Malta Residence Options for EU Nationals in a Nutshell
Malta offers three main residence options for EU, EEA and Swiss nationals wishing to relocate to the island.
These are the EU Residence permit, also referred to as Ordinary Residence (OR), the Residence Program (TRP) and the Highly Qualified Persons Rules (HQP). These programs provide EU nationals with the opportunity to live in Malta, while also enjoying all the benefits that come with living on this island.
In this article, we will provide an overview of the Malta residence options available to EU nationals, including the requirements and application process for each program.
EU Residence Permit
The EU Residence Permit is designed to cater for EU/EEA/Swiss nationals seeking to move freely within the EU and establish themselves in Malta, as per the European Directive 2004/38/EC. Applicants applying under the self-sufficiency route must show sufficient financial resources, health insurance coverage, and a clean criminal record. Moreover, applicants are required to either acquire or rent a property in Malta. Upon approval, successful applicants are granted a five-year residency permit, which can be extended upon its expiration.
" The free movement of persons constitutes one of the fundamental freedoms of the internal market, which comprises an area without internal frontiers, in which freedom is ensured in accordance with the provisions of the Treaty"
Benefits
- The right to live and work in Malta for five years, which can be renewed
- Favourable tax rates on foreign-sourced income remitted to Malta, as well as the possibility of becoming a tax resident in Malta
- The ability to bring family members to Malta
Requirements for the EU Residence Permit
- Applicants must be citizens of an EU/EEA country or Switzerland.
- Demonstrate receipt of stable and regular source of income
- Hold a Health Insurance Coverage in Malta
- Own or rent a property in Malta
- Proof of presence in Malta – minimum three months
Beneficiaries of the EU residence permit are taxed on income arising in Malta and income arising from abroad if remitted to Malta, at progressive tax rates from 0-35%, and subject to a minimum annual tax of €5,000 should they generate a worldwide annal income of more than €35,000.
The Residence Program (TRP)
The Residence Program (TRP) is an alternative pathway for EU/EEA/Swiss nationals seeking to reside in Malta whilst benefiting from a special tax status. Beneficiaries of this programme benefit from a reduced flat rate of 15% tax on income remitted to Malta.
Benefits of The Residence Program
- The right to live in Malta and travel in the Schengen Area
Malta residency provides the advantage of unrestricted movement within Schengen territories.
Beneficiaries of the TRP would be subject to a tax rate of 15% on any foreign income which is received in Malta. This includes income earned outside of Malta and received in Malta throughout the entire year in which the individual is granted special tax status.
Under Article 74(a) and (b) of the Act, individuals covered by these rules may claim relief for double taxation. However, it is important to note that regardless of the amount of income earned outside of Malta, a minimum tax payment of fifteen thousand euros (€15,000) is required for each assessment year.
Key Legal Issues - Special Tax Status
- Relocation
- Freedom of Movement within the Schengen Area
|
Requirements for the TRP
- Citizen of an EU/EEA country or Switzerland.
- Receipt of stable and regular source of income
- Health Insurance Coverage in Malta
- Rent or Purchase a Qualifying property (minimum rent of €8,750 annually or minimum purchase of €220,000)
- Pay a one-time application fee of €6,000
- Pay a minimum annual tax of €15,000
The Highly Qualified Persons Rules
The Highly Qualified Persons Rules (HQP) is the third scheme through which EU nationals can obtain Maltese Residence. Such rules were introduced as the need was being felt to attract highly skilled individuals in the financial services, gaming and aviation sector.
This programme is open not only to EU nationals, but also to third country nationals, provided that they meet the criteria requirements. It is aimed at highly qualified individuals who hold an eligible office within companies licensed and/or recognized by the Competent Authority overseeing the respective sector.
Benefits
The main benefit of the HQP rules in Malta is the attractive 15% tax rate which emanates from article 56(21) of the Income Tax Act.
Individuals earning income from a qualifying employment contract in an "eligible office" falling within the scope of the rules, are subject to a flat tax rate of 15%. This applies as long as the income reaches or exceeds the applicable threshold for that particular year which for basis year 2023 is set at €93,669. The 15% flat rate is applicable up to a maximum income of €5,000,000, with any excess income being exempt from taxation.
Under this tax scheme, one cannot claim any form of relief, deduction, reduction, credit, or set-off. However, beneficiaries under the HQP rules are still eligible for deductions of tax as allowed under Article 23 of the Income Tax Management Act. This combination of a low flat tax rate and potential deductions provides significant tax advantages for highly qualified individuals benefiting from the HQP rules in Malta.
Requirements for the HQP
An individual can apply under the HQP programme and benefit from the 15% tax rate if he satisfies the following:
- In receipt of employment income subject to income tax in Malta.
- Employment contract governed by Maltese laws.
- Professional qualifications
- Minimum five years of professional experience.
- Not have taken advantage of deductions available to expatriates
- Fully disclose information for tax purposes
- Proof of work
- Proof of sufficient and regular resources
- Possess a valid travel document.
- Possess a valid Health insurance
Malta Residence Options for EU Nationals in a Nutshell
Malta offers three main residence options for EU, EEA and Swiss nationals wishing to relocate to the island.
These are the EU Residence permit, also referred to as Ordinary Residence (OR), the Residence Program (TRP) and the Highly Qualified Persons Rules (HQP). These programs provide EU nationals with the opportunity to live in Malta, while also enjoying all the benefits that come with living on this island.
In this article, we will provide an overview of the Malta residence options available to EU nationals, including the requirements and application process for each program.
EU Residence Permit
The EU Residence Permit is designed to cater for EU/EEA/Swiss nationals seeking to move freely within the EU and establish themselves in Malta, as per the European Directive 2004/38/EC. Applicants applying under the self-sufficiency route must show sufficient financial resources, health insurance coverage, and a clean criminal record. Moreover, applicants are required to either acquire or rent a property in Malta. Upon approval, successful applicants are granted a five-year residency permit, which can be extended upon its expiration.
" The free movement of persons constitutes one of the fundamental freedoms of the internal market, which comprises an area without internal frontiers, in which freedom is ensured in accordance with the provisions of the Treaty"
Benefits
- The right to live and work in Malta for five years, which can be renewed
- Favourable tax rates on foreign-sourced income remitted to Malta, as well as the possibility of becoming a tax resident in Malta
- The ability to bring family members to Malta
Requirements for the EU Residence Permit
- Applicants must be citizens of an EU/EEA country or Switzerland.
- Demonstrate receipt of stable and regular source of income
- Hold a Health Insurance Coverage in Malta
- Own or rent a property in Malta
- Proof of presence in Malta – minimum three months
Beneficiaries of the EU residence permit are taxed on income arising in Malta and income arising from abroad if remitted to Malta, at progressive tax rates from 0-35%, and subject to a minimum annual tax of €5,000 should they generate a worldwide annal income of more than €35,000.
The Residence Program (TRP)
The Residence Program (TRP) is an alternative pathway for EU/EEA/Swiss nationals seeking to reside in Malta whilst benefiting from a special tax status. Beneficiaries of this programme benefit from a reduced flat rate of 15% tax on income remitted to Malta.
Benefits of The Residence Program
- The right to live in Malta and travel in the Schengen Area
Malta residency provides the advantage of unrestricted movement within Schengen territories.
Beneficiaries of the TRP would be subject to a tax rate of 15% on any foreign income which is received in Malta. This includes income earned outside of Malta and received in Malta throughout the entire year in which the individual is granted special tax status.
Under Article 74(a) and (b) of the Act, individuals covered by these rules may claim relief for double taxation. However, it is important to note that regardless of the amount of income earned outside of Malta, a minimum tax payment of fifteen thousand euros (€15,000) is required for each assessment year.
Key Legal Issues - Special Tax Status
- Relocation
- Freedom of Movement within the Schengen Area
|
Requirements for the TRP
- Citizen of an EU/EEA country or Switzerland.
- Receipt of stable and regular source of income
- Health Insurance Coverage in Malta
- Rent or Purchase a Qualifying property (minimum rent of €8,750 annually or minimum purchase of €220,000)
- Pay a one-time application fee of €6,000
- Pay a minimum annual tax of €15,000
The Highly Qualified Persons Rules
The Highly Qualified Persons Rules (HQP) is the third scheme through which EU nationals can obtain Maltese Residence. Such rules were introduced as the need was being felt to attract highly skilled individuals in the financial services, gaming and aviation sector.
This programme is open not only to EU nationals, but also to third country nationals, provided that they meet the criteria requirements. It is aimed at highly qualified individuals who hold an eligible office within companies licensed and/or recognized by the Competent Authority overseeing the respective sector.
Benefits
The main benefit of the HQP rules in Malta is the attractive 15% tax rate which emanates from article 56(21) of the Income Tax Act.
Individuals earning income from a qualifying employment contract in an "eligible office" falling within the scope of the rules, are subject to a flat tax rate of 15%. This applies as long as the income reaches or exceeds the applicable threshold for that particular year which for basis year 2023 is set at €93,669. The 15% flat rate is applicable up to a maximum income of €5,000,000, with any excess income being exempt from taxation.
Under this tax scheme, one cannot claim any form of relief, deduction, reduction, credit, or set-off. However, beneficiaries under the HQP rules are still eligible for deductions of tax as allowed under Article 23 of the Income Tax Management Act. This combination of a low flat tax rate and potential deductions provides significant tax advantages for highly qualified individuals benefiting from the HQP rules in Malta.
Requirements for the HQP
An individual can apply under the HQP programme and benefit from the 15% tax rate if he satisfies the following:
- In receipt of employment income subject to income tax in Malta.
- Employment contract governed by Maltese laws.
- Professional qualifications
- Minimum five years of professional experience.
- Not have taken advantage of deductions available to expatriates
- Fully disclose information for tax purposes
- Proof of work
- Proof of sufficient and regular resources
- Possess a valid travel document.
- Possess a valid Health insurance