Individuals resident in Malta under specific programmes

02 March 2020

An individual is subject to tax on worldwide chargeable income (including capital gains) if they are ordinarily resident and domiciled in Malta.

If an individual is not ordinarily resident or not domiciled in Malta, they are subject of tax on chargeable income and capital gains arising in Malta as well as on chargeable income arising outside Malta (but not capital gains) received in Malta. Non-residents are subject to tax on chargeable income and capital gains arising in Malta.

Tax shall not be payable in respect of income arising outside Malta to temporary resident, that is, any person who is in Malta for some temporary purpose only and not with any intent to establish his residents in Malta and who has not actually resided in Malta for a period equal to six months in a calendar year.

A person is ordinarily resident in Malta if he regularly resident over a number of years.  An ordinary resident ceases to be resident in Malta if he absent from Malta in circumstances that, in the opinion of the Commissioner of Inland Revenue, are inconsistent with the status of resident.  The indications that would be taken into account for this purpose are the duration of the absence and the connections that the individual may have retained with Malta. Domicile is a term of private international law.  An individual usually acquires the domicile of his parents on his birth but he may acquire a domicile of choice in another country if he is present in that country with the intention of remaining there permanently.

Individuals are taxed for every year of assessment on the income derived during the preceding calendar year.

Individuals resident in Malta under the Residence Programme and the Global Residence Programme, shall been granted a special tax status and will be subject to a tax of 15%.

15% is charged on income received in Malta from foreign sources and this rate is also applicable to his/her spouse, minor children and children who are in the care and custody of the beneficiary or his/her spouse. Other income that is chargeable to tax in Malta that is not charged as separate income at the abovementioned rate of 15%, will be charged at the rate of 35%.

The individual is liable to pay a minimum annual tax of €15,000. This rate covers the income of the beneficiary and his/her dependants, that arises outside Malta and is received in Malta. This minimum tax is to be paid by not later than 30th April of the year in which the oncome is received and is to be paid in full. The beneficiary is subject to the payment of a provisional tax.

Contact Rudolph Psaila to find out more.

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