Rental Income in Malta: What Landlords Need to Know About VAT, Tax and Record-Keeping
Malta's rental market has expanded rapidly in recent years. A growing workforce and a constant flow of visitors have pushed demand for both short and long-term accommodation upward, and landlords now face a greater need to understand what the law expects of them.
Short Lets vs Long Lets: Why the Distinction Counts
Rental income isn't treated uniformly, especially for VAT purposes. Whether a property is let short or long term has real financial implications, and misclassifying it can prove expensive.
Long lets: Letting a residential property over the long term is VAT-exempt without credit. The landlord doesn't charge output VAT to the tenant, but also has no right to recover input VAT on associated costs.
One exception applies. If a limited liability company lets a property to a tenant who is VAT-registered under Article 10 of the Maltese VAT Act, and the tenant uses it for an economic activity, VAT is charged at 18%. In that case the landlord is entitled to recover the related input VAT.
Short lets: Short-term lettings operate under a different regime. Landlords must charge VAT at 7%, and in contrast with long lets, they may reclaim input VAT on expenses connected to the business.
Short-let operators must also collect the Eco Contribution, a tourism levy declared to the Malta Tourism Authority. It is currently €0.50 per person per night, up to a maximum of €5 for each continuous stay. From 1 July 2026, it rises to €1.50 per person per night, with the maximum increasing to €22.50 per continuous stay.
Two Ways to Declare Rental Income
Whether your property is let short or long term, rental income can be declared in one of two ways.
Option 1: The 15% flat rate. This is the more widely used route. In 2024 alone, more than €660 million in rental income was declared under it. Landlords pay a flat 15% on gross rental income, with no deductions allowed. Form TA24 must be filed and the tax paid by 30 April of the following year, and late payment incurs interest of 0.6% per month.
Option 2: Including it in a standard tax return. Alternatively, rental income can be added to a personal or company tax return. Because allowable expenses can be deducted, this option may work out more tax-efficient depending on the landlord's wider financial situation.
Good Record-Keeping Is Non-Negotiable
Whichever option you choose, keep complete and current records. That means documentation for all income and expenses, plus any reports issued by the digital platforms you use to manage or promote your property.
Get in Touch:
Jade Sillato:
Finance Manager
jsillato@quazar.mt / +356 2388 4600
