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Contributed by EMD
11 April, 2014
The Maltese archipelago is made up of the main island Malta and its two other sister islands, Gozo and Comino. It is situated in the centre of the Mediterranean between Italy and North Africa. Covering just over 316km2, the current population is that of 421,230. The capital city is Valletta which is situated in the centre of the island and is a World Heritage City.
The climate is typically sub-tropical Mediterranean with a daily average of 12 hours of sun during the summer season which decrease during the winter season.
The islands are a globally renowned touristic attraction as they boast three UNESCO World Heritage sites. One is Valletta, the capital city itself which was built by the Order of St. John of Jerusalem under Jean de Valette after the Great Siege of 1565 and which houses hundreds of monuments in a very concentrated space, rendering it one of the most concentrated historic cities in the world. The others are the seven megalithic temples and the Hal Saflieni Hypogeum. Both were built between 3600-2500 B.C. and are considered to be essential global prehistoric monuments. The island also boasts a large number of beaches garnering its status as a holiday resort especially in the Summer season.
Maltese is the national language, which is Semitic by origin and has a Latin Script. However, English is also an official language, due to Malta’s long historical links with Britain, and Italian is widely spoken by the majority of its inhabitants. The country adopts a civil law system although it is heavily influenced by the common law system.
The vast majority of the country’s inhabitants profess the Roman Catholic faith although all other religions are tolerated.
Many civilisations have left their trace on the island. Settlers have inhabited the country since the Neolithic Period while other foreign occupiers include the Phoenicians, Carthaginians, Romans, Byzantines, Normans, the Sovereign Military Order of St. John, the French and the British. The expulsion of the British Forces culminated in the country’s Independence followed by the formation of a Republic. Malta became an EU Member State in 2004.
Malta is classified as an advanced economy along with 32 other countries according to the International Monetary Fund. It was historically advantaged by Malta’s prime location in the centre of the Mediterranean as a convenient hub for maritime activity, especially after the opening of the Suez Canal. This industry is continuously expanding, with the National Ship Register now being the largest in Europe. Tourism has also formed a large part of the country’s GDP. The entry into the European Union has also hugely aided Malta in becoming a global financial centre with the country boasting a robust legal and regulatory infrastructure.
The Maltese currency is that of the Euro after the country’s entry into the Euro zone in 2008.
With its pleasant climate, safe environment and hospitable English-speaking population, Malta is an ideal place to take up residence. In addition, it offers a range of benefits to individuals seeking to acquire residence on the island, given its advantageous tax regime and competitive cost of living. Any EU/EEA or third country national who stays in Malta for more than three months requires a permit from the immigration authorities which is granted on specific grounds.
Despite its small size, Malta offers many archaeological sites, cultural monuments, architecture, and other treasures spanning the entire history of mankind. For those who enjoy the night life, Malta offers many bars, restaurants, cafes, discotheques and Casinos, while for the sportive visitor many activities can be enjoyed throughout the year including tennis, golf, diving, sailing, windsurfing, horse riding and paragliding. For music, theatre and arts lovers, Malta boasts an abundant calendar of cultural events that are staged throughout the year including operas, plays, exhibitions, classical performances and also rock concerts.
Malta also offers culinary experiences to suit every palate. The food in Malta is mainly European and tends to be based primarily upon Italian tastes. Domestic menus are often set by the food currently in season, particularly in Summer with its varieties of fresh fish and fruit. However, one finds numerous restaurants in Malta providing a varied menu including oriental and Asian cuisine.
Ordinary residence is available for both EU/EEA and non-EU/EEA nationals. However, the qualifying criteria vary according to whether the individual seeking to obtain ordinary residence in Malta is an EU/EEA national or a third country national.
Ordinary Residence for EU/EEA nationals
There are different grounds on which EU/EEA nationals may become ordinary residents in Malta:
Relatives and partners of an EU/EEA national must prove that they are dependent on the applicant for them to be granted the right to accompany the applicant.
Ordinary Residence for third country nationals
These conditions differ from the previous ones:
A third country national who resides legally in Malta is given the right to apply for the reunification of his family members if he/she has reasonable prospects of permanent residence in Malta, has satisfactory accommodation for the family, has stable and regular means of resources and has resided in Malta for at least two years.
Individuals who are ordinarily resident but not domiciled in Malta are subject to income tax on income arising in Malta, on income arising outside Malta but received in Malta and on capital gains arising in Malta. Personal income is charged at a progressive tax rate from 0% up to a maximum of 35%.
Malta Retirement Residency Programme
By taking up this programme, beneficiaries will be able to benefit from a tax rate of 15% (subject to a minimum tax of EUR 7,500 per annum) on any income (consisting predominantly of a pension arising outside Malta but received in Malta), with the possibility to claim relief of double taxation. It is ideal for retirees, or persons reaching retirement age, who are looking at taking up residence in a country that offers them the best in terms of climate, lifestyle, health services and peace of mind whilst also providing very favourable tax benefits. Any income arising in Malta would be taxed at the rate of 35%.
The said Programme requires its applicants, namely pensioners, to purchase or rent immovable property in Malta, or in Gozo, which property must be solely occupied by the applicant, his/her family members and any special carers accompanying them. The property in question must have been purchased for a value of not less than €275,000 if situated in Malta, or €250,000 if situated in Gozo. The rental thresholds are set at a minimum of €9,600 per annum for a property situated in Malta, or €8,750 per annum for a property situated in Gozo.
Malta Global Residency Program
Introduced in June 2013, this programme allows third country nationals (i.e. non-EEA nationals) who buy or rent a property in Malta and direct their income to Malta to qualify for a residence permit, and be taxed at a flat rate of 15% on foreign income received in Malta subject to a minimum tax of EUR 15,000 per annum.
Any income arising in Malta would be taxed at the rate of 35%.
The High Net Worth Residency Program
This program grants special tax status to high net worth individuals who either come from EU/EEA countries or are of Swiss nationality. It gives its holders the right to pay tax at a beneficial rate of 15% on foreign income received in Malta with the possibility to claim double taxation relief, subject to a minimum annual tax payment of €20,000.
Any income arising in Malta would be taxed at the rate of 35%.
Highly Qualified Professionals
By means of the Highly Qualified Persons rules, which were issued in 2011, individuals in receipt of employment income from an eligible office in the areas of iGaming, financial services and aviation will be subject to a flat rate of tax of 15% on their employment income.
Other Useful Information
There are no rates or property taxes payable in Malta.
Double Taxation relief
Malta residents are afforded protection by double taxation agreements, which ensure that tax is never paid twice on the same income in different countries.
No death tax is payable in Malta, however Duty on Documents and Transfers is payable by the heirs of the deceased on real estate in Malta and in certain cases on shares of Malta companies.
For tax purposes, an individual is normally regarded as being resident in Malta for a particular year if, in that year, his stay in Malta exceeds 183 days. Foreigners residing but not domiciled in Malta are not taxed on their worldwide income, but only on Maltese source income and capital gains and on foreign source income remitted to Malta. Foreign source capital gains are not taxed even if remitted to Malta.
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