Global Residence Programme Rules 2013 for non-EU/non-EEA/non-Swiss Nationals
Contributed by Camilleri Galea Ltd.
06 August, 2013
Contributed by Camilleri Galea Ltd. [Camilleri Galea Ltd.]
A Global Residence Programme (GRP Rules) was introduced by virtue of Legal Notice 167 of 2013 and came into force with effect from 1st July 2013. The Programme is for individuals who are not nationals of the EU, EEA or Switzerland in terms of Legal Notice 167 of 2013 and Article 56(23) of the Malta Income Tax Act, Chapter 123 of the Laws of Malta (ÏTA). The new programme replaces the Residence Scheme for High Net Worth Individuals (HNWIs) applicable to non-EU/non-EEA/non-Swiss Nationals with effect from 1 July 2013 and is so far the most advantageous residence scheme available to these Nationals, particularly since the scope of the GRP Rules set more favourable conditions under the new programme.
Eligibility for application
To be able to apply under the GRP Rules, an individual must primarily be a third-country national being a person who is not an EU, EEA or Swiss national. Such person must also not be a long-term resident of Malta and must not have resided continuously and legally in Malta for five years and must not have a long-term resident status in terms of the Status of Long-Term Residents (Third Country Nationals) Regulations.
Requirement for application
The particular individual eligible to apply under the GRP Rules must prove to the satisfaction of the Revenue Commissoner that such individual satisfies all of the following conditions:
- The applicant must have a Qualifying Property Holding defined as immovable property situated in the Maltese islands, being either
- A Qualifying Owned Property purchased for a consideration of not less than 275,000 in Malta or for a consideration of not less than 220,000 if in Gozo or the South of Malta; or
- A Qualifying Rented Property rented in Malta for not less than 9,600 per annum or for 8,750 per annum if the property is situated in Gozo or the South of Malta. Whether purchased or rented, the said property must be the primary place of residence of the individual;
- The applicant must not be benefitting from the Residence Scheme Regulations, the High Net Worth Individuals EU/EEA/Swiss Nationals Rules, the High Net Worth Individuals Non-EU/EEA/Swiss Nationals Rules the Malta Retirement Programme Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules;
- The applicant must be in receipt of stable and regular resources that are sufficient to maintain himself and his dependants without resorting to the social assistance system in Malta;
- The applicant must be in possession of a valid travel document;
- The applicant must be in possession of health insurance which covers himself/herself and his/her dependants in respect of all risks across the EU as are normally covered for Maltese nationals;
- The applicant must be fluent in either Maltese or English; and
- The applicant must be a fit and proper person.
The above requirements must all be satisfied on an ongoing basis. An individual shall, with effect from the appointed day, cease to possess special tax status under these rules if any of the requirements mentioned above is no longer satisfied. An application for the Global Residence Programme by an individual may also cover the dependents and special carer of the said individual, under certain conditions.
Tax Treatment under the GRP Rules
An individual having the special tax status certificate issued in terms of the GRP Rules would be subject to the following tax treatment in Malta:
- Income from foreign sources would be chargeable to Malta income tax at a flat rate of 15% only if remitted to Malta with the option of claiming double taxation relief subject to the minimum annual tax liability. Any realised capital gains arising outside Malta, even if remitted to Malta, would be exempt from Malta tax as the individual would be non-Malta domicile.
- Other income of the beneficiary, his spouse and children that is not covered by these Rules and is not chargeable at the rate of 15% is charged separately at the rate of 35%.
- Realised capital gains arising in Malta on the transfer of a capital asset (other than immovable property situated in Malta) and any other realised income that is not charged at 15% flat income tax rate, would be chargeable to Malta income tax rate of 35%.
- Realised capital gains arising in Malta on the transfer of immovable property situated in Malta would be subject to a final withholding tax rate of 12% of the transfer value (in certain circumstances, exemptions such as the disposal of immovable property occupied as an individuals own residence for a period of three years). The individual may opt for the 35% tax rate on the capital gain in cases where the property being transferred had been acquired less than twelve years prior to the sale.
- No inheritance or wealth taxes.
In terms of the GRP Rules, a minimum annual tax payment of Eur15,000 payable by the individual inclusive of his/her dependents in respect of income from foreign sources and remitted to Malta applies. The payment would be due by not later than 30 April of the year in which the income is received in Malta. A return made to the Commissioner stating that all the conditions of the programme have been satisfied must accompany such payment.
Miminum residence period
No minimum residence period does exist but the individual in possession of the tax status certificate may not reside in any other jurisdiction for more than 183 days in a calendar year.
An application for the special tax status must be made through the services of a person that qualifies as an Authorised Registry Mandatory. Camilleri Galea Ltd. is able to offer this service as it is registered as an Authorised Mandatory.
A non-refundable one-off registration fee of 6,000 (5,500 in the case of applications involving a qualifying property holding situated in the South of Malta) is payable to the Commissioner upon application.
Localities for the purposes of the definition of the South of Malta are:
Disclaimer: Persons using this information are advised to seek appropriate professional advice following the publication of such detailed amendments or guidelines and prior to implementing any actions based on the information given in these updates. This update contains general information only, and Camilleri Galea Ltd.is not rendering professional advice or service by means of this update. Before making any decision that may affect your business or finances, you should consult a qualified professional adviser. Camilleri Galea Ltd. shall not be responsible for any loss whatsoever sustained by any person who relies on this information.
For more information, please contact:
Camilleri Galea Ltd.
Central Business Centre
Mdina Road, Zebbug 9015
Camilleri Galea Ltd. provides audit, tax, consulting and advisory services to companies and private clients operating in various industries. Camilleri Galea Ltd. is authorised to provide audit services in Malta in terms of the Accountancy Profession Act.
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