By virtue of two Legal Notices, the Government of Malta has replaced the High Net Worth Individual Rules for EU/EEA and Swiss nationals with the Residence Programme Rules. These rules are to have retrospective effect as from 1 July 2013 and will apply to EU/EEA and Swiss nationals, with the exception of Maltese nationals.
A beneficiary under the programme is an individual who is not a permanent resident of Malta and who proves to the satisfaction of the Maltese tax authorities that:
- he is not a person who benefits 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 (Personal Tax) Rules or the Highly Qualified Persons Rules;
- he holds a qualifying property holding;
- he is in receipt of stable and regular resources which are sufficient to maintain himself and his dependants without recourse to the social assistance system in Malta;
- he is in possession of a valid travel document;
- he is in possession of sickness insurance in respect of all risks across the whole of the European Union normally covered for Maltese nationals for himself and his dependants;
- he can adequately communicate in one of the official languages of Malta; and
- he is a fit and proper person.
The rules establish that dependants shall comprise:
- the beneficiary’s spouse or person with whom the beneficiary is in a stable and durable relationship;
- minor children, including adopted minor children and children who are in the care and custody of the beneficiary or the person mentioned in (1) above;
- children who are under the age of twenty-five, including adopted children and children who are in the care and custody of the beneficiary or the person mentioned in (1) above. Such children must not be economically active;
- children, including adopted children and children who are in the care and custody of the beneficiary or the person mentioned in (1) above, who are not minors but who are unable to maintain themselves because of circumstances of illness or disability of a serious gravity;
- dependent brothers, sisters and direct relatives in the ascending line of the beneficiary or the person mentioned in (1) above.
The minimum value if the beneficiary opts to acquire immovable property must be of at least €275,000. However, when the property is in the south of Malta or in Gozo, the minimum value can be of €220,000.
A beneficiary under the programme has the option to rent instead of buying immovable property. This minimum annual rental payment has to be at least €9,600 if the immovable property is situated in Malta or €8,750 if in Gozo or in the south of Malta.
Beneficiaries under the programme are subject to a flat rate of tax of 15%, with a minimum tax liability of €15,000 p.a. after allowing for any double taxation relief which the beneficiary may be entitled to. The minimum tax payable is due in advance every year, and shall be payable before the 30th of April
The 15% rate shall therefore apply on any income arising outside Malta in the year immediately preceding the year of assessment which is received in Malta (including income arising outside Malta and received in Malta during the whole of the year in which the special tax status was granted) by the beneficiary, the beneficiary’s spouse and children.
Income and capital gains (with the exception of transfers of immovable property situated in Malta, where the 12% final withholding tax would apply) of the beneficiary, the beneficiary’s spouse and children arising in Malta will be subject to a flat rate of tax of 35%.
Submission of applications
An individual, who wishes to submit an application in terms of the Residence Programme Rules, must be represented by an Authorized Registered Mandatory (ARM). A non-refundable administrative fee of €6,000 has to be paid upon application or €5,500 where the beneficiary has opted to acquire immovable property situated in the South of Malta.
ACT Advisory Services Limited is an ARM and can advise and assist you in the preparation and submission of the application and the pertinent documentation. At ACT, we will advise our clients with any tax planning opportunities which may be applicable as well as ensure (together with our foreign tax advisors) that there will be no negative tax implications in the departing country. Through our in-house tax specialists we will also be able to advise and assist our clients with their annual income tax compliance requirements.