Malta’s real estate gets lowly 3/10 rating in European report on property investment

Malta has ranked a disappointing 30th place out of the countries assessed in a new report examining where property investment is expected to pay off the most in Europe in 2025.

The study, carried out by UK insurance company William Russell, analysed key factors including property tax rates, income tax on rent, and gross rental yields across the continent. Malta’s performance in the ranking leaves much to be desired, falling behind countries like Moldova, Lithuania, and North Macedonia. Countries such as Germany, Spain, and Austria have ranked worse than Malta.

The island nation received an overall score of just 3.17 out of 10, reflecting what the report described as a “poor” yield rating. According to the study, rental income in Malta is taxed at a rate of 35 per cent – however, this figure does not tell the full story.

In practice, lessors in Malta can opt for a final withholding tax of 15 per cent on rental income, providing a simpler and often more favourable route for private landlords. Alternatively, they can choose to declare rental income as part of their overall earnings, where it would indeed be taxed at standard progressive rates, potentially reaching up to 35 per cent.

Meanwhile, the report lists selling costs at five per cent. Yet, real estate practices in Malta offer a little more nuance. If you are selling property through an agency, the typical commission is from 3.5 to 5 per cent. Additionally, tax on property transfers is set at 8 per cent of the selling price, although there are various exemptions and reductions.

Adding to the confusion, the report states that Malta’s corporate tax rate stands at 15 per cent. In reality, under Malta’s income tax legislation, companies are taxed at a standard rate of 35 per cent on their worldwide income. Although there are refund mechanisms that can significantly reduce the effective tax burden for foreign shareholders, the standard rate remains considerably higher than reported.

The low ranking is likely to come as a surprise to many who view Malta as a stable investment location, supported by its robust legal system, EU membership, and sunny Mediterranean climate.

That said, numbers alone rarely paint the full picture. Malta still offers significant lifestyle appeal, residency options, and strong long-term value growth, factors that may be overlooked in a report driven primarily by short-term returns.

As William Russell’s own study notes, while gross rental yields and tax rates are important, other critical elements – such as vacancy rates, property management costs, and broader economic conditions – must also be considered before making any investment decision.

In the end, while Malta might not top the charts for 2025, it remains a market where strategic, well-informed investors could still find opportunities.