KHCS | UK & International Corporate Consultancy
Citizenship Program
 
 
MALTA HIGH NET WORTH TAX RESIDENCE SCHEME – NON EUROPEANS

There are various citizenship programs available in certain jurisdictions. KHCS is working with a reputable firm of lawyers in Malta to assist non European nationals to obtain residence status in Malta. The services provided will include undertaking the entire process on behalf of families to ensure a smooth transfer of residency as detailed below.

HNWI Scheme
The High Net Worth Individuals Scheme (HNWI) is a special tax scheme in Malta designed to attract foreign individuals to take up residence in Malta and to formally recognise as tax resident for Maltese tax purposes those foreign nationals satisfying the eligibility criteria. The scheme is especially attractive to persons seeking to establish an alternative residence that suits their lifestyle and tax profile and offers a number of incentives to foreigners choosing to settle in Malta.

One application can include the main applicant and spouse, financially dependent ascendants and other non-family members and dependent relatives that are shown to be bona fide members of the household. Children under the age of 25 are automatically eligible for inclusion. Applicants must demonstrate their financial self-sufficiency and must be in possession of valid sickness insurance cover. Timing is two to three months.

There are no minimum wealth qualifications, minimum annual income or minimum annual remittance requirements.

1. Qualifying Property Holding

Within 12 months of taking up residency, the residence permit holder needs to comply with the requirement of acquiring or renting property in Malta. Residence candidates are required to demonstrate that an address is available to them in Malta by buying or renting property in Malta. Candidates for the residence programme need to meet minimum property value requirements at €275,000 for property in Malta and €220,000 for property in Gozo and the Southern Region of Malta. Candidates have the option to rent property in Malta at €9,600 or property in Gozo and the Southern Region of Malta at €8,750 in annual rent.

2. Benefits of the Scheme
2.1 Repatriation of Capital Income
Proceeds from the sale of property, encashment of investments, other income and excess income brought into Malta may be freely repatriated by residents, provided that any tax due has been settled.

2.2 Low Flat Tax Rate
A flat rate of 15% is chargeable on all income (less personal allowances) remitted to Malta from foreign sources.

2.3 Remittance Only Basis of Tax
Non-domiciled foreign holders of an HNWI residence permit in Malta are taxable on a ‘remittance basis’ only on income and not foreign source capital remitted to Malta and on income and capital gains arising in Malta.

2.4 Capital Gains
Income not remitted (transferred) to the resident’s bank account and capital gains (whether remitted or otherwise) fall outside the scope of Maltese tax. Capital/savings remitted to Malta also fall outside the scope of Malta tax.

Overseas capital funds invested locally are only taxed on any interest or dividends generated thereon, again at a 15% flat rate.

2.5 Double Taxation Relief
Malta enjoys 60 double tax treaties. Persons who take up residence in Malta can receive their pensions in Malta free of tax at source and subject to a mere 15%. HNWI residents also benefit from double taxation agreements existing between Malta, most European countries, Canada, Australia and the USA, ensuring that tax is never paid twice upon the same income.

2.6 Full Exemption from Customs Duty/VAT
Household and personal effects, furniture and other domestic articles (excluding firearms and weapons of all kinds) may be imported free of import duty if imported within six months of arrival in Malta to take up residence. In such cases import licenses are not required.

2.7 Stamp Duty
Stamp duty is payable by the acquirer on the transfer of immovable property situated in Malta and transfers of shares in Maltese companies (including transfers on death). Exemptions from stamp duty may be available on the transfer of shares in certain Maltese companies, e.g. if the company is listed on the Malta Stock Exchange or if the vast majority (at least 90%) of its business interests are outside Malta.

2.8 Sale of Property
Property in Malta can be sold completely exempt from tax if such property is held for a period of 3 years as the resident’s sole and ordinary residence. If sold before the lapse of 3 years, a final property tax of 12% is chargeable on the selling price.

2.9 Other Tax Considerations
  • No inheritance or death taxes
  • No estate duty
  • No net worth or wealth taxes
  • No municipal taxes, rates or real estate taxes




3. Conditions for obtaining a High Net Worth Residence Permit
Any foreigner, of whatever nationality, may submit an application for a HNWI permit provided specific conditions are satisfied.

3.1 Good Character
Applicants must produce documentary evidence of good conduct by presenting police conduct certificates or equivalent. Applicants are also required to pass a Fit and Proper Test which includes International Due Diligence searches.

3.2 Health Insurance
Applicants are required to take up a Private Health Insurance Policy which covers all medical risks in the whole of the EU including Malta for the main applicant and dependants. This may 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.

3.3 Financial Requirements
Applicants must be in possession of stable and regular resources.

4. Annual Obligations
The HNWI permit holders are required to fulfill the following annual requirements:
  • Retain qualifying property in Malta
  • Retain a Private Health Policy and stable resources
  • Not change their domicile to Malta
  • Refrain from staying in any other jurisdiction for more than 183 days and becoming a tax resident therein. The programme does not impose any formalities for evidencing any minimum residence requirement.


5. Access to the Schengen Area
Upon the approval and issuance of an HNWI Residence Permit, the applicant and his dependants may in turn submit an application in order to obtain a Residence Permit. This permit is valid for one year from its date of issue together and entitles the holder to travel freely into and within the Schengen Area. To travel to other areas, a visa would have to be obtained eg to travel to the UK, the visa would be obtained from the British Consulate in Malta.

6. Malta Companies
6.1 Business Operations
HNWI tax resident status permit holders may take up employment and offices in Malta and conduct business in Malta without restrictions.

A Maltese company can trade and provide services/consultancy/intermediation internationally throughout Europe (having a Maltese/EU VAT registration) as well as outside the EU, enjoying a net 5% effective tax rate after refunds to shareholders. The corporate tax rate is 35%. Also, Malta is a full member of the European Union since 2004 and enjoys reputable onshore status. This enables a shareholder to enjoy tax opportunities without being perceived as an offshore company / investor.

6.2 Holding Activities
A Maltese holding company can act as the group holding company, an asset protection company for business assets of any form (real estate anywhere, fixed assets, investments, securities, bank accounts, intellectual property, etc) but also personal assets including any luxury items, depending on the shareholders involved. Maltese holding companies are also excellent tax planning tools in that they enjoy low effective tax rate on world-wide profits as follows:

  • 0% on dividends received from a participating holding, that is where the parent company holds at least 10% of the equity in the subsidiary; or holds an investment in the subsidiary of at least € 1.5 million and holds that
  • investment for more than 183 days
  • 0% on capital gains made from the disposal of a participating holding
  • 5% on dividends from non-participating holdings
  • 10% on passive income (interest, royalties etc)


7. Malta Trusts
Maltese discretionary trusts lend themselves as favourable vehicles for confidential ownership of shares as well as for the acquisition of property in Malta. On sale by the Trust, provided the property is held for three years, and the applicants still reside in it, there is no capital gains tax or stamp duty on sale.

8. Our Services
8.1. Application Stage
We offer the services of:
  • advising you on the chances of success before filing your application;
  • providing legal advice related to immigration matters;
  • guidance on the preparation and forwarding of the necessary documentation;
  • vetting and preparing all supporting documentation for submission;
  • corresponding and liaising with the government authorities during the application process;
  • keeping informed with the progress of your application and forwarding the permit once it is issued;
  • assisting with the purchase / rental of a house in Malta reviews of contract, liaising with the notary.


8.2 Annual Declaration and Tax Compliance
At the end of the first year of residence and subsequently at the end of every calendar year, there is an obligation to complete an Annual Declaration form and supplementary documentation to confirm that the conditions attached to the permit have been fulfilled. We will act as Authorised Registered Mandatory and provide legal representation with the authorities in respect of the statutory annual declarations, in conjunction with the preparation and submission of annual tax returns.