period.

• Pay VAT on time: Any VAT due must be settled by the filing deadline. Late payments can incur interest and penalties that increase with the length of the delay.

• Keep VAT records: Invoices, receipts, and supporting documents must be retained for at least six years and made available to the tax authorities on request.

• Submit EU-related reports: Businesses that trade within the EU typically also need to submit EC Sales Lists and Intrastat declarations once applicable thresholds are exceeded.

• Handle errors and corrections: Mistakes can usually be corrected through amended returns or future filings, but unresolved errors and missed deadlines can incur penalties.

• Use systems to support compliance: Many businesses rely on software or tools like Stripe Tax to calculate VAT correctly at checkout, track taxable transactions, and generate reports that support accurate filings.

How do VAT refunds work for businesses in Malta?

If you pay more VAT on your costs than you charge on your sales, Malta’s VAT system allows you to recover the difference. You can either carry the credit forward to offset future VAT due or request a cash refund. Approved refunds are paid electronically by bank transfer to a registered Single Euro Payments Area (SEPA) account through Malta’s online tax portal. Refund claims might be reviewed, and larger or recurring refund positions can trigger requests for documentation or audits before payment is released. Outstanding tax debts or compliance issues can delay refunds or result in amounts being offset against other liabilities.

EU businesses reclaim Maltese VAT through the EU’s VAT refund system via their home countries’ tax authorities. Non-EU businesses must apply directly to Malta’s tax authority under a separate procedure.

Refunds are common for exporters, businesses that make zero-rated supplies, companies with high startup or capital expenses, and businesses with seasonal income.

What is a Malta VAT number and why is it important?

A Malta VAT number is your business’s official identifier within the VAT system. It connects everything you charge, reclaim, and report.

Here’s what you need to know about the VAT number:

• What it looks like: A standard Malta VAT number starts with “MT” followed by eight digits, and is issued under the normal or limited VAT schemes.

• Why it’s required: You cannot legally charge Maltese VAT or reclaim VAT on expenses without an active VAT number, and customers might reject invoices that don’t include one.

• What role it has in EU trade: A valid Malta VAT number allows the zero rating on qualifying intra-EU B2B sales and enables reverse charge treatment on many EU purchases.

• How it affects VAT recovery: Input VAT refunds and credits are available only to businesses with valid VAT numbers, which makes registration important for cash flow management.

• Why the numbers differ across registrations: Businesses under the small undertaking scheme receive local VAT identifiers without the “MT” prefix. Before 2020, these VAT numbers couldn’t be used for EU cross-border transactions. That year, EU Directive 2020/285 removed that restriction.

• Where the number must appear: Your VAT number must be shown on VAT invoices and returns and on many commercial documents, as it signals compliance and credibility to customers, suppliers, and tax authorities.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and goods and services tax (GST) on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful application programming interface (API).

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.