RETURNED MIGRANTS

Individuals born in Malta, whether Maltese nationals or not, who have been absent from Malta for at least 20 years in aggregate during the last 25 years prior to their return to Malta, will, if they so elect, be taxed at a maximum rate of 15% subject to a minimum tax liability of €2,325, upon taking up residence in Malta.

The tax is calculated on income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted to Malta.

Returned migrants may engage in gainful occupation in Malta, but any income derived from such occupation will be taxed at the standard resident married rates without any tax-free portion.

Returned migrants are required to remit to Malta foreign income of at least €14,000 (plus €2,400 per dependant) annually.

Applicable for calendar year 2009

This provides returning Maltese migrants and persons transferring their residence to Malta a guide on certain key features of the tax system in Malta and related matters.

It covers:
> Residence Scheme Certificate holders
> EU/EEA nationals holding a Maltese residence permit
> Returned migrants

RESIDENCE SCHEME CERTIFICATE

A non-Maltese person is eligible to apply for a residence scheme certificate if such person either:

• Owns assets outside Malta worth at least €349,000; or
• has an annual income of at least €23,000 arising outside Malta.
• An application form for such certificate should contain:
• A certificate confirming the above income or assets.
• A conduct certificate.
• A copy of the birth certificate and passport.
• 3 passport-sized photographs.
• The processing of such an application usually takes around 3 months.
• The residence scheme certificate does not subject the holder thereof to any statutory minimum periods of presence in Malta.
• Once in possession of a residence scheme certificate, holder must:
• Take up residence in Malta within 12 months.
  • Within 12 months from taking up residence, purchase property costing at least €116,000 for a house or €69,000 for a flat, or rent a residence for at least €4,150 per annum.
• Continue to satisfy the asset value/annual income test.
  • Remit to Malta at least €13,950 (plus €2,300 per dependant) annually.
  • Not engage in any gainful occupation or any form of business activities in Malta.

  Special considerations for EU/EEA nationals

A certificate holder who is an EU/EEA national may at any time opt to renounce the certificate and apply for a residence permit. The minimum tax liability of €4,192 is still payable in the year the option is taken up.
A residence scheme certificate will be deemed to have been withdrawn with immediate effect if the holder of the certificate is issued with a residence permit for EU/EEA nationals.

Income tax payable by holder of a Residence Scheme Certificate

The holder is subject to a flat income tax rate of 15%, subject to a minimum annual tax liability (after double taxation relief) of €4,192.
The tax is calculated on income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted to Malta.
Double taxation relief is available for tax levied outside Malta on income remitted to Malta which is subject to tax in Malta.
Foreign tax is added to income remitted to Malta and the total is subject to tax at 15%. Foreign tax paid is then deducted from the Malta tax, up to the Malta tax payable (i.e. 15%). However, the Malta tax payable cannot be less than €4,192.
A number of treaties concluded by Malta allow certain foreign income remitted to Malta to qualify for a reduced withholding rate of foreign tax or to be exempt from foreign tax (typically private pensions and certain capital gains).

Other tax cosiderations and requirements

There is no estate duty in Malta. Stamp duty is payable, amongst others, on the transfer of immovable property situated in Malta and shares in Maltese companies. Duty on the acquisition of immovable property is levied at 5%, with a reduced rate being possible in certain situations.

• For persons transferring their residence from a country in the EU to Malta, no import duty or VAT should be chargeable on used household and personal effects, cars, furniture and other domestic articles, unless subject to excise duty.

RESIDENCE PERMIT FOR EU & EEA NATIONALS

• A citizen of the EU/EEA has the right to enter, remain and reside in Malta. Where a person intends to reside in Malta for a period longer that 3 months, he is obliged to apply for a residence permit.
• Residence permit holders typically qualify as Maltese residents for income tax purposes and are taxed at normal progressive rates going up to 35%. Tax is chargeable on income and capital gains arising in Malta and on foreign income, excluding capital gains, remitted to Malta, for as long as the individual is deemed not to be domiciled in Malta.

Resident married couples opting for a joint computation*

Resident single persons and married couples opting for a separate computation*