Malta has long been one of the most popular retirement destinations in the world, especially for Britons who have a centuries-old historic link with the five islands that make up this island state. Abundant sunshine, fabulous cuisine and amazing cultural heritage, dual official languages and a convenient location make Malta a favourite holiday and retirement location with expats from around the globe. The Island of Malta is the largest of this small archipelago, the second largest being Gonzo. Most Maltese live on these two islands, which are also the first port of call for house hunters looking for a retirement home in Malta and a Mediterranean lifestyle. Before you pack your bags, there are a few things to consider:
The first thing to consider is a residency permit. If you are a citizens on the European Economic Area (EEA), or a family member of a citizen belonging to an EEA country or Switzerland, you should have no problems with entering and living in Malta for as long as you wish - or in the case of Britons, for as long as your home country remains a member of the EEA community.
Residency status is important for the purpose of taxation, so understanding whether or not you are a tax resident is important, for it is usually the country of residence (meaning the country you reside in for 183 days or more of the year) that taxes you on your worldwide income and gains.
Malta has the advantage that there is no specific legislation that defines the term "tax residence", which means technically you could stay less than 183 days in Malta and be still a tax resident for the purpose of paying taxes in Malta rather than your own home country. However, the Maltese tax authorities seem to use the six month physical presence as the benchmark of whether or not you are a tax resident of their country.
They also use a concept of "ordinary residence" to assess your status, which in this case indicates a regular presence with a degree of continuity, even though you may not spend the whole six months of a specific tax year in Malta.
It is best to consult a specialist lawyer who understands both tax regimes before you make a decision to retire to Malta. Any specialist in taxation and jurisdiction where you are currently tax resident will be able to help you make the most of any tax-advantages that will save you money, when you change your residency status.
Broadly speaking, there are no wealth taxes, rates or council taxes in Malta. The country does have various residence schemes for non-Maltese nationals, which include a maximum tax rate of 15%. Non-Maltese nationals may also be able to benefit from Malta’s own "remittance basis" of taxation – where you only pay tax on non-Maltese income if it is brought into Malta.
Overseas income is not taxable, provided it is not brought into Malta. Overseas capital gains are not taxable even if remitted to a Maltese bank account.
It is possible to apply for a long residency permit via a route called High Net Worth Individuals, similar to the Golden Visa scheme in Portugal and Spain. To be eligible, you need to have a qualifying property holding in Malta. For more information about this special permit, you can read more here: https://ird.gov.mt/downloads/hnwi/hnwi_guide_scheme.pdf.
It is important to note that your pension payments from foreign sources will be taxable in Malta, if such pension incomes are transferred to a bank account in Malta.
However, if you receive a pension from another country, you may apply for a special flat rate of 15% on your pension income remitted to Malta, if you meet certain requirements shown in this guide: www.ird.gov.mt/downloads/retirement/mrp_guidelines.pdf
Cost of living
Gone are the days when the cost of living was lower than anywhere else in Europe, as prices are catching up all round. Incomes are still lower than the European average though. This means people's purchasing power is fairly low, and it is still cheaper to live in Malta than in most large European cities.
It is certainly cheaper to rent and buy property in Malta than in Britain. It is also cheaper to go out, dine in restaurants and enjoy leisure activities in Malta, or insure vehicles and moor boats, hire builders or other tradespeople or travel by taxi or public transport. Buying electronics and cars though is expensive, as are all items that have to be imported.
Malta has been making big efforts to attract foreign investment in recent years. EU citizens can buy property in Malta providing they or their immediate family reside there. It is also possible to invest in additional properties in Special Designated Areas (SDAs), which include developments such as Tigne Point and Portomaso. This is often former agricultural land now available for building residential dwellings, though not always for constructing premises for businesses. Non-EU nationals must apply for a permit to buy, called an Acquisition of Immovable Property Permit (AIP), and they must invest a minimum amount that tends to change every year.
Health care is another major consideration for those planning to retire to Malta. The island state has a has a good reputation for its health care service system and was ranked as the fifth in the world in 2011. If you are in receipt of a state pension from the UK or other EU or EEA countries, or from Switzerland, you will qualify for an S1 certificate, which means you can access Malta’s free medical care system.
You must apply for this in advance of leaving. You can obtain an S1 from the International Pension Centre in the UK and send it to Malta’s Ministry of Health. Citizens of an EEA country or Switzerland should make sure to obtain a valid European Health Insurance Card before moving to Malta - this will enable them to access the public health services in Malta at a reduced cost or even for free
If you do not qualify for an S1, UK nationals can still access free medical care under the provisions of the Malta-Britain Reciprocal Health Agreement. However, if none of the above applies to you and you are not covered for free state healthcare in Malta, you will need private healthcare. For more information about Malta healthcare, here is a useful link for further reading: https://www.justlanded.com/Malta/Malta-Guide/Health/Introduction