The Malta Retirement Programme Rules offers a number of incentives to foreign individuals who would like to retire in Malta.
Apart from the various benefits associated with living in Malta, such as its warm Mediterranean climate and is central geographic location between Europe and Africa, there are also a number of other reasons why setting up residence in Malta can be beneficial.
Favourable rate of tax
Persons not domiciled in Malta are not taxed on their worldwide income but only on Maltese source chargeable income and capital gains and on foreign income remitted to Malta.
Where a pensioner not domiciled in Malta satisfies the conditions set out in the MRP, then he/she shall be entitled to additional beneficial tax treatment in addition to above-mentioned remittance and source basis of taxation. Once the applicant has acquired the right to reside in Malta in terms of a Registration Certificate and the application for the scheme has been approved, he/she is deemed to be resident in Malta and is chargeable to tax on the following income:
- All income arising outside Malta which is remitted to Malta by the beneficiary or dependent is taxable at 15% and such person may also claim double tax relief on the said amount subject to the following conditions;
- Pension income in the form of a lump sum or any other capital sum received by way of retiring or death gratuity/compensation for death or injuries are exempt from Maltese income tax even if remitted to Malta;
- Applicant must pay a minimum tax of €7,500 per annum and €500 per annum for every dependent and carer;
- Any tax paid under these rules at 15% shall not be refundable;
- If there is any other income which does not fall under the alleged rules they are charged separately at the rate of 35%.
No death duties are payable in Malta. Duty is however charged on the transfer of immovable property situated in Malta and on any shares owned in a locally registered company (excluding shares in companies listed on the Malta Stock Exchange).
Who may apply for the scheme?
To be eligible a person must be a pensioner, not domiciled in Malta and must have no intention to establish their domicile in Malta within 5yrs from the application for this programme. They must also be EU, EEA and Swiss citizens having a pension or any other form of retirement scheme and plans and lifetime or temporary annuities as their main source of income, constituting at least 75% of the applicant’s chargeable income. Documentary evidence must be presented as proof of receipt of the aforesaid pension income. Therefore, the applicant must not be in an employment relationship. However, he or she, may hold a non-executive post in a Maltese resident company.
The applicant must also either own property or lease property in Malta or Gozo – the ‘Qualifying Property Holding’. A lease must be taken for not less than a twelve month period and evidenced by a certified lease agreement submitted together with the application.
The minimum amounts for such Qualified Property Holding are as follows:
- Purchase of Property in Malta for not less than €275,000
- Purchase of Property in Gozo for not less than €250,000
- Lease of Property in Malta €9,600 annually
- Lease of Property in Gozo €8,750 annually
This Qualifying Property must not be shared with other individuals except for dependents and special carers. The term ‘dependents’ also refers to those individuals with whom the beneficiary has a stable relationship.
The applicant must also be in possession of a valid travel document and a health insurance which covers risks across the EU. In addition the applicant must not benefit from the Residents Scheme Regulations, the High Net Worth Individuals Scheme or the Highly Qualified Persons Rules. The beneficiary must also be a fit and proper person holding an international due diligence.
What are the application requirements?
Applications can only be submitted through an Authorised Registered Mandatory (registered as such with the Inland Revenue Department).
Documents required for the application process:
- 4 passport sized photographs (colour) for each applicant
- Birth or Marriage Certificate
- Copies of Passports (page of personal details)
- A Police Conduct Certificate in English.
- A declaration on Oath or a Solemn Declaration stating that the individual does not have any ongoing criminal or civil proceedings.
- Original Statement/s from the pension provider stating the full pension details
- Health Cover – this may be either by the transposition of EU Health rights via the S1(E121) or by having private medical healthcare.
- A non-refundable administrative fee of €2500 must be paid. This does not include our fee for assistance.
What conditions must be followed once the applicant is accepted?
Once the applicant is accepted under this scheme, the individual is to comply with the following obligations:
- Must reside in Malta for a minimum of 90 days a year (calculated over a five year period) and must not reside in any other country for more than 183 days in any calendar year
- Retain the ‘Qualifying Property Holding’
- The pension income must continue to be received in Malta when applying under the scheme
- Retain health insurance coverage
- Must continue not to be domiciled in Malta nor become a Maltese national/third country national
Other conditions may apply.