Malta Retirement Programme is a special tax programme is designed for EU nationals and Third Country Nationals alike, giving them an option to reside in Malta once they have reached retirement age, are in receipt of a pension as their primary source of income and are no longer in employment.
Under the same application, an applicant for Malta Retirement Programme may also include his dependants who may also benefit from this programme. Such dependants may include the applicant’s spouse or partner if proven that they are in a stable and durable relationship and any minor children in his custody or children who though not minors, suffer from a grave illness or disability which renders them unable to maintain themselves.
Should the beneficiary of the Malta Retirement Programme pass away, his tax status would be passed onto his dependent who inherited the qualifying property holding or took over the lease of the qualifying rented property.
Favourable tax status under Malta Retirement Programme
Beneficiaries of the Malta Retirement Programme are granted with a “special tax status”.
The status applies to the payment of their income tax, where the base tax rate applicable to any income received by the beneficiary in Malta arising outside of Malta will be fixed at a rate of 15%.
The minimum tax that the beneficiary must pay annually is set at Euro 7,500 per annum and an extra Euro 500 per annum for every dependant included under his application.
Any income, which does not fall under the aforementioned regulation, will be taxed at a fixed rate of 35% in accordance with the Malta Income Tax Act rules.
Eligibility criteria under Malta Retirement Programme
The Malta Retirement Programme (MRP) is governed by the Commissioner for Revenue (CFR) and requires applicants to meet a number of conditions.
Applicants for the programme should satisfy the following criteria as set in S.L. 123.134 (further amended by L.N. 69 of 2020), stipulating the following:
The applicant is not a Maltese National;
The applicant does not benefit from any other Maltese tax programme listed in S.L. 123.134.
Applicant can prove that he is in receipt of a pension receivable in Malta which constitutes at least 75% of his chargeable income.
Applicant owns or rents a qualifying property in Malta as his principal place of residence worldwide. The property considered as qualifying if:
Applicant is in receipt of stable and regular resources which are sufficient to maintain himself and his dependents without recourse to the social assistance system in Malta;
Applicant is in possession of a valid travel document;
Applicant is not nor does he intend to become domiciled in Malta within five years from the date of application;
Applicant is in possession of valid health insurance covering him and his dependants across all European Union member states;
Applicant can adequately communicate in one of the official languages of Malta.
Annual obligations under Malta Retirement Programme
Whilst the application for the Malta Retirement Programme is a straightforward procedure, the beneficiaries of this programme must meet the following ongoing obligations:
Maintain qualified owned or leased property at all time;
Maintain the required health insurance;
Submit the Annual Declaration together with the income tax return;
Stay in Malta for a minimum of 90 days a year (averaged over a five year period);
Do not spend more than 183 days a year in any other jurisdiction;
Comply with all special reporting and notification requirements.
Can the special tax status be withdrawn?
A beneficiary of the Malta Retirement programme will cease to benefit from this programme if he no longer satisfies any of the mandatory conditions of the programme. The special tax status will be terminated with immediate effect if:
- Beneficiary ceases to hold a Qualifying Property;
- Beneficiary becomes Maltese national;
- Beneficiary does not receive all of his pension in Malta as was indicated through the application submitted to the Commissioner for Revenue;
- Beneficiary violates any provisions of the Incomes Tax Act. Such breaches include:
- failure to comply with routine compliance obligations, such as cases of tax evasion and misrepresentation;
- failure to respond to requests for information from the Commissioner of Revenue in a timely manner;
- Beneficiary and his dependants fail to hold the required health insurance at all time;
- Beneficiary establishes his domicile in Malta or acquire Malta Permanent Residence or Long-term Residence in Malta;
- Beneficiary resides in Malta for less than 90 days a year averaged over a 5 year period or stays in any other jurisdiction for more than 183 days in a calendar year.
A special tax status may also be terminated if the beneficiary himself opts to withdraw from the special tax status by notifying the Commissioner for Revenue.
However, following the death of the beneficiary, the special tax status devolves onto his direct dependant who has inherited the main residence of the deceased (or rented a qualifying property immediately after the death of the deceased beneficiary). The dependant will only inherit the special tax status if he meets all the criteria required for the retirement programme and the Commissioner for revenue receives relevant documentation within 183 days from the death of the beneficiary.
Administrative Fee and Procedure
In order to apply for the Malta retirement programme, one must engage an Authorised Registered Mandatory, who will be liaising with the Commissioner for Revenue and submitting the application on behalf of the beneficiary.
SMM Consultancy Services is authorized to act as Authorised Registered Mandatary [ARM05114] by the CFR.
The application for the Malta retirement programme is subject to the government administrative fee of Euro 2,500.
SMM Immigration Department
If you are looking for a suitable country for your retirement, Malta may be the right choice for you, which will allow you to settle in a safe and pleasant environment as well as help you protect your pension through a special reduced income tax rate.
Contact SMM Immigration team for personalized guidance and free consultation. We are always available for both face-to-face or online consultations, get in touch with our team and speak with one of our experts today.