Discounts and VAT in Malta: which comes first?
Whether VAT in Malta is charged before or after a discount, with a worked example and the difference in what the customer pays.
Key facts
| Place | Malta |
|---|---|
| Tax | VAT |
| Standard rate on file | 18% |
| Multiply net price by | 1.18 |
| Tax share of a gross price | 15.25% |
| Currency | EUR |
Discount first, then tax
In general the discount reduces the taxable amount, and VAT at 18% is charged on the reduced price. If a 15% discount is applied to a net price, the tax is calculated on the remaining 85%.
Worked example
Here is the calculation with sample figures. Change any number in the Malta Discount and VAT Calculator to run your own.
| Price | €200.00 |
| Discount (%) | 15% |
| Tax rate (%) | 18% |
| Discount | €30.00 |
|---|---|
| Net amount | €170.00 |
| Tax | €30.60 |
| Total | €200.60 |
Does the order change the total?
Mathematically, applying a percentage discount and a percentage tax gives the same final price in either order. What changes is the tax amount you record and report, and that must reflect the price actually charged.
Vouchers and coupons
Store vouchers, manufacturer coupons and gift cards can each be treated differently. Some reduce the taxable price, others are treated as a form of payment. Check how each type is handled in Malta before you run a promotion.
Quick reference at 18%
Common amounts in Malta, worked both ways: adding tax to a net price, and extracting it from a price that already includes tax.
| Amount | Tax on net amount | Gross (net + tax) | Net if amount includes tax |
|---|---|---|---|
| €10.00 | €1.80 | €11.80 | €8.47 |
| €50.00 | €9.00 | €59.00 | €42.37 |
| €100.00 | €18.00 | €118.00 | €84.75 |
| €250.00 | €45.00 | €295.00 | €211.86 |
| €500.00 | €90.00 | €590.00 | €423.73 |
| €1,000.00 | €180.00 | €1,180.00 | €847.46 |
| €5,000.00 | €900.00 | €5,900.00 | €4,237.29 |
How Malta compares
Standard rates on file for other countries. A difference of a few points matters most on high-value purchases and on cross-border sales.
| Place | Rate on file | Compared with 18% |
|---|---|---|
| Lebanon | 11% | lower |
| Lithuania | 21% | higher |
| Luxembourg | 17% | lower |
| Mexico | 16% | lower |
| Morocco | 20% | higher |
| Nepal | 13% | lower |
Using the calculator step by step
- Open the Malta Discount and VAT Calculator.
- Type your figures into the numbered lines. Results update as you type.
- Check the rate field. It starts at 18%; change it if a reduced rate, local surcharge or exemption applies to you.
- Read the result on the receipt panel, and use the formula shown under it if you need to explain the figure to a client or colleague.
Key terms
- Exempt supply
- A sale that falls outside the tax entirely. No tax is charged and input tax usually cannot be reclaimed.
- Withholding
- Tax deducted at source, by an employer or payer, before the money reaches you.
- Reduced rate
- A lower rate that applies to specific categories, often essentials such as food, medicine or books.
- Deduction
- An amount subtracted from taxable income. It saves tax equal to the deduction times your marginal rate.
- Gross amount
- The amount after tax is added, which is usually what a consumer pays.
Common mistakes to avoid
- Charging tax on the full list price after giving a discount.
- Treating gift cards as discounts.
- Advertising a discount on the gross price but calculating it on the net price.
Run your own numbers. The Malta Discount and VAT Calculator updates as you type and shows the formula it uses.
Frequently asked questions
Is VAT calculated before or after a discount in Malta?
Usually after: tax applies to the discounted price the customer actually pays.
Does a discount reduce the VAT I owe?
Yes, because the tax is a percentage of the reduced price.
This article is general information for planning, not tax advice. Rates and rules change; confirm with your tax authority or a qualified adviser.