Malta Retirement Programme (MRP): Special Tax Status for Pensioners

Overview of the Malta Retirement Programme (MRP)

The Malta Retirement Programme (MRP) provides a favourable tax status for retirees who meet specific criteria. This program is designed to attract pensioners by offering advantageous tax benefits under Malta’s tax regime.

Eligibility Criteria for the Malta Retirement Programme

To qualify for the MRP, applicants must fulfil the following conditions:

1. Pension Income:
   • The applicant must receive a pension that makes up at least 75% of their total chargeable income. This pension must be received in Malta and can include payments from past employment, annuities, occupational retirement schemes, personal overseas retirement plans, or insurance policies. Note that lump sum payments and certain capital sums are excluded.
2. Exclusion from Other Tax Programs:
   • Applicants must not benefit from other Maltese tax programs like the Global Residence Programme, High Net Worth Individuals Rules, or Highly Qualified Persons Rules. A formal renouncement of these benefits must be declared in Part 6 of the application form.
3. Non-Maltese National:
   • The applicant must not be a Maltese national.
4. Property Requirements:
   • Applicants must own or rent a qualifying property in Malta to serve as their principal residence:
     • Owned Properties:
       • Purchased between January 1, 2011, and June 30, 2013: Minimum value of €275,000 (Malta) or €250,000 (Gozo/south Malta).
       • Purchased on or after July 1, 2013: Minimum value of €275,000 (Malta) or €220,000 (Gozo/south Malta).
       • Properties bought before July 1, 2013, must meet these current value thresholds.
     • Rented Properties:
       • Minimum annual rent of €9,600 (Malta) or €8,750 (Gozo/south Malta). A 12-month lease agreement is required.
5. Stable Financial Resources:
   • Applicants must show stable and regular financial resources sufficient to support themselves and their dependents without relying on social assistance from Malta.
6. Valid Travel Document:
   • A certified copy of a valid travel document must be submitted.
7. Health Insurance:
   • Comprehensive health insurance covering all EU risks must be provided from a Maltese or internationally reputable company.
8. Domicile and Language:
   • Applicants must not be domiciled in Malta or intend to establish domicile within five years. They must also be able to communicate in one of Malta’s official languages.
9. Good Character:
   • A police conduct certificate and a sworn declaration confirming no ongoing legal proceedings are required. Dependents over 18 and household staff must also meet this criterion.

Application Process

1. Submission:
   • Applications should be sent to the International & Corporate Tax Unit at AM Business Centre, Labour Road, Zejtun, ZTN 2401, with the envelope marked “Application: Malta Retirement Programme”.
2. Administrative Fee:
   • A non-refundable fee of €2,500 is required, payable by bank draft or cheque to the Commissioner for Revenue.
3. Processing:
   • Applications are reviewed for completeness. Missing documents will be requested. A Letter of Intent, valid for twelve months, will be issued. During this period, the applicant must submit the final deed or lease agreement and proof of tax payment.

Tax Treatment Under the Malta Retirement Programme

1. Tax Rate:
   • Beneficiaries are taxed at a reduced rate of 15% on foreign income received in Malta.
   • Other income is taxed at 35%.
   • A minimum annual tax of €15,000 applies to foreign income.
2. Provisional Tax:
   • Beneficiaries are required to make provisional tax payments, except in the first year.

Termination of Special Tax Status

Special tax status may be terminated if:

• The individual gains or applies for long-term resident status.
• The beneficiary breaches any tax or residency conditions.

Household Staff

• Qualifications and Taxation:
  • Household staff must have served the beneficiary for at least two years before the application. They are taxed at standard rates and must register with Maltese tax authorities.

Key Considerations

• Documentation:
  • Public documents from non-EU countries must be Apostilled or legalized. All documents must be in English or accompanied by a certified translation.
• Authorized Registered Mandatary (ARM):
  • Applications must be signed and submitted by a licensed ARM. A list of ARMs is available on the Commissioner for Revenue’s website.
• Annual Reporting:
  • Beneficiaries must report any changes affecting their status and submit annual tax returns.

Special Tax Status Regulations

1. Dependents and Their Taxation:
   • Income from dependents chargeable to tax in Malta will be taxed separately as per Article 56 of the Income Tax Act. Dependents include stable and durable relationship partners, children over 18 but under 25, and direct relatives.
2. Minimum Tax:
   • Beneficiaries must pay a minimum tax of €7,500 on foreign income received in Malta, plus €500 for each dependent and household staff member annually.
3. Provisional Tax:
   • Beneficiaries must make provisional tax payments according to the Payment of Provisional Tax (P.T.) Rules.
4. Household Staff:
   • Household staff must be employed systematically for at least two years and are taxed at standard rates.
5. Working in Malta:
   • Dependents or household staff wishing to work in Malta need to apply for a Single Permit with Identita (formerly known as Identity Malta).
6. Changes Affecting Minimum Tax:
   • Beneficiaries must notify the Commissioner for Revenue of any changes in dependents or household staff within four weeks.
7. Annual Declaration:
   • Beneficiaries must submit an Annual Declaration with their income tax return to report any material changes affecting their special tax status.
8. Cessation of Special Tax Status:
   • Status can be terminated voluntarily, due to the death of the beneficiary, or if there is a breach of tax conditions.
9. Power to Request Information:
   • The Commissioner for Revenue may request additional information and documents to verify entitlement to special tax status.
10. Abuse of Rights:
    • The Commissioner retains the right to issue assessments under Article 31 of the Income Tax Management Act if an individual improperly benefits from the reduced tax rate.