Malta Residence: Tax & non-Tax Considerations

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Malta Residence: Tax & non-Tax Considerations Manifesting continuous sunshine, abundant local fresh produce, unique historic attractions, impressive Mediterranean beaches, and a very low criminality rate, Malta has inevitably become an ideal location for persons to reside in. Non-Fiscal Considerations Upon the stay in Malta by an individual (EU or non-EU) for more than 3 months, a residence permit issued by the immigration authority is necessary. Issuance of a residence permit must be based on a “reasonable ground” which is generally any of the following:  Employment/Self-Employment - while EU nationals may work in Malta without the need for a work permit, nonEU persons may only work in Malta as long they have a work permit. The permit will normally be valid for one year and is granted to people with professional expertise which is sought after in Malta. If the foreign resident would want to work in Malta as an employee, he is required to produce an authorisation from his potential employer. On the other hand, if the foreign resident wishes to setup up an independent business, he would be required to produce a letter of recommendation from a person with whom he will have commercial connections.

 Economic Self-Sufficiency – EU nationals who show that they are able to provide for themselves and their dependents by evidencing possession of a minimum capital of €14,000 or weekly income of €92.32 in case of single persons (€23,300 and €108.63 respectively in case of married persons), plus a further €8.15 per week in case of other dependents. Non-EU nationals wishing to obtain Maltese residence on this ground must fulfil thresholds for annual minimum income of €13,976 if single (€16,305 if married) plus a further €2,329 in case of other dependents.  Studying – residence is generally granted for the period of studying in Malta.  Family Members – dependents on main applicants must apply for residence separately.  Permanent Residence – EU nationals become entitled for permanent residence after the lapse of a 5 year period of continuous legal living in Malta. Subject to certain conditions, non-EU nationals may still become eligible for long-term residence. Fiscal Considerations An individual, who would have physically resided in Malta for at least 6 months or satisfied other substance requirements, would have to register as a resident for tax purposes as well.

© 2014 KSi Malta, a member firm of the KS International an association of independent member firms. All rights reserved. No one should act or rely on information prior to seeking appropriate professional advice on his/her specific situation.


Foreign persons who enrol as residents with the tax authority become liable to Maltese taxation on:  Income and capital gains which arise in Malta; and  Foreign income which is received in Malta. Henceforth, no Maltese taxation is levied on foreign capital gains irrespective if remitted to Malta or not. In the case that Maltese taxation triggers in, the applicable rates will be the following:

Married

Single

Parents

011,900

0%

0-8,500

0%

0-9,800

0%

11,90121,200

15%

8,50114,500

15%

9,80115,800

15%

21,20128,700

25%

14,50119,500

25%

15,80121,200

25%

28,70160,000

29%

19,50160,000

29%

21,20160,000

29%

Over 60,001

35%

Over 60,001

35%

Over 60,001

35%

Specialised Tax Residence Schemes Foreigners wishing to take up residence in Malta, may in addition to benefitting from the remittance basis of taxation outlined above, opt to apply for one of Malta Tax Residence Programmes:  High Net Worth Individuals Scheme – applicable to EU/EEA/Swiss nationals and allows a 15% flat tax rate on foreign income received in Malta, with a minimum annual tax of €20,000 plus €2,500 per dependent. This involves a number of conditions including the acquisition of property in Malta for at least €400,000 or rental for at least €20,000 per annum.

 Global Residence Scheme – applicable to nonEU/EEA/Swiss nationals and allows a 15% flat tax rate on foreign income received in Malta, with a minimum annual tax of €15,000. This involves a number of conditions including the acquisition of property in Malta for at least €275,000 (€220,000 if in the south of Malta and €250,000 if in Gozo) or rental for at least €9,600 per annum (€8,750 if in the south of Malta or Gozo).  Highly Qualified Persons Scheme – applicable to all foreigners and allows income derived from certain highly ranked employment posts within the Maltese Financial, Gaming/Innovation and Aviation sectors. Such income could be subject to a 15% flat tax rate with a minimum annual tax of €11,250. Any income in excess of €5 million would not be subject to any Maltese taxation.  Malta Retirement Programme - applicable to EU/EEA/Swiss nationals who are not employed but are in receipt of a pension as their regular source of income. This allows for a 15% flat tax rate on foreign income received in Malta, with a minimum annual tax of €7,500. This involves a number of conditions including the acquisition of property in Malta for at least €275,000 (€250,000 if in the south of Malta) or rental for at least €9,600 per annum (€8,750 if in the south of Malta). Qualifying Recognised Overseas Pension Scheme (QROPS) Malta’s continuously thriving financial services sector has been extended to cater for new retirement schemes and funds. Such has Malta’s financial services reputation excelled that certain retirement schemes established in Malta are being recognised by Her Majesty’s Revenue and Customs in the U.K. (the HMRC) as Qualifying Recognised Overseas Pension Schemes (QROPS). This means that persons who have UK pensions which are being deferred may transfer them into a new pension scheme based in Malta and hence be taxed more favorably in Malta.

Contact us

Our Office

Bernard C. Gauci Senior Advisor bgauci@ksimalta.com

Villa Gauci Mdina Road Balzan BZN 9031 Malta Tel: (+356) 21226176 Fax: (+356) 21226019

Benjamin Griscti Senior Advisor bgriscti@ksimalta.com

www.ksimalta.com

A member of KS International

© 2014 KSi Malta, a member firm of the KS International an association of independent member firms. All rights reserved. No one should act or rely on information prior to seeking appropriate professional advice on his/her specific situation.


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