A special scheme has been launched (Legal notice 317 of 2012) which is aimed at pensioners who wish to receive their foreign pension in Malta whilst benefitting from a beneficial tax rate and the possibility of claiming double tax relief.
The new rules allow the beneficiaries to pay tax on their foreign source income received in Malta at the fixed rate of 15% whilst availing themselves of double tax relief if such income would have already suffered foreign tax. Each beneficiary is bound to pay a minimum tax of €7,500 per annum and an additional €500 for each dependent and special carer. The rules define dependents as spouses, spouse equivalents, children and adopted children of either the beneficiary and/or the spouse whilst a special carer is deemed to be an individual who through a contract of service, has provided aiding and health care services for at least 3 years prior to the application.
In order to qualify under this scheme, the applicant must be an individual who:
- Holds a qualifying property holding;
- Is not a person who benefits under the Residents Scheme Regulation, the High Net Worth Individuals Schemes or the Highly Qualified Persons Rules;
- Is an EU, EEA or Swiss national;
- Is in receipt of a pension, as supported by documentary evidence, all of which is received in Malta and constitutes at least 75% of the beneficiary’s chargeable income (The term “pension” is specifically defined in the Rules);
- Is in possession of a valid travel document;
- Is in possession of a health insurance that covers all risks across the whole European Union as are normally covered for Maltese nationals and that such cover also includes dependents; Is not domiciled in Malta and who does not, within five years from the date of application, intend to establish his domicile in Malta;
- Is a fit and proper person.
A Qualifying Property Holding is deemed to exist when the beneficiary either:
- Owns a qualifying property or
- Rents out a qualifying property
A Qualifying owned property is immovable property that is acquired after 1st January 2011 at a consideration of not less than: €275,000 for property situated in Malta or €250,000 for property situated in Gozo.
If the immovable property was purchased before 1st January 2011 for a consideration less than the above-mentioned amounts, the said property will be deemed to constitute a qualifying property if the market value declared in the application is not less than the values highlighted above.
The market value of the property must be supported by a separate and independent architect valuation and plan that will be submitted to the Commissioner of Inland Revenue upon application. A Qualifying rented property is immovable property that is leased for not less than:
- €9,600 per annum for property situated in Malta OR
- €8,750 per annum for property situated in Gozo
The beneficiary, who shall benefit from a special tax status under the Malta Retirement Program Rules, will cease to possess this status on the occurrence of any of the following:
- If at any time, after the appointed day, the beneficiary does not hold a qualifying property; If the beneficiary becomes a Maltese national or a third country national;
- If the beneficiary fails to receive in Malta all the pension indicated in the documentary evidence submitted to the Commissioner of Inland Revenue as deemed necessary;
- If after the appointed day, the beneficiary or his/her dependents are not in possession of a health insurance in respect of all risks normally covered for Maltese nationals;
- If the beneficiary establishes his domicile in Malta;
- If the beneficiary acquires a permanent residence certificate in terms of article 7 of the Free
- Movement of European Union Nationals and their Family Members Order; If the beneficiary’s stay is not in the public interest;
- If the beneficiary resides in Malta for less than ninety days a year averaged over any five year period;
- If the beneficiary stays in any other jurisdiction for more than 183 days in a calendar year.
A beneficiary who ceases to possess the special tax status for any of the reasons mentioned above, shall notify the Commissioner of Inland Revenue of such event within four weeks from when he/she becomes aware of such event. Failure to do so will result in an administrative penalty of €5,000 although there may be special circumstances where the Minister responsible for Finance may condone any of the failures mentioned above.