Malta’s VAT and tax rules shift for foreign businesses

The new rules
Malta’s Budget Measures Implementation Act, 2026 took effect on March 10, 2026 and it rewires parts of the country’s tax and VAT system for foreign companies, cross-border operators and some remote workers with business income. The biggest headline is a 175% deduction for qualifying R&D and innovation spending, plus tighter VAT registration rules for non-Maltese entities making taxable supplies in Malta.
Not tourist stuff.
This is the real tax story.
The change also adds open market value checks for related-party deals where deduction rights are restricted, which, surprisingly, can matter a lot for family-linked or company-group transactions.

Who it affects
Foreign businesses are hit first, especially any entity selling goods or services in Malta without a local setup, because the VAT threshold for non-residents is effectively nil once a taxable supply is made. Remote workers on Malta’s Nomad Residence Permit aren’t directly targeted by this Act, but if they run a business, invoice locally or sit inside a related-party structure, they should check the new VAT and valuation rules carefully.
That’s the catch.
Short-term tourists aren’t really in scope, though the separate eco-contribution rises to €1.50 per night from July 1, 2026, capped at €22.50 per stay.

What to do
If you’re a non-Maltese entity, register for VAT from your first taxable supply in Malta, don’t wait for a threshold that isn’t there. If you claim the R&D deduction, keep clean records showing the spend benefits the qualifying activity, because revenue costs are fully deductible while capital costs are spread over six years.
Honestly, this is paperwork-heavy.
It’s also worth checking related-party pricing now, because Malta can adjust values to open market levels if your current price doesn’t hold up.

Read our full Malta guide for the complete picture and keep an eye on visa updates as the tax side keeps shifting.