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Mark Galea Salomone |
Kirsten Cassar |
The global residence programme (GRP) is a programme designed to attract individuals who are non-EU, non-EEA or non-Swiss nationals who seek to take up residence in Malta, by offering a special tax status of 15% on the receipt of foreign source income in Malta. The rules enacted by virtue of Subsidiary Legislation 123.148 to the Income Tax Act of Malta and recently amended by Legal Notice 267 (2014) prescribe numerous conditions that must be satisfied for such individuals to benefit from the special tax status of 15%. To apply under the GRP rules, the third country national applicant must firstly hold 'qualifying property' which is to be occupied as the principal place of residence worldwide. The value of the immovable property acquired must vary between a minimum of €220,000 or €275,000 dependent on which locality the immovable property is situated in. If such immovable property is rented, the lease needs to be taken out for more than 12 months and must be valued between a minimum of €8,750 a year or €9,600 a year, also dependent on where the immovable property is situated.
Applicants must also satisfy all of the following criteria to be eligible to submit an application in terms of the GRP rules:
Have receipt of stable and regular resources that are sufficient to maintain himself/herself and his/her dependents;
Have possession of a valid travel document;
Have possession of sickness insurance to cover himself/herself and any dependents in respect of all risks across the whole EU normally covered by Maltese nationals;
Is able to adequately communicate in English or Maltese;
Is a fit and proper person; and
Is not already a beneficiary under other tax programmes, such as the high net worth individuals (HNWI) rules or the highly qualified persons rules.
An authorised registered mandatory (ARM) has a pivotal role to play for the individual to successfully apply and qualify for the special tax status. The ARM is a person that holds a warrant to practice as an advocate, legal procurator, notary public or accountant under the relevant laws of Malta and is registered with the Commissioner for Revenue. Accordingly, any application for special tax status will only be valid if signed and submitted by the ARM.
A non-refundable one-off registration fee must be paid upon submission of the application, amounting to €6,000 or €5,500 depending on where the immovable property is situated. In order for the applicant to retain the GRP status he/she must not stay in another jurisdiction for more than 183 days in a calendar year. Furthermore, individuals benefitting from the GRP are not precluded from working in Malta, provided that they satisfy the requisite conditions for obtaining a work permit. Beneficiaries of the GRP may also have special carers providing a service in their qualifying property, as long as all the requisite procedures are satisfied.
Once the special tax status has been acquired, the person is deemed to be resident for tax purposes in Malta and is chargeable to tax on his/her foreign income at the rate of 15% provided that a minimum tax liability of €15,000 is paid annually.
The GRP therefore complements other regulations (such as the HNWI rules) that have aimed to attract non-Maltese individuals to become tax resident in Malta and benefit from the remittance basis of taxation (with respect to income arising outside Malta) coupled with a lower tax rate (both schemes levy tax at 15% with respect to income arising in Malta or income arising outside Malta and received in Malta). No Maltese tax is charged on capital gains arising outside Malta even if these are remitted to Malta.
In the 2015 Budget the Government of Malta announced that it is also planning to introduce a new tax programme in line with the GRP, targeting United Nations pensioners. The details of this new programme have not yet been released. It is therefore unclear how this programme will treat the remittance of pension income into Malta from a tax perspective and whether it will also apply the reduced 15% tax rate to other streams of income remitted to Malta.
Mark Galea Salomone (mark.galeasalomone@camilleripreziosi.com) and Kirsten Cassar (kirsten.cassar@camilleripreziosi.com)
Camilleri Preziosi
Tel: +356 2123 8989
Website: www.camilleripreziosi.com
