Permanent Residence Schemes
Revision No. 9 - Last Updated : 11-04-2002
|
Quick Reference: (Click on any link in the table to go straight to the relevant paragraph) |
||
|
|
|
|
A good number reading this fact sheet may probably have visited Malta, at least, once on holiday or business. A number would have thought of coming back once again. A lot actually do. As custom becomes habit, it is natural that one starts thinking of establishing a permanent base. Attracted by the Island’s historical wealth, cultural links, European identity, geographical location, European time zone, friendly atmosphere and a balm Mediterranean climate, an increasing number of foreigners are opting to take up Permanent Resident status in Malta.
Indeed, for these reasons and for the attractive residence schemes with advantageous tax conditions, Malta is often regarded as the ideal retirement location.
Physical residence in Malta is not required as persons holding a Permanent Residence Permit have freedom to come and go as they please without need of applying for Visas or extensions of stay in Malta for prolonged periods.
Requirements
The conditions which any foreigner must satisfy to obtain a Permanent Residence Permit are the following:
· he must be entitled to an annual income of, at least, ten thousand Malta liri (approximately US$25,000) or possess a minimum worldwide capital of, at least, one hundred and fifty thousand Malta liri (Lm150,000); and
· prove that he can remit annually to Malta from overseas an income equivalent to, at least, six thousand Malta liri (Lm6,000) plus one thousand Malta liri (Lm1,000) for each of his dependents (i.e. spouse, children under 21 years of age etc.)*.
Application
The standard form application for Permanent Resident status must be accompanied by:
· a banker’s, accountant’s, auditor’s or other financial institution’s certificate confirming the applicant’s financial status as detailed above;
· a conduct certificate issued by the Police authorities nearest to the applicant’s place of residence;
· if this certificate is not normally issued in the applicant’s country of residence, then 3 character references will be required from any of the following: banker, advocate, notary, medical practitioner, accountant, auditor or any other person of similar standing*;
· an original marriage certificate in the case of a married couple or in the case of a female who has been married, divorced, widowed etc.; and
· original birth certificates, authenticated copies of passports and 3 passport-size photographs of each person whose name appears on the application form.
The application fee is fifty Malta liri (Lm50).
Processing of application
Processing may take from 8 to 12 weeks. If the application is successful, a Permanent Residence permit will be issued on an indefinite basis.
Once in possession of a permit, the foreigner will be required, within 12 months of obtaining such permit :
· to purchase immovable property in Malta valued at not less than thirty thousand Malta liri (Lm30,000) in the case of an apartment or fifty thousand Malta liri (Lm50,000) in the case of any other property; or, alternatively
· to rent/lease property for not less than one thousand eight hundred Malta liri (Lm1,800) per annum*.
The property so purchased is to be used solely as a residence for the owner and his family and, while guests may be accommodated when the owner is in Malta, the property may not be rented out for gain.
The permit holder will be :
· prohibited from purchasing other immovable property in Malta;
· prohibited from exercising any occupation, profession, business or any other form of employment in Malta. However, Permanent Residence permit holders may own shares in Maltese companies; and
· prohibited from participating in politics in Malta.
Final requirements
Finally, once all the requirements have been satisfied, the Permanent Residence permit holder will be required to:
· remit a legal copy of either the deed of purchase or of the lease/rent agreement to the competent authorities;
· produce documentary evidence (e.g. bank statements) to prove that the funds to finance the purchase or lease of property emanated from overseas; and
· complete an Annual Declaration form to confirm the fulfilment of the above conditions at the end of the first year of residence and, subsequently, at the end of each year thereafter.
Fiscal benefits
A flat rate of 15% Malta Income Tax per annum is charged on foreign source income remitted to or received in Malta less allowable deductions.
A tax rebate is given as a deduction against the resulting tax. Tax free allowances are also granted in the case of married couples and single persons.
The above is subject to the condition that the Permanent Resident permit holder pays a minimum of one thousand Malta liri (Lm1,000) per annum as tax.
Income derived from Malta and chargeable to tax in Malta is liable to tax at full rates (maximum 35%).
Example 1
Pension received in Malta (exempt from tax in
country of origin in virtue of Double Taxation
Treaty) Lm15,000
Tax Free Allowance
(Married) Lm 2,500
Chargeable income Lm12,500
Malta tax due @ 15% Lm 1,875
Example 2
Dividends received in Malta (subject to 15%
Withholding Tax in the country of origin in virtue
of Double Taxation Treaty) Lm40,000
Tax Free Allowance
(Married) Lm 2,500*
Chargeable Income Lm37,500
Total tax suffered in Malta @
15% Lm 5,625
Double Taxation relief Lm 5,625
Minimum tax payable in Malta Lm 1,000
The holder of a Permanent Residence permit who is also domiciled in Malta is not subject to tax on worldwide income.
Other incentives
Exemption from customs duty on importation
Used personal and household effects (e.g. furniture and other domestic articles) may be imported free of import duties or any other tax within 6 months of obtaining the permit. In such cases, import licenses are not required.
One motor vehicle may also be imported free of VAT or other duty provided:
· it has been in the ownership of the permanent resident for a continuous period of, at least, 6 months prior to obtaining the permit;
· all fiscal and customs charges due on the vehicle in the country of origin or departure have been paid prior to the vehicle’s arrival in Malta; and
· it is imported within 6 months of the foreigner’s arrival in Malta or of the date of issue of the permit whichever is the later.
A married couple will only be allowed to import one motor vehicle on these terms.
A first registration fee of between 11% to 16.5% is payable according to the vehicle’s horsepower.
If the motor-vehicle is disposed of, VAT at the rate of 15% and, if the vehicle is of non-EU origin, duty of 12% will be due on the value of the vehicle as assessed by the Customs authorities at the time of disposal.
Repatriation of capital and income
Any unspent residue of capital brought over to Malta; any income that has accumulated during the permit holder’s stay in Malta; and any proceeds from the sale of the immovable property and/or other investments purchased in Malta, may be repatriated without restriction.
Sale of immovable property
The full proceeds of the sale of the immovable property purchased in Malta may be repatriated without restrictions.
No Capital Gains Tax will be levied where the property had been occupied for a period of, at least, 3 years as the main or only residence of the permit holder and the property is transferred within 12 months of it being vacated.
However, if the above conditions are not met, Capital Gains Tax at 5% will be levied on the difference between the original cost of acquisition (including expenses incurred to acquire the property and documented expenses incurred wholly and exclusively in the development of the property) and the transfer value after allowable deductions.
Death duties
Death duties are only charged on a deceased resident’s Malta estate. No social security contributions are payable by a foreign permanent resident in Malta. Besides, there are no wealth taxes applicable in Malta. There are no property taxes either.
A Maltese identity card may be issued by the competent authorities in the permit holder’s favour after 6 months from the date of issue of the permit and upon proving that the permit holder has been in Malta for 6 months. Moreover, a Maltese driver’s licence which can be utilised all over Europe may also be issued within approximately 5 weeks.
Downloads:
· This Document in PDF Format.