The Residence Programme
Introduction
The Residence Programme was introduced by virtue of Legal Notice 270 of 2014 and
Articles 56(23) and 96 of the (Malta) Income Tax Act, Chapter 123 of the Laws of
Malta . It shall be deemed to have come into force with effect from 1st July 2013
and is applicable for individuals who are nationals of the EU, EEA or Switzerland
(but not Maltese nationals) to confer a special tax status.
Who is eligible to apply?
To apply under the Residence Programme Rules, an individual must be a EU,
EEA or Swiss National being a person who is not a Maltese National. Such person
must also not be a "Permanent resident" of Malta (which term is not used to denote
beneficiaries under this or similar expatriate schemes but rather in the sense set
out below) or have applied for a Permanent Residence Certificate and not be in possession
of a permanent residence certificate in terms of the Free Movement of European Union
Nationals and their Family Members Order. Should an individual who has been granted
Special Tax Status in terms of the TRP Rules become a Permanent Resident of Malta
such individual will lose his Special Tax Status and be subject to tax in Malta
on his worldwide income at the ordinary rates of taxation in terms of Article 56
of the ITA.
Legal Notice 268 of 2014 - As a result of the introduction of the Residence
Programme Rules and, in terms of Legal Notice 268 of 2014, 'grandfathering' provisions
have been introduced in respect of the HNWI EU/EEA/Swiss Nationals Rules. In terms
of these provisions, a person in possession of or having a pending application in
respect of special tax status in terms of the above referred HNWI Rules may request
the Commissioner, through an Authorised Registered Mandatary for a determination
in writing that the special tax status be migrated to that in terms of the Residence
Programme Rules or that the application in terms of the above referred HNWI Rules
be considered as an application in terms of the Residence Programme Rules. John
Huber is Authorised as Registered Mandatary.
Procedure for application
An application for special tax status in terms of the TRP Rules may only be submitted
to the Commissioner through the services of a person that qualifies as an Authorised
Registered Mandatary and on the prescribed application form. John Huber is Authorised
as Registered Mandatary.
A non-refundable administrative fee of €6,000 is payable to the Commissioner on
application. In the event that the qualifying owned property is situated in the
South of Malta, the administrative fee is reduced to €5,500. A list of localities1
has been published for the purpose of identifying towns and villages defined in
the rules as the South of Malta.
Conditions for application
The particular individual must also satisfy certain criteria which are applicable
to all applicants, i.e.:
- The applicant must hold a ‘Qualifying Owned Property’ situated in Malta of not less
than €275,000 or if in Gozo or in the south of Malta, of not less than €220,000;
- Alternatively, the applicant must lease ‘Qualifying Rented Property’ situated in
Malta of not less than €9,600 per annum or not less than €8,750 per annum for a
property situated in Gozo or in the south of Malta;
In all cases, the said property must be occupied as the primary place of residence
and no persons other than the beneficiary, his dependants and household staff (who
have been employed by the applicant for at least two years prior to the application)
shall reside in the property;
- The applicant must not be benefitting from any other tax incentive programme in
Malta;
- The applicant must be in receipt of stable and regular resources that are sufficient
to maintain himself and his dependants;
- The applicant must be in possession of a valid travel document;
- The applicant must be in possession of health insurance which covers himself and
his dependants in respect of all risks across the EU as are normally covered for
Maltese nationals;
- The applicant can adequately communicate in one of the official languages of Malta
ie. the applicant is fluent in Maltese or English.
- The applicant must be a fit and proper person (an international due diligence exercise
is carried out by the Inland Revenue Department prior to granting the special tax
status);
Dependants
The applicant's dependants who should also– be listed in the application if they
reside with the beneficiary in the qualifying property are:
- 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 paragraph (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 paragraph
(a) above, provided that such children are not economically active;
- Children including adopted children and children who are in the care and custody
of the beneficiary or the person mentioned in paragraph (a) above, who are not minors
but who because of circumstances of illness or disability of a serious gravity,
are unable to maintain themselves;
- Dependent brothers, sisters and direct relatives in the ascending line of the beneficiary
or the person mentioned in (a)above.
In order to apply as a dependant of the applicant, in all cases (a) to (e) above
a dependant should not be benefitting 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
Rules or the Highly Qualified Persons Rules.
Tax treatment
An individual in possession of the relevant special tax status certificate issued
in terms of the Residence Programme Rules, his spouse and children referred to in
minor children , children and care and custody and children unable to maintain themselves
would be subject to the following tax treatment in Malta:
- Income from foreign sources would be chargeable to Malta income tax as from the
year in which the special tax status was granted only if remitted to Malta ('remittance
basis' of taxation) and at a flat rate of 15% with the possibility of claiming double
taxation relief but subject to the minimum annual tax liability referred to below.
- The income of a beneficiary, his spouse and children referred to in (b) and (d)
in the list of dependents not chargeable at the rate of 15% is chargeable at the
rate of 35%. Consequently, no separate tax computation is provided for.
- Any other realised income that is not charged at the 15% income tax rate above and
including realised capital gains arising in Malta on the transfer of a capital asset
(other than immovable property situated in Malta) would be chargeable to Malta income
tax at the rate of 35%.
Any realised capital gain arising outside of Malta, even if remitted to Malta, would
be exempt from Malta tax in view of the non-Malta domicile of the individual.
A non-refundable minimum annual Malta income tax payment payable by the individual
amounting to €15,000 in respect of income from foreign sources that is remitted
to Malta, applies in terms of the TRP Rules. This minimum tax is due for payment
by not later than 30 April of the year in which the income is received in Malta
and is payable in full in both the year when the special tax status was granted
and in the year when the individual ceases to possess the said special tax status.
The payment must be accompanied by a return made to the Commissioner confirming
that all the conditions of the scheme have been satisfied. The said return is not
required to be submitted in the year that the special tax status is granted.
Minimum residence period
There is no minimum residence period. An individual in possession of the relevant
special tax status certificate may not reside in any other tax jurisdiction for
more than 183 days in any calendar year.
Localities for the purposes of the definition of the South of Malta are listed alphabetically
as follows : Birzebbugia, Cospicua, Fgura, Ghaxaq, Gudja, Kalkara, Kirkop, Luqa,
Marsascala, Marsaxlokk, Mqabba, Paola, Qrendi, Safi, Sta. Lucija, Senglea, Siggiewi,
Tarxien, Vittoriosa, Xghajra, Zabbar, Zejtun, Zurrieq.
Please contact us directly info@johnhubermalta.com
for an appointment to further discuss your requirements.
Disclaimer - No one should act upon such information without appropriate professional
advice after a thorough examination of the particular situation. At John Huber and
associates we endeavour to provide accurate and timely information, yet there can
be no guarantee that such information is accurate as of the date it is received
or that it will continue to be accurate in the future. The information contained
herein is of a general nature and is not intended to address the circumstances of
any particular individual or entity.
