Malta is a little known tax haven within the European Union. But before we talk about the tax advantages, a little background information…
As the most densely populated country in Europe, Malta is best known for tourism, offering a Mediterranean paradise for sun-hungry northern Europeans. It also boasts a fascinating history, as an island that has provided a safe haven for everyone from pirates and crusaders to modern hospital orders. Malta is an English-speaking country where cars drive on the left. It is one of the newest members of the European Union, and its currency is the euro.
In terms of its offshore financial sector, Malta is not particularly attractive to offshore banking or corporations. Although it is free of currency controls, has a stable banking system, and you can easily open accounts there in multiple currencies, you should not expect banking privacy in Malta.
Many tax exiles, however, are checking out Malta to see if they’d like to call it home in the long term. Like Europe’s mountain tax haven, the Principality of Andorra, Malta is a relatively affordable European base for retirement and official residence. You can probably afford to buy a nice 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 has no minimum stay requirements for official residents.
Although Malta is not tax-free, you can effectively limit your tax to just €4,192 per year. Those who apply under the Residents Scheme Regulations 2004 (the Maltese Retired Scheme) and meet the few stipulated conditions will receive a certificate issued by the Commissioner for Inland Revenue (Malta). This certificate serves a dual purpose: first, it acts as a permanent residence permit for Malta issued in terms of section 7 of the Immigration Act. Secondly, it gives the natural person a special Maltese tax status which entitles them to these considerable tax benefits.
Residents with this status must pay a flat rate of 15% on their local Maltese income (including capital gains) and on their foreign income remitted to Malta. There is a minimum tax of €4,192. Foreign source income not remitted to Malta, in other words, all of your worldwide income, whether earned, unearned, capital gains or whatever, is not taxed at all.
It gets better Persons in possession of this type of residence certificate in Malta can also claim double taxation relief in respect of taxes paid outside of Malta on any income remitted to Malta which is subject to tax in Malta. This applicability of this benefit is becoming more available given the vast network of double taxation treaties that Malta has now concluded.
Who is eligible?
Any non-Maltese citizen, no matter if he/she is an EU citizen or not, can apply for the aforementioned certificate of residence by providing documentary evidence that he/she:
1. you can bring to Malta an annual income of not less than €13,950 for yourself and a further €2,300 for each dependent; Y
2. has an annual income of not less than €23,000 from outside Malta or has in his possession a capital of not less than €349,000
3. Will take up residency within one year of being approved.
Within one year of residency approval, the person must buy or rent a home in Malta. If you buy accommodation in Malta, it should cost at least €69,000 for a flat, or at least €116,000 for a house. If the applicant decides to rent rather than buy, the rent paid must be at least €4,150 per year.
In general, if you are considering changing your residence to free yourself from onerous taxes, Malta is an interesting option to consider.