RESIDENT SCHEME REGULATIONS


Global Residency Programme

In June 2013, the Global Residence Programme - Malta's latest residence option - was launched for non-EU foreigners, offering great advantages and favourable thresholds. A similar residence programme avialable to EU nationals is expected to be published shortly.

The Global Residence Programme in brief: 
Under the Global Residence Programme, the value of the immovable property bought in Malta by foreigners has to be at least €275,000. However, when the property is in the south of Malta or in Gozo, the minimum value can be €220,000.

  • Applicants will also be eligible if they rent property on an annual basis of €9,600 in Malta and €8,750 in Gozo or in the South of Malta.
  • Minimum tax to be paid in advance reduced to €15,000 on income derived in Malta, with further income charged at 15%.
  • Residents under this Programme and their dependents, have to be covered by health insurance. They will not be entitled to free state health services.
  • The new Residence Programme for Foreigners replaces the High Net Worth Individuals Scheme for non-EU foreigners.
  • The requirement to place a €500,000 bond with the government and an additional €150,000 per dependent has also been removed.
  • A standard application processing fee of €6,000 is applicable if a property is purchased in Malta and €5,500 if the property is bought in Gozo or South of Malta.
  • There are no minimum stay requirements.

More detailed information:

The new residence option, referred to as Global Residence Programme, will allow people who buy or rent a property in Malta and direct their income to Malta to benefit from a residence permit.

In order to qualify for residency, under the new Global Residence Programme, a non-EU foreigner will need to buy a property of €220,000 or over (if the property is in the South of Malta or in Gozo) or of a minimum value of €275,000 for properties in Central and Northern Malta.

Foreign nationals who are interested in renting a property, can also do so and they are eligible for Residency given that the annual rental value is of €9,600 (or €800 monthly) in Malta and €8,750 (or €730 monthly) in Gozo or the South of Malta.

The Global Residence Programme replaces the High Net Worth Individuals (HNWI) Scheme which was introduced back in September 2011 and which required much higher thresholds for non-EU foreigners to apply. Under the old scheme, non-EU foreigners also needed to place a €500,000 bond with the government and an additional €150,000 per dependent, however this provision has now been removed, making the new residency scheme much more favourable and accessible to those interested in taking up residency in Malta or Gozo. The Global Residence Programme will also shortly be made available to EU nationals.

According to the new Global Residence Programme, a flat rate of 15% is applicable on income declared in Malta. A minimum tax of €15,000 is applicable, payable in advance. (This has been reduced from €25,000 plus €5,000 per dependent under the old HNWI Scheme).

Applicants of the new Global Residence Programme have no minimum stay requirements. However they may not spend more than 183 days in any other jurisdiction.

In terms of application fees, a standard rate has been established, this being €6,000 in the case of property purchased in Malta and €5,500 if the property is bought in Gozo or South of Malta.

Applicants of the new Global Residence Programme will also be able to work or set up business in Malta and will be taxed at a flat rate of 35% on any income arising in Malta. The standard 15% flat rate will be applicable on income declared in Malta from overseas.

Under the new Global Residence Programme, foreign residents including their dependents have to be covered by health insurance. The new regulations will come into effect through a legal notice by the end of June 2013. A separate legal notice is expected later on in the year, to bring into effect the profgramme for EU nationals.

Speaking at the launch of the programme, Parliamentary Secretary for Competiveness and Economic Growth Edward Zammit Lewis said: "The new programme is addressed specifically to address the needs of non-EU and non-EEA foreign nationals. It is government's intention to look into all the programmes that Malta has and if necessary introduce improvements to make them more attractive."

The government will also simplify the application procedure by introducing the concept that a mandatory may appear for his client when applying for the programme and also either applying for or procuring the Uniform Residence Permit. Zammit Lewis said the government will be providing the programme all the necessary support and resources to ensure its success.

Malta provides a number of residency options depending on the ultimate objectives of the individual. Foreign clients typically welcome the idea of investing in property in Malta and spending time in the country, whilst at the same time benefitting from the fiscal benefits, that the various residence options offer. Some of the information in this booklet may be out of date due to recent updates to the various Malta residency schemes available. We recommend that you visit our website www.franksalt.com.mt/malta-residence for full details. The following is a general review of the prevalent residency programmes.

The Malta Citizenship By Investment Programme 

Introduced in the first quarter of 2014, the Malta Individual Investor Programme (IIP) offers citizenship in a EU Member State that is stable, neutral and highly respected, tying in a solid investment and a lasting bond with the country. The program allows for the grant of citizenship to duly qualified, reputable foreign individuals and families (EU and non-EU nationals) who make a significant contribution to the economic development of Malta.

The new Malta Individual Investor Programme (also referred to as the Malta Citizenship Programme) will be a good opportunity for investors to contribute to the local Maltese economy whilst at the same time benefiting from a citizenship in Malta. Successful candidates will be granted citizenship by a certificate of naturalization, which can also be extended to include their families and dependent.

The Maltese authorities guarantee an efficient application process, and the world’s strictest due diligence standards and vetting of applicants, thus ensuring only highly respectable clients will be admitted.

Benefits

Successful candidates will be awarded Malta citizenship, which automatically includes EU citizenship, thus giving the right of establishment in all 28 EU countries and Switzerland. Other benefits include the ability to work and/or set up business in Malta and visa-free travel to more than 160 countries in the world, including the USA.

Eligibility criteria for the Malta Individual Investor Programme

The main applicant must be at least 18 years of age and may also add to a citizenship application for his/her spouse, as well as children and parents or grandparents, given that certain conditions are met.

Financial contribution

All individuals and families applying to the Malta Individual Investor Program must make a significant contribution to the National Development and Social Fund established by the Government. This consists of a financial contribution of €650,000 for the main applicant and an additional €25,000 per direct dependents, including the spouse and minor children. In the case of dependent children that are 18 to 26 years of age, or dependent parents over 55 years, a €50,000 contribution is applicable.

Property

The applicant must also commit to retain a residence in Malta for a period of at least 5 years, either through the purchase of a property for which the minimum value must exceed €350,000, or by renting out a property for which the minimum annual rent must exceed €16,000

Bonds Investment

An investment of €150,000 in Government approved financial instrument is required, which must be maintained for a minimum period of 5 years.

Residency status

on buying/renting their property in Malta, citizenship candidates are issued an identity card. Citizenship is granted after 12 months from date of property purchase or rental. Candidates need not spend 365 days in Malta before citizenship is granted. Residence is defined under Maltese law as an intention to reside in Malta for any fiscal year, usually evidenced by a stay of a minimum of 183 days or by the purchase / rental of property together with a visit to Malta.

Fit and proper test

applicants must show they are in good standing and repute and will undergo a 'fit and proper' test. They must also show they do not suffer from any contagious disease.

Clean Criminal Record

The applicant must have no criminal record. Applicants must provide a police certificate which may be submitted subsequently to the submission of the application but before approval. A person who has been denied a visa to a country with which Malta has visa-free travel arrangement shall not be entitled to apply under the program. A person who is deemed a potential national security or reputational risk, or is subject to criminal investigation will also be denied citizenship.

Application and Due Diligence fees

Standard due diligence fees are applicable as follows: For main applicant: EUR 7,500; for spouses, adult children and parents: EUR 5,000; for children between 13 and 18 years of age: EUR 3,000 each.

The programme is limited to the first 1,800 approved applications.

The application will be processed by Identity Malta (a government institution) and is to be submitted through a local Approved Agent.

Through its hands-on participation in promoting Malta on an international level, and in association with a number of local approved agents Frank Salt Real Estate can assist international clients in obtaining Malta residence and citizenship under the respective programs, including the Malta Individual Investors Programme.

Taxation Merits tied to the Malta Citizenship by Investment Programme

The acquisition of Maltese citizenship under the IIP does not have any tax consequences, and even if one’s residence is moved to Malta, one would still retain the status of a non-domiciled person and thus have a limited, advantageous tax exposure.

The acquisition of Maltese citizenship under the IIP does not have any tax consequences, and even if one’s residence is moved to Malta, one would still retain the status of a non-domiciled person and thus have a limited, advantageous tax exposure.

Candidates that become residents and domiciled in Malta are required to pay income tax on their worldwide income. Personal income is taxed at progressive rates of up to 35%. However, individuals that are resident in Malta but not domiciled in Malta will only be required to pay tax on income arising in Malta and income (excluding capital gains) that arises outside Malta that is received in Malta.

Capital Gains Tax: Malta does not impose estate or donations tax but it does levy a capital gains tax on various assets (mainly immovable property and shares). Capital Gains Tax is not levied on transfer of immovable property if the person transferring the property has owned it and occupied it as his main residence for a period of three years and has not vacated it for more than one year. Otherwise tax shall be levied at the 0 to 35% tax regime on the gain if the property is sold within the first 12 years of ownership or 12% of the sales consideration if the transfer is effected after 12 years of ownership. However the 12% final tax does not apply if the individual property owner is not resident in Malta.

Malta has concluded double taxation treaties with around 60 countries with a number of other agreements signed but not yet in force.

The standard VAT rate in Malta is of 18%. The corporate tax rate is 35%, however special tax concessions apply for non-resident / non-domiciled owners.

MALTA RETIREMENT PROGRAMME: New residency programme directed at retirees, it applies to pensioners and grants EU/EEA/Swiss Nationals the benefit of retiring in Malta and paying a reasonable tax rate. Beneficiaries will be subject to a 15% flat tax rate on foreign source income received in Malta, by the Scheme’s beneficiaries or their dependants, subject to a minimum tax payment of €7,500, with an additional €500 per dependant. Minimum value of property purchased is €250,000 (Gozo) and €275,000 (Malta). Any income arising in Malta would, in turn, be taxable at a rate of 35%. The Scheme also confers the right to claim double taxation relief. Beneficiaries under this Programme are required to purchase or rent a residence for specific minimum amounts. They must also spend in excess of 90 days per calendar year in Malta, averaged over a period of 5 years, and may not spend more than 183 days in any other country.

ORDINARY RESIDENCE: EU Nationals may apply for Maltese ordinary residence on a number of grounds including economic self-sufficiency, employment or self-employment in Malta. Ordinary residents are not taxed on a worldwide basis. They are taxed at normal rates which range from 0 to 35% on foreign income remitted to Malta and local income and capital gains. Overseas capital gains remitted to Malta as well as income not remitted to Malta are not subject to local taxes.

MALTA RESIDENCE  PROGRAMME FOR EU NATIONALS: The Malta Residence Programme for EU nationals has just been launched to attract wealthy individuals and families who do not already enjoy permanent residence status in Malta, to take up residence in Malta. This programme was created to upgrade the already successful residence programme available to nationals of the EU, EEA or Switzerland, the High Net Worth Individuals (EU/EEA/Swiss Nationals) Rules.

The Malta Residence Programme rules shall be deemed to have come into force with effect from 1st July 2013 by virtue of Legal Notice 270 of 2014.

The Malta Residence Programme – Tax Benefits

The tax benefit will consist mainly of the right to pay tax at a flat rate of 15% on all foreign source income which is remitted to Malta. Any other income (such as local source income) is subject to a flat rate of 35% tax. This is subject to a reduced minimum annual tax liability of €15,000 covering the main applicant and dependents included on the same application.

Terms of the new Malta Residence Programme

Buying a Property

Applicants must own a property in Malta which is purchased for at least €220,000 for property purchased in Gozo or in the Southern region of Malta. If the property is purchased in any other area, applicants must purchase a property for at least €275,000.

Renting a Property

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.

Administrative Fees

A non-refundable administrative fee needs to be paid in respect of any application for special tax status, including the Malta Residence Programme. The official application fee is that of six thousand Euros (€ 6,000) except where the qualifying owned property is situated in the South of Malta, in which case the administrative fee is reduced to five thousand five hundred Euros (€5,500).

PURCHASE OF PROPERTY IN MALTA AS A HOLIDAY HOME: In the case of a purchase of a holiday home (or second residence) in Malta, the process is simple and similar to that followed by Maltese nationals. In the case of EU citizens, an AIP permit is required unless (i) the property is being purchased as an investment, or (ii) the individual has been resident in Malta for more than 5 years, or (iii) the property forms part of a Special Designated area. In the case of non-EU citizens, an AIP permit is always required unless the property being purchased is within a Special Designated Area. The relative permit will be issued usually within 6 weeks and a nominal fee of €233 is applicable. The property must also satisfy a certain minimum value which currently stands at circa €110,469 for apartments and maisonettes and €184,064 for villas, townhouses and other properties. These values are index linked and thus may be subject to nominal revisions annually. Unless in a Special Designated Area, only one property can be purchased as a holiday home.

PURCHASE OF PROPERTY AS AN INVESTMENT: One of the most lucrative investment opportunities in Malta is the purchase of property as a rental investment. At present this is estimated between 3.5% to 6%p.a., depending on the type o property in question, the location, the financing method utilised and the level of finishing. EU Nationals can purchase more than one unit and no price thresholds or other criteria apply, given that the buyer states the scope of the acquisition in the purchase agreement.

PROPERTY FOR COMMERCIAL UNDERTAKINGS: Also exempted is the acquisition of immovable property by an EU national for the conduct of one’s business activity or for the supply of services by such persons or company. A declaration reflecting the purchaser’s intention for the acquisition should be inserted in the purchase agreement. GLOBAL RESIDENCY PROGRAMME: The new residence option allows non-EU nationals to benefit from a residence permit in Malta. In order to qualify for residency, under the new Global Residence Programme, a non-EU foreigner will need to buy a property of €220,000 or over (if the property is in the South of Malta or in Gozo) or of a minimum value of €275,000 for properties in Central and Northern Malta. Those interested in renting a property, can also do so and they are eligible subject to a minimum annual rent of €8,750. A flat rate of 15% is applicable on income declared in Malta. A minimum tax of €15,000 is applicable, payable in advance. Applicants have no minimum stay requirements. However they may not spend more than 183 days in any other single jurisdiction. Applicants of the new Global Residence Programme will also be able to work or set up business in Malta and will be taxed at a flat rate of 35% on any income arising in Malta. The standard 15% flat rate will be applicable on income declared in Malta from overseas. Under the new Global Residence Programme, foreign residents including their dependents have to be covered by health insurance. July 2013 update.

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