Malta has a history of attracting foreigners to its shores as a country of residence for a multitude of reasons.
Tax is an incentive, but living in a foreign country should be an experience. Malta does indeed offer a unique experience, mainly driven by the fact that the Maltese have been welcoming foreigners to our shores for thousands of years.
Our first written endorsement came 2,000 years ago when St Paul was shipwrecked in Malta on his way to Rome and wrote about the “uncommon kindness of the Maltese” and how “they made us feel all welcome”. This is in our DNA.
It is, however, a fact that when Malta became an independent state in 1964, a primary economic target was to formulate a way to encourage the expatriates already resident in Malta to stay on and continue living here. This led to Malta’s first residence programme called the ‘six-penny settlers’, aptly named after the tax rate at the time.
The concept was new, bold and innovative. The result was not only that expatriates living in Malta stayed on, but it also led to other British people, a number of them of very good standing and rather well known, to take up residence in Malta.
Since then, Malta has emerged as a destination of choice for families and individuals who decide to live here from all over the world, but mainly from Europe. The formula is relatively simple: a great lifestyle combined with tax advantages.
In May of last year, the government embarked on a project to review its residence programmes and also on some new initiatives. Attracting foreigners to come and live in Malta and to receive private wealth management was and remains a primary economic focal point for Malta.
The first result was the Global Residence Programme, aimed at non-EU nationals, allowing them to live and stay in Malta and move freely within Schengen, provided that certain minimum criteria are satisfied.
Attracting foreigners to come and live here was and remains a primary economic focal point for Malta
A similar programme for EU nationals should also be rolled out soon. The main advantage of the residence programmes is a flat rate of tax of 15 per cent on all income received in Malta.
We do not charge tax on worldwide income that is not received in Malta by those who are not domiciled in Malta. Malta also does not charge tax on capital gains realised outside the country.
Another successful and attractive programme is the Malta Retirement Programme, which is effectively aimed at retirees from the EU, the European Economic Area and Switzerland who want to take up residence in Malta.
Beneficiaries under this programme also pay tax at a flat rate 15 per cent and take advantage of Malta’s vast tax treaty network. A number of conditions are also imposed, but they are relatively simple to satisfy and ensure that Malta attracts the right people.
A common factor to all programmes is the requisite that property should be acquired in Malta either by way of purchase or by lease. This condition has been a contributor to the fact that Malta’s property market has remained stable, if not relatively buoyant, even during the financial crisis.
Malta is considered to be one of the leading destinations of choice for expatriates seeking a home. Among other things, the country offers a highly desirable and vibrant lifestyle, superb climate, great healthcare, a society that is easy to integrate into, is politically and economically stable and is tax efficient.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices, which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
Kevin Cassar is a private client manager at Blevins Franks Financial Management Ltd.