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Establishing Residence, Obtaining Citizenship & Taxation

Establishing Residence, Obtaining Citizenship & Taxation

Residence permit is required when a person intends to reside in Malta for a period longer than three months. A residence permit is usually issued for persons taking up studying in Malta, working in Malta or persons who are economically self-sufficient and thus would like to retire or otherwise reside in Malta.

Establishing Residence & Obtaining Citizenship

EU Nationals

  • EU citizens have the right to reside in Malta. Although an application for residence permit is required, the procedure is more of a formality and a notification process
  • The standard documents required for a residence application are:
  • A copy of the applicant/dependant’s valid passport
  • Two (2) passport size photos of each applicant/dependant
  • Persons taking up residence to work in Malta are to provide a contract of employment
  • Persons taking up residence in Malta other than for studying or for working will need to further provide:
  • Evidence of medical insurance covering risks in Malta
  • Evidence of sufficient financial resources (i.e. must be higher than the level of the Maltese minimum social security pension), such as documents confirming the receipt of a pension or bank statements showing annual income certificate - where applicable

EU Nationals

  • EU Nationals may further benefit from the following programmes, the main benefit of which is a reduced rate of tax
  • High Net Worth Individuals Programme (Appendix i)
  • Malta Retirement Programme (Appendix ii)
  • Highly Qualified Persons Programme (Appendix iii)
  • Special provisions are in place for persons holding a Maltese passport who had emigrated from Malta wishing to return to take up residence

Non EU Nationals

Non EU citizens may be allowed entry to reside in Malta however, the process involved is not merely an administrative one and involves the exercise of discretion by the officials of the competent authority:

  • Work permits are only granted in favourable labour market conditions
  • Attempts by persons who are economically self sufficient to retire or otherwise reside in Malta have a low rate of success (unless they participate in a special programme)
  • The Highly Qualified Persons Programme (Appendix iii) may apply to Third
  • Country Nationals subject to certain limitations
  • The Inland Revenue administer the ‘Global Residence Programme’ (Appendix iv) whereby applicants may be eligible to a certificate which will allow them to reside in Malta for as long as the relative conditions are satisfied
  • Identity Malta also launched the Individual Investor Programme which provides successful applicants with a Maltese passport (Appendix v)
  • The transfer into Malta of used household and personal effects from a country within the EU is not subject to VAT (import duty not applicable) unless such goods are subject to excise duty (like cigarettes or alcohol). Cars are only exempt from VAT if they are more than 6 months old and clocked more than 6,000km. Registration tax on cars is still payable
  • If imported within 12 months of arrival into Malta, the transfer into Malta of used household and personal effects from a country outside the EU is not subject to VAT and import duty, unless such goods are subject to excise duty (like cigarettes or alcohol). Registration tax on cars is still payable

Malta Double Tax Treaties in Force *

Albania, Australia, Austria, Bahrain, Egypt, Estonia, Finland, France, Israel, Italy, Jersey, Jordan, Morocco, Netherlands, Norway, Pakistan, Slovenia, South Africa, Spain, Sweden, Barbados, Georgia, Korea (Rep. of), Poland, Switzerland**, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Rep, Denmark, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Ireland, Isle of Man, Kuwait, Latvia, Lebanon, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Montenegro, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Syria, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States of America and Uruguay

*As at July 2014

** Ships and Aircraft

Malta Double Tax Treaties initialled/signed not yet in force *

Mexico Moldova Ukraine

* As at July 2014

Appendix i - High Net Worth Individuals Programme

Eligibility

  • Applies to citizens of EU, Iceland, Norway, Liechtenstein and Switzerland
  • The applicant must show that he is in receipt of stable and regular resources without having recourse to social assistance in Malta
  • Applicant must hold a valid travel document
  • Applicant must be a fit and proper person
  • Applicant must declare that he does not stay in any other jurisdiction for more than 183 days in a calendar year
  • Applicant has no intention of establishing his domicile / long term residence in Malta

Conditions

  • Ownership of ‘Qualifying Property’ in Malta purchasing cost of no less than €400,000 or a rental property for not less than €20,000 per annum
  • A declaration is required that the property is occupied as the principal place of residence worldwide
  • The property may not to be sub-let or lived in by other persons
  • Applicant must possess sickness insurance covering risks across the EU

Application

The official application form should be accompanied by the following supporting documents:

  • Conduct certificate from the Police Authorities of the country of nationality of the applicant and every dependant over 18 years of age, issued not earlier than six months prior to the application date (accompanied by the Apostille Certificate)
  • Applicant  is to make  a  declaration  on  oath  in  front  of  a  Maltese Commissioner of Oaths confirming that he/she is not subject to any ongoing criminal proceedings

Application

The official application form should be accompanied by the following supporting documents (cont’d):

  • Copy of passports
  • Copy of birth certificates (Apostilled)
  • Copy of marriage certificates - where applicable (Apostilled)
  • Passport sizes photos (X 2) – certified true likeness
  • Certified true copy of medical insurance document
  • Personal Questionnaire
  • Certified true copy of deed of purchase or lease agreement of qualifying property (may be submitted upon issue of letter of intent)

Procedure

  • An application under the High Net Worth Individuals Programme may only be made through the services of an Authorised Registered Mandatory
  • The applicant need not be the owner or lessee of a qualifying property at the stage when an application is filed
  • The application may first be filed for the Commissioner’s consideration, together with the personal questionnaire and the payment of the administrative fee and the acquisition or leasing of the qualifying property may be made after a letter of intent is issued notifying applicant of a positive outcome

Annual Requirements

  • An Annual Tax Return is required to be filed by beneficiaries of the High Net Worth Individuals Programme
  • This declaration of one’s taxable income is also a means by which any material changes that affect one’s special tax status are expected to be highlighted

Administrative Fee

  • A one time administrative non-refundable fee of Euro6,000 is payable to the authorities upon application.

Taxation

  • Foreign income that is received or remitted into Malta, is subject to tax at a flat rate of 15%. No tax is levied in Malta on the remittance of foreign capital gains
  • Any income or capital gains derived from Malta are taxable at the rate of 35%
  • Subject to relief from any foreign tax (DTR)
  • Subject to a minimum tax liability of Euro20,000 (after any DTR) and another
  • Euro2,500 per dependant

Residence Card

  • Beneficiaries under the High Net Worth Individuals Programme are entitled to reside in Malta, however, the current practice is that the document which will allow the beneficiary entry into Malta, is the Residence Card
  • An application for ‘Residence Card’ is made with Identity Malta
  • The  beneficiary  under  the  programme  will  be  automatically  entitled  to  the residence card
  • The  residence  card  is  usually  issued  for  a  period  of  one  year  which  is automatically renewable for a similar period for as long as one remains a beneficiary under the programme
  • The residence card entitles the holder to unlimited travel within the Schengen zone

Appendix ii - Malta Retirement Programme

Eligibility

  • Applies to citizens of EU, Iceland, Norway, Liechtenstein and Switzerland
  • The applicant must show that he is in receipt of a pension and that he is not employed in Malta
  • The applicant must show that he is in receipt of stable and regular resources without having recourse to social assistance in Malta
  • Applicant must hold a valid travel document
  • Applicant must be a fit and proper person
  • Applicant must declare that he does not stay in any other jurisdiction for more than 183 days in a calendar year
  • Applicant must reside in Malta for at least 90 days per annum averaged over a 5 year period
  • Applicant has no intention of establishing his domicile / long term residence in Malta

Conditions

  • Ownership of ‘Qualifying Property’ in Malta acquisition cost of no less than €275,000 (or €250,000 if situated in Gozo) or a rental of property for not less than
  • €9,600 per annum (or €8,750 if in Gozo)
  • A declaration is required that the property is occupied as the principal place of residence worldwide
  • The property may not be sub-let or lived in by other persons
  • Applicant must possess sickness insurance covering risks across the EU

Application

The official application form should be accompanied by the following supporting documents:

  • Conduct certificate from the Police Authorities of the country of nationality of the applicant and every dependant over 18 years of age, issued not earlier than six months prior to application date (accompanied by the Apostille Certificate)
  • Applicant  must  make  a  declaration  on  oath  in  front  of  a  Maltese Commissioner of Oaths confirming that he/she is not subject to any ongoing criminal proceedings

Application

  • The official application form should be accompanied by the following supporting documents (cont’d):
  • Copy of passports
  • Copy of birth certificates (apostilled)
  • Copy of marriage certificates - where applicable (apostilled)
  • Passport sizes photos (X 2) – certified true likeness
  • Certified true copy of medical insurance document
  • Personal Questionnaire
  • Certified true copy of deed of purchase or lease agreement of qualifying property (may be submitted upon issue of letter of intent)
  • Evidence of pension

Procedure

  • An  application  under  the  Malta  Retirement  Programme  may  only  be  made through the services of an Authorised Registered Mandatory
  • The applicant need not be the owner or lessee of a qualifying property at the stage when an application is filed
  • The application may first be filed for the Commissioner’s consideration, together with the personal questionnaire and the payment of the administrative fee and the acquisition or leasing of the qualifying property may be made after a letter of intent is issued notifying applicant of a positive outcome

Annual Requirements

  • An Annual Tax Return is required to be filed by beneficiaries of the Malta

Retirement Programme

This declaration of one’s taxable income is also a means by which any material changes that affect one’s special tax status are expected to be highlighted

Administrative Fee

  • A one time administrative non-refundable fee of Euro2,500 is payable to the authorities upon application.

Taxation

  • Foreign income that is received or remitted into Malta, is subject to tax at a flat rate of 15%. No tax is levied in Malta on the remittance of foreign capital gains
  • Any income or capital gains derived from Malta are taxable at the rate of 35%
  • Subject to relief from any foreign tax (DTR)
  • Subject to a minimum tax liability of Euro7,500 (after any DTR) and another
  • Euro500 per dependant

Residence Card

  • Beneficiaries under the Malta Retirement Programme are entitled to reside in Malta however, the current practice is that the document which will allow the beneficiary entry into Malta, is the Residence Card
  • An application for ‘Residence Card’ is made with Identity Malta
  • The  beneficiary  under  the  programme  will  be  automatically  entitled  to  the residence card
  • The  residence  card  is  usually  issued  for  a  period  of  one  year  which  is automatically renewable for a similar period for as long as one remains a beneficiary under programme
  • The residence card entitles the holder to unlimited travel within the Schengen zone

Appendix iii - Highly Qualified Persons Programme

Eligibility

Highly qualified persons to occupy “eligible office” with companies licensed and/or recognized by the following authorities:

  • Malta Financial Services Authority;
  • Companies licensed by the Lotteries and Gaming Authority;
  • Undertakings holding an Air Operators’ Certificate or an Aerodrome Licence issued by the Authority for Transport in Malta

Eligible office" comprises employment in one of the following positions:

  • Actuarial Professional
  • Aviation Continuing Airworthiness Manager
  • Aviation Flight Operations Manager
  • Aviation Ground Operations Manager
  • Aviation Training Manager
  • Chief Executive Officer
  • Chief Financial Officer
  • Chief Commercial Officer
  • Chief Insurance Technical Officer
  • Chief Investment Officer
  • Chief Operations Officer (including Aviation Accountable Manager)
  • Chief Risk Officer (including Fraud and Investigations Officer)
  • Chief Technology Officer
  • Chief Underwriting Officer
  • Head of Investor Relations
  • Head of Marketing (including Head of Distribution Channels)
  • Head of Research and Development; (including Search Engine Optimisation and
  • Systems Architecture)
  • Portfolio Manager
  • Senior Analyst (including Structuring Professional)
  • Senior Trader/Trader
  • Odds Compiler Specialist
  • Income from a qualifying contract of employment is subject to tax at a flat rate of 15% provided that the income does not fall below a minimum set amount which is adjusted annually in line with the Retail Price Index. The amount for 2014 stands at €81,205.
  • The 15% flat rate is imposed up to a maximum income of €5,000,000, the excess is exempt from tax.
  • The 15% tax rate applies for a consecutive period of five years for European Economic Area (ie EU countries plus Norway, Iceland and Liechtenstein) and Swiss nationals and for a consecutive period of four years for third country nationals.

An individual may benefit from the 15% tax rate if he satisfies all of the following employment conditions:

  • derives employment income subject to income tax in Malta
  • has an employment contract subject to the laws of Malta and proves to the satisfaction of the Competent Authority that the contract is drawn up for exercising genuine and effective work in Malta (Note: where an individual receives salaries from different companies in the same group and the group relationship of such companies is of 100% ownership, he / she will still be eligible if the aggregate salaries (excluding fringe benefits) are higher than the minimum thresholds as specified above).
  • proves to the satisfaction of the Competent Authority that he / she is in possession of professional qualifications and has at least five years professional experience;
  • has not benefitted from deductions available to investment services expatriates with respect to relocation costs and other deductions (under article 6 ITA);
  • fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his / her employer paying out income from a qualifying contract as chargeable to tax in Malta;
  • proves to the satisfaction of the Competent Authority that he / she performs activities of an eligible office; and
  • proves that:
  • He / She is in receipt of stable and regular resources which are sufficient to maintain himself / herself and the members of his family without recourse to the social assistance system in Malta;
  • He / She resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in Malta;
  • He / She is in possession of a valid travel document; and
  • He / She is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself / herself and the members of his / her family.

Exclusions and Anti Abuse

The individual income derived from employment in an “eligible office” will not qualify for the 15% reduced rate if:

  • it is paid by an employer who receives any benefits under business incentive laws or is paid by a person who is related to the employer who received such benefits
  • the individual holds more than 25% (directly or indirectly) of the company licensed and/or recognised by the said authorities
  • the individual is already in employment in Malta before the coming into force of the scheme either with a company not licensed and/or recognised by the said authorities

The individual income derived from employment in an “eligible office” will not qualify for the scheme if a claim is made for any relief, deduction, reduction, credit or set-off of any kind except for any income tax deducted at source.

  • Provisions in respect of split contracts have been introduced. An arrangement in terms of which a beneficiary receives a payment from a person related to his employer and such payment is not declared for tax purposes in Malta is considered to be an artificial arrangement.

Any rights are withdrawn with retrospective effect if a beneficiary is a third country national and he either:

  • Physically stays in Malta, in the aggregate, for more than four years; or
  • Directly or indirectly acquires real rights over immovable property situated in Malta or holds a beneficial interest directly or indirectly consisting in, inter alia, of real rights over immovable property situated in Malta.

Any individual who claims a benefit under the scheme when he / she is not entitled to do so is liable to a penalty equal to the amount of benefit claimed and if the benefit is paid the individual is liable to repay the benefit received plus an additional tax of 7% per month or part thereof.

Appendix iv - Global Residence Programme

Eligibility

  • The applicant must show that he / she is in receipt of stable and regular resources without having recourse to social assistance in Malta
  • Applicant must hold a valid travel document
  • Applicant must be fluent in Maltese or the English language
  • Applicant must be a fit and proper person
  • Applicant must declare that he does not stay in any other jurisdiction for more than 183 days in a calendar year
  • Applicant has no intention of establishing his domicile / long term residence in Malta

Conditions

  • Ownership of ‘Qualifying Property’ in Malta purchase cost of no less than €275,000 (or €250,000 if purchased in Gozo or €220,000 if situated in the South of Malta) or a rental of property for not less than €9,600 per annum or €8,750 if situated in Gozo or in the south of Malta
  • A declaration is required that the property is occupied as the principal place of residence worldwide
  • The property may not to be sub-let or lived in by other persons
  • Applicant must possess sickness insurance covering risks across the EU
  • The official application form should be accompanied by the following supporting documents:
  • Conduct certificate from the Police Authorities of the country of nationality of the applicant and every dependant over 18 years of age, issued not earlier than six months prior to application date (accompanied by the Apostille Certificate)
  • Applicant  must  make  a  declaration  on  oath  in  front  of  a  Maltese Commissioner of Oaths confirming that he/she is not subject to any ongoing criminal proceedings

The official application form should be accompanied by the following supporting documents (cont’d):

  • Copy of passports
  • Copy of birth certificates (apostilled)
  • Copy of marriage certificates - where applicable (apostilled)
  • Passport sizes photos (X 2) – certified true likeness
  • Certified true copy of medical insurance document
  • Personal Questionnaire
  • Certified true copy of deed of purchase or lease agreement of qualifying property (may be submitted upon issue of letter of intent)
  • An  application  under  the  Global  Residence  Programme  may  only  be  made through the services of an Authorised Registered Mandatory
  • The applicant need not be the owner or lessee of a qualifying property at the stage when an application is filed
  • The application may first be filed for the Commissioner’s consideration, together with the personal questionnaire and the payment of the administrative fee and the acquisition or leasing of the qualifying property may be made after a letter of intent is issued notifying applicant of a positive outcome

Annual Requirements

  • An Annual Tax Return is required to be filed by beneficiaries of the Global Residence Programme
  • This declaration of one’s taxable income is also a means by which any material changes that affect one’s special tax status are expected to be highlighted

Administrative Fee

  • A one time administrative non-refundable fee is payable to the authorities.
  • The fee stands Euro6,000 (or Euro5,500 if qualifying property is in Gozo or the South of Malta)

Taxation

  • Foreign income that is received or remitted into Malta, is subject to tax at a flat rate of 15%. No tax is levied in Malta on the remittance of foreign capital gains
  • Any income or capital gains derived from Malta are taxable at the rate of 35%
  • Subject to relief from any foreign tax (DTR)
  • Subject to a minimum tax liability of Euro15,000 (after any DTR)

Residence Card

  • Beneficiaries under the Global Residence Programme are entitled to reside in Malta, however, the current practice is that the document which will allow the beneficiary entry into Malta, is the Residence Card
  • An application for ‘Residence Card’ is made with Identity Malta
  • The  beneficiary  under  the  programme  will  be  automatically  entitled  to  the residence card
  • The  residence  card  is  usually  issued  for  a  period  of  one  year  which  is automatically renewable for a similar period for as long as one remains a beneficiary under programme
  • The residence card entitles the holder to unlimited travel within the Schengen zone

Appendix v - Individual Investor Programme

Participation in the programme leads to a certificate of naturalisation as a citizen of Malta. A Maltese passport may be applied for once a set of eligibility criteria are satisfied and conditions are met.

Eligibility

  • Applicant must be 18 years of age or older
  • Dependants of the main applicant may consist of spouse, children under the age of 18, unmarried children between the age of 18 and 26 and dependant parents over the age of 55.
  • Applicants and dependants must be in good health and free of any contagious disease
  • Applicants and dependants must pass a ‘fit and proper’ test
  • Contribution of €650,000 by the main applicant, of which €10,000 is non- refundable and paid on application
  • Spouses and children up to the age of 18 are required to make a further contribution of €25,000 each, whilst dependant parents and unmarried children between the age of 18 and 26 must contribute €50,000 each
  • An investment in Maltese property for a minimum amount of €350,000 which is to be retained for 5 years or a 5 year rental contract for Maltese property at a minimum of €16,000 p.a. Property not to be let or sub-let
  • Investment in bonds, shares or other investment vehicles in Malta for an amount of at least €150,000 to be held for at least 5 years
  • Applicants and dependants must be covered by a global health insurance policy
  • Must have been a resident of Malta for 12 months prior to the issue of the certificate of naturalisation. Advance written approval will be sought from the authorities about applicants’ proposed links to Malta to confirm that these satisfy the residence requirement

Administrative Fee

  • Application must be made through an accredited agent
  • Due diligence fees of €7,500 are due by main applicant and €5,000 each by spouse, dependant parents and children aged 18 and over. Fees are also applicable to children aged between 13 and 18 at €3,000 each
  • Passport fees are set at €500 per person and bank charges at €200 per application
Published: 24 May 2015

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