CITIZENSHIP BY INVESTMENT BLOG

Tax residency: the 183 Days rule

What is this 183 Days rule?

Answer: In general, the 183 Days rule denotes the maximum number of days an individual can be physically present in a country before an income tax liability comes into force. Being physically present in a jurisdiction for more than 183 days allows a country to create a tax claim over a person. To avoid double taxation, many countries have entered into double taxation treaties which restrict such tax claims from the foreign jurisdiction.

Malta taxation is based on domicile (not residency or citizenship status). This means if you are not domiciled in Malta, then only income and capital gains generated from activities inside Malta are fully taxable. Income arising outside of Malta and not sent to Malta is not taxable. In addition, capital gains or savings generated outside of Malta even if brought into Malta are not taxable for non-domiciled residents.

183 Day Rule
When you take up Malta residency or citizenship, such as through the popular Malta citizenship by investment program, you do not automatically acquire domicile status. Under Maltese Law, at birth you automatically acquire your domicile status (Domicile of Origin) from your father. If your father later changes his domicile to a new location (Domicile of Choice), yours automatically changes to this new location as well. Further, on attaining the age of 18, you are allowed to acquire a new domicile of choice, but there is no such requirement.

Living in Malta for less than 183 days? You are not automatically considered a tax resident and therefore pay tax only on the income earned in Malta. However, if you spend regularly a considerable time in Malta and establish personal and economic ties with the country, you may be considered as resident for tax purposes.

In short, tax is due only on (a) income generated inside of Malta, (b) capital gains arising inside of Malta, and (c) income, such as from employment, generated outside of Malta and remitted to Malta. Other Malta Tax considerations: There are no inheritance or death taxes, no estate duty, no net worth or wealth taxes, no municipal taxes, and no real estate taxes. Please contact us to speak with a Malta tax advisor. Tax Rate: 0% to 35%

Living in Greece for less than 183 days? You are considered a Greek tax resident your life is centered there, your family lives there and your children are educated there. Income Tax Rate: 22% to 45%

Living in Cyprus for less than 183 days? You have to pay tax only on income earned in Cyprus. However, if you live in Cyprus for a period exceeding 183 days, you have to pay tax on the income earned in and outside Cyprus. Income Tax Rate: 0% to 35%

Living in Bulgaria for at less than 183 days? You are not considered tax resident and pay tax only on income earned in Bulgaria. However, if you live in Bulgaria for a period exceeding 183 days, you must pay tax on your worldwide income there. Income Tax Rate: flat rate of 10%

Living in Portugal for at less than 183 days? You are not considered tax resident and pay tax only on the income earned in Portugal. However, if you live in Portugal for a period exceeding 183 days, consecutive or not, you must pay tax on your worldwide income. You are also considered a tax resident if you lived there for less than 183 days, but on 31 December of the year in question you had a house/flat in a condition that suggests you intend to maintain and occupy it as your usual residence. Income Tax Rate: 14,5% to 48%

Living in Spain for at less than 183 days? You are not considered tax resident and pay tax only on income earned in Spain. However, if you live in Spain for a period exceeding 183 days, you must pay tax on your worldwide income there. Income Tax Rate: 19% to 45%.

Source: Europa.eu

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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