Malta’s New Residence Programme Launched

An individual who is not a resident of Malta is taxable in Malta only on Malta source taxable income and capital gains. In addition the remittance basis of taxation is applied when foreign sourced income is received in Malta. Capital gains generated outside Malta are not taxable in Malta even if received in Malta.

Maltese Government has just introduced a new residency programme, with the aim of attracting wealthy individuals to seek residence in Malta. The rules are referred to as the Global Residence Programme (GRP).

The GRP is directed to non-EU nationals who are looking for an alternative place of residence. Aiming to attract qualifying individuals, the rules have been drafted to offer an advantageous tax status. The programme applies the remittance basis of taxation, with the difference that a flat tax rate of 15% shall apply to all foreign income remitted to Malta.

Interested individuals may include retired individuals and their families, business people, travelling sales executives and consultants.  Malta can offer a better option as an alternative place of residence in Europe being a Mediterranean island with mild to warm climate most of the year. To qualify as a beneficiary under the programme one has to meet a number of conditions.

Beneficiary basis of taxation

Dependant persons
The definitions of dependent persons in the new rules have been relaxed from previous schemes and now comprise of the following:

• Spouse or partner in a stable or durable relationship
• Children – natural – adopted – in care – minor up to the age of 25 provided that they are not involved in any economic activity
• Dependent brothers, sisters and direct relatives in an ascending line
• Employees – carers – domestic workers – of the applicant (must provide proof of employment for the preceding two years)

Residence – immovable property
In order to successfully qualify for the special tax status provided for by the programme, an applicant must purchase or rent a property in Malta. The following minimums apply:

In principle the qualifying property, whether purchased or rented, shall be the applicant’s primary residence and principal place of abode worldwide. It is explicitly prohibited to lease or sublease the qualifying property.

Minimum stay requirements in Malta
There is no minimum stay requirement in Malta. Nevertheless beneficiaries under this scheme are required to spend no more than 183 days in every calendar year in any other single jurisdiction.

How to apply
Application forms are provided by the Inland Revenue Department and have to be submitted through an Authorised Registered Mandatory.

The application fee is €4000 at application stage. From the date that the person actually takes up residence in Malta, a further amount of €2000 shall be payable. Persons who take up residence in Gozo or in the South of Malta can benefit from a reduction of €500 from the latter €2000.

Important points
Applicants must:

• be covered (and all dependants) by a private health insurance policy covering all risks across the EU.
• be in receipt of stable and regular financial resources which are sufficient to maintain themselves and their dependants.
• satisfy a fit and proper test as provided by the Maltese Authorities and must be in possession of a valid travel document as required by Maltese immigration law.

ECOVIS Malta can provide an approved Authorised Registered Mandatory and may assist clients in their application for the GRP and all annual compliance requirements as outlined by the Scheme.

Legal Notice 167 of 2013 introduced the GRP Rules and these rules come into force with effect from 1st July 2013. It has been announced that further rules may be issued to provide similar arrangements for EU, EEA and Swiss nationals.

For assistance contact ECOVIS Malta by sending an email to malta@ecovis.com