Last year in July, the Global Residence Programme was put into action in Malta. It allows non-EU citizens to become resident on the island if certain conditions are met. The aim of the programme is to stimulate the economy, and make the island nation more attractive to foreign investors.
What are the requirements to be eligible for this programme, and what are the tax liabilities? In this article I would like to explain some key facts about the programme and the taxation policies.
The three most common conditions to be eligible for the Global Residence Programme (GRP) are:
– Possession of land or property worth at least €275,000 (or €220,000 in the south of Malta and Gozo)
– Renting property for at least €9,600 per year (or €8750 in the south of Malta and Gozo)
– Purchasing government bonds
Apart from the above mentioned conditions it is also necessary to have a certain command of the English language, and to be in good physical and mental health. Becoming a part of this programme is very likely if all these conditions are met. The cost for the whole application process is around €6,000.
The structure of tax liabilities for participation in the GRP
The applicants are motivated to apply for the GRP in order to get residential status in a European country, and therefore admission to the EU, and also possible tax benefits.
The taxation is as follows:
– 15% tax on foreign income that flows into Malta
– A minimum tax liability of €15,000 per year, even if the income and resulting tax liability is below that
– Other income is taxed as ordinary income at a rate of 35%
It is possible to optimise the tax burden with precise configuration, especially with regards to the 35% taxation. However, almost none of our clients have to pay the 35% tax. For example: it is possible to develop an alternative package with the “non-dom” status.
