Malta Res Non Dom: Taxation of Living Expenses

. Magdalena Velkovska co-authored with Dr Jean-Philippe Chetcuti | 19 Dec 2022

Non Dom Taxation Living Expenses

Malta: Favorable Tax System for Resident Non-Doms

The Maltese tax system is notable for its favourable taxation to Maltese residents who are not domiciled in Malta.  Maltese tax residents not domiciled in Malta are only taxable on their income and capital gains generated in Malta and only on that part, if any, of their foreign income remitted to Malta.  Consequently, Maltese resident not doms are not taxable on any foreign income not remitted, used or enjoyed in Malta; neither are they subject to Maltese taxation on their capital and capital gains arising outside Malta, whether remitted to Malta or not.   
Apart from income tax on a source and remittance basis as described above, there is no wealth tax and no inheritance tax in Malta's tax system is also favourable for Malta-registered companies with notable features including: the Maltese Tax Refund to Company Shareholders, Malta Participation Exemption.  See also our publication on Malta Res Non Dom Taxation for Entities. 

Remittance for Everyday Living Expenses

The General Rule in accordance with the Income Tax Act CAP. 123 stipulating resident non-doms are only taxable on source and remittance basis, remains unamended until today. 

Nevertheless, the Commissioner for Revenue of Malta has issued guidelines by virtue of which he is taking a position that any remittances of capital nature when remitted to Malta for the purpose of being used for everyday living expenses shall be considered to be remittances of income and therefore subject to Maltese tax, insofar the individual has an income arising outside of Malta for the year in question. 

The remitted capital for living expenses shall not be subject to Maltese tax in instances when the resident non-dom taxpayer has not got any income arising abroad, and therefore cannot remit any income to Malta. 

Furthermore, the remitted capital will not be subject to Maltese tax should its purpose be for capital investments, such as property acquisition, capital injection, vehicle or yacht purchase and for similar investments for capital purposes. 

As the Maltese tax is being declared by the taxpayer or his/her tax representative, through the self-assessment system, it is to note the CFR retains the discretion to challenge every tax return.  In such instance the taxpayer will be required to present supporting documents proving the nature and purpose of use of the remitted (or any other declared) funds. 


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