Malta: Living There - Tax Issues
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Living There
INDIVIDUAL TAXATION
Maltese residents pay income tax on their worldwide income. Resident foreigners are taxed on their income sourced in Malta. Married couples may choose to be assessed and taxed jointly or separately.
If granted permanent residency through the Residence Scheme Regulations 2004, permanent residents become eligible for a tax concession that provides for a low flat tax rate of 15% on all income received and earned in the country with a minimum liability of MTL1,800 (4,184) per annum.
INCOME TAX
Income is then taxed at progressive rates. The following can be deducted from a taxpayers gross income:
- School fees up to MTL300 (697) for a child in secondary school and up to MTL200 (465) for a child in primary school,
- Payments up to MTL4,000 (9,298) for school services extended to a special childs needs.
- Alimony payments, maximum of the taxable income
INCOME TAX: JOINT ASSESSMENT OF MARRIED COUPLES |
|
| TAXABLE INCOME, MTL () | TAX RATE |
| Up to 4,300 (9,996) | nil |
| 4,300 6,000 (13,948) | 15% on the band over 9,996 |
| 6,000 7,250 (16,853) | 20% on the band over 13,948 |
| 7,250 8,500 (19,759) | 25% on the band over 16,853 |
| 8,500 10,000 (23,246) | 30% on the band over 19,759 |
| Over 10,000 (23,246) | 35% on all income over 23,246 |
| * Exchange Rate as of 15 October 2007: 1 = 0.430182 MTL (Malta Liri) Source: Global Property Guide |
|
INCOME TAX: SEPARATE ASSESSMENT OF MARRIED COUPLES, INDIVIDUALS |
|
| TAXABLE INCOME, MTL () | TAX RATE |
| Up to 3,100 (7,206) | nil |
| 3,100 4,100 (9,531) | 15% on the band over 7,206 |
| 4,100 5,000 (11,623) | 20% on the band over 9,531 |
| 5,000 6,000 (13,948) | 25% on the band over 11,623 |
| 6,000 6,750 (15,691) | 30% on the band over 13,948 |
| Over 6,750 (15,691) | 35% on all income over 15,691 |
| * Exchange Rate as of 15 October 2007: 1 = 0.430182 MTL (Malta Liri) Source: Global Property Guide |
|
Residents Scheme
In line with the Republic of Maltas accession to the European Union in 01 May 1 2004, the government has relaxed its immigration policies to further attract foreign investors. The Residents Scheme Regulations of 2004 grants permanent residency to foreign nationals who satisfy the following conditions:
- Applicants must have an annual income of at least MTL10,000 (23,246) or hold capital assets of MTL150,000 (348,690). The given amounts are not required to be remitted to the country. However, documents must be presented to support this. The value of a property purchased in the country is credited to the capital requirement.
- A local residence must be purchased for a minimum of MTL30,000 (69,738) for apartments or MTL50,000 (116,230) for other types of residential property. Alternatively, a property may be leased for at least MTL1,800 (4,185) per year.
Upon approval of the application for the resident scheme, one is required to remit an annual income of MTL6,000 (13,975) and an additional MTL1,000 (2,330) for each dependent.
No minimum residence or stay is required when one receives permanent residence. However, he is expected to visit Malta within the first year to register as a Maltese taxpayer with the Inland Revenue and have his passport stamped. He must also fulfill the residence purchase requirement within the given year.
Take note: acquiring permanent residency in Malta does not grant permission to work in the Islands. One may only hold directorship in an International Trading or Holding Company or use the country as a base for freelance services directed overseas, but he is prohibited from offering his services in the local market. It is necessary to obtain a separate work permit for this.
CAPITAL GAINS TAX
Capital gains tax is not applied on immovable property that has been owned and occupied by the owner for a period of at last three years preceding the sale, provided that the property has been disposed of within 12 months of vacating the property.
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Your Comments
posted by J H | 2007-08-26
Retired Financial Trader, Malta
This section is incorrect. Only residents that are citizens i.e. Maltese pay tax on worldwide income. Foreign citizens taking up residency in Malta pay only on funds remitted into Malta and nothing on worldwide income. For example earning ?200,000 worldwide income while remitting only ?10,000 into Malta for living expenses means you pay tax only on ?10,000 i.e. ?750 (The first approx ?5,000 is charged in the NIL band). This would be the rate for a temporary resident. For a permanent resident the rate would be the minimum listed in the article. To reiterate, if the remaining ?190,000 earned worldwide is not remitted into Malta these earnings are TAX-FREE. It would be useful for your readers and most appreciated if you would check the information above and correct the articles. Thank you.