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Malta Tax Residence Scheme for Swiss High Net Worth Inviduals


23/09/2011

The 2011 HNWI Rules regulate the issue of Malta residence permits to EU and non-EU nationals. Swiss, Liechtenstein, Icelandic and Norwegian nationals eligible under this scheme will be subject to Malta tax at 15% on a remittance basis.

 

Last Updated: 23/08/2012
 
The 2011 High Net Worth Individual Residence Rules for Swiss nationals regulate the issue of Malta residence permits to Swiss nationals. Swiss Hight Net Worth Individuals eligible under this scheme will be subject to Malta tax at a flat rate of 15% on a remittance basis, that is, only on foreign source income if remitted to Malta.

For new applicants, Malta's new Swiss HNWI Tax Residence Scheme replaces the former Malta Residents Scheme Regulations.

Revision of Malta's Permanent Residence Scheme

The new HNWIs Residence Schemes have pruned and moulded their precursor, the Permanent Residence Scheme, to do away with a number of deficiencies present in its predecessor. The previous scheme, last amended in 2003, imposed a relatively low annual minimum tax and required no minimum stay for personal tax residence purposes. Also, the property investment thresholds and qualifying capital thresholds remained disproportionately low, resulting in insignificant financial injection in our economy.

Eligibility for Malta Residence for Swiss HNWI

No minimum wealth, minimum annual income or minimum annual remittance requirements apply for eligibility under this scheme. The following are the applicable conditions:

Minimum Property Holding

A HNWI applicant must hold under title of ownership or rent property in Malta before the date of the application. Whether the applicant chooses to purchase or enter into a lease agreement, the scheme provides for a minimum value of the property involved:
 

  • In the event of a deed of sale the value and purchase price of the property must be not less than €400,000;
  • In the event of a contract of lease, it is required that the property is rented for a value of not less than €20,000 annually.

In either case, the applicant and his dependants must habitually reside under the said property’s address and have such address as their principal place of residence.

Fit & Proper Test

As per standard practices in relation to due diligence procedures especially when coming into contact with other nationals as laid down by the law, the Inland Revenue Commissioner will conduct a Fit and Proper Test which the applicant is obliged to undergo upon application. A Fit and Proper Test would include diverse criteria as to the investigation on the individual’s reputation particularly to criminal offences such as any offences connected to terrorism, money laundering, crimes against humanity, child abuse and any other inspections deemed necessary such as police conduct checks.

Health Insurance Coverage

The individual wishing to form part of the Scheme together with their dependants are required to be in possession of a Health and Sickness Insurance Policy covering and indemnifying all possible risk and hazards across the whole of the EU; nevertheless the nature of the Insurance is not expected to extend beyond what is considered to be a policy of standard cover to Maltese nationals. The Health Insurance Policy may either be issued by a licensed Maltese company or by a reputable international health insurance company, provided that documents in relation to and giving evidence of the insurance policy are submitted to the relevant department at the time of application.

Malta Tax Residence

In order to optimise the previous scheme, certain requirements have been imposed so as to elevate the standard of fiscal residence which the HNWIs Residence Scheme is associated with. An annual minimum stay requirement has been introduced upon those individuals wishing to fall under and benefit from the new scheme. The individual possessing the special HNWI tax status is expected to limit his presence in any other jurisdiction to 183 days. In the event that the individual is present in any other jurisdiction in excess of the time limit imposed, he shall be considered to be a tax resident in the alternate jurisdiction, thus forfeiting his rights under the HNWI scheme.

Swiss High Net Worth Individuals rules:

The following is a summary of the applicable requirements to Swiss High Net Worth Individuals or families under the Malta HNW Residence Scheme:

1. Financial Background Stable & regular income
2. Property Purchase; or Minimum of EUR 400,000
    Property Rental Minimum of EUR 20,000
    Property Subletting / Sharing Not allowed
3. Tax Rate 15% Foreign source income remitted income to Malta
35% Malta source income
4. Annual Minimum Tax Payment Main Applicant: EUR 20,000
Dependant: EUR 2,500
5. Health Insurance Required
6. ´╗┐Max Residence in any other country < 183 days
7. Malta domicile allowed No
8. Local Business / Employment Allowed

Taxation of Non-EU HNWI Residents

Residence permit holders under the HNWI Residence Scheme are precluded from shifting their domicile to Malta.  As non-domiciled residents of Malta, residence permit holders are taxable on a remittance basis.  Resident non-doms are not subject to tax on foreign sourced income that is not remitted to Malta and on foreign capital gains, whether remitted or not.

Foreign capital gains are subject to tax at a flat rate of 15% subject to a minimum of EUR 20,000 for the main permit holder and a further EUR 2,500 for each additional dependent included in the residence permit.

Existing Malta Permanent Residents

Malta Permanent Residence Permit holders under the former Permanent Residence Scheme will continue enjoying their former status. However, those who sell the property to which their permit refers or terminates their existing lease must acquire a Qualifying Property Holding or lease according to the thresholds of the new HNWI Residence Scheme.

Related publications:

 

Reference Materials



Related Publications

Malta Global Residence Programme - 20/05/14
Malta HNWI Tax Residence Scheme - Europeans - 16/09/11
Malta Ordinary Residence - 05/04/11
[more]

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