Liability to tax in Malta is largely linked to 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.
Individuals who are both ordinarily resident and domiciled in Malta, are subject to tax on a worldwide basis whereby all income and capital gains arising in Malta or elsewhere are deemed to be subject to tax in Malta regardless to whether the foreign source income is remitted to Malta or not.
Individuals who are either resident or domiciled in Malta are subject to tax on Malta source income and capital gains and on foreign source income received in Malta. Foreign capital gains are not subject to tax even if remitted to Malta.
Individuals temporarily resident in Malta (physically present for a period not exceeding 183 days in a calendar year and with no intention to reside in Malta) are only subject to tax on the income arising in Malta.
Income tax on individuals is levied at progressive rates, the highest rate being that of 35%. Individuals subject to income tax in Malta on the remittance basis of taxation are subject to an annual minimum tax payment of €5,000 applicable from basis year 2018 if the individual is in receipt of annual foreign income which does not amount to less than €35,000. The minimum tax of €5,000 shall not effect the minimum tax applicable to beneficiaries of a special tax status in Malta.
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