Malta Global Residence Programme

These invaluable advantages have resulted in a considerable increase in foreigners seeking to obtain residency in our sunny archipelago and hence Malta's residence programmes and fiscal framework have been designed to cater for this.

The Global Residence Programme Rules2013 (GRP) have beenset up to attract non-EU nationals to acquireresidence in Malta. The residence programme is especially alluring to retirees, authors, intellectuals, innovators, entrepreneurs and consultants or simply persons seeking to establish an alternative residence in Europe that suits their lifestyle and tax profile.

Benefits of the Scheme

Malta owes the origins of its tax system to its historical roots as a United Kingdom colony between 1800 and 1964. The Maltese Income Tax Act retained the British notion of the distinction between income and capital gains, taxing solely the former and the latter only in particular circumstances.

In the absence of a definition of "residence" and "domicile" under Maltese law, Malta relies on the meaning assigned to the terms under United Kingdom Common Law.

Non-domiciled foreign holders of a GRP residence permit in Malta, are taxable on a 'remittance basis'only on income remitted to Malta and on income and capital gains arising in Malta. Foreign source capital is not taxable even if remitted to Malta.

Furthermore, proceeds from the sale of property, encashment of investments, other income and excess income brought into Malta, may be freely repatriated by residents provided that any tax due has been settled.A flat rate of 15% is chargeable on all income remitted to Malta from foreign sources. This is subject to a minimum annual tax payment of €15,000 covering the main applicant and dependants included on the same application. Income and capital gains arising in Malta are taxed at the rate of 35%.

Malta residents can choose to receive their pensions in Malta and pay tax at the flat rate of 15% on their pension, with no tax at source in certain scenarios.

GRP residents also benefit from double taxation agreements existing between Malta, most European countries, China, Hong Kong, Canada, Australia and the USA, ensuring that tax is never paid twice upon the same income. To date, Malta enjoys more than 60 double tax treaties.

Conditions for obtaining Global Residence Permit

All non-EU nationals may submit an application for a GRP permit provided that specific conditions are satisfied. Applicants must produce documentary evidence of good conduct by presenting police conduct certificates or equivalent and are also required to pass a Fit and Proper Test which includes International Due Diligence searches. A Private Health Insurance Policy which covers all medical risks in Malta is also required for the main applicant and dependants.

An applicant must own property in Malta which is purchased for not less than €220,000 if bought in Gozo or in the Southern region of Malta, and a minimum of €275,000 if anywhere else in Malta. Alternatively, the applicant may opt to rent a property of which the minimum rental is €8,750 per annum if rented in Gozo or in the Southern region of Malta, and a minimum of €9,600 per annum if rented anywhere else in Malta.

Applicants must be in possession of stable and regular income. They must also be in possession of a valid travel document and must be fluent in one of the official languages in Malta, these being Maltese and English.

Other Tax Considerations

Property in Malta can be sold completely exempt from tax if such property is held for a period of 3 years as the resident's sole and ordinary residence. If sold before the lapse of 3 years, tax is charged on the capital gain derived.

Stamp duty is payable by the acquirer on the transfer of immovable property situated in Malta and transfers of shares in Maltese companies (including transfers on death).Exemptions from stamp duty may be available on the transfer of shares in certain Maltese companies, e.g. if the company is listed on the Malta Stock Exchange or if the vast majority (at least 90%) of its business interests are outside Malta.

Used household and personal effects, furniture and other domestic articles (excluding firearms and weapons of all kinds) may be imported free of import dutyif imported within six months of arrival in Malta to take up residence. In such cases, import licenses are not required.

There are no inheritances or death taxes, no estate duty, no net worth or wealth taxes, no municipal taxes or real estate taxes.
Annual Obligations and Financial Requirements

Once the residence application has been approved, the GRP permit holders are required to fulfill the following annual requirements:
 Retain qualifying property in Malta
 Retain a Private Health Policy and stable resources
 Refrain from changing domicile to Malta
 Refrain from staying in any other jurisdiction for more than 183 days and becoming a tax resident therein.

Financial requirements of GRP permit holders are summarised as follows:

* Subject to changes in exchange rates

How we can help
With roots in Malta's emergence as a prominent offshore financial centre, Chetcuti Cauchi has since established itself as a respected alternative to Big 4 outfits in Malta. Chetcuti Cauchi is a professional services group providing legal, tax, company formation and fiduciary services to businesses and private clients worldwide.

Kenneth Camilleri
B.Accty (Hons.), CPA, MIA, AIIT, MIM
Partner

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