Changes to Malta’s Remittance Basis of Taxation

Malta Permanent & Long Term Residents now Taxed on a World-Wide Basis

Pursuant to Malta’s Income Tax Act, any person that is considered to be ordinarily resident and domiciled in Malta is subject to Malta tax on a worldwide basis –  on any income or gains whether arising in Malta or not.

Persons that are either resident or domiciled in Malta are subject to Malta tax on income and gains arising in Malta and on income arising outside Malta (excluding capital gains) that is remitted to or received in Malta.

What are the changes?

Due to changes to the Global Residence Scheme and the newly enacted Retirement Residency Programme laws of 2014,  Malta Permanent Residents and Long Term Residents will be taxed on a world-wide basis on income and gains.

Notwithstanding the changes, Malta’s Global Residence Scheme and Malta’s Retirement Residence Programmestill allow non-permanent residents who are EEA or Swiss nationals to enjoy favourable rates of income tax on foreign-source income received in Malta, subject meeting certain conditions.

“Permanent Resident” is defined as:

1. a person who has right of permanent residence in terms of article 6 and is in possession of a permanent residence certificate issued in terms of article 7 of the Free Movement of European Union Nationals and their Family Members Order; or
2. a person who applies for right of permanent residence in terms of article 6 of the Free Movement of European Union Nationals and their Family Members Order.

“Long-Term Resident” is defined as:

1. a person who has long-term resident status in terms of the Status of Long-term Residents (Third Country Nationals) Regulations; or
2. a person who applies for long-term resident status under the Status of Long-term Residents (Third Country Nationals) Regulations.

Effect of Malta’s Remittance Amendments

Whilst Malta’s remittance system has been amended in respect of Permanent and Long Term Residents, Malta’s remittance system remains the same and applicable for both individuals – not seeking long term residence in Malta – and companies.

Acumum – Legal & Advisory – Malta’s International Law Firm