Malta is a little-known tax haven within the European Union. But before we talk about the tax advantages, a little background information…
As Europe’s most densely populated country, Malta is best known for tourism, offering a Mediterranean haven for sun-starved northern Europeans. It also boasts a fascinating history, as an island that has granted safe haven to everybody from pirates and crusaders to modern-day hospital orders. Malta is an English speaking country where cars drive on the left. It’s one of the newer members of the European Union, and its currency is the euro.
In terms of its offshore finance sector, Malta is not particularly attractive for offshore banking or corporations. Though it is free of currency controls, has a stable banking system and you can easily open accounts there in various currencies, you should not expect banking privacy in Malta.
Many tax exiles, however, are checking out Malta to see if they would like to call it home longer term. Like Europe’s mountain tax haven, the Principality of Andorra, Malta is a relatively affordable European base to retire to and set up official residence. You can probably afford to buy a pleasant house with a pool in Malta, even if you can’t afford a studio in Monaco! Unlike Andorra or Monaco, Malta is in the European Union. Also unlike Andorra, Malta does not have minimum stay requirements for official residents.
Although Malta is not tax free, you can effectively cap your tax at just €4,192 per year. Those who apply under the Residents Scheme Regulations, 2004 (the Maltese retiree program) and satisfy the few conditions stipulated will be provided with a certificate issued by the Commissioner of Inland Revenue (Malta). This certificate has a dual purpose: First, it acts as a Malta permanent residence permit issued in terms of Article 7 of the Immigration Act. Secondly, it confers on the individual a special Maltese tax status which entitles him/her to these considerable income tax benefits.
Residents with this status must pay a flat rate of 15% on your local Maltese income (including capital gains) and on his foreign income remitted to Malta. There is a minimum tax of €4,192. Foreign source income not remitted to Malta – in other words, your entire worldwide income whether it be earned, unearned, capital gains or whatever – is not taxable at all.
It gets better. Persons in possession of this type of Malta residence certificate can also claim double taxation relief in respect of tax paid outside Malta on any income remitted to Malta which is subject to tax in Malta. This applicability of this benefit is increasingly available giving the very wide network of double taxation treaties that Malta has now concluded.
Who is eligible?
Any non-Maltese citizen, no matter whether an EU citizen or not, may apply for the above-mentioned residence certificate by providing documentary evidence that he /she:
1. can bring into Malta an annual income of not less than €13,950 in his respect and a further €2,300 in respect of each dependent; and
2. has either an annual income of not less than €23,000 arising outside Malta or has in his possession a capital of not less than € 349,000
3. Will take up residence within one year of being approved.
Within one year of residence approval, the individual must purchase or rent a home in Malta. If the Malta accommodation is bought, it should cost at least €69,000 in the case of a flat, or at least €116,000 if it is a house. If the applicant decides to rent instead of buying, the rent paid must be at least € 4,150 per annum.
Overall, if you are considering changing your residency in order to free yourself from burdensome taxation, Malta is an interesting option to consider.