Recent Changes to the Malta Retirement Programme & Other Tax Updates

March 24, 2020 | 4 minute read

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Through the enactment of Legal Notice 69 of 2020, the Malta Retirement Programme Rules (MRPR) have been amended as follows:

  • The dependant of a beneficiary of the MRPR cannot be a person who is a beneficiary of any other program which grants a special tax status in Malta. Prior to this change, the limitation applied only to beneficiaries under the Residents Scheme Regulations, the High Net Worth Individuals -EU / EEA / Swiss Nationals Rules, the High Net Worth Individuals  Rules  -  Non-EU  /  EEA  /Swiss Nationals Rules, or the Highly Qualified Persons Rules. This list has now been extended to include also the  Qualifying Employment  in  Aviation  (Personal  Tax)  Rules;  the Qualifying  Employment  in  Innovation  and  Creativity(Personal  Tax)  Rules;  the  Qualifying  Employment  in Maritime Activities and the Servicing of Offshore Oil and Gas  Industry  Activities  (Personal  Tax)  Rules;  the Residence  Programme  Rules;  the  Residents  Scheme Regulations  or  the  United  Nations  ("UN")  Pensions Programme Rules;

  • A person no longer needs to be employed by the beneficiary for at least two years to be eligible to apply as a household staff of the beneficiary;

  • A definition for the term ‘Long Term Resident’ has been added. This is now defined as (a) a person  who  has  long-term  resident status in terms of the Status of Long-term Residents (Third Country Nationals) Regulations; or (b)  a  person  who  applies  for  long-term resident  status  under  the  Status  of  Long-term Residents (Third Country Nationals) Regulations;

  • A definition for the term ‘permanent resident of Malta’ has been added. This is defined as (a) a person  who  has  right  of  permanent residence in terms of article 6 and is in possession of a permanent residence certificate issued in terms of article 7 of the Free Movement of European Union Nationals and their Family Members Order; or (b)  a  person  who  applies  for  right  of permanent residence in terms of article 6 of the Free Movement  of  European  Union  Nationals  and  their Family Members Order;

  • The definitions for EEA and third country national have been deleted;

  • The concept of inheritance of the special tax status has been introduced in the new rules. A person can inherit the special tax status from a beneficiary of the MRPR if he/she is a dependent of the beneficiary and has also inherited the property that was the primary residence of the said beneficiary, or who rents a qualifying property immediately after the death of the beneficiary and who satisfies all the other criteria to qualify as a beneficiary;

  • The criteria for eligibility to the MRPR has been amended so that persons who are beneficiaries of the the Qualifying Employment in Aviation (Personal Tax) Rules; the Qualifying Employment in Innovation and Creativity(Personal Tax)  Rules;  the  Qualifying  Employment  in Maritime Activities and the Servicing of Offshore Oil and Gas  Industry  Activities  (Personal  Tax)  Rules;  the Residence  Programme  Rules;  the  Residents  Scheme Regulations  or  the  United  Nations  ("UN")  Pensions Programme Rules are not eligible to apply for the special tax status under the MRPR. Prior to this change only beneficiaries of the the Global Residence  Programme  Rules;  the  High  Net  Worth Individuals – EU / EEA / Swiss Nationals Rules; the High Net  Worth  Individuals  Rules  –  Non-EU  /  EEA  /  Swiss Nationals Rules; the Highly Qualified Persons Rules did not qualify as beneficiaries;

  • An individual who meets the new definitions of long-term resident or permanent resident in Malta is taxable in Malta on any income accruing in or derived from Malta or elsewhere, and whether received in Malta or not in respect of income mentioned in article 4 of the Income Tax Act and subject to tax at the rates mentioned in article 56 of the Income Tax Act. The Authorised Registered Mandatory responsible for the application to the special tax status of each beneficiary is now obliged to report the Commissioner for Revenue on an annual basis if any individual benefitting from the special tax status has become a long-term resident of Malta or a permanent resident of Malta. This reporting shall be done by not later than 30th April of each year for any change happening in the previous calendar year and failure to do so is subject to a penalty of €10,000;

  • A beneficiary shall cease to possess the special tax status if he becomes a long-term resident or permanent resident of Malta;

  • The new amendment gives the right to the Commissioner for Revenue and the competent authority in relation to the  Status  of  Long-term  Residents  (Third  Country Nationals) Regulations or in relation to the Free Movement of European Union Nationals and their Family Members Order to exchange information in relation to the status of an applicant to the MRPR.

This legal notice has also changed the requirements for the transferring of the special tax status under the Global Residence Program Rules, the Residence Program Rules and the United Nations Program Rules. Following this change the special tax status can only be transferred if the dependent  provides  proof  to  the  Commissioner  that  all  the requirements of the respective program are satisfied in such manner as the Minister for Finance  may  determine  further  to  consultation  with  the Commissioner for Revenue.


Double taxation agreement between Malta and the Republic of Armenia

A double taxation agreement between Malta and the Republic of Armenia has come into force through the enactment of Legal Notice 28 of 2020. The double taxation agreement seeks to eliminate double taxation in transactions involving the two countries and to prevent tax avoidance and evasion.

An amendment to Deductions (Income from Employment) Rules

The Deductions (Income from Employment) Rules entitle a person taxable under the single rates of taxation and who does not earn employment income exceeding a certain threshold and who does not derive any other income, to deduct from his/her employment income €9,100 so that the first €9,100 of income is not taxable.

Through the enactment of Legal Notice 22 of 2020, the threshold of income for a person to be eligible for the deduction of €9,100 as explained above has now been extended to €9,840. Prior to this amendment, the deduction applied to persons whose income did not exceed €9,700.

Entry into force of the Double taxation agreement with Belgium

The double taxation agreement between Malta and the Republic of Belgium which was previously signed but not yet in force has now become into force on the date of the notification. 

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