Tax Advisory

Malta proves to be an attractive country to those foreigners who want to pull away from large cities and to opt for a quieter smaller environment. The Island offers warm hospitality, a pleasant climate, a rich culture and historical heritage that date back to prehistoric times even older than Stonehenge and the pyramids.
For these reasons and for the attractive residence schemes and advantageous tax conditions many make Malta their second home. Expatriates may take up residence in Malta upon obtaining a residence permit under the Immigration Act.

The following are the fiscal incentives offered under the Permanent Residence Scheme:

A very low income tax rate

Those obtaining a permanent residence permit pay tax at a reduced rate of 15% on that portion of foreign income that is remitted to Malta and on certain capital gains. For income tax purposes the applicant is deemed to remit to Malta €28,000 per annum resulting in a minimum tax liability of approx. €4,000.

Double Taxation Relief/Agreements

Permanent Residence Permit Holders are governed by Double Taxation Agreements; this safeguards individuals from being taxed twice on the same income. Malta enjoys Double Taxation Treaties with a number of countries most of which treaties are based on OECD Model Convention on the Taxation of Income and Capital.

No Estate Duty, Mortgage Taxes, Provincial Taxes,

Land Duty and Property Taxes
The local taxation system imposes a duty on certain documents and transfers amounting to 5% of the market value which is payable on the transfer of an immovable property. A duty of 2% is payable on the transfer of shares in a limited liability company.

- A low VAT Rate – standard rate is 18%
- Exemption from Customs Duty on the Importation of household effects
- Exemption from Customs Duty and Value Added Tax on the Importation of certain vehicles

No VAT is payable on a vehicle imported into Malta by a permanent resident if:-

a) the vehicle is manufactured in the European Union;
b) the resident holder has owned the vehicle for at least six consecutive months from when the residence permit was issued;
c) that the customs /fiscal charges which are normally due would have been paid;
d) the vehicle has to be brought to Malta within six months from when the permit would have been issued or six months from when actual residence is taken up in Malta, whichever is the later

Benefits – Permanent resident holders are taxed at a flat rate of 15% on income remitted to Malta, subject to a minimum annual tax liability of EUR 4,150 per annum after relief from double taxation. The tax payable is worked out on income and capital gains arising in Malta and on foreign income, excluding capital gains, remitted to Malta. Therefore no tax liability is created on any capital gains arising outside of Malta irrespective of whether they are remitted to Malta or not. Any excess income brought to Malta, proceeds from the sale of the principal residence in Malta (subject to conditions), encashments of investments and any income accumulated during the resident’s stay may be repatriated, provided that there are no outstanding tax liabilities payable in Malta. There are no estate duties to be paid but duty is levied on the transfer of immovable property situated in Malta as well as shares held in Maltese companies. The duty payable on the purchase of immovable property is fixed at the rate of 5%.

Permit holders are not to engage in any gainful occupation or any form of business activities in Malta and import duty or VAT on the importation into Malta of used household and personal effects, motor vehicle, furniture and other domestic articles is waived if such goods are imported within the first 6 months of obtaining the residency license.

Application conditions and procedure – When applying for a Permanent Residence Permit, candidates may include dependants, namely children under18 years of age, their spouse, parents and grandparents if being maintained by the applicant.

A prospective permanent resident must provide evidence that he/she either owns assets outside Malta worth at least EUR 349,000 or is in receipt of an annual income of at least EUR 23,000 arising outside Malta.

The applicant will be required to remit to Malta at least EUR 13,950, plus EUR 2,330 per each dependent annually and must, within one month from taking up residence, either purchase residential premises in Malta at a cost of not less than EUR 116,000 in the case of a house, or EUR 69,000 for a flat, or rent/lease suitable accommodation at a cost of not less than EUR 5,150 per annum.

An application for a Permanent Residence Permit must be supported by the following documents:

Evidence that applicant has an annual income of Eur23,000 or capital assets of at least Eur349,000 and that he is in a position to remit to Malta a minimum annual income of Eur13,950 plus Eur2,330 for each dependent. This evidence can take the form of a bank reference, bank statements or certificates of deposit or securities or income tax returns.

The application process may take up to three months. The applicant is to take up residence in Malta within 12 months of the issue of the permit.