Tax Information For Malta

By purchasing a property in Malta or entering into a long-term lease, one may benefit from the Permanent Residency Scheme. The following is some information about the benefits and conditions required in taking up residency.

Permanent residence scheme

Fiscal Benefits of Maltese Residence

  1. A low tax rate: no worldwide taxation
  2. Exemption from Customs Duty/VAT
  3. Freedom of movement: no requirement to live in Malta
  4. Repatriation of your capital and income

1. An unusually low tax rate: No "worldwide" taxation of income

A flat rate of 15% is chargeable only on income (less personal allowances) received, or remitted to, Malta from either local or foreign sources. This is subject to a minimum payment approx. €4300 / £2,900 / US$4,700.

Overseas capital funds invested locally are of course only taxed on any interest or dividends generated thereon, again at a 15% flat rate.

Maltese permanent residence provides a legal tax residence in a European jurisdiction which has around 30 double tax treaties with other countries [Malta's Double Tax Treaty Network]. Once the permit is issued and the permit holder has registered with the Inland Revenue Department in Malta, the Maltese tax authorities will certify that for Maltese taxation purposes, the permit holder is resident in Malta.

2. Exemption from Customs Duty/VAT

Used household and personal effects, furniture and other domestic articles (excluding firearms and weapons of all kinds) may be imported free of import duty if imported within six months of your arrival in Malta to take up residence. In such cases import licences are not required.

A maximum of one private motor-vehicle may be imported per person (husband and wife counting as one) free of Value Added Tax (Item 12, Fifth Schedule to the VAT Act, 1998) and free of customs duty (Second Schedule to the Import Duties Act), subject to such person satisfying the Comptroller of Customs that:

  1. They are in possession of a permit of residence issued to him by the Government in terms of section 7(1) of the Immigration Act, 1970; and
  2. The motor-vehicle has been in his ownership for a continuous period of at least six months immediately before the issue of the residence permit, provided that customs charges and/or fiscal charges to which such vehicle is normally liable have been paid either in the country of origin or in the country of departure and subject to the motor-vehicle being imported within six months of the date of the said permit or of such person’s arrival in Malta to take up residence, whichever date is the later. Provided that where any motor-vehicle imported as aforesaid free of duty is sold or disposed of by such person for use in Malta, such motor-vehicle shall be deemed to be taken out of bond at the time of such sale or disposal and duty shall be payable thereon by the person who becomes the owner thereof in accordance with the provisions of section 4 of the Act.
  3. At time of disposal the vehicle’s value is assessed by Customs. Motor-vehicles of EU origin are subject to payment of 15% VAT on the assessed value, while those of Non-EU origin pay 12% duty on the assessed value and 15% VAT on the total of the assessed value and duty due.

3. Complete Freedom of Movement

There are no annual minimum stay requirements. A permanent resident may travel to and from Malta freely without the need to apply for a visa or extension of stay.

4. Repatriation of your capital and income

Proceeds from the sale of property, encashment of investments, local income and excess income brought into Malta may be freely repatriated by permanent residents, provided that any tax due has been settled.

Conditions for permanent residency

Any foreigner, of whatever nationality, may submit an application for a permanent residence permit provided specific conditions are satisfied. This permit is issued on an indefinite basis.

A. Acquisition of Property

An applicant for Maltese permanent residency must purchase an apartment/house in Malta for no less than EUR 75,000. Alternatively, the applicant may opt to lease or rent a property in Malta of which the minimum rental is EUR 4,230 (approx. US$4,900) per year. Twelve months after taking up residence in Malta, a permanent resident is required to produce evidence that you have complied with either condition. There are no limitations to capital investment in Malta. Investments in real estate in Special Designated Areas (Portomaso, Tas-Sellum, St. Angelo Mansions, Tigne Point and few other developments) are unlimited, but outside of these areas investments are limited to one owner-occupied house or apartment.

Compared to the rest of Europe and the Mediterranean, housing in Malta remains relatively cheap. For instance a two-bedroom apartment in a good location is likely to cost from Euro 120,000 (approx. US$290,000) or more depending on the level of finish, sea-views and so on. A villa, usually with three to four bedrooms, a swimming pool and a two to four car garage would sell for about Euro 300,000 upwards.
In Malta, no property taxes, council taxes, rates or other official costs are due on property owned free-hold. Ground rent may be payable when a property is not purchased free hold, but this usually amounts to a negligible annual payment. The only tax is a one time 5% stamp duty on purchase.

B. Annual Income Remitted to Malta

The minimum annual income to be brought into the country is EUR 14,100 per applicant, with an additional EUR 2,350 for each dependent (spouse, children under 21 years of age and parents/grandparents wholly dependent on applicant). In other words, a married couple would, for example, have to bring in at least EUR 16,450 per year.

C. Wealth Test: Capital / Income Qualifications

Applicants must produce evidence of an annual income of EUR 23,500 or over, OR a capital equivalent to EUR 352,500 or over. In either case, the whole amount is not required to be brought into the country, and the value of the property purchased locally is also taken into account as part of the capital requirement.
(Lm 1 = approx. Euro 2.329 = approx. USD 2.7)

D. Employment/Engagement in Business

No employment or engagement in business may be undertaken by applicants for permanent residency unless authorised by the competent authorities. Interestingly, however, official Government policy welcomes the introduction of overseas expertise and ideas in tourism, manufacturing and catering sectors and a number of interesting options are outlined elsewhere.

E. Post-Issue Conditions

Once in possession of the permit:

  1. You will be required to take up residence by no later than one year from the issue-date of your permit.
  2. You must not exercise any occupation or profession, hold any appointment, seek employment, or engage in any form of business in Malta.
  3. You should not participate in political activities; however, should you be interested in local council activities you may contact the Local Council Department, at the address shown below.

Application Package

The following is an indicative list of documents necessary in support of an application for residence:

  1. Photocopy of Passport
  2. 5 x passport photographs
  3. Birth certificate
  4. Marriage certificate (if married)
  5. Proof of income / proof of assets
  6. Clean criminal conduct certificate

An interview may be requested by the Maltese Embassy or Consulate in your home country.

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