In order to be deemed a Malta ordinary resident under Malta income tax legislation, an individual ought to spend in excess of 6 months in Malta. Nevertheless, there are instances when one can be deemed to be ordinarily resident even if he/she does not spend more than 6 months in Malta in a calendar year.
Ordinary residence requires more than mere residence. It connotes to residence in a place with some degree of continuity and implies residence which is normally part of a person’s everyday life.
Whereas case law has interpreted the test to establish residence as being a test which is driven by a physical presence test (183 days), a legalistic facts and circumstances test is applied for the purposes of determining ordinary residence.
Ordinary residence can therefore be attained over a longer span of time even if one spends less than six months physically in Malta. The following have been said to constitute “ordinary residence”:
(i) a regular physical presence in a country;
(ii) residence with a degree of continuity;
(iii) residence taken up voluntarily.
The term resident, when applied to an individual generally denotes an individual who resides in Malta except for temporary absences. Countries generally determine tax residence according to the number of days spent in a country in any given period or consecutive periods, typically 183 days in a calendar year.
An individual is a Malta ordinary resident if such person is present in that country from year to year. Ordinary resident implies fixed regular presence in a country. Consequently, an individual may have dual residences. To this end Malta’s Double Tax Treaty Network plays a fundamental role in resolving dual residence conflicts.
An individual is domiciled in a country if such country is his permanent home. Domicile implies material residence in a country combined with an intention to reside permanently. No person can be without a domicile. Moreover, a person can have only one domicile at the same point in time.
Individuals obtain the domicile of their father’s upon birth but domicile obtained at birth (domicile of origin) may be replaced with a domicile of choice (e.g. such as when a person immigrates to another country intending to reside permanently in such country). A domicile of origin may be displaced only if the relative person does not intend to return to reside in his domicile of origin.
Generally, there are two sets of rates which apply to resident individuals and these are the rates known as ‘married rates’ (which apply to a joint computation) and the rates known as ‘single rates’ (which apply in separate computations), as outlined hereunder:
|Married Rates||Chargeable Income €||Rate||Deduct €|
|0 - 11,900||0||0|
|11,901 - 21,200||0.15||1,785|
|21,201 - 28,700||0.25||3,905|
|28,701 - 60,000||0.32||5,914|
|60,001 and over||0.35||7,714|
|Single Rates||Chargeable Income €||Rate||Deduct €|
|0 - 8,500||0||0|
|8,501 - 14,500||0.15||1,275|
|14,501 - 19,500||0.25||2,725|
|19,501 - 60,000||0.32||4,090|
|60,001 and over||0.35||5,890|
|Parent Rates||Chargeable Income €||Rate||Deduct €|
|0 - 9,300||0||0|
|9,301 - 15,800||0.15||1,395|
|15,801 - 21,200||0.25||2,975|
|21,201 - 60,000||0.32||4,459|
|60,001 and over||0.35||6,259|
In order to qualify for this computation, a parent must satisfy these conditions:
- s/he maintained under his/her custody a child or paid maintenance (established or authorised by courts) in respect of his or her child;
- such child was not over 18 years of age, or not over 21 years if receiving full-time instruction at a tertiary education establishment;
- such child did not earn income in excess of €2,400 from gainful occupation.
Individuals who stay in Malta for less than 6 months are considered to be non-residents and pay tax at non-resident rates. The rates of tax which apply to non-residents are uniform. Unlike residents, non-residents do not have the right to use joint computations. Non-residents are taxed at the following rates: