Taxation of Employment Income for Domiciled and Non-domiciled

Understand the tax opportunities arising from the taxation of non-domiciled residents in Malta.

According to Maltese law, an individual’s Domicile of Origin is acquired at birth from the father. If the offspring is a dependent minor and the father changes his domicile or severs ties with the one of birth, this is passed on to the offspring. However, the offspring may also obtain a different domicile when they turn 18. They must show an intention to indefinitely reside in the country of choice and sever the domicile of origin.

Domiciled status means that people will be invariably liable to pay taxes. How does Malta tax its residents?

Taxation of Domiciled and Non-Domiciled Residents

On the one hand, Maltese domiciled residents should pay Malta taxes on their worldwide income and any other financial gains. On the other hand, non-domiciled individuals are taxed on foreign source income (not capital) remitted to Malta. Any income or capital gains arising from Malta always fall under the remit of national tax laws at the applicable personal income tax rates.

Any capital gains that arise outside of Malta do not fall under Maltese tax law, even if they are remitted to Malta. Any capital and savings brought into Malta also fall outside of the remit of the national tax system.

Double Taxation Relief

Malta is a party to more than 60 double taxation treaties around the world. The country has signed double taxation agreements with most European nations. It also has an agreement with Australia, Canada, and the United States, ensuring that tax is never paid twice upon the same income.

People who take up residence in Malta can receive their pensions free of tax at source and subject to 15% under the Global Residence or the Retirement Programme. Any overseas capital invested in Malta is taxed only on interest or dividends generated at a 15% flat rate.

Used household, personal effects, furniture, and domestic articles may be imported free of import duty within six months of arrival in Malta to take up residence. Import licenses are not required.

There is no tax on inheritance, estate duty, and wealth. There are no municipal and no rates as well. Stamp duty is payable on the transfer of immovable property in Malta and transfers of shares (including on death) in Maltese companies.

Becoming a Non-domiciled Resident in Malta

Malta allows people to move and take up residence in the country under various schemes and programmes. Non-EU or EEA nationals and their families can take residence under the Global Residence Programme (GRP) or Malta Permanent Residency Programme (MPRP).

On the other hand, EU nationals may take up residence in Malta under the Malta Ordinary Residence Programme. Malta’s tax laws define an individual as a non-domiciled resident of Malta based on spending more than 183 days per year in Malta or a demonstrated intention to reside accordingly within the tax structure.