Key tax rules for European expatriates living and working in Malaysia. Updated for 2025. This is a quick-reference summary. For the full analysis including foreign income rules, EPF, double taxation treaties, and investment structures, see the full Malaysia tax guide below.
How you become a tax resident
Tax residency in Malaysia is determined by physical presence alone. Spend 182 days or more in Malaysia in a calendar year and you are a tax resident for that year. Immigration status and intent are not relevant. The count is based on days physically on Malaysian soil.
Non-residents pay a flat 30% on all Malaysian-sourced income. Residents pay progressive rates starting at 0% and rising to 30% above MYR 2 million. For most senior professionals earning MYR 200,000 to MYR 600,000, the effective resident rate sits between 18% and 24%.
Progressive rate schedule for residents
| Chargeable Income (MYR) | Rate |
|---|---|
| 0 to 5,000 | 0% |
| 5,001 to 20,000 | 1% |
| 20,001 to 35,000 | 3% |
| 35,001 to 50,000 | 6% |
| 50,001 to 70,000 | 11% |
| 70,001 to 100,000 | 19% |
| 100,001 to 400,000 | 25% |
| 400,001 to 600,000 | 26% |
| 600,001 to 2,000,000 | 28% |
| Above 2,000,000 | 30% |
Capital gains treatment
Malaysia does not levy a general capital gains tax on shares or other investment assets. Gains from selling Malaysian or foreign listed securities are not taxable for individual investors.
Real Property Gains Tax (RPGT) applies to gains on disposal of Malaysian real property. RPGT for non-citizens and non-permanent residents is 30% for disposals within 5 years, 10% in years 6 and beyond. Malaysian citizens receive a one-time exemption on the disposal of one property.
How foreign-sourced income is treated
Foreign-sourced income remitted to Malaysia by tax residents is taxable in principle since January 2022. However, a blanket exemption applies where the income has already been subject to tax in the country of origin. This exemption runs through 31 December 2036.
Income not remitted to Malaysia is outside scope entirely. Income from UK ISAs, pension commencement lump sums, or capital gains from countries with no CGT may not qualify for the exemption as there is no foreign tax to point to. These situations require case-by-case analysis.
Key DTA partners
Malaysia has comprehensive DTAs with over 70 countries. Key provisions for European expats:
Can foreigners own property in Malaysia?
Foreign nationals can own freehold and leasehold property in Malaysia subject to state government approval and minimum price thresholds. The minimum purchase price for foreigners varies by state: Kuala Lumpur and Selangor set the threshold at MYR 1 million. Most condominiums and high-rise properties are eligible. Agricultural land and reserved Malay land are restricted. The Malaysia My Second Home (MM2H) programme offers additional property purchase pathways.
Filing calendar
- 30 April Deadline for filing income tax return (Form BE for residents without business income) for the preceding tax year. E-filing extends to 15 May.
- 30 June Deadline for filing Form B (for residents with business income).
- 31 December End of the Malaysian tax year. Residency is assessed on a calendar-year basis.
- 182 days Residency threshold. Days physically in Malaysia during the calendar year. Count includes the day of arrival and departure.
Get the Malaysia tax calendar for expats
Filing deadlines, residency milestones, and key dates for European expats in Malaysia.