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Relocating in Malta
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Malta is an ideal place to take up residence. Besides its pleasant climate, safe environment and
hospitable, English speaking population, it offers various benefits to persons who decide to acquire a
residence in Malta and Gozo
One may take up residence in Malta in terms of the Residents Scheme Regulations, 2004 by obtaining a certificate from
the Inland Revenue Department, which certificate is issued for an indefinite period as long as certain conditions are
satisfied on an annual basis. Holders may therefore reside indefinitely in Malta and may enter and leave Malta as and
when required without the need of any other formalities.
The following is a list of incentives and advantages applicable to holders of a certificate in terms of the Residents
Scheme Regulations.
Tax-related incentives
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A Low flat rate of income tax of 15% with a minimum tax liability of € 4,200 after double taxation relief per
annum. The tax is calculated on income and capital gains arising in Malta and on foreign income (excluding
capital gains) remitted to Malta;
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The holder of a Permanent Residence permit is not subject to tax on worldwide income. Foreign source
income is taxed in Malta to the extent that it is received in or remitted to Malta;
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Malta’s tax legislation provides for relief from double taxation, whether through negotiated double tax
agreements with a substantial number of countries worldwide, or through unilateral provisions. Certain
foreign income remitted to Malta qualifies for a reduced withholding rate of foreign tax (this applies typically
to individuals, interest and royalties), or is exempt from foreign tax (this applies typically to private pensions
and to certain capital gains). The provisions of each particular treaty entered into by Malta must, however, be
consulted to determine the treatment of each item of income in each particular case.
Double taxation treaties in force as at end-June 2010:
There is no real estate tax in Malta. Tax on capital gains arising from the sale of real estate in Malta does exist but
residents are exempt if they have used the property as their main residence for three consecutive years and
the property is disposed of not later than one year of vacating it.
Conditions for Application
One must own worldwide capital of at least € 349,000 (or equivalent) or have an annual income of at least € 23,000
(or equivalent). The permit holder is also required to remit € 14,000 per annum (plus € 2,300) for each dependant,
(including the spouse) into Malta. The minimum remittances must not be repatriated out of Malta.
Furthermore, a holder of a Residents Scheme certificate is required to purchase or lease property in Malta, having the
following minimum values:
Purchase of Apartment - €70,000
Purchase of House - €116,500
Lease of Residence - €4,200 per annum
Non-EU nationals will also need to obtain a permit from the Ministry of Finance to purchase the property (AIP permit)
which permit requires higher minimum values than those for permanent residency unless the property being purchased
is located in a special designated area.
Special Designated Areas are specific developments where one may freely purchase as many units as they wish without
the need of an AIP permit.
The issue of a certificate typically takes around three months from the date of the application. The minimum amount
of tax shall be payable within thirty days of approval of the application and shall be credited against the tax due for
the first year of residence. The holder of a permit must take up residence within 12 months from the issue of the said
permit.
Other Residents
An individual may also take up residence in Malta by declaring his intention within three months of arrival in Malta. A
person taking up residence in Malta must complete and submit a form (EU or non-EU) at the Immigration Division at
Police Headquarters.
The local authorities would require such foreign individuals to prove that they have sufficient means to live in Malta
without being a burden on the country.
An individual may also become a resident of Malta as a consequence of taking up employment in Malta. A foreigner
taking up such employment would require employment permission, which would be applied for by his employer.
Schengen Zone (Uniform Residence Permit)
Malta became part of the Schengen Zone in 2007. Non-EU citizens may obtain the Uniform Residence Permit, issued
on the basis of one being a permanent resident. In this case, it grants its holder the possibility to travel throughout the
Schengen Zone without the requirement of a visa for at least three months.
In order to apply for the Uniform Residency Permit, the applicant must have a place of residence in Malta.
Taxation
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. As already noted, however, foreigners residing 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. The applicable income tax rates are,
however, the normal rates of income tax applicable to residents, which are as follows:
Married Rates
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First
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€11,900
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Nil
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Next
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€9,299
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15%
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Next
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€7,499
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25%
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Remainder
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over €28,701
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35%
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Single Rates
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First
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€8,500
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Nil
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Next
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€5,900
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15%
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Next
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€4,999
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25%
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Remainder
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over €19,501
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35%
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Inheritance Tax
There is no inheritance tax in Malta. However, in the event of death, the beneficiary is liable to 5% transfer tax on the
value of the immovable property, as at time of death. If the property is jointly owned and one of the spouses passes
away, the 5% is levied on half the value of the property.
This tax is not payable upon the transfer of the residential home to the surviving spouse, provided that the surviving
spouse does not sell the home during his/her lifetime.
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