Malta is a pretty small island in the heart of the Mediterranean, with a rich culture and a significant number of historical sites. Malta is a member of the European Union, the eurozone, and part of the Schengen area. Thus people coming from countries who are also members do not need any entry Visa.
Malta is an ideal place to take up residence, as the country offers a range of benefits to individuals seeking to relocate on the island, given its advantageous tax regime and competitive cost of living. Malta offers a vast number of tax incentives aimed at attracting foreign expatriates.
The Residence Programme Rules (RPR)
The Residence Programme Rules, 2014 (‘RPR’) was introduced by virtue of Legal Notice 270 of 2014 and came into force with effect from 1st July 2013. The RPR confer a special tax status to EU/EEA/Swiss nationals upon the satisfaction of the Commissioner for Revenue (‘the Commissioner’).
The RPR effectively replaces the High Net Worth Individuals Rules applicable to EU/EEA/Swiss nationals. Individuals who qualify under the RPR are taxable at the rate of 15% on foreign source income remitted to Malta (remittance basis of taxation) subject to a minimum annual tax payment of €15,000 with the possibility to claim double taxation relief.
Conditions for Application Under RPR
An individual who is not a permanent resident of Malta and who is eligible to apply under the RPR must prove to the satisfaction of the Commissioner for Revenue (the Commissioner) that such individual satisfies all of the conditions set out below:
Is an EU, EEA or Swiss National but is not a Maltese national;
Does not benefit under the Residents Scheme Regulations, the High Net Worth Individuals – EU/ EEA/Swiss Nationals Rules, the High Net Worth Individuals – non EU/EEA/Swiss Nationals Rules, the Malta Retirement Programme Rules, the Global Residence Programme Rules, the Qualifying Employment in Innovation and Creativity Rules or the Highly Qualified Persons Rules;
Holds a ‘Qualifying Property Holding’ which is defined as immovable property situated in the Maltese islands which was either:
Purchased in Malta for a consideration of not less than €275,000; or in Gozo or the South of Malta for a consideration of not less than €220,000; OR
Rents a property in Malta for not less than €9,600 per annum; or €8,750 for a property situated in Gozo or in the South of Malta. In all cases, the said property must be occupied as the primary place of residence;
Receives stable and regular resources which are sufficient to maintain him/herself and his/her dependents as defined in the RPR, without recourse to the social assistance system in Malta;
Is in possession of a health insurance for him/herself and his/her dependents;
Is a ‘Fit and Proper’ person;
Is in possession of a valid travel document; and
Is fluent in one of the official languages of Malta.
Tax Treatment under RPR in Malta
Individuals who qualify under the RPR are taxable at the beneficial rate of 15% on foreign source income remitted to Malta (remittance basis of taxation) with the possibility to claim double taxation relief subject to the minimum annual tax liability of €15,000. The income of a beneficiary, his/her spouse and children not chargeable to tax under these Rules (i.e. at the rate of 15%) is chargeable at the rate of 35%.
A minimum annual Malta income tax payment of €15,000 is payable by the individual. This minimum tax is due for payment by not later than 30th April of the year immediately preceding the relevant year of assessment. It must be accompanied by a return made to the Commissioner confirming that all the conditions of the scheme have been satisfied. The minimum amount is payable in full in both the year when the special tax status was granted and in the year when the individual ceases to possess the said special tax status.
RPR Application Process
An application for special tax status in terms of the RPR may only be submitted to the Commissioner through the services of a person who qualifies as an Authorised Registered Mandatory and on the prescribed application form.
A non-refundable administrative fee of €6,000 is payable to the Commissioner on application. In the event that the qualifying owned property is situated in the South of Malta, the administrative fee is reduced to €5,500. A list of localities has been published for the purpose of identifying towns and villages defined in the rules as the “South of Malta” and is set out below:
The RPR provides for a list of continuing obligations that need to be satisfied by all successful applicants, being that the individual:
Must not become a Maltese, or a third-country national;
Must retain holdings of the Qualified Property Holding;
Must not become a permanent resident of Malta;
Must retain insurance for him/herself and his/her dependents and continue to have stable resources; and
Must not stay in any other jurisdiction for more than 183 days in a calendar year.