Overview
The Residence Programme (TRP) in Malta offers special tax status to attract European Union (EU) nationals and nationals from specific countries seeking residency in Malta. This guide outlines the eligibility criteria, application procedure, and tax benefits associated with TRP.
Eligibility Criteria
To be eligible for TRP, applicants must meet the following criteria:
Nationality Requirements
- Must be an EU national (excluding Maltese nationals), or
- A national of Iceland, Norway, Liechtenstein, or Switzerland.
Exclusion from Other Tax Programs
Applicants must not be beneficiaries under the following Maltese tax programs:
- Residents Scheme Regulations
- High Net Worth Individuals Rules
- Malta Retirement Programme Rules
- Global Residence Programme Rules
- Qualifying Employment in Innovation and Creativity Rules
- Highly Qualified Persons Rules
If already benefiting from one of these programs, the individual must renounce those benefits before applying for TRP.
Property Requirements
Applicants must own or rent a qualifying property in Malta as their principal residence worldwide.
Owned Properties
- Minimum values:
- €275,000 for properties not in the south of Malta
- €220,000 for properties in the south of Malta or Gozo
Rented Properties
- Minimum annual rent:
- €9,600 for properties not in the south of Malta
- €8,750 for properties in the south of Malta or Gozo
A declaration supported by an independent architect’s valuation is required if the property was purchased before July 1, 2013, for less than the stipulated amounts.
Financial Stability
Applicants must have stable and regular resources sufficient to maintain themselves and their dependents without needing social assistance from Malta.
Travel Documentation
Applicants must possess a valid travel document.
Health Insurance
Applicants and their dependents must have sickness insurance covering all EU risks, provided by a Maltese or reputable international insurer.
Language Proficiency
Applicants must be able to communicate in Maltese or English.
Good Conduct
Applicants must be fit and proper persons, substantiated by a police conduct certificate and a sworn declaration of no ongoing civil or criminal proceedings.
Application Procedure
Submission
- Applications must be submitted through an Authorised Registered Mandatary (ARM) to the International & Corporate Tax Unit in Zejtun, Malta.
- A non-refundable administrative fee of €6,000 is required (€5,500 if the property is in the south of Malta).
Documentation
Required documents include proof of property ownership or lease, financial resources, valid travel documents, health insurance, language proficiency, and good conduct. All documents must be translated into English if not already in English.
Review and Due Diligence
- Applications are checked for completeness and vetted.
- An acknowledgement letter is sent to the ARM.
- Due diligence is performed to verify the applicant’s background.
Approval Process
- Upon successful due diligence, a face-to-face meeting is scheduled.
- A letter of intent is issued, valid for twelve months, during which the final property deed or lease agreement must be submitted.
- If any issues arise during due diligence, the applicant and ARM may provide explanations.
Tax Benefits
Special Tax Status
- Beneficiaries are taxed at a flat rate of 15% on foreign income received in Malta, with a minimum annual tax of €15,000.
Dependents
- The special tax rate applies to the beneficiary, their spouse, minor children, and adult children unable to maintain themselves due to serious illness or disability.
Additional Income
- Local income and certain other foreign income not covered by the 15% rate are taxed at 35%.
Permanent Residency
- Beneficiaries who acquire permanent residence status under the Free Movement of European Union Nationals and Their Family Members Order may no longer benefit from the TRP tax regime.
Household Staff
Eligibility
- Household staff must have provided services to the beneficiary for at least two years prior to the application. Exceptions may apply for recent hires due to special circumstances like death or illness.
Tax Treatment
- Household staff are taxed at the rates set in Article 56(1) and cannot benefit from the 15% tax rate. They must register with Malta’s tax authorities.
Working in Malta
- Dependents or household staff wishing to work must apply for a Single Permit through Identita (formerly known as Identity Malta), following specific procedures.
Changes Affecting Minimum Tax Payable
- Any changes in the number of dependents or household staff must be reported to the Commissioner within four weeks.
Annual Tax Return
- Beneficiaries must submit an annual tax return and declaration of any changes affecting their tax status. False declarations are subject to penalties under the Income Tax Management Act and the Criminal Code.
Cessation of Special Tax Status
By Choice
- Beneficiaries can opt-out by notifying the Commissioner, effective from the date indicated or within three months of notification.
By Death
- The special tax status can devolve to a dependent who inherits or rents the qualifying property, subject to meeting all requirements and providing necessary documentation within 183 days of the beneficiary’s death.
By Default
- Status is revoked if the beneficiary breaches any Income Tax Act provisions, fails to respond to the Commissioner’s requests, or no longer meets specific conditions (e.g., becomes a Maltese national, loses qualifying property, lacks sickness insurance, or stays in another jurisdiction for over 183 days).
Power to Request Information
- The Commissioner may request documentation to verify eligibility for reduced tax rates. Information may be exchanged with the authority responsible for the Free Movement of EU Nationals.
Abuse of Rights
- The Commissioner can issue assessments if an individual improperly benefits from the reduced tax rate.
