The Residence Programme (‘TRP’) is a special tax status which replaced the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules. It was introduced by virtue of Legal Notice 270 of 2014 and is deemed to have come into force with effect from 1st July 2013. TRP is designed to attract individuals who are nationals of the EU, EEA or Switzerland and who are not permanent residents of Malta. A beneficiary may also have household staff providing a service in his Qualifying Property, as long as all the criteria in his respect have been met, however such staff cannot enjoy the preferential tax benefits afforded to the beneficiary.
Foreign sourced income of beneficiaries which has been remitted to Malta is taxable at a fixed rate of 15%, with the possibility of claiming double tax relief on such income, provided that the individual must ensure that a minimum tax of €15,000 is paid every year. 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 Residence Programme if he:
- is an EU, EEA (Iceland, Norway, Liechtenstein) or Swiss national;
- is not a Maltese national;
- 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 TRP 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’). An applicant need not be the owner or lessee of the Qualifying Property at 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 €6,000 (or €5,500 where the Qualifying Property is in the South of Malta or in Gozo) is payable before the application can be processed.
Individuals who have applied for special tax status in terms of the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules; and – Beneficiaries of special tax status granted in terms of the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules, and who request the Commissioner to have their special tax status to be regulated under TRP will not need to submit documentation that is required in relation to the application for special tax status under TRP if such documentation had already been submitted together with the application for special tax status in terms of the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules and as long as the relevant documentation is still valid and has not been superseded. In the case of individuals who have applied for special tax status in terms of the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules but were not yet confirmed as beneficiaries as at 30th June 2013, such individual may request the Commissioner to consider their application as having been made in terms of TRP rules and be regulated as such.