The much anticipated "High Net Worth Individuals - EU / EEA / Swiss Nationals Rules, 2011" were published by virtue of Legal Notice 400 of 2011 dated 30th September 2011. The Rules apply to EU, EEA and Swiss nationals wishing to reside in Malta together with any family members and enjoy special tax status in accordance with the Rules thus benefitting from a flat rate of tax on income remitted to Malta from foreign sources.
In order to obtain special tax status, one would have to apply to the Commissioner of Inland Revenue through an authorised professional registered with the Inland Revenue Department who will act as the individual's representative on all applications and correspondence with the Commissioner. In terms of the Rules authorised representatives include lawyers in possession of a warrant to practise as advocate under the Maltese Code of Organisation and Civil Procedure, notaries public appointed in accordance with the Notarial Profession and Notarial Archives Act and legal procurators holding a warrant to practice as such under the Maltese Code of Organisation and Civil Procedure.
Upon satisfying certain conditions (see below), an individual granted special tax status would be entitled to benefit from a fifteen per cent (15%) flat rate of tax charged on income remitted to Malta from foreign sources and to claim double taxation relief in terms of the Maltese Income Tax Act. The Rules do however establish a minimum amount of tax payable in respect of any calendar year being EUR 20,000 and an additional EUR 2,500 for each dependent, if any. The term "dependents" under the Rules includes the beneficiary's spouse and any minor children.
A tax computation is to be submitted annually indicating the tax payable and any credit for relief of double taxation being claimed.
Special tax status will be awarded to an individual upon proving to the satisfaction of the Commissioner that the following conditions have been met: -
- The individual applying for special tax status must acquire a property in Malta at a consideration of not less than EUR400,000 or lease a property in Malta at not less than EUR 20,000 per annum. The property so purchased or leased should be the principal place of abode worldwide and therefore the place where the individual habitually resides.
- The applicant must be an EU, EEA or Swiss national and be in possession of a valid passport or identity card suitable for travel.
- The applicant should have stable and regular resources sufficient to maintain himself and his dependents, if any.
- The applicant should have sickness insurance in respect of all risks across the whole of the European Union for himself and his dependents, if any.
- The applicant cannot be domiciled in Malta to qualify for the special tax status envisaged by the Rules and at the time of submission of the application for special tax status must also declare that he does not intend to establish his domicile in Malta within five years from the date of such application.
- The individual applying for special tax status must not have long-term residence status.
- Finally the applicant must prove that he is a fit and proper person to be granted special tax status.
Once it is has been established that the individual applying for special tax status qualifies as a beneficiary, the Commissioner will confirm that the individual so qualifies in writing.
Upon being granted special tax status, the beneficiary is obliged to continue meeting the conditions imposed by the Rules until he or she wishes to retain such status.
The holder of special tax status under the Rules is required to have an authorised representative at all times since such representative acts as a channel of communication between the Commissioner of Inland Revenue and the individual benefitting from such a status. The authorised representative will act on behalf of the individual in respect of all applications, correspondence, submissions, filings, declarations and notifications contemplated under the Rules.
The information given above is intended as a general introduction for information purposes and should not be construed as legal advice. Should you be interested in taking up residency in Malta, for further information and advice please contact us