Economy and Banking Sector of Malta

Location Mediterranean Sea
Population (2016)434 403 ↑ (+0.01%)
EU Status member since 2004
Economy
National Currency EUR (Euro) since 1 January 2008
GDP 
    Nominal GDP (2015)8.8 bln EUR ↑ (+0.10%)
    Nominal GDP per Capita (2015)20 400 EUR ↑ (+0.09%)
    Real GDP Growth (2015)6.3 % ↑ (2014: 3.5 %)
Inflation Rate 
    CPI, MoM (Sep 2016)-0.9 % ↓ (Aug 2016: 0.4 %)
    CPI, YoY (Sep 2016)0.9 % ↓ (Aug 2016: 1.0 %)
    CPI, Year Average (2015)1.2 % ↑ (2014: 0.8 %)
Unemployment Rate (2015)5.4 % ↓ (2014: 5.9 %)
Government Bond Yield (Sep 2016)0.60 % ↓ (Aug 2016: 0.61 %)
Credit Ratings (as of Sep 2016)
    FitchA high credit quality, outlook positive
    Moody'sA3 upper medium grade, outlook stable
    S&PBBB+ lower medium grade
Taxation
Withholding Tax 0.0 - 15.0%
Double Taxation Agreements 72 signed agreements
Information Exchange 
    Exchange on Request 5 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 16 December 2013, Model 1
Banking Sector
Financial Market Development 4.4 (max 7.0) rank: 41st out of 138 countries
    Banks' Soundness 5.9 (max 7.0) rank: 16th out of 138 countries
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Aug 2016, EUR)0.98 % ↓ (Jul 2016: 1.20 %)
Banking Sector Structure 
    Number of Banks29
    Recent Changes (2015) new banks: 2, closed banks: 1
    Consolidated Assets (2015) 47 139.99 mln EUR ↓ (-9.16%)
Major Banks
 Bank of Valletta (BOV)  Mediterranean Bank plc
 HSBC Bank Malta plc  FIMbank Plc
 Deutsche Bank (Malta) Ltd  Lombard Bank Malta plc
 List of Banks in Malta

Maltese Economy

National Currency

Malta joined the Euro Area on 1 January 2008. The preceding national currency, Maltese lira (MTL), was replaced by Euro.

Top

GDP

According to Eurostat, nominal GDP of Malta in 2015 was 8.8 bln EUR.

Malta outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.5% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 6.3% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Malta.
Chart 1. Real GDP Growth in Malta. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Malta was 20 400 EUR.

Malta has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -5.5% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Malta; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Malta; European Union = 100.
Top

Inflation Rate

According to Eurostat, inflation rate in Malta in 2015 expressed as annual percentages of average consumer prices was 1.2% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Malta.
Chart 3. Inflation Rate in Malta. Source: Eurostat, International Monetary Fund.
Top

Taxation in Malta

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Malta are shown in Table 1.

Dividends Interest
Natural person, resident 15.015.0
Natural person, non-resident 0.00.0
Table 1. Withholding tax rates in Malta.
Top

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Malta signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Australia
 Austria
 Bahrain
 Barbados
 Belgium
 Bulgaria
 Canada
 China
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Egypt
 Estonia
 Finland
 France
 Georgia
 Germany
 Greece
 Guernsey (Mar 2013)
 Hong Kong
 Hungary
 Iceland
 India
 Ireland
 Isle of Man
 Israel (Dec 2013)
 Italy
 Jersey
 Jordan
 Korea, Republic of
 Kuwait
 Latvia
 Lebanon
 Libya
 Lithuania
 Luxembourg
 Malaysia
 Montenegro
 Morocco
 Netherlands
 Norway (Feb 2013)
 Pakistan
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation (May 2014)
 San Marino
 Saudi Arabia
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 Syrian Arab Republic
 Tunisia
 Turkey (Jun 2013)
 United Arab Emirates
 United Kingdom
 United States
 Uruguay

There are also several agreements between Malta and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Iceland (Apr 2013)
 Liechtenstein (Sep 2013)
 Mexico
 Moldova, Republic of (Apr 2014)
 Russian Federation
Top

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Malta signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Bahamas
 Bermuda
 Gibraltar

There are also several agreements between Malta and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Cayman Islands (Nov 2013)
 Macau (May 2013)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Malta signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

Top

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Malta has FATCA agreement with the U.S. in effect since 16 December 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Malta are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Maltese financial accounts hold in U.S. financial institutions will be reported to Maltese authorities.

Further Information:
FATCA and European countries

Top

Maltese Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Malta is scored 4.4 out of maximum 7.0 and ranked 41st out of 138 analysed economies. Soundness of banks is scored 5.9 bringing Malta into the 16th place, trustworthiness and confidence of financial market is scored 4.5 (51st place).

Financial Market Development in Malta.
Chart 4. Financial Market Development in Malta. Source: WEF.
Top

Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Malta are summarised in Table 2.

Scheme Participantsall credit institutions operating in Malta, branches of non-EEA banks, branches of Maltese banks abroad
Scheme Exemptionsbranches of EEA-banks (covered by their home countries)
Covered Accountsmost types of deposit are covered, including current, deposit and savings accounts
Maximum Protected Amount100 000 EUR
Paid In Currencyin the same currency as the deposit

Table 2. Deposit guarantee scheme in Malta.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

Further Information:
Deposit Guarantee Schemes in Europe

Top

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Malta is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Top

Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.98% which was above the Euro Area average (0.53%).

Deposit Rates in Malta.
Chart 5. Deposit Rates in Malta. Source: ECB.

Further Information:
Compare Bank Deposits in Malta

Top

Banking Sector Structure

Currently there are 29 credit institutions operating in Malta.

Recent structural changes (2013 - 2015) of the banking sector of Malta are summarised in Table 3.

201320142015
Number of Opened Banks032
Number of Closed Banks031

Table 3. Recent structural changes in the banking sector of Malta.

All the credit institutions operating in Malta can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Banks25
Branches of foreign banks3
Central banks1

Table 4. Number of banks by category in Malta.

The list of the most recently opened banks in Malta is provided in Table 5.

NameStart Date
 Credorax Bank Limited (new)June 2015
 Yapi Kredi Bank Malta Limited (new)January 2015
 SATABANK plc (new)November 2014
 ECCM Bank plc (new)July 2014
 PILATUS BANK LTD (new)January 2014

Table 5. The most recently opened banks in Malta.

There are 3 branches of foreign banks from 2 different countries in Malta. Table 6 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Turkey2
 Netherlands1

Table 6. Number of branches of foreign banks in Malta grouped by country of origin.

Top

Share on Google+