Retirement Programme For EU, EEA and Swiss Nationals
The residence scheme for foreign retiree individuals who are European Union, European Economic Area (Iceland, Norway, Liechtenstein) and Swiss nationals was introduced by virtue of Legal Notice 317 of 2012 and Article 56(3) of the Income Tax Act – Chapter 123 of the Laws of Malta in terms of which a successful applicant is granted a special tax status.
Conditions for special tax status
An applicant must submit an application (which may cover also his dependants and special carers) with the Inland Revenue Department and satisfy the following conditions:
- Holds “Qualifying Property Holding”, that is, immovable property situated in Malta or Gozo which was either (i) purchased after 1 January 2011 for a consideration of at least Eur275,000 for property in Malta or Eur250,000 for property in Gozo; or (ii) rents immovable property for not less than Eur9,600 annually for property in Malta or Eur8750 for property in Gozo;
- May not benefit under any other Scheme such as the “Residents Scheme Regulations, the “Highly Qualified Persons Rules” or the “High Net Worth Individuals (EU/EEA/Swiss Nationals) Rules;
- Receives pension income in Malta subject to a minimum annual pension of Eur37,500, which pension income constitutes at least 75% of the income chargeable for tax purposes in Malta.
- Possess a valid travel document;
- Must not be employed in Malta. The applicant may however hold a non-executive post with a Maltese company or engage in activities relating to a public trust or foundation;
- Possess health insurance for himself and his dependants covering all risks in the EU;
- Not domiciled in Malta;
- Must be a fit and proper person.
Special Tax Status
A person in possession of a special tax status certificate would benefit from the following tax treatment:
- Foreign Income remitted to Malta would be chargeable at a flat rate of 15% subject to an annual minimum payment of Eur7,500 and a further Eur500 in respect of each dependant and special carer;
- Any other income not chargeable at the rate of 15% (including capital gains arising in Malta on the transfer of a capital asset would be chargeable at the rate of 35%;
- Capital gains on the transfer of immovable property in Malta would be subject to a final withholding tax of 12% of the transfer value. In this regard an exemption would apply in certain circumstances such as the sale of immovable property which has been occupied as the beneficiary’s sole ordinary residence for a period of three years;
- Any realised capital gain arising outside Malta and remitted to Malta would be exempt from Malta tax.
Procedure and Administrative Fee
An application for a special tax status certificate and supporting documents must be submitted to the Inland Revenue Commissioner through an Authorised Registered Intermediary. If at the time of application, the applicant does not hold “Qualifying Property Holding” the Commissioner will issue a letter of intent and issue a special tax status certificate only upon receipt of evidence of the acquisition of such property.
A non-refundable fee of Eur2,500 is payable to the Director General (Inland Revenue Department) upon submission of the application.
Minimum Residence Period
An individual who has been granted a special tax status certificate is required to reside in Malta for at least an average of 90 days in a calendar year calculated over a five year period and must not reside in any other jurisdiction for more than 183 days in a calendar year.
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