Malta Citizenship Direct Investment

Personal Taxation of Maltese Residents

This overview of Malta’s personal taxation of Maltese residents applies to persons taking up residence under European freedom of movement rules, under any immigration rights or residence programme as well as under the Maltese Citizenship by Exceptional Services rules.

Personal Tax Connecting Factors

Under Maltese law, the connecting factors determining the taxability of individuals are domicile and residence, remnants of Malta’s British colonial history dating back to the 1940s.

Citizenship is not a factor that effects the taxation of individuals and therefore acquiring Maltese citizenship by exceptional services does not, alone and in itself, give rise to any tax consequences.  Contact us for Maltese tax advice on the tax implications of the residence required by the Maltese citizenship rules, to assess the extent to which it may result in tax residence and to plan all remittances required under the investor citizenship route.

Permanent resident status under immigration law, particularly the Permanent Residence Programme Regulations of 2021, is not equivalent to Maltese tax residence.  Accordingly, Maltese permanent residence permits issued under these Regulations do not automatically result in residents being considered tax resident in Malta given that this immigration programme does not require any minimum physical presence in Malta in any given year.  Contact us for a consultation on the requirements, implications and planning of tax residence in Malta.

Tax Resident Status

Tax resident status is not an automatic consequence of acquiring permanent residence in Malta. Tax resident status results from a residence in Malta of over 183 days, or where residents have spent less than the 183 days in Malta, they may demonstrate various connecting factors evidencing their intention to reside in Malta ordinarily.  Permanent residents of Malta requiring formal confirmation of their tax residence status in Malta are able to obtain this through a separate procedure – prior legal advice is recommended.  Contact us for a tax consultation.

Taxation of Non-Malta residents

Non-tax residents are only subject to tax on local source income, that is income arising in Malta including salaries, local business profits, rental income and pension income.

Malta Tax of Foreign Domiciled Residents of Malta

Tax residents of Malta enjoy a remittance basis of taxation, often referred to as res non-dom taxation, whereby they are only subject to Maltese tax on their foreign income only to the extent remitted to Malta.  Res non-doms are not subject to Maltese taxation on their foreign source capital gains, whether remitted to Malta or not.   The enjoyment of the res non-dom tax regime by persons having incomes sources abroad exceeding €35,000 are subject to a minimum annual tax of €5,000.

Taxation of Income in Malta

Income is taxable in Malta only if it arises in Malta.  Income arising abroad, is only taxable in Malta if a person is tax resident in Malta and only on that portion that is remitted to Malta.  Capital gains are taxable in Malta only if arising in Malta but are subject to various exemptions.  Capital gains arising out of Malta are not subject to tax, nor are they reportable, whether remitted to Malta or not.

Other Maltese taxes

Malta has no wealth or capital taxes, no wealth reporting obligations, no inheritance taxation, no property taxes, no dividend taxes, and no system of rates.

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Malta Citizenship by Direct Investment Regulations Issued – 2020

Within the remit of the Maltese Citizenship Act, the Granting of Citizenship for Exceptional Services Regulations, 2020 are published nailing down the much awaited procedural and administrative details of the new Maltese investment migration regulations. By virtue of Legal Notice 437 of 2020 Malta launched the Granting of Citizenship for Exceptional Services Regulations with the scope of laying down the requirements and regulating the granting of citizenship by naturalisation for exceptional services to the Republic of Malta on the basis of exceptional interest.

Maltese Citizenship: Exceptional Services

Article 10(9) of the Maltese Citizenship Act, provides for the acquisition of Maltese Citizenship by individuals who render exceptional services to Malta including scientists, researchers, athletes, sports people, artists, cultural performers, investors and entrepreneurs. Exceptional services are defined as services that are unusually excellent or manifestly superior at a local level, and refers primarily to contributions given by scientists, researchers, athletes, sports people, artists, cultural performers, investors and entrepreneurs.

Maltese Citizenship is granted to the applicant who renders such exceptional services as well as all eligible dependents of such individual.

Exceptional Services through Investment in Malta

The grant of Maltese citizenship for exceptional services through investment in Malta requires an investment of at least €600,000 to be made upon demonstrating three years of presence. This period of three years can be reduced to one year if the contribution is increased to €750,000.

The applicant is also required to submit:

  • Proof of residence in Malta for at least thirty-six (36) months or by exception of (12) months against a higher investment, preceding the date of application &
  • An undertaking to purchase a residential property worth at least €700,000 or rent a property for a minimum annual rent of €16,000, which shall be kept for a minimum of five (5) years from the oath of allegiance &
  • An Undertaking to donate prior to the issue of a certificate of naturalisation, a minimum of €10,000 to a registered and compliant philanthropic, cultural, sport, scientific, animal welfare or artistic NGO or society.

Screening and Due Diligence of Applicants for Maltese Citizenship

After the first level of screening, in the form of an eligibility assessment and a screening against the known grounds for rejection, applicants undergo an enhanced standard of due diligence at various stages in the residence application and subsequent eligibility and citizenship applications.

Connecting factors with Malta a prerequisite for Maltese citizenship

This is in addition to demonstrating connecting factors with Malta through personal, social, commercial, investment and philanthropic engagement with the host country Malta.

Qualifying Dependents

An applicant applying under these regulations can include in a citizenship application the following dependents:

  • The spouse in a monogamous marriage or partner having the same or similar status. The term spouse shall be construed as gender neutral
  • A child of the Main Applicant or the spouse under the age of eighteen (18)
  • An economically dependent and unmarried child of the Main Applicant or the spouse who has not yet attained the age of twenty-nine (29), at the time when the citizenship application is accepted by the Agency
  • A child of the Main Applicant or the spouse, including an adopted child who at the time of the application has attained the age of eighteen (18) and is qualified as a person with a disability
  • An economically dependent parent or grandparent of the Main Applicant or the spouse above the age of 55

Supervision & Regulation of Applications

Applications shall be submitted to and processed by the new Community Malta Agency that has the responsibility of inhouse and additional outsourced due diligence to ensure only clean and reputable families and investors make it to naturalisation as Maltese citizens.

The number of certificates under the Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment shall not exceed four hundred (400) per annum, and a total of 1,500 for the duration of the regulations.