CITIZENSHIP BY INVESTMENT BLOG

Malta Taxation of New Residents and Citizens

We frequently receive inquiries regarding the tax implications for those considering applying for the Malta Permanent Residence Program (MPRP) or the Malta Citizenship by Investment Program (CES/MEIN).

This blog post aims to offer a brief overview of the essential tax regulations and responsibilities applicable to new residents and citizens in Malta. Please be aware that tax laws can be intricate, and we strongly advise seeking advice from a licensed tax advisor for tailored guidance on your individual circumstances. Should you require assistance, we can facilitate an introduction to a reputable Maltese tax expert. Feel free to reach out to us for further details.

In general, Malta taxation is based on residence and domicile (your permanent home), but not citizenship status.
Malta Taxes
1. Understanding of Domicile versus Residence:

"Domicile" denotes having a permanent location / a permanent home, and implies stronger ties than simply having residency status in a specific country. Domiciliation can be obtained through birth (domicile of origin), by choice, or by marriage.

Each individual can hold only one domicile at a time. Changing domicile necessitates abandoning the former and establishing a new one.

“Residence”, on the other hand, denotes a principal establishment in a specific location and is a question of fact. Key points to note are that “residence” confirms your legal residency status in Malta and is determined by factors such as length of stay in the country, employment, economic activity, establishment, etc., and governs applicable laws and tax regulations.

2. Taxation for Non-Domiciled Persons:

New Maltese citizens and residents, who are resident but not domiciled in Malta, are subject to taxation on source and remittance basis only. This entails taxation solely on:

- Income originating in Malta.
- Foreign income, such as from employment, remitted to Malta.
- Capital gains arising in Malta.

Foreign source income not brought to Malta and capital gains or savings (even if remitted to Malta) are exempt from taxation.

3. Taxation for Domiciled Persons:

New citizens or permanent residents of Malta who become domiciled in Malta are generally subject to taxation on worldwide income and capital gains, irrespective of their source or remittance to Malta. However, Malta's extensive double tax treaty network with countries around the world aims to alleviate double taxation.

4. Double Taxation Relief:

Malta has established double taxation treaties with numerous countries to prevent the double taxation of identical income sources. Ask us if your country is covered.

5. Property Purchase for Citizenship:

Under the citizenship by investment program, if property in Malta is purchased, a favorable tax rule applies. However, selling the property before it becomes the sole ordinary residence for three years incurs a final property tax of 8% on the selling price. If sold after three years, the sale is tax-exempt!

6. Inheritance Tax:

Inheritances to a surviving spouse or children are exempt from inheritance taxes! Inheritances to persons other than spouses or children incur an 8% inheritance tax on the total inherited value. Additional exemptions / reliefs are available for charitable donations, descendants, and others that can reduce or even eliminate the inheritance tax liability.

7. Property Tax / Wealth Tax:

Unlike many other countries, Malta does not impose net worth taxes or annual property taxes on real estate.

In summary, Malta offers favorable tax environment to new residents and citizens of then country. Please keep in mind that this newsletter serves as a general informational overview only, and that given the complexity of tax matters, we recommend consulting a licensed tax advisor for personalized guidance. Should you require assistance, we can facilitate an introduction to a qualified Maltese tax professional. Kindly contact us for further information or to schedule an appointment.

We appreciate the opportunity to be of service and look forward to welcoming you to Malta soon!

Because immigration by investment programs can change over time please contact us to speak with an advisor or to receive a preliminary quotation. The information provided in this blog post is intended for educational and informational purposes only. It should not be construed as legal or financial advice.

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Residency & Citizenship by Investment Programs Worldwide

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Santa Venera, SVR 1016
Malta

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