U.S. taxes for Americans in Malta: what to file, and how to catch up.
Malta draws Americans in gaming, finance and remote work, often on its residence programs, and all of them still file a U.S. return every year. Malta taxes many newcomers only on foreign income they bring into the country, but the U.S. taxes all of it, so low Maltese tax can leave a U.S. bill. The details to get right are the remittance basis, Maltese pension schemes and local funds. Most people who fell behind can catch up under the Streamlined procedures, with no penalty if they qualify.
Sound familiar?
- You moved to Malta for a job in gaming or finance.
- You’re taxed in Malta only on the foreign income you bring in.
- Someone offered you a Maltese pension scheme as a way to grow money tax-free.
- Your Maltese bank asked about your U.S. citizenship.
How does the IRS treat Maltese income, pensions and savings?
Accounts go on your FBAR once they add up to more than $10,000. What differs is how the IRS taxes them.
| Item | U.S. treatment | |
|---|---|---|
| Remittance basis | Foreign income you keep outside Malta may not be taxed there, but the U.S. taxes it anyway. With no Maltese tax to credit, U.S. tax is often due. | Taxable |
| Personal retirement schemes | The IRS has warned about Maltese pension plans sold to Americans as tax-free. Since a 2021 agreement between the two countries, most of them don’t get the treaty’s pension benefits for U.S. citizens. | Watch out |
| Social security pension | Under the treaty, only Malta can tax it, even for U.S. citizens. | Usually fine |
| Maltese funds | Usually PFICs (Form 8621), with complex reporting and tax rules. | Watch out |
| Bank accounts | Interest is taxable for the U.S., and the accounts count toward your FBAR total. | Taxable |
| Your own Maltese company | Usually needs Form 5471 each year, and Malta’s tax refunds to shareholders don’t carry over to the U.S. side. | Check first |
Which Maltese investments are PFICs?
Maltese collective investment schemes, and the European funds and ETFs that Maltese banks and brokers sell. For U.S. tax they’re passive foreign investment companies, or PFICs, with their own reporting and harsh default tax rules.
- Each fund needs its own Form 8621 in most years, and gains can be taxed at the top U.S. rate plus an interest charge, unless an election was made in time.
- Funds held inside a Maltese pension scheme are where many Americans first meet the PFIC rules, because the scheme itself may not be treated as a pension.
- Not PFICs: shares of individual companies on the Malta exchange, Maltese government stocks, and bank deposits.
What does the U.S.–Malta tax treaty actually say?
The treaty was signed in 2008 and took effect in 2011. For Americans living in Malta, these parts matter most:
- The saving clause. The U.S. can tax its citizens as if the treaty didn’t exist, except for the provisions the treaty lists.
- Pensions. A 2021 competent authority agreement narrowed which Maltese pension schemes the treaty’s pension rules cover, closing off plans marketed to Americans as a way around U.S. tax.
- Social security. The Maltese social security pension is taxed only by Malta, even for U.S. citizens, and U.S. Social Security only by the U.S.
- Relief from double tax. The U.S. gives a credit for Maltese income tax on the same income, but only for tax actually paid.
There’s no U.S.–Malta social security agreement, so a self-employed American generally owes U.S. self-employment tax. Read the U.S.–Malta tax treaty on IRS.gov.
When are Maltese and U.S. taxes due?
Both tax years run January to December, so each Maltese year lines up with one U.S. return. Your FS3, the year-end salary statement from your employer, gives most of what the U.S. return needs.
| Malta | United States | |
|---|---|---|
| Tax year | January to December | January to December |
| Annual return | June 30, if you have to file; many employees get a pre-filled return or none | April 15, moved to June 15 automatically when you live abroad, or October 15 with an extension |
| Paying the tax | Withheld from your salary (FSS), with any balance due by June 30 | April 15, even if you file later |
| Foreign accounts | Only foreign income brought into Malta, for those on the remittance basis | The FBAR, due October 15, filed online |
Foreign tax credit or exclusion: which wins in Malta?
It depends on your residence status and how you’re paid:
- Employees of Maltese companies pay Maltese tax at rates up to 35%, and the foreign tax credit can cover much of the U.S. tax on the salary. Some special regimes for highly qualified workers lower that rate, and with it the credit.
- Remote workers on Malta’s nomad residence permit pay little or no Maltese tax on foreign pay, so the foreign earned income exclusion, up to $130,000 for 2025, usually does the work.
- Investment income kept outside Malta isn’t taxed there on the remittance basis, so the U.S. tax on it is paid in full.
We run your returns both ways before choosing. How we compare the exclusion and the credit.
A worked example: a gaming analyst in St Julian’s
Nina moved to Malta in 2020 for an online gaming company. She earns €70,000, keeps a U.S. brokerage account whose dividends she never brings to Malta, and was pitched a Maltese personal retirement scheme last year.
| Item | How it’s handled |
|---|---|
| Salary | Maltese tax is close to or above the U.S. tax on it, so with the foreign tax credit her U.S. tax on it is little or nothing. |
| U.S. dividends | Not taxed in Malta while they stay outside, so U.S. tax on them is due in full. |
| The pension pitch | Since the 2021 agreement, most such schemes don’t get the treaty’s pension benefits for U.S. citizens. We’d look closely before she signs anything. |
| Catching up | Three years of returns and six FBARs under the Streamlined procedures, with no penalty if she qualifies. |
Catching up from Malta
Most Americans in Malta who fell behind without meaning to can catch up under the Streamlined Foreign Offshore Procedures: three years of returns, six years of FBARs and, if you qualify, no penalties. If only FBARs are missing, or you’ve moved back to the U.S., another route may fit better. See every IRS catch-up option for expats, compared.
Common questions
Do I pay U.S. Social Security tax in Malta?
Usually not if you work for a local employer. There’s no U.S.-Malta social security agreement, though, so self-employment tax can still apply if you work for yourself, and FICA if you work for a U.S. company.
Will the U.S. tax my U.S. Social Security in Malta?
The U.S. taxes it as usual. Under the treaty, Malta can’t.
I already have a Maltese pension scheme. What now?
Don’t ignore it. How it’s reported depends on how it was set up and what you’ve done with it. We’ll look at the details before your next filing.
I’m on the remittance basis. Do I owe U.S. tax on income I keep abroad?
Yes. The U.S. taxes your worldwide income whether or not you bring it into Malta, and with no Maltese tax on it, the U.S. tax is paid in full.
I’m on Malta’s nomad permit. Do I still file in the U.S.?
Yes. The foreign earned income exclusion usually covers your pay if you meet the 330-day or residence test, but you have to file to claim it, and self-employment tax can still apply.
Does Malta’s shareholder tax refund help my U.S. taxes?
No. The refund lowers the Maltese tax you finally pay, and only the tax you actually bear can count toward the U.S. credit. Owners of Maltese companies also usually file Form 5471.
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