In June 2013, the Maltese Government launched the latest residence scheme – the Global Residence Programme – a residency and tax programme which provides favourable tax incentives for non-EU, non-EEA and non-Swiss Nationals seeking an alternative residence base in the Maltese Islands.
The Global Residence Programme replaces the High Net Worth Individuals (HNWI) Scheme, introduced in September 2011, which required much higher thresholds for non-EU foreigners to apply. Under the old scheme, non-EU foreigners also needed to place a €500,000 bond with the government and an additional €150,000 per dependent, however this provision has now been removed, making the new residency scheme much more favourable and accessible to those interested in taking up residency in Malta or Gozo.
A legal notice bringing into effect the Global Residence Programme for EU Nationals is expected to come into effect in the second half of 2013.
Benefits of the Global Residence Programme
Beneficiaries of a Special Tax Status under the Global Residence Programme (GRP) enjoy a flat rate of personal income tax of 15%, chargeable only on a remittance basis. Foreign source income received in Malta is subject to Malta tax only if remitted to Malta while foreign capital gains are altogether outside the scope of tax in Malta.
Minimum tax under the present High Net-Worth Individuals (HNWI) Scheme has been reduced from €25,000 for the applicant (plus an additional €5,000 per dependent) to a minimum annual tax of €15,000 under the GRP, covering all dependents. Local source income arising from business, investment or other economic activity held in Malta is subject to tax at 35%.
Beneficiaries are not legally bound by minimum stay requirements. However, they are not permitted to spend more than 183 days in a calendar year in another jurisdiction.
In order to qualify for residency under this programme, an applicant will need to satisfy the following conditions:
The new residence option enables non-EU foreign nationals who buy or rent a property in Malta and direct their income to Malta to benefit from a residence permit.
- Property purchased in Malta must have a minimum value of €275,000
- Property purchased in Gozo, or in the South of Malta must have a minimum value of €220,000
- If the Foreign National opts for rental of property, the property must have a minimum annual rental value of €9,600 (or €800 a month) in Malta and €8,750 (or €730 a month) in Gozo or in the South of Malta;
- Applicants must also take out an all-risks medical insurance – they will not be eligible to benefit from Malta’s free State healthcare system;
The definition of dependents has been widened from that under the HNWI scheme. The age limitation of children (natural, adopted or in care) has been increased to 25. Dependents now includes brothers, sisters and direct relatives in an ascending line as long as it is shown to the satisfaction of the Director of Inland Revenue that these are dependents of the beneficiary of the GRP. Certain employees are also provided for including carers, butlers, personal drivers and other domestic staff in the employment of the applicant for the preceding two years.
Applying for Special Tax Status under the GRP:
Special Tax Status under the GRP Rules must be applied for, through an Authorised Registered Mandatory and the non-refundable application fee is of €6,000 Euro and €5,500 if the qualifying property is in Gozo or the south of Malta.
The GRP Rules state that the beneficiary must continuously satisfy the obligations in terms of the Rules and also that the special tax status may be inherited.
This article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Table – Comparison of Previous Scheme and the new Global Residence Programme
|HNWI||Global Residence Programme|
|Malta and Gozo||Malta||Gozo & Malta (South)|
|Immovable Property Purchase||400,000||275,000||220,000|
|Bond||500,000 plus 150,000 per dependent||None||None|
|Minimum Tax||25,000 plus 5,000 per dependent||15,000||15,000|