banner tower
Banner - Barrakka
Banner 1 - Books

Residence in Malta

Malta has always attracted foreigners to it and a good number of foreigners have opted to take up a Maltese residence. Malta's lifestyle, good weather, warm people and rich history are a few of the things which make foreigners fall in love with the island. However one very important aspect about moving to a foriegn country, is understanding the tax laws and ramifications on one's income and wealth.

We have substantial expertise in tax and have assisted with a considerable number of clients who have considered taking up a Maltese residence.

Under Maltese tax laws, individuals are subject to tax in Malta on the basis of their residence and domicile. Individuals who are deemed to be both resident and domiciled in Malta are subject to income tax on a worldwide basis. Income earned, accrued or derived in Malta or elsewhere is subject to tax in Malta irrespective of whether the foreign source income is remitted to Malta or not. 

Due to the strict interpretation of domicile which our law adopts, it is legally difficult for an expatriate who has taken up a Maltese residence, to also attain a Maltese domicile. Hence expats who have taken up a Maltse residency are usually not taxed on a worldwide basis - but only on income and capital gains arising in Malta (unless exempt) and on foreign sourced income which is remitted to Malta.  Foreign source income which is not remitted to Malta is not subject to Maltese tax and capital gains earned abroad are not taxable even if they are remitted to Malta.

This makes Malta an attractive jurisdiction for people looking to set up a residence in a tax effective jurisdiction.

An individual may take up residence in Malta by declaring his intention within three months of arrival in Malta.  For tax purposes, an individual is considered to be a "resident in Malta" when he resides in Malta except for such temporary absences as to the Commissioner may seem reasonable and not inconsistent with the claim of such individual to be resident in Malta. The definition of a resident is clearly not directly tied to the duration of stay in Malta, however it is generally understood that one would definitely be considered as a Maltese resident for a particular year if, during that year, his stay in Malta exceeds 6 months. 

Malta offers a number of various residence options namely:

  • Residence under the EU's Freedom of Movement

  • Malta Residence and Visa Programme

  • Global Residence Scheme

  • Residence Programme Rules (EU Nationals)

  • Malta Retirement Programme Rules, 2012

  • Qualifying Employment in Innovation and Creativity (Personal Tax) Rules
  • High qualified Persons Rules   
  • United Nations Pensions  Programme of Malta
 
Residence under the EU's Freedom of Movement

EU nationals have the right to reside in Malta if they are exercising any of their Treaty rights as workers, self-employed persons, economically self-sufficient persons or students. 

EU nationals and their family members can accept offers of work and seek employment in Malta, and can also work as a self-employed or set up a local business.

People who are seeking to retire in Malta, or who do not need to work usually take up residence under the self-sufficiency route. The minimum requirement to satisfy the self-sufficiency criteria is that the individual must show that he has capital of at least €14,000 or a weekly income of €84.95. In the case of a married couple the minimum capital is set at €23,300 or a weekly income of €93.10.  Furthermore the person must be covered by sickness insurance covering him and his family against all medical risks whilst in Malta 

An EU national (and his family members) who has legally lived in Malta for a continuous period of five years will be entitled to apply for confirmation of permanent residence. 

Malta Residence and Visa Programme

This Programme was created in 2015 and is available to any third country nationals (non-EUs) wishing to settle in Malta together wtih their family and also enjoy visa free travel within Europe and other Schengen countries. This provides for the applciation of a residence certificate which will be isued by Identity Malta Agency (IMA) and once such certificate is issued it confers residency right to the the holder and to his registered dependents. Such residency rights means they are free to settle and stay in Malta indefinitely and also to come and visit Malta, Visa free at any time.

This is not specially a tax incentive programme, however holders of the certificate will still benefit from the non-dom concept of taxation - namely that only income arising in Malta or income arising abroad and sent to Malta are taxable in Malta.

Further information can be found here 

Global Residence Scheme

The Global Residence Programme Rules have been brought into force as of the 1st of July 2013 by means of legal notice 167 of 2013. This scheme shall apply to third country nationals (non-EU Nationals) and their dependants who do not currently benefit from any other special tax status. In order to be eligible for application, the applicant must also hold a qualifying property building, be in possession of a valid travel document, be fluent in one of Malta’s official languages and be considered as a fit and proper person.  Additionally, rules also require that the beneficiary be in possession of a sickness insurance and be in receipt of stable and regular resources that are sufficient to maintain the beneficiary and the dependants without the need to resort to the social assistance system in Malta.   

The scheme entitles the beneficiary to enjoy a tax rate of 15% for income which arises outside of Malta in the year immediately preceding the year of assessment which is received in Malta (including income arising outside Malta and received in Malta during the whole of the year in which the special tax status was granted) by the beneficiary, the beneficiary’s spouse and children with the possibility to claim relief of double taxation. The Rules stipulate a minimum amount of tax payable which is that of €15 000 for any year of assessment. 

Further information about the Global Residency Scheme can be found here

Malta Residence & Visa Programme

In 2015, Malta launched the Residence and Visa Programme for Non- EU/EEA/Swiss nationals wishing to reside, settle or stay indefinitely in Malta, as well as travel within Schengen area without the need for applying for a visa.

The beneficiary and his dependants can also apply to reside, settle or stay indefinitely in Malta. Applicants must satisfy certain conditions, including a three tier investment in Malta comprising of a contribution, acquiring or renting qualifying immovable property situated in Malta or Gozo and investing in the Maltese economy.

Applicants need to be non-EU/EEA/Swiss citizens and need to have an annual income of not less than €100,000 arising outside of Malta or in possession of capital of not less than €500,000;

The Programme can be viewed as a Residence by Investment route open to Non EU nationals and their dependents who would be granted a Maltese residence permit allowing its beneficiaries a permit which will allow free travel within the Schengen Area, thus free travel within the 26 members of the Schengen Area.

Such residence permit will also grant its beneficiaries the right to reside, settle and stay indefinitely in Malta. Importantly, spouses, children, parents and grandparents may also qualify as dependants and hence get a residence permit too.

Further information can be found here.

Residence Programme Rules (EU Nationals)

This Programme entitled  The Residence Programme Rules 2014’ was introduced in 2014 and is very similar to the Global Residence Programme described above.

The Residence Programme introduces a similar programme tailored for Expats who are EU, EEA or Swiss nationals. Such applicants cannot be Maltese nationals/citizens and must not be currently benefiting from any other special tax status in Malta. In order to be eligible for the programme the applicant must also hold a qualifying property and satisy the other requirements set out above

Similarly this also entitles the beneficiary to enjoy a tax rate of 15% for income which arises outside of Malta in the year immediately preceding the year of assessment which is received in Malta (including income arising outside Malta and received in Malta during the whole of the year in which the special tax status was granted) by the beneficiary, the beneficiary’s spouse and children with the possibility to claim relief of double taxation. The Rules stipulate a minimum amount of tax payable which is that of €15 000 for any year of assessment. 

Further information can be found here

Malta Retirement Programme Rules, 2012

Issued in October 2012, the Malta Retirement Programme Rules (MRP) (Legal Notice 317/2012) provides for a special tax status for retirees from the EU, EEA countries and Switzerland who remit their pension to Malta.

Individuals benefiting from this programme may hold a non-executive post on the board of a company resident in Malta, but are prohibited from being employed by the company in any capacity. Such individuals may also partake in activities related to any institution, trust or foundation of a public character and any other similar organisation or body of persons, which are also of a public character, that is engaged in philanthropic, educational or research and development work in Malta.

An attractive tax rate of 15% is payable on the portion of pension remitted provided that the minimum tax payable is that of €7,500 for the beneficiary and € 500 for every dependant. This rate of tax will apply from the date of confirmation of the special tax status which is referred to as the “appointed day” up to “day of cessation of status”. Progressive tax rates are to apply in the days prior to the appointed day or subsequent to the day of cessation of status.

Further information can be found here.

Qualifying Employment in Innovation and Creativity (Personal Tax) Rules

Following the success introduction of the ‘Highly Qualified Persons’ scheme, with effect from the 1st of January 2013, Malta introduced another scheme intended for expatriates working in Malta named the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules. The scheme is intended for individuals who fulfil a role directly engaged in the development of innovative and creative digital products.

These rules provide an opportunity for individuals working in the development of innovative and creative digital products in Malta in opting to have their employment income in respect of work exercised in Malta to be chargeable at a reduced rate of 15%.

In fact, income from a qualifying contract of employment in an “eligible office” is subject to tax at a flat rate of 15% provided that the taxable income is at least €45,000. This minimum amount of income shall be adjusted annually in line with the Retail Price Index as published in the Gazette by the National Statistics Office.

The 15% tax rate applies to income up to a maximum €5,000,000. Thus should any income exceed the maximum amount of €5,000,000, no further tax would be charged on the excess income. 

Further information can be found here

High qualified Persons Rule

In 2011, Malta introduced specific tax rules, namely the Highly Qualified Rules, intended to attract top expertise and skill in the financial services, remote gaming and aviation sectors, enabling operators in these sectors to attract and recruit the highest qualified, experienced and senior professionals available globally.

In essence, the scheme is designed to attract highly qualified persons to occupy eligible offices with companies licensed and/or recognized by the MFSA, the LGA and companies holding an Air Operators’ Certificate issued by the Authority for Transport in Malta

In accordance with these Rules, applicants that successfully register under the scheme are entitled to benefit from a fixed reduced tax rate of 15 % on all income derived from their employment in Malta. Should the income from an qualifying employment exceed €5,000,000 per annum, no further tax is chargeable on the excess.

Further information can be found here

United Nations Pensions Programme Rules, 2015 (UNPP) 

This contemplates the granting of “special tax status” to UN Pensioners.
 
The UNPP provides for the granting of a special tax status to individuals who are neither permanent residents nor long-term residents of Malta and who are in receipt of a UN pension or a Widow’s/Widower’s Benefit of which at least 40% is received in Malta. Any such individual may hold a non-executive post on the board of a company resident in Malta or partake in activities related to any institution, trust or foundation of a public character and any other similar organisation or body of persons, which are also of a public character, that is engaged in philanthropic, educational or research and development work in Malta

Further information can be found here

Benefits associated with a Maltese residence

  • Worldwide basis of taxation is not applicable to persons who are resident but not domiciled in Malta;
  • Capital gains remitted to Malta are not subject to any tax whatsoever;
  • Access to Malta’s wide treaty network as well as unilateral relief provisions. 
  • No net worth or wealth taxes;
  • Capital gains realised on the transfer of one’s own residence is exempt from tax if the property has been owned and occupied for at least three consecutive years and the property is transferred within one year of being vacated;

Kindly Contact Us now for further information and advice.