Tax Residence in Malta

Malta Retirement Programme (MRP)

Thinking of retiring? Think Malta. Considered to be one of the leading destinations for people seeking to retire overseas, Malta has a long history of attracting foreigners to its shores for more reasons than one.

Over the years, successive Maltese Governments have worked hard to ensure that Malta becomes an ideal place to take up residence and local legislation encourages foreigners to live in Malta under favourable fiscal conditions.

Tax is always a good incentive when choosing to move to a new country of residence but Malta offers much more. Location, location, location – a definite must for a great property investment and Malta has it all. Virtually in the centre of the Mediterranean with easy access to most European cities offered by a number of leading airlines. This coupled with a vibrant lifestyle and its Mediterranean climate gives Malta the edge when looking for an ideal place to retire.

Over the years, these islands have earned the reputation of an attractive tax and cost-efficient Euro-zone location attracting many foreigners to take up residence, as well as global corporate entities to set up operations. Why? Because Malta doesn’t just offer attractive financial and tax incentives but has proved to be one of the few countries to have a stable political situation and economy; a highly-skilled multi-lingual workforce, low crime rates, high education levels, an established world class health care system and much more.

The introduction of the Malta Retirement Programme allows for an attractive tax structure among other advantages. Primarily foreigners residing in Malta and benefiting from this programme are not taxed on their worldwide income but only on Maltese source income and on foreign income remitted to Malta. In addition, Malta does not have any wealth or real estate taxes.

Although Capital gains tax on the sale of property does exist, this does not apply to the sale of one’s own residence if owned and occupied for at least 3 years. Furthermore, whether through negotiated double tax agreements with a number of countries worldwide, or through unilateral tax provisions, Malta’s tax legislation provides for relief from double taxation.

The Malta Retirement Programme is directed towards the requirements of many EU, EEA or Swiss nationals whose main income is from pensions, retirement schemes and lifetime or temporary annuities.

When seeking to determine which of Malta’s residence schemes is more suited for a prospective applicant’s requirements, one should always seek professional advice from a knowledgeable Authorised Registered Mandatory and an expert in the various Malta residence schemes.

Malta Retirement Programme (MRP) key points:

• Applications may only be submitted from an Authorised Registered Mandatory;
• Tax shall be a flat rate of 15% on the gross income that shall be chargeable in Malta. The entire pension must be declared in Malta and the pension shall constitute at least 75% of the total income chargeable to tax in Malta;
• There is a minimum tax of €7,500 per annum which is increased by €500 for each dependent;
• Husband and wife must pay a minimum of €8,000 in tax per annum;
• All individual’s resident in Malta and benefitting from the Malta Retirement Programme must not reside in any other single jurisdiction for more than 183 days in any year and must also reside in Malta for a minimum of 90 days a year averaged over any five-year period;

In addition, a common underlying factor to these various programmes is the requisite to purchase or lease property in Malta. The Maltese property market is active and fast moving and often regarded as a safe and lucrative investment. This is where we at Belair Property Group play an important and vital role. Our longstanding reputation and experience in the property Sales and Letting market has enabled us to provide a personalised service to our clients.

MRP – Property requirements are as follows:

• Purchase of property in Malta with a value of €275,000 or above;
  Or
• Purchase of property in the South of Malta or in Gozo with a value of €220,000 or above
  Or
• Lease of property in Malta for a minimum of €9,600 annually;
  Or
• Lease of Property in the South of Malta or in Gozo €8,750 annually.

In the event of a Lease this must be taken for a period of not less than twelve months and evidenced by a certified lease agreement submitted together with the application.


How can Belair Property Group facilitate your move to Malta?

Belair Property not only assists in sourcing the right property to suit your requirements, but through our network of Authorised Professionals we can also offer assistance relating to banking, legal, tax and trust issues. We work with a number of highly reputable practitioners from tax/law firms in Malta who are able to assist you with your application, as well as, the complete process of acquiring Residence in Malta. They offer decent value for money and have proven themselves over recent years to a number of our esteemed clientele.  Please contact us for further details on info@belair.com.mt or visit our website www.belair.com.mt

The Malta Residence Programme is aimed at EU/EEA/Swiss Nationals whereby EU/EEA nationals and their families have the option to live in Malta as residents (providing they do not already have permanent residence status in Malta).

Through this programme the applicant and their family benefit from the following:

• No minimum stay requirements
• No minimum investment requirements
• 15% flat tax rate on any income that is received in Malta from foreign sources by the applicant, his spouse and his minor children or any children suffering from a disability, with the further possibility of claiming double taxation relief. Other chargeable income, including income arising in Malta from any trade, business, profession or vocation is charged at 35% tax;
• Granted a Maltese residence permit;

Beneficiaries of special tax status granted in terms of The Residence Programme will need to pay a minimum tax of fifteen thousand euro (€15,000) annually. This minimum tax covers income of the beneficiary and his / her dependants mentioned below that arises outside Malta and is received in Malta and does not include income that arises in Malta.

Dependants who will be able to benefit from the rate of fifteen cents on every euro are:

• The beneficiary’s spouse;
• Minor children including minor children and children who are in the care and custody of the beneficiary or the beneficiary’s spouse;
• Children including adopted children and children who are in the care and custody of the beneficiary or the beneficiary’s spouse, who are not minors but who because of circumstances of illness or disability of a serious gravity, are unable to maintain themselves. 

Requirements 

For a person to be eligible to the Malta Residence Programme one must own or rent a property which is intended to become the individual’s principal place of residence worldwide. 

• The property purchased must be of a value of at least €275,000 and of €220,000 when the property is in the south of Malta or in Gozo. Or
• When renting a property, the values are set at €9,600 per annum for immovable property in Malta and €8,750 per annum for immovable property in Gozo or the south of Malta.
• It is important to note that the qualifying property may not be let or sub-let.
• The applicant must show that he is economically self sufficient to maintain himself and his dependant without making use of the social assistance system in Malta.
• The applicant must be in possession of medical insurance which covers himself and his dependants in respect of all risks across the whole of the EU normally covered for Maltese nationals. The health insurance cover must be procured by a company licensed in Malta or by an international reputable health insurance company.
• The applicant is to be a fit and proper person and must produce a police conduct certificate issued not earlier than six months prior to the the date of submission of the application, together with a sworn declaration taken before a Commissioner for Oaths in Malta confirming that the applicant is not subject to any ongoing civil or criminal proceedings.

An application for special tax status under The Residence Programme may only be submitted to the Commissioner for Revenue through the services of an authorised registered mandatory.

The Global Residence Programme addresses non-EU, non-EEA and non-Swiss nationals only. As in all other personal tax incentives that Malta offers, individuals qualifying under this programme are subject to a favourable flat rate of tax of 15% on income remitted to Malta. Any Income that arises in Malta will be taxed at a flat rate of 35%. The minimum yearly tax payable when an individual qualifies under the Global Residence Programme is of €15,000 and this shall cover all dependents.

The definition of dependents not only includes simply the wife and children with the latter being capped up to the age of 25 but also includes dependent brothers, sisters and direct relatives in an ascending line provided that the Director of Inland Revenue is satisfied that these are dependents of the beneficiary of the Programme. Employees such as, carers/butlers and other persons that may have been in the employment of the applicant for the preceding two years have also been provided for in this Residence Programme.

To qualify under the Global Residence Programme applicants are required to purchase a property in Malta with a value of €275,000 or more. Properties located in Gozo or the South of Malta have a lower threshold starting from €220,000 or more. Alternatively, foreign nationals who are interested in renting a property, can do so and still be eligible under this programme given that the annual rental value of the property being rented is of at least €9,600 per annum (or €800 monthly) in Malta. Similarly, this threshold is slightly lower for property in Gozo and/or the south of Malta starting from €8,750 per annum (or €730 monthly).

The Programme requires the use of an Authorised Registered Mandatory in Malta to submit the application on behalf of the client. This should ensure that applications are dealt with in a professional and regulated manner. Applicants authorized under this Programme and granted the Uniform Residence Permit will be monitored to ensure that both the applicant and dependents are covered by an all-risks medical insurance policy in Malta.

The yearly renewal of the Uniform Residence Permit will only be given on condition that the applicant and dependents have not only satisfied the minimum conditions for the past year but will also satisfy the conditions for the forthcoming period for which the Uniform Residence Permit is given. This includes the payment of the minimum tax.

The immovable property declared as the applicant’s residence in Malta cannot be used by any other person other than dependents or those in his employ. The applicant may not rent out the property being declared as his/her residence in the application for whatever period and in whichever location. In addition, the applicant may not be resident for more than 183 days in any other single jurisdiction.

Administration fee.

A non-refundable Application fee of €5,500 if the property is in Gozo or the South of Malta; or €6,000 if situated in other parts of Malta, is payable when applying for the Global Residence Programme.

Identity Malta is entrusted with the running of the programme. Each application must be administered by a registered accredited person or registered approved agent with Identity Malta.

The Malta Residence and Visa Programme Regulations, 2015 provides international investors with residency rights. These rights will apply only for non-EU / EEA / Swiss Nationals.

The new programme falls under the Immigration Act and is available to both the applicant and also their dependants subject to the below qualifications.

The qualifications and general requirements for the issuing of a certificate under these regulations are that such person:

1. is at least eighteen years of age;
2. meets the application requirements.
3. has a clean criminal record (as do his dependants), has passed the due diligence test and is a fit and proper person.
4. commits himself to provide proof of title to a qualifying property which may be either of the following:
   • A qualifying owned property purchased at a consideration of not less than two hundred and seventy thousand euro (€270,000) for a property situated in Gozo or in the south of Malta, or three hundred and twenty thousand euro (€320,000) for a property situated elsewhere in Malta.
     Or
   • A qualifying rented property, taken on lease for a rent of not less than ten thousand euro (€10,000) per annum for a property situated in Gozo or in the south of Malta, or not less than twelve thousand euro (€12,000) per annum for a property situated elsewhere in Malta.
5. commits himself to a qualifying investment of an initial value of two hundred and fifty thousand euro (€250,000) which must be held for a minimum of period of 5 years from the date of certificate.
6. Commits himself to pay in full a contribution of thirty thousand euro (€30,000) in accordance with these regulations.
7. Has not had his application deemed to be against the public interest.

There will be a non-refundable administrative fee of five thousand five hundred euro (€5,500) on application, which will be deducted from the contribution. The applicant will need to provide an affidavit declaring that from the date of the application onwards he has either an annual income of not less than hundred thousand euro (€100,000) arising outside Malta or has capital of not less than five hundred thousand euro (€500,000).

The applicant has to be a third country national, not a Maltese, EEA or Swiss national. and must not be under the Residents Scheme Regulations, the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules, the Malta Retirement Programme Rules, the Residence Programme Rules, the Qualifying Employment in Innovation and Creativity Rules or the Highly Qualified Persons Rules.

The beneficiary must hold both the qualifying property and the qualifying investment for a minimum five (5) year period following the appointed date.
The certificate will give the applicant and the registered dependants to reside, settle or stay indefinitely in Malta.

Identity Malta is entrusted with the running of the programme. Each application has to be administered by a registered accredited person or registered approved agent with Identity Malta.