Pre-Immigration Tax Planning

Malta NonDom Taxation

Before starting any relocation process, pre-immigration tax planning is critical in ensuring awareness of key tax rules, structuring of any existing wealth and assets to take full benefit of Malta's benign personal tax system for non-doms. Pre-immigration tax planning and advice is provided by our Malta tax Lawyers before starting any immigration, relocation or special tax status application is started.

The Importance of Pre-Immigration Tax Planning

Executives, employees or high net worth individuals planning to relocate to Malta should be mindful of the distinction between tax residence and special tax status available under several Malta residence programmes. Special tax status does not in itself result in tax residency. Moreover, while Malta taxes non dom residents only on Maltese-source income and capital gains, exemptions may be availed of in particular scenarios and tax is due on any income - but not capital gains - remitted in Malta.  Our tax lawyers specialise in scenarios involving foreigners spending time in Malta or relocating / taking up residence in Malta and are able to assist with pre-immigration tax advice and planning as necessary.

Under the Citizenship by Investment Programme, applicants are often bringing into Malta significant sums of money to cover the contribution, the investment in Government bonds as well as property and other investments they may choose to make. All funds transferred to Malta, even for the payment of taxes, rent, investments, fees or other expenses, maybe be subject to taxation in Malta if the funds used are considered taxable income at the source. Our pre-immigration tax planning service compliments our Malta Citizenship by Investment application handling and ensures that our clients not only enjoy the highest chances of success in applying for citizenship but also in avoiding undue taxes.

Non-Dom Tax Regime

Therefore the main variable and connecting factor is Residence. By taking up residence in Malta, an individual (whether a citizen or not) enters into a non-dom tax regime akin to the tax regime applicable in the UK, even if without the complicated residence tests and rules applicable in the current British tax system. A Maltese resident who is not Domiciled in Malta is chargeable to tax in Malta only on a source and remittance basis. Therefore he would be chargeable to tax only on income arising in Malta and on foreign source income if and to the he extent that it is remitted /received in Malta. Foreign source capital gains are out of scope of taxation even if remitted to Malta. The tax planning opportunity here is that foreign source income that is kept in bank accounts outside Malta remain out of scope of Malta tax as do foreign capital gains even if remitted to Malta.

Domicile of Origin, Domicile of Choice

A person who is granted citizenship under the Malta Individual Investor Programme is not deemed to acquire a domicile of choice by virtue simply of being granted citizenship. A number of onerous steps need to be taken to shed one's domicile of origin and it is safe for a client to assume that his domicile will not change 'by mistake' even by taking up residence as a citizen of Malta.

Pre-Immigration Tax Planning Opportunities for Non-Domiciled Individuals

Pre-immigration tax planning opportunities exist also for persons to consider using Malta companies and trusts to conduct international business or financial activity from Malta:

  • company tax rate: 35% reduced to an effective tax of 5% in the hands of personal shareholders.
  • no personal tax on dividends paid by a Malta company (imputation system applies)
  • tax refund to shareholders of a Malta company: 6/7 ths, i.e. 30 out of 35 paid by the company is refunded to shareholders.

Companies can bank anywhere in the world and can be owned by shareholders of any nationality. Our tax partners and tax advisors have a long-standing experience using Malta in the planning of international business, wealth structuring and wealth preservation. We are well positioned to ensure you benefit from the full legal extent of Malta's tax friendly and pro-business environment while remaining fully compliant with all tax obligations.

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Key Contacts

Dr Jean-Philippe Chetcuti

Senior Partner, Tax & Immigration

+356 22056111

Dr Priscilla Mifsud Parker

Senior Partner, Corporate, Tax & Immigration

+356 22056122

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