malta residency programme

Malta Tax Domicile

The Malta Tax Domicile of an individual is the most persistent tax connection recognised in Maltese tax law and is acquired from one’s father at birth or after reaching the age of 18 by choice. Losing one’s Malta tax domicile cannot happen without intent, action and strong resolve.  Likewise, for a foreign non-dom person to acquiring tax domiciled status in Malta requires significant planning and implementation.

Domicile of Origin

A person acquires tax domicile of origin at birth automatically from the father.  Children born out of wedlock or losing their father, automatically adopt the domicile of their mother. Where the country of birth is different from the country of the father’s domicile, the father’s domicile prevails as the domicile of birth of that individual.

The strength of the domicile of origin is demonstrated by the automatic revival of this domicile upon abandoning the domicile of choice without the acquisition of a new one.  The tax domicile of origin remains relevant throughout the life of the person as domicile retains its capacity for revival.

Tax Domicile of Choice

It is very difficult to renounce the domicile of origin. Only upon reaching majority can a person exercise legal capacity to adopt a new domicile – a domicile of choice.  However, the burden of proof of the acquisition of a tax domicile of choice falls upon the taxpayer claiming this change in tax domicile.

To lose one’s domicile of origin one must acquire a domicile of choice. It is not sufficient to leave the country of domicile of origin permanently without clear evidence that the individual has no intention whatsoever to return to the country of his domicile of origin.  In order to do so one must be able to prove that:

  • He is resident in the new country.
  • He intends to reside there permanently or for an unlimited time.

One must be physically present in a country in order to acquire the domicile of choice. One must also consider criteria such as the individual’s business and family interests in the new country of domicile, the ownership of any property there and any remaining ties with other countries.

Tax Domicile by Operation of Law

To establish a definite legal system by which certain rights and obligations may be governed, the objective of the law is that no person shall be without a domicile. This is crucial today, especially because free movement has given not only rights to individuals but also obligations and in the interest of liability, it is necessary to hold that a person cannot posses more than one domicile at the same time.

Given the importance of having a domicile, in situations where one cannot establish the domicile of origin and is unable to make a choice, the law intervenes. The third kind of domicile is the domicile of dependence and it arises by operation of law.

It is a domicile in which the law establishes a person’s domicile, such as in the case of a foundling, where the law provides that a foundling acquires the domicile of the country where he is found.

It has been held that as the domicile of origin requires the child to take the domicile of the father at birth, in the case where either the child’s father is dead or the child is illegitimate, the child acquires the domicile of the mother.

Until one has the legal capacity to adopt a domicile of choice, his domicile of origin will be replaced by domicile of dependence should the person on whom he is legally dependent adopt a domicile of choice elsewhere. This means that until a person reaches adulthood his domicile will shift according to the domicile of the person on whom he is dependent. Women take up their husband’s domicile upon marriage and such domicile is maintained even if they are legally separated or if the husband passes away (Attard, 2005).

Non Dom Status

Foreigners considering taking up residence in Malta under whichever Malta immigration programme or any Maltese special tax programme, will oftentimes enjoy the benefit of non-dom status. Non doms who are resident in Malta are not subject to tax on their worldwide income and instead are subject to tax on income arising in Malta.  Residence can be acquired under the special tax status programme the Malta Global Residence Programme requiring a yearly minimum tax payment of merely €15,000 and an upfront investment of only €6,500.   Alternatively, one can acquire Permanent Residence for life for all the family under the Maltese Permanent Residence Programme by buying or renting a property in Malta.

Malta Tax Domicile Planning

Losing, acquiring or reviving tax domicile requires expert planning by experienced tax lawyers.  For an expert tax consultation on Maltese tax domicile and residence planning, book a meeting with one of our tax lawyers. With over 20 years advising on Maltese personal and corporate tax matters, we look forward to assisting you with planning your relocation, residence or tax domicile in Malta.

Malta Ordinary Residence

Malta Ordinary Residence Programme

 

Malta, being a member of the European Union allows non-Maltese nationals various routes to apply for residency in Malta.

Malta Ordinary Residence

European nationals under EU legislation, as incorporated into Maltese law, are eligible to apply for Maltese residency if they intend to reside in Malta for more than 3 months. Ordinary residence is achieved through this route whereby an individual formally registers his presence with the local immigration and tax authorities.

Despite being the smallest EU member state, there are a number of reasons why individuals are relocating to Malta including the country’s strong economy, high quality healthcare and education, an English-speaking workforce and a favourable tax regime.

Legal Basis – The Malta Ordinary Residence

The right of EU nationals to establish themselves and their family in another EU country stems up from Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States. The aim of this directive is to lay down the conditions for the right of free movement and impose limits to those rights on grounds of public policy, public security, or public health. It also clarifies the status of individuals who are employed, self-employed, students and unemployed nationals who are self-sufficient.

Eligibility for the Malta Ordinary Residence Programme

The key point under this directive is that an EU/EEA or Swiss national can live in another EU country for up to 3 months without any conditions or formalities, other than the requirement to hold a valid identity card or passport. If an individual intends to reside for more than 3 months, there is a requirement to register one’s residence.

The right of residence in another EU country applies to:

  • Individuals who are employed or self-employed
  • Individuals who are economically self-sufficient
  • Individuals who are following a course of study including vocational training

This right also extends to family members of an EU nationals who satisfies the above conditions.

Malta Ordinary Residence : Family Members

The Directive stipulates that Member States shall issue a residence card also to family members of an EU national even if those nationals are non-EU citizens. The Directive defines family members as:

  • The spouse or partner of an EU national
  • Children under the age of 21 who are economically dependent on the EU national
  • Dependent direct relatives in the ascending line

Residential Property Requirement with the Malta Ordinary Residence

Whichever eligibility criteria applies, the EU national is still required to have a residential property in Malta which can either be purchased or rented. Under the Ordinary Residence regulations, the legislation sets no minimum value for the rental or purchase price. Read more about renting in Malta or purchasing a property.

Taxation under Ordinary Residence in Malta

Individuals who obtain residency in Malta but are not considered to be domiciled, are taxed on source and remittance basis of taxation. A resident non-domiciled individual is taxed on income arising in Malta and foreign income, if this income is remitted or used in Malta. Accordingly, residents under this regime are not taxed on foreign source income not transferred to Malta, nor on any capital gains arising outside of Malta.

A limitation to this rule was introduced in 2018 whereby a minimum annual tax was introduced. Under this development non-domiciled residents of Malta are subject to pay a minimum annual ta of €5,000 if one earns at least €35,000 of annual income outside of Malta. The applicable tax rates for individuals are progressive tax rates between 0-35%, unless the individual applies for a Special Tax Status with the Commissioner for Revenue through his Authorized Registered Mandatory (ARM), which application is subject to few conditions.

How can we assist?

As a Maltese immigration firm our team has assisted numerous EU nationals and their family members to obtain EU residence in Malta and register with the local tax authorities. We can also assist with the filing of annual tax returns, application for Special Tax Status and all aspects of relocation in Malta.

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