Minimum tax charge introduced for persons ordinarily resident but not domiciled in Malta

The Budget Implementation Act (Act VII of 2018), introduced measures whereby persons who are ordinarily resident but not domiciled in Malta, and who are therefore taxable in Malta on that part of their foreign source income which is remitted to Malta, became subject to a minimum tax of €5,000 per annum regardless of the amount of foreign source income actually remitted to Malta. The minimum tax will be introduced with effect from year of assessment 2019.

The minimum tax applies in respect of those persons subject to the remittance basis of taxation, whose annual income arising outside Malta is at least €35,000 per annum but does not apply to those individuals who hold special tax status under any scheme such as the Global Residence Programme (GRP), the Malta Retirement Programme (MRP) or the Residence Programme (TRP).

In calculating the minimum tax payable, all Malta income tax payable shall be taken into account including tax paid by way of withholding or otherwise, however it shall not include any property transfer tax paid in terms of article 5A of the ITA.  Moreover, if the non-domiciled person proves to the Commissioner for Revenue that the tax payable on foreign income would have been less than the minimum tax above had he/she been taxed in Malta on a worldwide basis, that person’s tax liability will be capped at such lower amount

Foreign source capital gains remitted to Malta will continue to be exempt from tax in Malta.