The Maltese Government has introduced a new residency scheme in July 2013, namely “Global Residence Programme” (GRP).
The scheme is particularly appealing to non-EU nationals as the new rules confer a most advantageous tax status to qualifying third country nationals, namely a 15% rate of tax on all foreign income remitted to Malta. The programme seeks to attract individuals and their families including business people, pensioners, consultants and holders of intellectual property rights and make of Malta their viable alternative place of residence in Europe. For the applicant to qualify as a beneficiary a number of conditions have to be satisfied, as outlined hereunder
Tax Treatment and Minimum Tax Requirements
Beneficiaries under the programme are entitled to pay tax at an advantageous rate of 15% on all income earned outsidef Malta and remitted or received in Malta. This is subject to a minimum amount of tax ( €15,000) payable by the beneficiary after taking into consideration any double taxation relief that the beneficiary may be entitled to in terms of any pertinent double tax treaty and Malta’s domestic tax legislation. The minimum tax requirement is payable in respect of income arising outside Malta. Furthermore, no additional tax will be payable by the beneficiary’s dependants. Other Maltese sourced income attributable to a beneficiary, the beneficiary’s spouse and pertinent dependants shall be taxed at a flat rate of 35%.
The rules provide for a definition of dependents. To this end the age limit attributable to children (natural, adopted or in care) is now age 25. The definition also encompasses dependent brothers, sisters and direct relatives in an ascending line, provided that the Director of Inland Revenue is satisfied that these are indeed dependents of the beneficiary of the GRP. Employees of the beneficiary are also provided for, as the regulations include as eligible dependants also carers and other persons that may have been employed by the applicant for the preceding two years. Such an employment relationship must be evidenced by a contract of service. Consequently the definition of dependants comprises the following parties:
a. The beneficiary’s spouse or a person with whom the beneficiary is in a stable or durable relationship;
b. Minor children, including minor adopted children, who are in the care or custody of the beneficiary or the above mentioned persons;
c. Persons under the age of 25, including adopted persons, who are children of (or in the care and custody of) the beneficiary or the person mentioned in (a) above, provided that such persons are economically their dependants indeed;
d. Persons, including adopted persons who are children of (or in the care and custody of) the beneficiary or the person mentioned in (a) above, and are unable to maintain themselves due to illness or disability;
e. Dependent brothers, sisters and direct relatives in the ascending line of the beneficiary or the person mentioned in (a) above.
Immovable Property Requirements
In order to be granted the special tax status provided for by the GRP scheme, an applicant is obliged to satisfy minimum property purchase or minimum property rental requirements. Therefore the applicant shall purchase or rent immovable property in Malta or in Gozo. Furthermore the pertinent legislation provides that the property must be solely occupied by the applicant, his/her family members and any special carers accompanying them.
In the event of a property being purchased in Malta, the purchase value must amount to a minimum value of €275,000 or €220,000 if purchased in Gozo and the South of Malta.
However the applicant may opt to rent a property and being still eligible for the GRP incentives: according to the related legislation, the minimum rental values is €9,600 per year for properties rented in any part of Malta except for the Southern part of Malta or in Gozo, where the minimum rental value decreases to €8,750 to satisfy the GRP requirements.
Where the applicant has purchased a property prior to the introduction of the GRP at a cost which is inferior to the aforementioned amounts, such property may nevertheless still meet the criteria and it could still be considered as a qualifying property within the GRP rules. But in the latest case, the value of the property needs to be duly certified by an architect and needs to be equivalent or superior to the minimum values indicated above.
The qualifying property, whether purchased or rented, ought to be the applicant’s primary residence and principal place of residence worldwide. The rules also provide for a clear prohibition to rent out or sublet the qualifying property.
Minimum Stay Requirements in Malta
The Programme does not impose a minimum stay requirement in Malta. Consequently permit holders do not need to spend a minimum amount of days in Malta. Nevertheless beneficiaries under this scheme are required to spend no more than 183 days in every calendar year in any other jurisdiction.
Applicants under the scheme need to submit the relevant application, through an Authorised Registered Mandatory (ARM). NUAL-LAW.EU may assist clients through pre-applications, tax planning as well as with the entire application process together with the pertinent annual compliance requirements imposed by the Scheme.
A non-refundable Government fee of €6,000 must be paid and submitted together with the application. The fee is reduced to €5,500 if the beneficiary acquires or rents immovable property situated in Gozo or in the South of Malta. The fee is payable as follows:
– At application stage – €4,000;
– From the date that the person actually takes up residence in Malta, a further Government fee of amount of €2,000 (or € 1,500 whether the place of residence is Southern Malta or Gozo) shall be payable.
Applicants and their accompanying dependants are obliged to be covered by a health insurance policy covering all risks across the EU. Furthermore, applicants must be in receipt of stable and regular financial resources which are sufficient to maintain themselves and their dependants. Applicants are also required to satisfy a fit and proper test as provided by the Maltese Authorities and must be in possession of a valid travel document as required by Maltese immigration law.
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