Zero Tax on Pension in Malta 2026: New Law and All Tax Benefits for Retirees

Transferring your pension abroad to the country you like because you went there on holiday or for work is not enough, you need to understand the implications that this choice has on you, not only for the tax benefits of every type of income and not just of the pension alone, but of your legal, asset, healthcare and quality of life protection.

MALTAway offers a Consulting Service for your pension abroad, the choice of the country in which it is ideal to transfer your pension and the most appropriate tax regime.

This choice must be made based on a country selection model that we have defined in 40 years of experience, combining it with your specific legal, income and asset profile necessary to understand the advantages, constraints and counter-indications that individual countries offer to those who transfer their residence and their pension opting for the most efficient tax regime.

Zero Tax on Pension in Malta 2026: New Law and All Tax Benefits for Retirees

MOVING TO LIVE AS RETIREES IN MALTA

Malta has a favourable climate with many sunny days a year and temperatures in winter that generally never drop below 10 degrees, a splendid sea as well as a truly incredible historical and artistic heritage with its 7,000 years of history that make a visit to the small archipelago a continuous discovery in an alternation between natural and historical beauties.

Thanks also to its proximity to Italy it is increasingly attracting foreigners and in particular Italians to move to the Archipelago, including retirees who find themselves living in an environment with traditions and culture often close to Italy and where knowledge of the Italian language is widespread.

MALTA ADVANTAGE: NON-DOMICILED TAXATION SYSTEM

From a fiscal point of view there are essentially two taxation systems in the world. The most widespread tax system is that of “worldwide taxation” which is based on taxation on a worldwide basis according to which the incomes produced anywhere in the world by a resident natural person are subject to taxation and not only those produced in the territory of the State. This system is in force in Italy but also in the countries analysed above, including Switzerland, and is always combined with a global declaratory regime of one’s own assets and incomes.

Different is the “territorial” taxation system which applies to subjects not domiciled in a State and who are required to pay taxes in the country of residence only on incomes produced there.

Malta enjoys a territorial tax regime, very different from the worldwide one, and certainly more advantageous and attractive.

This allows people who decide to move to live on the archipelago who are resident but not domiciled (Maltese citizens and those who take up permanent residence in the territory are excluded) to enjoy the advantageous tax system for non-domiciled or non-dom persons.

In general the non-dom regime in Malta provides that persons who habitually reside, but are not domiciled in Malta, are subject to income tax on income generated in Malta, on income generated outside Malta but if collected in Malta and on capital gains generated in Malta. No tax is due on capital gains generated abroad, but which are remitted to Malta.

MALTA ADVANTAGE: PENSION TAXATION REGIME

As retirees who transfer their pension to Malta, one can pay taxes according to the ordinary taxation regime in force in Malta, with 3 rates certainly more advantageous than in many different countries and a tax exemption on the first €12,000 of income, or adhere to a special regime with a 15% taxation.

The New Tax Regime on Pensions in Malta from 2026

With the publication of Legal Notices 52 and 53 of 2026, the Maltese government has introduced a radical reform of pension taxation. Starting from the base year 2026 (declaration year 2027), that is for incomes received after 31.12.2025, a full tax exemption has been established on a significant portion of pension income.

This is not a temporary, special, conditional tax exemption regime on pensions, but a permanent zero taxation.

Full Exemption: The first €37,104 of annual pension income is now completely exempt from taxes.

The exemption acts as a deduction at source. This means that the ordinary progressive rates apply exclusively on the portion exceeding the exemption threshold.

Furthermore, should a retiree have other taxable incomes that entail a tax obligation under Malta’s progressive rates (ranging from 0% to 35%), the individual under certain conditions can also benefit from a tax reduction of up to €540.

Malta Retirement Programme (MRP) with 15% taxation

In 2012, then amended in 2014, new rules were introduced in Malta with a special regime — the Malta Retirement Programme — for retirees who are EU/EEA/Swiss citizens (excluding Maltese citizens) but also for non-EU citizens that guarantees a preferential tax condition:

A flat rate of 15% on any foreign source of income that is received in Malta, by them or their dependent family members, subject to a minimum annual tax of €7,500 and a further €500 for each dependent family member and home care assistant.

Said regime remains and does not appear to have been amended by the new law.

Ordinary Regime vs. Special Regimes:

For retirees with average incomes, the ordinary taxation regime is now drastically more advantageous compared to special flat tax regimes (such as the MRP at 15%), which often require a minimum annual tax (equal to €7,500) and do not benefit from the new exemption.

In our advisory packages and services, having carried out due diligence on your legal, asset and income profile, we can analyse and evaluate which tax regime is the most efficient for you, without any conflict of interest that typically arises with local professionals.

Option Flexibility:

Although the switch from a special regime to the ordinary one is possible, it requires a formal waiver of the special status and a transition towards Ordinary residence. The waiver of the special regime, as well as the option to the same, must be made through an authorised intermediary (we are on the list of authorised intermediaries in Malta).

Conclusion:

The 2026 reform drastically reduces the tax burden for the majority of retirees resident in Malta, making ordinary residence the preferable option for low or average pension incomes while the 15% option is advisable only for high incomes.

Moving abroad can prove to be an obstacle course without professional advice from those who are competent in international matters, for different categories of income and asset classes, for different countries of origin and destination, from those who are able to know the legal and tax regulations of the different countries involved, to verify existing bilateral treaties, to get to the bottom of issues, to know and interpret the rules and to understand the legal and tax implications.

Otherwise one risks making decisions to move abroad without knowing all the aspects and implications, or making legal and fiscal choices that turn out to be wrong and with consequences and even heavy penalties.

For further information, consultations, evaluation of the options of the different regimes and questions or for residency programmes and tax regimes, contact us.

MALTAWAY CONTACTS for Fiscal Residence Relocation, Pensions and Special Regimes

For any clarification, consultation, legal opinion, support for procedures and applications both for pension transfer, Relocation, Fiscal Residence, Pensions and special regimes, due diligence on your legal, asset and income profile to analyse and evaluate which tax regime is the most efficient for you, do not hesitate to contact us, the MALTAway professionals make their International Practice of over 40 years available to you.