VAT Return interest and penalty in Malta – Article 10
Bookkeeping & More • September 30, 2025
This article explain interest and penelty rules for late and understated VAT returns in Malta by being registered under article 10
Interest in missing or late payment:
- 0.60% Interest is applicable from 1 September 2022.
Penalty for Late Tax Return
If a person required to file a tax return does not do so on time, they face an administrative penalty calculated as the higher of:
- 1% of the excess output tax over deductions (excluding any previous excess credit), or
- €20 for each month or part thereof from the deadline until the return is filed.
However, if the payable tax is less than €250, the penalty won't exceed the actual tax amount or €50, whichever is greater, and overall penalties won't exceed €250.
Example 1:
Excess Output Tax
Scenario:
- Excess output tax over deductions: €1,000
- Tax payable: €300
- Filing delay: 3 months
Penalty Calculation:
- 1% of €1,000 = €10
- €20 per month x 3 months = €60
- Penalty = higher of €10 or €60 = €60
- Since tax payable (€300) exceeds €250, no maximum cap applies.
Total penalty: €60
Interest Calculation:
- €300 x (7.2%/12) x3 = €300*0.006*3 = €5.40
Total interest: €5.40
Total payable: €65.40
Example 2:
Small Tax Payable (€200)
Scenario:
- Excess output tax: €500
- Tax payable: €200
- Delay: 2 months
Calculation:
- 1% of €500 = €5
- €20 x 2 months = €40
- Penalty = higher of €5 or €40 = €40
- Since tax payable (€200) < €250, the penalty cannot exceed the greater of the actual tax (€200) or €50, so the maximum penalty is €50.
Total penalty: €40 (since €40 < €50, limited by the cap)
Interest Calculation:
- €200 x (7.2%/12) x2 = €200*0.006*2 = €2.40
Total interest: €2.40
Total payable: €42.40
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