Malta Residence Programmes and Malta Citizenship
We at Kresse International take care about your needs, concerning any kind of Malta residency requirements and consult about your options for citizenship.
Malta Residence Regulations
In terms of residency requirements in Malta, two categories of applicants are to be differentiated, namely nationals of:
- The European Union (EU), the European Economic Area (EEA), including Iceland, Norway and Lichtenstein, and Switzerland, and
- Third countries
The following six different options have to be differentiated:
1. Residence permits for EU/EEA nationals
Any EU and EEA or third country national residing in Malta for a period of more than three (3) months is required to obtain a permit from the authorities in Malta.
An individual may qualify for Ordinary Residence, which requires that such individual has been physically living in Malta for a period of six months or more and is currently working in Malta or able to financially support himself and his family.
Temporary residence is also granted to persons who are following an education in Malta.
Permanent residence can be applied for by an EU/EEA national and his family members once they have been living in Malta for a continuous period of five years, provided that such applicants have not absented themselves from Malta for more than six months a year. The applicants should be employed, self-employed, studying or economically self-sufficient throughout the five year period.
2. Highly Qualified Persons Rules
In 2011 new rules were introduced for individuals receiving an employment income from an ‘eligible’ office. The tax benefit consists of a flat tax rate of fifteen percent (15%) on their employment income.
The purpose of these rules is to encourage expatriates working within specialised sectors to relocate to Malta. Income is considered to derive from a qualifying contract of employment when it relates to employment income of a minimum of seventy five thousand Euros (€75,000) consisting of emoluments from an ‘eligible office’. This relates to an employment in any one of the following positions:
- Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Operations Officer, Chief Technology Officer;
- Portfolio Manager, Chief Investment Officer, Senior Trader/Trader, Senior Analyst (including Structuring Professional), Actuarial Professional, Chief Underwriting Officer, Chief Insurance Technical officer;
- Head of Marketing, Head of Investor Relations
An individual under this scheme shall benefit from the 15% tax rate if the following conditions are satisfied:
- The individual is able to demonstrate that:
- Employment activities carried out are in relation to the functions of an eligible office;
- Employment income received is related to employment activities carried out in Malta;
- He has adequate and specific competence, is in possession of professional qualifications and has at least 5 years’ experience;
- The employment contract is subject to the laws of Malta for the purposes of carrying out genuine and effective work;
- The individual fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment;
- The individual has not benefitted from any other deductions available to investment services expatriates;
- The individual is not domiciled in Malta
The reduced rate of tax applies for a consecutive period of five years for EEA and Swiss nationals and for a consecutive period of four years for other nationals.
3. High Net Worth Individuals Rules (HNWI)
These Rules, introduced in September 2011, address only applicants from the European Union (EU), the European Economic Area (EEA) and Switzerland. For non-EU nationals the so-called Global Residence Programme Rules were introduced in 2013 (see below).
Malta's HNWI Rules apply to those individuals who wish to have their tax residence in Malta.
Persons eligible under these new rules will be subject to a flat rate of 15% on a remittance basis, meaning, only on foreign source income if remitted to Malta.
Summary of the HNWI Rules
- EU/EEA/Swiss Nationals
- Stable & regular income
- Property Purchase of EUR 400,000 Minimum or
- Property Rental of EUR 20,000/year
- Maximum Residence in any other country < 183 days
- 15% Foreign source income remitted to Malta; 35% Malta source income
- Annual Minimum Tax Payment
- Main Applicant : EUR 20,000; Dependent : EUR 2,500
- Health Insurance Required
4. The Global Residence Programme Rules 2013
The new Global Residence Programme replaced the High Net Worth Individual Rules above with respect to third country nationals.
In order for a person to qualify under these Rules, such person would be required to hold a
- Qualifying property holding : purchase of an immovable property at a consideration of not less than Euro 270,000 for a property situated in Malta (for south of Malta and Gozo, reduced amount of Euro 220,000)
- Alternatively, a property taken on a lease which is not less than Euro 9,600 per annum in Malta or Euro 8,750 per annum for a property situated in the south of Malta or Gozo.
- Stable and regular resources, sufficient to maintain himself and any dependent person;
- A health insurance covering all risks in the EU
- Be fluent in English and
- Be a fit and proper person
Under these Rules a third country national would be subject to pay income tax at a rate of 15% on income arising outside of Malta and remitted to Malta. Any other income arising in Malta, not chargeable to tax under the Rules, shall be charged as separate income at the rate of 35%.
5. The Malta Retirement Programme 2012
The Malta Retirement Programme (MRP) is a programme designed to attract nationals of the EU, EEA and Switzerland who are not in an employment relationship and are in receipt of a pension as their regular source of income.
Individuals benefitting from this Programme may hold a non-executive post on the board of a company resident in Malta. This implies that the beneficiary would be prohibited from being employed by the company in any capacity.
Such individuals may also partake in activities related to any institution, trust or foundation of a public character and any other similar organisation or body of persons, which are also of a public character, that is engaged in philanthropic, educational or research and development work in Malta.
Once a EU/EEA/Swiss national is resident in Malta in terms of a Registration Certificate, such person may apply for a tax status under the rules of the MRP, granting the right to tax at a flat rate of 15% on foreign-sourced income, subject to a minimum tax payment of EUR 7,500 plus EUR 500 per dependant and every special carer.
The entire pension/s must be declared in Malta and the pension/s shall constitute at least 75% of the total income chargeable to tax in Malta.
Benefitting persons must not reside in any other single jurisdiction for more than 183 days in any year and must also reside in Malta for not less than 90 days a year averaged over any five-year period.
To qualify under the MRP the applicant has either to own or lease property in Malta or Gozo. Lease must be taken for not less than a twelve month period.
Minimum amounts are as follows:
- Purchase in Malta: EUR 275,000 (South of Malta and Gozo: EUR 220,000)
- Lease in Malta : EUR 9,600 (South of Malta and Gozo: EUR 8,750)
EU citizens may import their household effects free of VAT and import duties and register a car providing they have owned the car for 24 months prior to bringing it into Malta. The car has to be brought into Malta within 12 months of taking up residence.
Applications for special tax status under the MRP are to be made through any Maltese Authorised Registered Mandatory. We at Kresse International cooperate with several Mandatories.
6. Malta Citizenship by Investment Programme 2014
Introduced at the beginning of 2014, the Malta Individual Investor Programme (IIP) offers high and ultra-high net worth individuals and families worldwide citizenship in Malta as a highly respected EU Member Country.
Successful candidates will be granted citizenship in Malta by a Certificate of Naturalization, which can also be extended to include their families. Once a candidate is awarded Malta citizenship, which includes EU citizenship, they have the right of establishment in all 28 EU countries and Switzerland. They also have the ability to set up business in Malta, and can get a Malta passport enabling them to enjoy visa-free travel to more than 160 countries across the World including the United States.
The Maltese Citizenship Programme has a cap of 1800 applications in place for the whole programme. The number of applicants at the end of 2015 amounted to around 700.
Eligibility for Individual Investor Programme Malta
6.1 Fit and Proper Test
The Malta citizenship by investment program has some of the strictest due diligence standards of any immigrant investor program in the World to ensure only deserving and reputable applicants are granted Maltese citizenship.
As part of the Malta Individual Investor Programme, there is a four-tier due diligence process carried out directly by the government to comprehensively assess candidates. Applicants must have a clean criminal record, and the Malta government conducts extensive criminal checks with INTERPOL, the International Criminal Court, and various other sources and authorities. As part of the due diligence process, applicants must also provide a police certificate before they will be approved for European citizenship.
6.2 Good Health
In order to be admitted into the citizenship by investment Malta program, applicants must show that they do not suffer from any contagious diseases. All applicants must also be covered by an international health insurance policy.
6.3 Financial Contribution
All individuals and families applying to the Malta Individual Investor Program must make a significant non-refundable contribution to the National Development and Social Fund set up by the Government of Malta and run by a board of trustees. The fund, which is on the same level as the central bank, finances projects in the country linked to public health, education, job creation, social improvement, and innovation.
The following contributions must be made within four months of being issued a Malta IIP Letter of Approval in Principle:
- Main applicant – EUR 650,000
- Spouse – EUR 25,000
- Minor children – EUR 25,000 each
- Children 18-26 (unmarried) – EUR 50,000 each
- Dependent parents & grandparents – EUR 50,000 each
- Adult children (physically or mentally challenged) – EUR 50,000 each
Real Estate Purchase or Rental
Applicants must commit to retaining an immovable residence in Malta for a minimum time period of five years. This can be done by either buying a property in Malta for at least EUR 350,000, maintaining ownership for 5+ years, or by leasing a property for 5 years or more with a minimum annual rent of EUR 16,000. Applicants must provide evidence of owning or leasing a property on the islands within four months of receiving a citizenship Malta Letter of Approval in Principle.
Before a person can be admitted for Maltese citizenship by investment, applicants are required to invest at least EUR 150,000 in government approved financial instruments (bonds, stocks, and debentures that benefit the nation) and must commit to keeping the investment for at least five years.
Upon purchasing real estate or entering a property lease in Malta, investor citizenship candidates are issued a Malta identity document called an eResidence card. This signifies the commencement of their residency in Malta and also demonstrates the candidate's genuine link with the country. 12 months after an applicant has established residency in Malta, applicants who have maintained residence in the country will be granted citizenship. You do not need to spend all 365 days in Malta before citizenship is granted, Maltese law defines residence as "an intention to reside in Malta for any fiscal year, usually evidenced by a stay of a minimum of 183 days or by the purchase / rental of property together with a visit to Malta". This means that upon purchasing or leasing an apartment or villa in the Mediterranean island nation and procuring a Malta residence card, applicants are not required to spend any time in Europe. Candidates who have been a resident of the country for at least one year prior to I.I.P. approval already satisfy this residency requirement and can subsequently become a citizen of Malta much faster.
Malta Citizenship Scheme Application Timeline
Malta Residency: Potential candidates who are not already resident in the country are advised to begin the Malta residency process immediately since the Individual Investor Programme has a 12 month residency requirement.
Upon initiation of a nominee's residency in Malta, a small deposit of EUR 5,000 for the primary applicant and EUR 1,000 for each family member is due on account of the National Development and Social Fund contribution.
Applications for Maltese Citizenship by Investment are to be made and processed wholly by Identity Malta, applicants having to be represented by a Maltese Authorised Registered Mandatory. We at Kresse International cooperate with several Mandatories.
Taxation of a new Maltese Citizen
The Maltese tax system is based on domicile and residence – but not citizenship. The grant of Malta citizenship to a non-domiciliary of Malta does not result in the beneficiary to acquire a new domicile of choice in Malta.
Residence for tax purposes is established by demonstrating the intention to reside in Malta on the basis of a day count of 183 days. Tax residents in Malta, not domiciled in the Maltese Islands, are taxable on a remittance basis. A non-domiciliary, who is not resident in Malta, is therefore not taxable on foreign source income not received in Malta, nor on any capital gains arising outside of Malta, whether remitted or not. Only on income and capital gains arising in Malta, a non-resident citizen of Malta shall be taxable.