Complete Guide to Malta’s Personal Taxation System (for 2019)

    Complete Guide to Malta’s Personal Taxation System (for 2019)

    The basis of taxation for individuals in Malta depends on an individual’s residence and domicile status. The term resident, when applied to individuals usually refers to an individual who resides in Malta except for such temporary absences as are deemed reasonable and not inconsistent with the claim of such individual to be a resident in Malta.

    In general, individuals are considered as resident in Malta when they are physically present in Malta for a period exceeding 183 days in a calendar year. The term ‘domicile’ is not defined in the Malta Income Tax Act but usually refers to the intention that a person may have to reside permanently in Malta and is generally associated with the country in which an individual has his permanent home and typically severing all ties with our countries.

    If you are trying to understand Malta’s Personal Taxation System (for 2019), then this is the article for you.

    In this article, we will try and explain everything thing that you need to know about paying Tax in Malta on an individual basis.

    We will broadly be covering the following topics:
    • Malta Income Tax Rates (for 2019)
      • Resident Tax Rates in Malta
      • Non-Residents Tax Rates in Malta
    • Payment of Tax in Malta
      • Provisional Tax
      • The FSS (Final Settlement System)
    • Social Security Contributions in Malta
    • Special Programs for individuals relocating to Malta
    • Malta Inheritance Tax

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    So, If you are both resident and domiciled in Malta, then you should be subject to tax in Malta on worldwide income irrespective of whether such income is received in Malta or otherwise.
     
    On the other hand, if you are a resident but not domiciled in Malta, then you should be subject to tax in Malta only on your Malta source income and on foreign income remitted to Malta.
     
    Additionally, Capital gains arising from sources outside Malta are not subject to tax in Malta even if remitted to Malta. With effect from the basis year 2018, persons subject to the remittance basis of taxation are subject to a minimum tax of €5,000 per annum subject to certain conditions.
     
    As from the basis year 2018, if you are a long-term resident, or hold a permanent residence certificate or a permanent residence card, you will not be subject to income tax in Malta under the remittance basis of taxation.
     
    Malta adopts a progressive taxation system whereby higher income is levied at a higher rate of taxation.
     
     
     
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    Malta Personal Income Tax Rates for 2019

    The tax rates applicable to individuals subject to tax in Malta depend on whether the individual is deemed to be resident in Malta or otherwise.

    Malta Personal Income Tax Rates for 2019

    Resident Tax Rates in Malta

    Malta implements three different tax rates for individuals resident in Malta, namely

    • Single Rates of Taxation;
    • Married Rates of Taxation applicable to married couples who opt for a joint tax computation; and
    • Parent Rates of Taxation is applicable to individuals who maintain a child below the age of 18 years (or 23 years if the child is attending tertiary education) and who is not gainfully occupied earning more than €3,400 per annum.

     

    Tax Rates for Basis Year 2019

    Tax Rates for Residents in Malta

               Chargeable Income (€)

    From                                       To                                                   Rate                                   Subtract (€)

    Single Rates
    0 9,100 0% 0
    9,101 14,500 15% 1,365
    14,501 19,500 25% 2,815
    19,501 60,000 25% 2,725
    60,001 and over 35% 8,725
    Married Rates
    0 12,700 0% 0
    12,701 21,200 15% 1,905
    21,201 28,700 25% 4,025
    28,701 60,000 25% 3,905
    60,001 and over 35% 9,905
    Parent Rates
    0 10,500 0% 0
    10,501 15,800 15% 1,575
    15,801 21,200 25% 3,155
    21,201 60,000 25% 3,050
    60,001 and over 35% 9,050

     

    Non-Residents Tax Rates in Malta (for 2019)

    Taxpayers who are not resident in Malta for income tax purposes are subject to the following tax rates on their income arising in Malta:

    Tax Rates for Non-Residents in Malta

              Chargeable Income (€) 
           From                                                 To                                                       Rate                                 Subtract (€)
    0 700 0% 0
    701 3,100 20% 140
    3,101 7,800 30% 450
    7,801 and over 35% 840

     

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     Payment of Tax in Malta

     

    Payment of Tax in Malta

    The payment of Personal Tax can be mainly carried out by three systems, namely:

    • The Provisional Tax system,
    • The Final Settlement System (FSS) or
    • By means of the Self-Assessment

     

    Provisional Tax

    Individuals engaged in a trade, business, profession or vocation are liable for the payment of taxation under the Provisional Tax (PT) system whereby taxation due for a particular year is payable during the same year.
    PT is paid in three installments during the year and the amount of PT due is calculated on the tax due by the individual in the benchmark year.
     

    The FSS (Final Settlement System)

    Individuals in receipt of a salary or wage are liable for the payment of taxation under The Final Settlement System (FSS) whereby the payor of the income deducts tax payments from the monthly wage of the employee.
     
     

    Other Tax payments under the Self-Assessment Taxation System

    Another taxation due by an individual in Malta not already paid under the PT or FSS is due to be collected by 30th June of the year following which the income has been received.
     
     

    Social Security Contributions in Malta

    All persons who are over the age of sixteen (16) and who have not yet attained retirement age of 65 years, and who are in insurable employment, are liable to pay Social Security Contributions.
     
    Social Security contributions are paid in weekly rates, and each year of gainful occupation will carry 52 or 53 social security contributions (depending on the annual number of Mondays) on the payee’s contribution record.
     
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     Special Programs for individuals relocating to Malta (for 2019)
     
     

    Special Programs for individuals relocating to Malta (for 2019)

    Malta offers attractive residence schemes with associated tax advantages including no taxation on worldwide income, with taxation only on Maltese sourced income and foreign income or gains received in Malta.
     
    Foreigners may take up residence in Malta and be subject to the normal rates of income tax with no minimum tax or remittance requirements.
     
    There are no net wealth or real estate taxes. whilst a Malta capital gains tax arising from the sale of immovable property in Malta does exist. This does not apply to the sale of one’s main residence if the property is owned and occupied for at least three years.
     
    The Maltese income tax system offers a number of programs designed at attracting the relocation of individuals to Malta.
     
     

    The Malta Residence Program

    The Residence Program (TRP)" is designed to attract individuals who are not permanent residents of Malta but are nationals of the EU, EEA or Switzerland. Beneficiaries of TRP benefit from a flat rate of taxation on foreign income remitted to Malta of 15%.
     
    Further details can be found below:
     
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    The Malta Global Residence Program

    This program is intended for individuals who are not nationals of the EU, EEA or Switzerland and who are not long-term residents of Malta. Beneficiaries under the Global Residence Program benefit from a beneficial flat rate of taxation on foreign income remitted to Malta at 15%.  
     
    Further details can be found below:
     
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    The Malta Retirement Program

    Nationals of the EU, EEA and Switzerland who have a pension as their regular source of income can qualify for this program upon relocating to Malta. Beneficiaries of this program also benefit from a flat rate of taxation on income received from outside of Malta at 15%.
     
    Further details can be found below:
     
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    The Malta Highly Qualified Persons Rules

    This program is designed to attract highly qualified persons occupying an eligible office with the financial services, gaming and aviation industry to Malta.Beneficiaries of this program benefit from a flat rate of taxation at 15% on employment income derived from an eligible office up to a maximum income of €5,000,000. 
     
    Further details can be found below:
     
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     Inheritance Tax in Malta
     

    Inheritance Tax in Malta

    Malta does not levy inheritance tax however the causa mortis transfer of shares in Maltese companies and immovable property situated in Malta are subject to stamp duty.

    The causa mortis transfer of immovable property in Malta is subject to stamp duty by the transferee at the rate of 5% on the market value of the property at time of transfer.

    The causa mortis transfer of shares in Maltese companies is subject to stamp duty at the rate of 2% of the market value of the shares transferred or at the rate of 5% if the company owns immovable property situated in Malta.

    Certain transfers of shares in Maltese companies may be exempt from stamp duty.

     

    Our team of tax professionals can guide and assist you with all your questions related to Tax in Malta.
    Email us at info@nexiabt.com. OR
     
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