Malta, a popular destination due to its favorable tax regime and attractive lifestyle, offers various tax residency options for non-EU citizens. Understanding the requirements and benefits of becoming a tax resident in Malta can provide significant financial advantages. Here’s an overview of Malta’s tax residency rules for non-EU citizens.

Malta Tax Residency Overview

In Malta, tax residency is determined by the following criteria:

1. Physical Presence Test: Non-EU citizens can become tax residents in Malta if they spend more than 183 days in a calendar year in the country. Alternatively, if they are present in Malta for 183 days or more in any 12-month period, they may qualify as residents.
2. Ordinarily Resident Test: Individuals may be considered ordinarily resident if they have established their home in Malta and it is reasonable to expect they will continue to live there for the foreseeable future. This usually requires demonstrating significant personal and economic ties to Malta.
3. Domicile Test: Domicile status is a more complex criterion. For tax purposes, being domiciled in Malta usually means having your permanent home in the country. Non-EU citizens who are not domiciled in Malta but are residing there will still be considered tax residents if they meet the physical presence test.

Tax Benefits for Maltese Residents

1. Flat Rate Tax: Malta offers a flat rate tax of 15% on income derived from foreign sources for individuals under the Global Residence Program. This program is particularly beneficial for non-EU citizens seeking to relocate to Malta.
2. Tax Refunds: Malta operates a full imputation system for dividends, meaning that shareholders receiving dividends from Maltese companies are eligible for refunds of tax already paid at the corporate level. This can effectively reduce the tax rate on dividends.
3. No Inheritance Tax: Malta does not levy inheritance tax, which can be advantageous for estate planning.
4. Double Taxation Agreements: Malta has a wide network of double taxation agreements (DTAs) with numerous countries. These agreements help prevent double taxation of income and provide relief to tax residents.

Global Residence Program

For non-EU citizens, the Global Residence Program (GRP) offers a special tax rate and residency status. Key features include:

• Minimum Tax: Individuals under the GRP are required to pay a minimum tax of €15,000 per annum on income remitted to Malta.
• Property Requirement: Applicants must either purchase or lease property in Malta. The minimum property purchase price is €275,000 or €220,000 in certain areas.
• Additional Requirements: Applicants must have health insurance, be in possession of adequate financial resources, and not be a threat to public policy or security.

Steps to Obtain Tax Residency in Malta

1. Determine Eligibility: Ensure you meet the physical presence or ordinary residency criteria. Evaluate your domicile status if needed.
2. Apply for Residency: Submit an application for residency under the appropriate program, such as the Global Residence Program, if applicable.
3. Purchase/Lease Property: Meet the property requirement by either purchasing or leasing real estate in Malta.
4. Obtain a Tax Identification Number: Register with the Maltese tax authorities and obtain a tax identification number.
5. Adhere to Local Regulations: Ensure compliance with all local regulations, including health insurance and financial requirements.

Conclusion

Becoming a tax resident in Malta offers numerous benefits, particularly for non-EU citizens. With favorable tax rates, strategic tax planning opportunities, and a welcoming environment, Malta is an attractive destination for those seeking both lifestyle and financial advantages. Consulting with a local tax advisor or legal expert can help navigate the complexities of tax residency and ensure compliance with all legal requirements.