The Malta Retirement Programme
The Malta Retirement Programme (MRP) is a programme designed to attract all nationalities who are not in an employment relationship and are in receipt of a pension as their regular source of income. A fixed tax rate of 15% will be due on the foreign income received in Malta (including a pension) , and the annual minimum tax payable shall be of €7,500 for the beneficiary and €500 for every dependant (if any).
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In order for a person to be eligible to apply for the MRP, the individual must satisfy all of the following conditions:
- The applicant must either own an immovable property in Malta acquired on or after 1 July 2013 for a value of not less than €275,000 (€220,000 if the property is situated in Gozo, or in the south of Malta), or rent an immovable property in Malta for not less than €9,600 per annum (€8,750 per annum if property is situated in Gozo). If the property is acquired after 1 January 2011 but before 1 July 2013, the value of the property must not be less than €275,000 if it is situated in Malta (not less than €250,000 if the property is situated in Gozo);
- The applicant must not be a person who already benefits under any other residents programme in Malta;
- The applicant must not be a Maltese national;
- The applicant must be in receipt of a pension, as supported by documentary evidence, all of which is received in Malta. This pension should constitute at least 75% of the beneficiary’s chargeable income;
- The applicant must be in possession of a health insurance which covers himself and his dependents in respect of all risks across the whole of the EU normally covered for Maltese nationals;
- The applicant must not be domiciled in Malta and must not intend to establish his domicile in Malta within 5 years from the date of the application for the special tax status; and
- The applicant must be deemed to be a fit and proper person, and therefore, an international due diligence check shall be carried out prior to the granting of the special tax status.
- Two individuals who are either spouses, or prove that they are in a stable and durable relationship with one another may jointly acquire or rent the same.
- An individual who has been granted the special tax status must comply, yearly, with the following obligations:
- The Qualified Property Holding must be retained;
- The applicant must not become a Maltese national or a third country national;
- The applicant must retain the health insurance cover and continue to have stable resources;
- The applicant must not become domiciled in Malta;
- The applicant must reside in Malta at least 90 days a year averaged over any five year period and must not reside in any other jurisdiction for more than 183 days in a calendar year; and
- Special reporting obligations, such as the filing of an annual return together with the annual tax return, and notifications must be complied with.
Beneficiaries of this special tax status will need to pay a minimum tax of €7,500 annually and a further €500 in respect of every dependent and household staff.
Any other income arising in Malta or any other foreign income which is not subject to tax in terms of these rules will be subject to tax at a flat rate of 35%.
The minimum tax is payable in full both in the year in which the special tax ststus is granted and also in the year, the individual ceases to posses this special tax status. The minimum annual tax is paid by not later than the 30th April of every year. Payment in the first year is made before the special tax status is granted.
An individual who acquires a permament residence certificate will be subject to tax in Malta on all his worldwide income, whether such income is received in Malta or not at the standard rates of tax applicable to resident individuals.
Dependents may be any of the below:
- The beneficiary’s spouse;
- The person with whom the beneficiary is in a stable and durable relationship;
- The beneficiary’s unmarried minor children;
- Adopted minor children of the beneficiary;
- Children who are in the custody of the beneficiary or the spouse and such children are financially dependent on the beneficiary;
- Children of the beneficiary or of his spouse who are not minors but who, because of circumstances of illness or disability of a serious gravity are unable to maintain themselves.
Household staff means an individual who has been in an employment relationship, as evidenced by a contract of service, with the beneficiary for at least two years prior to the application for a special tax status in terms of the MRP rules.
A non-refundable administrative fee of €2,500 needs to be paid upon application to the Director General at the Inland Revenue Department.
An application for the special tax status must be made through the services of a person that qualifies as an ‘Authorised Registered Mandatory’ and is registered as such with the Inland Revenue Department. ACT Advisory Services Limited is able to offer this service as it is registered as an Authorised Registered Mandatory.
ACT is a well-known and respected boutique tax advisory firm providing high-quality tax advice to Multinational Enterprises, SMEs including family owned and other owner-manged companies, family offices, trusts, foundations, employees and high net worth individuals.
Maltese companies are subject to tax at the rate of 35% on their worldwide income and capital gains. Malta grants various fiscal incentives to both companies and their shareholders upon the distribution of a dividend.
Malta has recently seen an increase in the number of Electronic Money Institutions (EMIs) looking to set up their operations in Malta. This has been largely due to the growth in the e-commerce and the i-gaming industries.