In 2012, Malta introduced a new programme called the Malta Retirement Programme (hereinafter the ‘Programme’) designed to attract nationals of the EU, EEA and Switzerland who are not in an employment relationship and are in receipt of a pension as their regular source of income. Individuals that benefit from this Programme may hold a non-executive post on the board of a company resident in Malta which implies that a beneficiary would be prohibited from being employed by the company in any capacity. Such individuals may also partake in activities related to any institution, trust or foundation of a public character and any other similar organisation or body of persons, which are also of a public character that is engaged in philanthropic, educational or research and development work in Malta.
In order to be eligible for the Programme, an applicant would be required to meet the following criteria:
- Purchase or Lease an immovable property which the applicant occupies as his principal place of residence worldwide, where such property should cost at least Euro 275,000 in Malta or Euro 250,000 in Gozo. The immovable property should have been purchased after the 1st January 2011. Nevertheless in the event that a property was purchased before 1st January 2011 for an amount which is less than the above-mentioned amounts, such property may also satisfy this requirement if the individual declares that the property was purchased for less than the above indicated amounts and the declaration is supported by a separate and independent architect valuation of the property, an architect’s plan of the property and a certified copy of the final deed of purchase. Alternatively, the immovable property should be leased for an amount of Euro 9,600 annually in Malta or Euro 8,750 annually in Gozo, where such lease is taken out for a period of at least one year and is evidenced by a certified lease agreement.
- Not be a beneficiary in terms of the tax regulations relating to the Residents Scheme Regulations, the High Net Worth Individuals Rules or the Highly Qualified Persons Rules, unless such applicant has renounced to the benefits provided by the said rules and regulations prior to submitting the application for the Programme.
- Is either an EU national, a national of Iceland, Norway or Liechtenstein or a national of Switzerland.
- Is in receipt of a pension which is supported by the original documentary evidence. An individual is deemed to be receiving a pension if he is in receipt of periodic payments paid in respect of past employment, remunerations paid as lifetime or temporary annuities or regular income from an occupational retirement scheme, personal overseas retirement plan or insurance policies. An individual is not considered to be receiving a pension if he is in receipt of a lump sum payment or any capital sum received by way of commutation of pension, retiring or death gratuity. The entire pension declared in the application to be received by the applicant must be received in Malta in its entirety. Furthermore, the pension should constitute at least 75% of the individual’s Malta chargeable income for any particular year.
- Is in possession of a valid travel document.
- Is in possession of a health insurance which covers the applicant and his dependants in respect of all risks across the whole of the EU normally covered for Maltese nationals.
- Is not domiciled in Malta and does not intend to establish his domicile in Malta within five years from the date of application;
- Is a fit and proper person. The applicant would be required to submit an updated apostilled police conduct certificate accompanied by a sworn declaration before a Commissioner for Oaths in Malta confirming whether the individual was not found guilty of any civil or criminal convictions as well as providing a confirmation of any civil or criminal ongoing proceedings.
- Has applied for a residence card and a copy of the acknowledgement or residence card is to be submitted with the application.
A non-refundable administrative fee of Euro 2,500 should be paid upon application by means of a bank draft payable to the ‘Director General (Inland Revenue Department)’.
An individual who has been granted special tax status in accordance with the Programme shall be subject to a rate of fifteen cents on every Euro thereof on any income that is received in Malta from foreign sources by the applicant or his dependants. This rate of tax will apply from the date of confirmation of the special tax status up to the date of cessation of status. Other chargeable income of the beneficiary that is not charged to tax as separate income at the abovementioned rate shall be charged to tax at the rate of 0.35c on every Euro. This may include bank interest received from a local source or dividends received from a company registered in Malta.
The applicant qualifying for this special tax status in terms of the Programme shall be required to pay a minimum tax of Euro 7,500 per annum and a further Euro 500 in respect of each dependant. The minimum tax for the first year shall be payable not later than the tax return date. The applicant would also be subject to payment of provisional tax payments in accordance with the Payment of Provisional Tax Rules. The applicant would retain the right to request a claim of double taxation relief, provided that the minimum amount of tax payable by the applicant is as provided above. In the year when the special tax status is confirmed or cancelled, the minimum tax will be calculated on a pro-rata basis by applying a split-year treatment.
Annual Tax Return
An individual who benefits from special tax status under the Programme should submit an annual tax return which includes an annual declaration by means of which wherein any material changes that affect the beneficiary’s special tax status need to be indicated.
An application shall be submitted through the services of an Authorised Registered Mandatary (ARM). Integritas Corporate-Services Ltd is registered as an ARM and can therefore be of assistance in the application procedure.