Ultimate Guide to Taxation in Malta: Residency, Special Regimes, and Opportunities for High Net-Worth Individuals (HNWIs)

Malta, a picturesque island nation in the Mediterranean, has become a hotspot for individuals seeking favorable tax regimes and a high standard of living. Known for its strategic location between Europe and North Africa, Malta is not only attractive for its beautiful scenery and rich history but also for its robust financial sector, pro-business environment, and competitive tax structure.

In recent years, Malta has attracted global citizens, high-net-worth individuals (HNWIs), and retirees seeking to optimize their tax situation while enjoying a Mediterranean lifestyle. This guide provides a comprehensive overview of Malta’s tax system, special tax regimes, and how one can benefit from relocating to this low-tax jurisdiction.

Malta’s Tax System Overview

Malta operates a remittance-based tax system for individuals who are not domiciled in the country. This means that non-domiciled residents are taxed only on income and capital gains arising within Malta and on foreign income (but not capital gains) only if it is remitted to Malta. This creates significant tax planning opportunities for foreign nationals and HNWIs.

Key points about Malta’s tax system include:

• Corporate tax is set at a nominal rate of 35%, but due to Malta's full imputation system, effective corporate tax can be reduced to 5% or lower through refunds available to shareholders.
• Personal income tax rates are progressive, with the highest rate being 35% for residents.
• No wealth tax: Malta does not impose any wealth, inheritance, or estate tax.
• Capital gains tax is applicable only on property located in Malta.
• Value-added tax (VAT) in Malta is set at 18%, one of the lower rates in the European Union.

Tax Residency in Malta

Ordinary Residence

One can become a tax resident in Malta by either:

• Spending more than 183 days in a calendar year in the country; or
• Establishing one's ordinary place of residence, which implies moving to Malta with the intention of establishing a long-term stay.

Taxation on Ordinary Residents:

• Malta taxes residents on a remittance basis. This means individuals are only taxed on foreign income that is brought (or remitted) to Malta.
• Domestic income earned within Malta is taxed at progressive rates of up to 35%.

Global Residence Program (GRP)

The Global Residence Program (GRP) is designed for non-EU/EEA/Swiss nationals. This special tax status offers a 15% flat tax rate on foreign-sourced income remitted to Malta. The key benefits of the program include:

• Minimum annual tax of €15,000 for any remitted income.
• Exemption from Malta's capital gains tax on assets held outside of Malta (even if remitted).
• Freedom of movement within the Schengen Area for up to 90 days in a 180-day period.
• The option to work or run a business in Malta, subject to a separate application for a work permit.

Ordinary Residence for EU/EEA/Swiss Nationals

EU, EEA, and Swiss nationals can take advantage of ordinary residence status without having to apply for special schemes. They benefit from the remittance basis of taxation, just like GRP residents, without the minimum tax requirements.

Special Tax Regimes for High-Net-Worth Individuals (HNWIs)

Malta Residence and Visa Program (MRVP)

The Malta Residence and Visa Program (MRVP) is a popular scheme for non-EU nationals seeking residence in Malta. It provides a gateway to reside and travel across Europe’s Schengen Area. Under this program:

• Participants must make a minimum investment in Maltese government bonds or real estate.
• Foreign income is taxed at a 15% rate, but only if remitted to Malta.
• The program offers a path to permanent residence and, after a set period, even citizenship under certain conditions.

The Malta Retirement Program

Malta is also an attractive destination for retirees, thanks to its Retirement Program for EU, EEA, and Swiss nationals. This regime offers:

• A 15% flat tax rate on foreign pension income remitted to Malta.
• A minimum annual tax of €7,500, with an additional €500 per dependent.
• No tax on capital gains made outside of Malta, regardless of whether they are remitted to the country or not.

High Net Worth Individuals (HNWI) Tax Scheme

The High Net Worth Individuals (HNWI) Scheme was created for non-EU nationals and EU nationals residing in Malta. Although the original HNWI scheme has evolved into the Global Residence Program, those previously granted this status still benefit from reduced tax rates and favorable conditions.

Corporate Taxation in Malta

Malta is also known for its competitive corporate tax regime. Although the standard corporate tax rate is 35%, Malta’s full imputation system allows shareholders to claim significant refunds on dividends paid from foreign-source income.

The tax refund system works as follows:

• Shareholders can apply for a refund of up to 6/7ths of the tax paid, bringing the effective tax rate down to as low as 5%.
• For holding companies, the refund can reduce the effective tax rate to 0% in certain cases, making Malta an ideal jurisdiction for international holding structures.

Malta’s Double Taxation Treaties

Malta has over 70 double taxation treaties with countries worldwide, ensuring that foreign-sourced income is not taxed twice. These treaties make Malta an attractive destination for HNWIs and businesses operating internationally. The most important treaties include those with the United States, the United Kingdom, Italy, France, and Germany.

Immigration and Relocation

In addition to its tax advantages, Malta offers an easy immigration process for HNWIs and retirees.

Malta's stable economy, highly developed infrastructure, and access to the European market further enhance its appeal as a relocation destination.

Why Choose Malta?

Malta, with its favorable tax system and strategic location, has become a top destination for those seeking to optimize their tax situation. Offering remittance-based taxation and special regimes for high-net-worth individuals (HNWIs) and retirees, Malta provides effective solutions for personal and corporate tax planning within an EU jurisdiction. This guide covers the key aspects of Malta's tax advantages.

At Travels & Savings, The Tax Firm for Global Citizens, we specialize in helping individuals and businesses navigate the complexities of international taxation. Whether you are considering relocating to Malta or exploring its tax regimes, our team of experts is here to provide tailored advice to meet your unique needs.

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