Andorra or Malta: tax simplicity or an international regime?

Andorra and Malta can both suit international entrepreneurs, but their tax systems are built on different logic.

Andorra's regime favours relatively low nominal rates and a clear tax structure. Malta uses a more complex system involving, among other things, full imputation, potential refunds to shareholders, and, for certain individuals, taxation based on foreign income remitted to the country.

The final burden therefore can't be compared using a single percentage. To review the rules on personal income tax, corporate tax and IGI, our dedicated guide covers Andorra's regime in detail.

In 2026, Maltese rates applicable to individuals run from 0% to 35%, with different bands depending on family situation.

Maltese companies are, in principle, subject to a 35% rate. Following a distribution, shareholders can, where conditions are met, obtain a refund of part of the tax paid thanks to Malta's imputation system. To understand Andorra's passive residency permit, see our dedicated guide.

Malta's system relies on an initial tax charge at company level, potentially followed by a refund granted to the shareholder after distribution.

The outcome depends, among other things, on:

• the nature of the profit;
• the tax account used;
• the shareholder's residency;
• eligibility for the refund;
• the timing of the distribution;
• documentation;
• foreign rules applicable to the shareholder.

This mechanism can reduce the final economic burden, but it involves more administration and can create a cash-flow gap.

Since 2025, Malta has also offered a final 15% tax option known as FITWI, subject to conditions and a commitment period. This option shouldn't be presented as an automatic rate applicable to all businesses.

Certain individuals resident but not domiciled in Malta can be taxed under the remittance basis principle.

Broadly speaking, a distinction needs to be drawn between:

• Maltese-source income;
• foreign income remitted to Malta;
• foreign income kept abroad;
• foreign capital gains;
• the individual's residency and domicile status.

This regime is technical and doesn't mean all foreign income automatically escapes tax.

Andorra applies a different logic: a tax resident is generally taxed on their worldwide income, according to the categories, exemptions and reductions provided for under personal income tax rules.

Malta can be relevant for activities requiring an English-speaking environment, international partners, or certain specific regulatory frameworks.

Andorra can be more coherent for a structure run directly by its owner, with a local presence and a services or trading activity suited to the territory.

In both cases, it's necessary to plan for:

• effective management;
• full bookkeeping;
• a bank or payment account;
• a suitable address;
• consistent contracts;
• documentation on the origin of funds;
• compliance with substance requirements.

The standard Maltese VAT rate is 18%, compared with a general IGI rate of 4.5% in Andorra.

The headline rate alone doesn't, however, determine how a transaction is treated. International services, digital services, distance sales, and property transactions need to be located according to the applicable rules.

A double taxation treaty is in force between the two states.

It can be relevant, in particular, for dividends, interest, royalties, professional income, and situations of dual residency.

ProGestió compares the simplicity of Andorra's framework with Malta's mechanisms based on your activity, foreign income, and how your wealth is organised. Would you like your project analysed?

Request an analysis of my project