Tax Benefits of Living in Malta

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Malta : the tiny island in the heart of the Meditteranean Sea, with a population of just over 400,000 and a history stretching back 7,000 years. Malta has been voted as ‘One of the Best Places to Live Abroad’ for 2013 and has also won the ‘Destination of the Year Award’, awarded by Travel Trade Gazette, one of the biggest accolades in the travel industry.

Malta has also been voted as ‘The Best Place to Retire‘ by Yahoo! Finance, yet what is it about this charming island that makes it such an attraction for relocation, business and retirement?

Apart from a high standard of living, low crime rate and English-speaking population, Malta boasts many favourable tax conditions that allow residents to enjoy a relatively good cost of living in a beautiful climate.

Malta offers beneficial tax rates, offering its residents a flat tax rate of only 15% on annual income, and highly favourable double-taxation treaties with numerous European countries. Double taxation ensures that a new resident will not have to pay tax to their country of origin. Tax is levied only on income brought into Malta, whilst global income is free from tax. 

Malta also has no Inheritance Tax, but duty of 5% is payable on the transfer or transmission of immovable property. No Municipal Tax, and freedom of movement in and out of the country is hassle free; you can reside in Malta for as little or as long as you require. Tax rates for Ordinary and Permanent Residents vary slightly, as Permanent Residents are liable to a minimum tax payment even if no income is remitted.

When it comes to purchasing a property in Malta, in a Special Designated Area as a foreign resident, no permits are necessary and non-residents can purchase a holiday home under these terms and conditions.  When selling a property in Malta after using  it as an ordinary residence for a period of three years, no Capital Gains Tax is liable to be paid.

The two types of residencies you can seek in Malta are Ordinary and Permanent Residence, and the only real difference is in the taxation. Ordinary Residence is restricted to EU citizens whereas Permanent Residence is open to citizens of any country. If you are from the EU you can apply for Permanent Residence, but consult an attorney or lawyer to determine which scheme is best for your situation.

For high end businessmen and investors, Malta offers The High Net Worth Individuals (HNWIs) Scheme launched in September 2011 offering interesting tax planning opportunities for foreigners who take up residence in Malta.

The Scheme replaces the Residents Scheme. Residents Scheme permit holders retained their existing rights but were required to satisfy certain additional conditions. The fundamentals of the HNWIs Schemes are similar to those in the old Residents Scheme, including the requirement to acquire or rent property in Malta and the entitlement to a special rate of tax on foreign income that is remitted to Malta. 

When considering relocating abroad, there are more than just favourable tax conditions to consider, but with the freedom and luxury lifestyle offered by Malta, it is little wonder that the island is home to an ever-increasing popular of expats from across the world.

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