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.