The Malta Retirement Programme (‘MRP’) came into effect through Legal Notice 317 of 2012 to offer a special tax status to EU / EEA / Swiss Nationals who are not in an employment relationship and who are in receipt of a pension which constitutes at least 75% of their income. The special tax status is not available to Maltese Nationals or to persons domiciled in Malta. Individuals benefitting from the MRP may hold a non-executive post on the board of a company resident in Malta. Such individuals may participate in activities related to any institution, trust or foundation of a public character and in any other similar organisation or body of persons, also of a public character, that is engaged in philanthropic, educational or research and development work in Malta. A beneficiary may also have household a special carer as long as all the criteria in his respect have been met, however such person cannot enjoy the preferential tax benefits afforded to the beneficiary.
Beneficiaries of the MRP are subject to a preferential tax rate of 15% on all income arising outside Malta and received in Malta by the beneficiary, the beneficiary’s spouse, children and other dependents as defined, with the possibility of granting relief from double taxation in terms of the Maltese Income Tax Act. However, the minimum amount of tax payable in respect of such income shall not be less than €7,500 per year, and an additional €500 per year for each dependent and/or special carer. Special reporting obligations (the filing of an annual declaration together with the annual tax return) must be complied with.
An individual may only apply for special tax status under the MRP if he:
- is in receipt of a pension, as supported by documentary evidence, all of which is received in Malta and constitutes at least 75% of the beneficiary’s chargeable income;
- is not a Maltese national;
- is not domiciled in Malta and does not intend to establish his domicile in Malta within 5 years from the date of the application for special tax status;
- does not reside in any other jurisdiction for more than 183 days;
- is not a beneficiary under another special tax status in Malta;
- owns a Qualifying Property (namely a property in Malta that exceeds the minimum value threshold of €275,000 or leases a property for more than €9,600 per annum; the values for property in the south of Malta or in Gozo are slightly lower). The Qualifying Property cannot be let or sub-let;
- can show that he has access to regular income that is sufficient to maintain him as well as his dependants without need to turn to Maltese social assistance;
- is in possession of valid travel document;
- can show sufficient health insurance cover for himself and his dependants;
- can communicate adequately in English or Maltese; and
- is a ‘fit and proper’ person in accordance with due diligence checks carried out in his respect. (This requirement needs to be satisfied in relation to all individuals that are dependants over the age of 18 as well as household staff mentioned in the application form).
An application for special tax status under the UNPP is to be submitted to the Commissioner of Inland Revenue. Applications and the necessary supporting documentation, including evidence of meeting the criteria mentioned above, are to be submitted exclusively through the services of an authorised registered mandatory (‘ARM’); however, an applicant need not be the owner or lessee of a qualifying property at the time of application and may submit the certified final deed or lease agreement, as the case may be, at a later stage. A non-refundable administrative fee of €2,500 is payable before the application can be processed.