Malta has a lot going for it in terms of pure physical beauty. You’ve seen the postcards of Malta with its deep blue sea, clear skies, golden sandstone buildings, colourful boats and countless church domes. However, Malta is also one of the EU’s most attractive jurisdictions, offering political stability, efficient regulation, a strong financial market, investment in infrastructure and a social, cosmopolitan way of life that measures up to any European city.
Whereas the Global Residence Programme (GRP) targets Non-EU individuals, this programme is open to EU, EEA and Swiss nationals also wishing to benefit from special tax status in Malta. The Residence Programme Rules 2014 is a natural alternative for the High Net Worth Individual programme and any other Tax Scheme that is targeted to EU, EEA and Swiss nationals.
Apart from the obvious joys of living on a sunny island in the Mediterranean with a stable government, strong infrastructure and safe environment, becoming a resident in Malta could allow you to enjoy very favourable tax rates, such as a rate of 15% on foreign source income received in Malta, as well as having the possibility of claiming double tax relief on that income. Malta is also a Schengen country.
Over the last ten years Malta has become an excellent centre for business attracting several foreigners investors to the Maltese Islands. The infrastructure has accommodated for the needs of these individuals whereby lifestyle developments, first class rated office buildings and a number of four and five star hotels have been developed. Malta has a natural environment where high net worth individuals and retirees may live a comfortable lifestyle which is agreeable to what they would expect and beyond.
Applicants must be EU, EEA or Swiss nationals, who are not already permanent residents in Malta and who own or lease a property in Malta. The property must be bought for no less than €275,000 (or €220,000 if in Gozo or in the south of Malta). If renting, the applicant must pay an annual rent of no less than €9,600 (or €8,750 for properties in Gozo and in the south of Malta).
Applicants must not already be benefitting from any other tax incentive programmes offered by the Maltese government. In addition, applicants must prove they have the necessary resources to maintain themselves and any dependents, must be in possession of a valid passport and health insurance (that covers all dependents too), as well as be able to communicate in English or Maltese.
Each application includes a non-refundable fee of between €5,500 and €6,000, depending on the location of the applicant’s property. The Inland Revenue Department carries out due diligence on all applicants and only grants special tax status to those that are found to be of a satisfactory reputation.
Once an applicant is successful, that person will be able to enjoy a tax rate of 15% on all foreign source income that is received in Malta, with the added possibility of claiming double taxation relief subject to a minimum tax liability of €15,000 a year. All other income is charged at a rate of 35%.
To retain the special tax status, the beneficiary must not become a Maltese national or a ‘permanent resident’, must retain the property in the application, and must have health insurance and the financial resources to support themselves and any dependents. Beneficiaries are not allowed to remain in any other jurisdiction for more than 183 days in any calendar year. Finally, special reporting obligations must be adhered to when filing tax returns.
Applications for special tax status may only be made through an ‘Authorised Mandatory’, who is registered with the Inland Revenue.
Should the beneficiary of special tax status apply for, and acquire, the right to become a permanent resident of Malta, the special tax status will be forfeited and all income worldwide will be taxed at normal rates. This includes applying for a permanent residence certificate in terms article 6 and article 7 of the Free Movement of European Union Nationals and their Family Members Order.
Hence this does not affect those individuals that take up residence in Malta and benefit from any of the expatriate incentive programmes such as the Residence Programme. It is of due importance that one does not apply for “permanent residence” or “long term residence” under the Free Movement of European Union Nationals and their Family Members Order or status of Long Term Residents Regulations respectively.
One must obtain professional advice from an ‘Authorised Mandatory’ at all times to understand which programme may benefit the individual on a case by case basis.