Disclaimer
These notes are based on our understanding of the applicable provisions of Maltese law as in force as at 1 January 2008.  We do not hold ourselves to be experts in the legal and tax fields and therefore these notes cannot and should not be considered as providing a detailed analysis of the applicable legal provisions, should not be used in replacement thereof and should not be relied on for any purposes of any obligations that may arise out of Maltese law.  For this purpose we urge you to obtain appropriate legal and tax guidance and advice including advice on other tax and legal benefits that could be applicable.  In the circumstances we cannot be held in any way responsible for any liability or cost that may arise from any reliance on the contents or otherwise of these notes.

As from 1 January 2008, the unit of local currency in Malta is the Euro (€). 

Residence Scheme Certificate

Main income tax benefits

An individual qualifying for the scheme may take up residence permanently or indefinitely in Malta on obtaining the certificate issued under the Residence Scheme Regulations, 2004. The certificate entitles the holder to a flat income tax rate of 15%, subject to a minimum annual tax liability (after taking into account any double taxation relief) of €4,150. The tax is calculated on chargeable income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted to Malta.

Other tax considerations

There is no estate duty tax in Malta. Duty on documents and transfers (stamp duty) is however payable on a transfer (whether on death or otherwise) of immovable property situated in Malta and shares in Maltese companies, unless the respective companies are quoted on the Malta Stock Exchange or are otherwise exempt from such stamp duty. Duty on the acquisition of immovable property is currently levied at 5% and this is chargeable on the higher of the cost and market value of the relative property.
For persons transferring their residence from a country outside the EU to Malta, used household and personal effects, car, furniture and other domestic articles (unless subject to excise duty, e.g. on alcohol) may be imported free of duty and VAT if imported within 12 months of the certificate holder’s arrival in Malta, subject to the relevant conditions.  Private motor vehicles qualifying for the above exemption are subject to a reduced rate of Motor Vehicle Registration Tax, again subject to some further conditions.

For persons transferring their residence from a country in the EU to Malta, no import duty or VAT should be chargeable on used household and personal effects, cars (which are more than 6 months old and have travelled more than 6,000 kilometres), furniture and other domestic articles (unless subject to excise duty, e.g. on alcohol). Private motor vehicles would, however, by subject to Motor Vehicle Registration Tax at the normal rates.

Eligibility

Any non-Maltese citizen is eligible to apply for a residence scheme certificate and qualify for the particular tax treatment outlined above, subject to certain conditions including if he or she:
• Either owns assets outside Malta worth at least €349,000 or has an annual income of at least €23,000 arising outside Malta
• Within 12 months from taking up residence in Malta either purchases a residence in Malta at a cost of at least €116,000 for a house or €69,000 for a flat, or lease/rent a residence in Malta at a rent of at least €4,150 per annum.
• Remits to Malta (and not re-transfer out of Malta) at least €13,950 plus €2,300 per dependant (being a spouse, son and daughter under 21 years of age and a parent or grandparent of the applicant who is financially dependant on him/her) annually
• Files, with the Inland Revenue Department, the application form together with various supporting documentation.
The processing of an application for a residence scheme certificate typically takes around 3 months from the date of the application.  Once an application is approved, the applicant will be notified of the approval and will be obliged to pay €4,150 to the Commissioner of Inland Revenue by not later than 30 days from such notification. The payment will be available as a credit against the applicant’s Maltese tax liability for the year in which he takes up residence in Malta.

A non-refundable administration fee of €115 (or equivalent in foreign currency) is charged for the processing of the application.

Residence permit (EU/EEA nationals)

Eligibility

A citizen of the EU has the right to enter, remain and reside in Malta. Where a person intends to reside in Malta for a period longer than 3 months, he is obliged to apply for a residence permit.
An application form for long-term residence, duly completed and signed, should be submitted to The Director, Department of Citizenship and Expatriate Affairs, 3 Castille Place, Valletta, CMR 02, Malta, together with the following supporting documentation.

For employment purposes:
Employment licence;

For self-employment purposes:
Trading licence registration from Employment and Training Corporation (ETC) Malta;

For study purposes:
Enrolement letter from respective educational institution and proof of sufficient financial resources;

By economic self-sufficient persons:
Bank statement for proof of economic standing;

For retirement purposes:
Copy of health insurance and copy of annual pension statement.

In all above scenarios, two (2) colour passport size photographs and a copy of the passport should be included with the respective residence permit application.

Maltese income tax considerations

An individual holding a residence permit (EU/EEA nationals) and qualifying as resident in Malta for Maltese income tax purposes, is subject to the normal income tax rules and rates applicable for every Maltese resident person. The current marginal tax rate is 35% and the tax is calculated on chargeable income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted to Malta, for as long as the individual is deemed not to be domiciled in Malta for Maltese income tax purposes.

Returned Migrants

Main income tax benefits

Individuals born in Malta who are not Maltese nationals and who take up residence in Malta may, if they so elect, qualify for a flat income tax rate of 15%, subject to a minimum annual tax liability (after taking into account any double taxation relief) of €2,325, provided that they satisfy the eligibility requirements for expatriates applying for a residence scheme certificate. The tax is calculated on chargeable income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted to Malta.
Returned migrants may engage in gainful occupation, but any income derived from such occupation will be taxed at the standard resident rates without any tax-free portion.
Individuals born in Malta, whether Maltese nationals or not, who have been absent from Malta for at least 20 years in aggregate during the last 25 years prior to their return to Malta, if they so elect, also qualify for the same tax treatment. They will be required to remit to Malta annually at least €14,000 plus €2,400 per dependant, but the other conditions applicable to expatriates applying for a residence scheme certificate will not apply.
The election in terms of the scheme, once made, may be withdrawn, in which case it cannot be taken up again.