By virtue of Legal Notice 270 of 2014, The Residence Programme, which replaces the old High Net Worth Individuals (EU/EEA/Swiss Nationals) rules, endeavours to attract affluent individuals who are nationals of the EU, EEA or Switzerland and who do not enjoy permanent resident status in Malta (permanent resident status in Malta is granted in terms of Article 6 of the Free Movement of European Union Nationals and their Family Members Order). Individuals benefitting from this Programme are not precluded from working in Malta. These rules shall be deemed to have come into force with effect from 1st July 2013.
Dependants under the Programme
The pertinent legislation establishes 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 (a) 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 (a) 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 (a) 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 (a) above.
Attributes to Qualify as Beneficiary
A beneficiary under the programme is an individual who is not a permanent resident of Malta and who proves to the satisfaction of the Commissioner of Inland Revenue that:
- he is an EU, EEA or Swiss national but is not a Maltese national;
- 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.
Minimum Property Requirements
The Property value reflects the thresholds established by the Global Residence Programme (available for non-EU, non-EEA and non-Swiss nationals).
The minimum property holding requirement ought to amount to 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 as opposed to purchasing property. This minimum rental requirement ought to amount to at least €9,600 for leases in Malta and €8,750 in Gozo or the south of Malta.
The new program establishes that the minimum tax payable is €15,000, with further income arising outside of Malta but brought into Malta to be taxed at 15%. 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 with the possibility to claim double taxation relief, provided that the minimum amount of tax payable in terms of the programme is paid.
Income of a beneficiary, the beneficiary’s spouse and children that is not chargeable to tax under the 15% tax rate, shall be charged to tax as separate income at the rate of 35%.
Application Fee and Authorised Registered Mandatory (ARM) Requirement
An individual, as duly represented by an authorised registered mandatary, may apply to the Commissioner for a special tax status by paying a non-refundable administrative fee of €6,000 upon application or €5,500 where the qualifying owned property is situated in the South of Malta.
An application seeking confirmation of the special tax status ought to be submitted to the local tax authorities through an Authorised Registered Mandatory (ARM) registered as such with the pertinent authorities. WDM International is registered with the local tax authorities as an ARM.
Our firm also provides pre-application tax planning as well as assistance with the entire application process together with the pertinent annual compliance requirements imposed by the scheme.