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Taxation of Employment income - comparison between domiciled and non-domiciled

To fully understand the tax opportunities that arise out of taxation of non-domiciled residents in Malta, it is essential to understand the meaning of domicile and resident status under Maltese law.

Maltese domiciled status

Maltese domiciled residents are liable to pay taxes in Malta on their worldwide income and any other financial gains. Domiciled status means that people will invariably liable to pay taxes, however, there is a very attractive non-domiciled individuals. The tax rate is fixed at 15 percent and you also have to own property or rent in Malta. You also have to pay a fixed one off fee and are also liable to pay minimum tax of pre-determined amounts, depending on your income/gains.

Non-Domiciled Status

According to Maltese law, the Domicile of Origin of an individual is acquired at birth from the father. If the offspring is a dependent minor and the father changes his domicile of choice, severing ties with the one of birth, this is passed on to the offspring. However, on turning 18, the offspring may also obtain a different domicile by showing an intention to reside in the country of choice indefinitely and severing the domicile of origin.

Resident non-Domiciled status

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 up residence under the Global Residence Programme.

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

Non-domiciled Malta residents are taxed on foreign source income (not capital) which is 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 re 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 party to more than 60 double taxation treaties around the world. People who take up residence in Malta can receive their pensions here free of tax at source and subject to 15% under the Global Residence or the Retirement Programme.

Any overseas capital which is invested in Malta are taxed only on interest or dividends generated at a 15% flat rate.

Because Malta has signed double taxation agreements with most European nations, Australia, Canada and the United States, ensuring that tax is never paid twice upon the same income.

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

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