Malta: Basis of taxation of individuals
04 March 2020
An individual is subject to tax on their world-wide 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, he is 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 residence 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 has been regularly resident over a number of years. An ordinary resident ceases to be resident in Malta if he is 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.
Contact Rudolph Psaila to find out more.