In 2011, the 1988 Malta Permanent Residence Scheme evolved into the High Net Worth Residence Scheme in two streams for Europeans and non-Europeans. Like the original Permanent Residence Scheme, the Malta HNWI Rules were configured to attract high net worth individuals to take up permanent resident status in Malta. The scheme was particularly attractive to affluent retirees, intellectuals, authors, and international consultants or simply persons seeking to establish an alternative residence that suits their tax profile and lifestyle. However, in 2014, the High Net Worth Residence Scheme was removed by means of a legal notice. This scheme was subsequently replaced with the Residence Programme (TRP), for EU, EEA, and Swiss nationals, and the Global Residence Programme (GRP) for non-EU, non-EEA, and non-Swiss nationals.
Who is eligible to apply for the Residence Programme?
Individuals who are at least 18 years of age and who are EU nationals, or nationals of Iceland, Norway, Liechtenstein, and Switzerland who are not beneficiaries of any other available Tax Residence Scheme may apply for the Residence Programme (TRP). However, these rights may be renounced prior to applying for TRP. Moreover, the applicant may include any financial dependants in his application, including a spouse, financially dependent ascendants and other non-family members and dependent relatives that are shown to be bona fide members of the household. Children under the age of 25 are automatically eligible for inclusion. This essentially means that household staff may be included in the application for the Residence Programme.
Requirements of the Residence Programme
To start with, the applicant must have or obtain a residential address in Malta which is his primary place of residence worldwide. This is achieved either by purchasing or renting immovable property in Malta and no one other than the applicant and his dependents may reside in the property. It thus follows that such property may not be let or sub-let. The following are the minimum value requirements of the immovable property:
Furthermore, the Residence Programme incurs the fee of €6,000 and the minimum tax requirement for all the family is €15,000. An important financial requirement is that the applicant must be able to sustain himself and his dependants financially – he/she must be financially independent. This self-sufficiency must be demonstrated and in addition to this, the applicant and his dependants must also be in possession of sickness insurance coverage and a valid travel document. The applicant must also be able to communicate in either English or Maltese.
Perhaps one of the most essential requirements is that the applicant is a fit and proper person. What does this mean? This requirement is in place to ensure that no applicants who are involved in any criminal activity are allowed to reside in Malta. Therefore, the applicant is required to submit a recent police conduct, accompanied by a sworn declaration from the Commissioner of Oaths, stating that he/she is not subject to any criminal or civil proceedings. This also applies to dependants over 18 years of age and any household staff included in the application.
An additional requirement (which is also pertinent to the Global Residence Programme), is the stipulation that a Malta resident under the Residence Programme may not reside in a country other than Malta for more than 183 days per year. Noteworthy to mention is that the applicant may also apply for a work permit to be able to work in Malta.
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Benefits of the Residence Programme
There are numerous benefits to transferring your tax residence to Malta and perhaps the most notable include that Malta is a safe, politically stable jurisdiction with a prospering economy, and a tax efficient system. The financial requirements are easy to satisfy and permanent residents are entitled to the following benefits:
- Fast process – processing time is 3-4 months
- No minimum presence requirements
- Tax efficient tax rate of 15% on remitted income: when a Malta resident is not domiciled in Malta, taxation of this individual is on a remittance basis. This means that he/she is only taxed to the extent of the income which is remitted or accrued in Malta, and those benefitting from this programme will also benefit from a 15% flat rate of taxation. Furthermore, any foreign capital gain, even if remitted to Malta, is not taxable. It follows that for residents under this programme, there is no worldwide basis of tax.
- No inheritance/wealth taxes – in Malta, these two factors are not grounds for taxation.
- A low tax annual liability of €15,000 per family
- Malta has in place over 60 double taxation agreements with most European countries and countries like Canada, Australia and USA. This ensures that tax is never paid twice on the same income.
- No minimum investment requirements. Applicants under this scheme are only required to pay the relevant fee and purchase or rent immovable property in Malta. The applicant is not required to invest to qualify for this programme.
- Household staff may be included in the application.
Why Chetcuti Cauchi?
An application for special tax status will only be valid if signed and submitted by the authorised registered mandatary. As lawyers, we are authorised mandataries and it would be our pleasure to assist you by providing pre-immigration tax and legal advice, as well as represent you in an application for the Residence Programme.
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