Malta Retirement Programme

The Malta Retirement Programme, 2012

EU Nationals

Malta has always been an ideal place to retire. The islands’ warm climate, open door policy to foreigners and affordable accommodation has contributed in no small way to this. In 2012, the Malta Retirement Programme, also known as MRP, was launched and is specifically designed to attract nationals of the EU, EEA (Iceland, Norway or Liechtenstein), and Switzerland who are in receipt of a pension as their regular source of income.

What are the benefits?

There are several clear tax benefits for individuals who qualify under Malta’s EU Retirement Programme.

• No world-wide taxation
• Foreign income not remitted to Malta is tax exempt
• No inheritance taxes
• 0% on foreign capital gains
• Foreign Income received in Malta by any individual or his dependents is taxable at a flat rate of 15% from the date on which the applicant is has been confirmed. It is important that applicants are aware of the tax status date, as any remittances before this date is subject to tax at progressive rates which can be as high as 35% on income exceeding €60,000.
• Local source income taxable at 35%, including local bank interest, or dividend income, limited to 25% of total taxable income

Minimum Tax Payments & Requirements

Beneficiaries under the MRP Submit need to submit one annual tax return, with accompanying proof of remittance. They must ensure that they make minimum annual payments:

• Minimum annual payment of €7,500 for the main applicant or €500 in respect of each dependent
• In first year, no provisional tax payments, and tax paid on a pro-rata basis
• Can apply for relief of double taxation provided minimum amount of tax payment is made

Who May Apply?

An EU national or an individual from an EEA country including Iceland, Norway or Liechtenstein as well as Switzerland in receipt of a pension can apply. Dependents may also apply under the programme and includes:

• Spouse
• Person with whom the beneficiary is in a stable and durable relationship
• Unmarried minor children, including adopted children and those who are in the custody of the applicant and are financially dependent on the applicant
• Children over the age of 18 who because of illness or disability are unable to maintain themselves

Special carers may also come to Malta if they assist the applicant or any one of his dependents. Income received by special carers is subject to normal progressive rates of tax.

Conditions to Apply

Applicants, who are not beneficiaries under any other tax regulation in Malta, must satisfy a number of conditions including:

1. Owners or Rents Property in Malta

Applicants need to prove that they have acquire residence in Malta either by buying property on the island or else through entering a lease agreement. Property purchase is subject to independent architect valuations, and full details of the state of rental property must be included in the lease. Property is subject to minimum values as follows:

2. Documentary Evidence Requirements

Applicants must show that they are in receipt of regular income, which can either be:

• Periodic payments received in respect of past employment
• Remuneration paid as lifetime or temporary annuities
• Regular income from an occupational retirement scheme, personal overseas retirement plan or insurance policies

Lump sum payments or capital sums received are not considered as regular income and cannot be taking into consideration as a valid means of self-sufficiency.

3. Amount of Pension Remitted to Malta

All an applicant’s pensionable income must be received by the applicant in Malta. Minimum remittance requirements are:

• €50,000 in the case where all foreign pension income remitted to Malta

If an applicant’s pensionable income is not remitted to Malta, he or she will automatically loose his or her status under the programme. Other income may also be received or earned in Malta. In this case, however it is important to ensure that pension income accounts for at least 75% of the total taxable income in Malta. In this case the pension received and remitted to Malta must be:

• €37,500 foreign pension income where €12,500 is earned from other income

4. What other Documents do I need?

Anyone wishing to retire in Malta and reap the benefits of Malta’s favourable retirement programme must ensure that they have:

• Valid travel document, certified
• Full EU sickness insurance, either through Reciprocal Agreement with Malta or procured by the applicant himself, certified copies of which must be included in the application
• Be considered as a fit and proper person including updated police conduct certificate, apostilled, accompanied by a sworn declaration before Commissioner of Oaths in Malta, confirming that individual has no ongoing civil or criminal convictions
• Applied in full for a Registration Certificate in Malta in terms of the Free Movement of European Nationals and their Family Members Order
• Copy of acknowledgement of Registration Certificate in Malta or Residence Card/Document

5. Minimum Stay Requirements

• An individual must reside in Malta for more than 90 days per year averaged over 5 years ie. 450 days
• Does not stay in another country for more than 183 days in a calendar year

What are the costs?

• Non-refundable administrative fee of €2,500

Can I still work after retirement?

Applicants may:

• Hold a non-executive post on the board of a company resident in Malta
• Cannot be employed by a company in any capacity
• Undertake activities related to institutions, trust or foundations of a public character and any similar organisation or body of persons, which are of a public character engaged in philanthropic, educational, or research and development in Malta

How can we help you?

Our offices can act as Authorised Registered Mandatory (ARM) on your behalf which is a necessity in applying for special tax status under the MRP programme. We can provide guidance on how to apply, including initial vetting of all documents before submission to the necessary authorities. Our qualified accountants can also assist by helping you complete your annual income tax return and ensuring that you comply with all the necessary requirements under the programme.

Contact us on +356 2778 1700 or chat with us on Skype ID: acumum to discuss ways how you can benefit under the programme.