Malta: Permanent Residence Permits For Malta

The Republic of Malta consists of three islands, Malta, Gozo and Comino. They are situated in the center of the Mediterranean Sea, just 80 kilometers off the southern coast of Sicily, Italy.  The climate is typically Mediterranean with mild winters, pleasant spring and autumn seasons and hot summers. Malta is the more heavily populated island; Gozo is quieter and more rural whereas Comino is uninhabited, except for a five-star hotel.

The population is just under 400,000 and the official languages are English and Maltese. In practice everybody in Malta can speak English. The mainstay of the economy is tourism; the secondary pillars of the economy are the financial services sector, manufacturing, the semi-conductor industry and the Freeport.

Malta became independent from Britain in 1964 after being a colony for more than 200 years. It is a Republic since 1973. It is a fully-fledged democratic country with respect for the rule of law.  Malta is a member of the major international organizations including the United Nations and the Council of Europe, the International Monetary Fund and is in the process of negotiating membership with the European Union, probably scheduled for 2003/4.

Malta has a sound infrastructure, both financial and geographical. Telecommunications, postal links, courier services, banking and all other services are generally speaking very efficient and of a very high standard. The national airline, AirMalta, operates 35 flight routes mostly within Europe and the Mediterranean regions and most major European airlines have frequent flights to Malta. There is a frequent sea link with Italy.

Malta today offers non-Maltese persons the possibility of acquiring Permanent Residence Status. Persons of any nationality are eligible for Permanent Residence Permits with no differentiation whatsoever. There are four main advantages to persons wishing to establish their residence in the islands.

Firstly, the English speaking population makes integration and communication easy; all official documentation is written in English; laws are written in English and Maltese; commercial and business relationships are generally speaking carried out in English. There are also private English-speaking schools, which offer a high level of education; the University is open to children of Permanent Residents. There are also a number of private hospitals offering a very high quality medical service; Malta has been ranked 5^th in the world by the World Health Organization for medical services and facilities.

Secondly the standard of living is high, comparable to other European countries of the Mediterranean region whereas the cost of living is generally cheaper than in Europe. It is therefore possible to live a better life with a lesser expenditure. Life is more laid back than in Europe, and particularly in Gozo the pace of life is slow and relaxed and the charm of this little island is difficult to get away from. There is a very low crime rate and foreigners are very rarely targeted, provided common sense is used, as in all situations. While drug abuse is on the increase, it is very limited still and confined to one or two areas, but in general this is not a problem. Children can be very safely brought up and there is a general care and awareness given by the people to children and elderly persons, particularly where foreigners are concerned. Most foreigners who come to live in Malta are surprised at the help and attention they are given by the local population.

Third, the climate is a particular attraction to persons coming from the colder regions of the world.

Fourth, the taxation level imposed on Permanent Residents is very advantageous. The low taxation rate, coupled with a long list of double taxation treaties that Malta has negotiated with other countries, makes residence in Malta a very attractive solution for high worth individuals. Tax at 15% is only levied on income brought into Malta and global income is not taxed in any way.

A Permanent Residence Permit entitles the holder who is not a citizen of Malta, to reside permanently in Malta without the necessity of obtaining and renewing an entry visa; the Permanent Resident therefore has freedom of movement in Malta. Provided that the Permanent Resident remains within the law, then the permit is renewed annually as a formality and once granted, a permit will not be revoked unless there the Resident breaks a condition of the permit. The Permanent Residence Permit has not effect however on the visas the holder might need to enter other countries from Malta; therefore a permit holder who, because of his nationality, might require a visa to enter another country from Malta, will still need to acquire that visa notwithstanding that he holds a Maltese Residence Permit and notwithstanding that a Maltese person might not need a visa to enter that other country.

A Residence Permit will never entitle the holder to acquire Maltese citizenship.

Permanent Residence permit holders pay a flat tax rate of 15% on all income brought into Malta. This is subject to a minimum payment of Lm1,000 (US $2,500) per annum. Given the personal deductions allowed by the Income Tax Act, the minimum payment of Lm1,000 covers an income of approximately Lm9,000. The Permanent Resident’s global income, which is not brought to Malta, is not taxed in any way. Moreover Malta has an extensive double taxation treaty system with thirty other countries, including all the EU countries and most other European countries. This is of particular advantage to persons from these countries that can claim double taxation relief, thus further reducing their tax liabilities.

Once the permit is issued and the permit holder has registered with the Inland Revenue Department in Malta, the Maltese tax authorities will certify that for Maltese taxation purposes, the permit holder is resident in Malta. On the basis of this certificate, most countries (and in particular those which have a double taxation treaty with Malta), will consider the permit holder to be resident in Malta for tax purposes; the consequence of this varies from country to country. Some countries will not tax their citizens at all if they are resident in Malta; others will tax them at a much lower rate; others still will require their citizens who move their residence to Malta to sever all connections with their home country; other countries will require their citizens not to be present in their home country for more than a certain number of days in one calendar year. It is impossible to list the conditions, which each and every country imposes on its citizens who are resident outside of the country, because each country has its own taxation rules. However, in general, moving one’s residence to Malta is always highly tax advantageous, particularly for high net worth individuals.

The holder of a Permanent Residence Permit also gets an exemption from customs duty on household and personal effects brought into Malta, furniture and other domestic articles (excluding firearms and weapons of all kinds) and one car provided they are brought to Malta within six months of arrival in Malta. Personal effects and the vehicle may be taken back out of Malta with no charge.  A Permanent Resident is also entitled to purchase a vehicle in Malta with an exemption from the payment of import and customs duty; however the import and customs duty would have to be paid if the resident sells the car to a Maltese person, but not if he sells it to another Permanent Resident.

Once a Permanent Resident decides to abandon his Maltese residence, accumulated capital and income may be taken back out of Malta with no restrictions.  No death duty (succession tax) is payable in Malta but on a person's death there is a 5% charge on immovable property situated in Malta. As regards the inheritance of immovable property, Malta has no probate of will procedures and succession is dependent on the last will of the deceased, or failing that, on the dictates of the law. Unless the deceased has disposed otherwise, his estate passes to his children (or to his nearest of kin if there are no children). The spouse does not inherit anything according to law. To avoid these complicated and sometimes unpleasant situations, Permanent Residents who buy property in Malta are well advised to execute a will. This is done at the office of a Notary Public and each will is registered in the Maltese Public Registry. The date of registration (as officially certified by the Public Registry) is proof that the will is the last will of the deceased.

When the Permanent Resident abandons his Maltese residence, he is entitled to re-sell any immovable property and take the capital out of Malta but the profit made from the sale is taxed as a Capital Gain; the rate for Capital Gains Tax is 35% at the present moment.

No minimum stay in Malta is required, but when the Permanent Residence Permit is first issued the holder must come to Malta at least once within the first twelve months to have his passport stamped and to register with the Inland Revenue Department.   Moreover within twelve months from the issue of the permit, the holder must either purchase an apartment for not less than US $75,000 or lease/rent property for not less than US $4,500 per year. Generally speaking therefore, for a married couple, the net outlay to move one’s residence to Malta could be from as little as Lm3100 (US $7750) per year, consisting of Lm1000 tax, Lm1800 rental of an apartment and Lm300 application fee.

In practice, housing is still relatively cheap in Malta, compared to the rest of Europe and the Mediterranean. A two-bedroom apartment in a good area will cost from US $100,000 (but more if it has sea-views etc) whereas a villa (independent, with three bedrooms and usually a swimming pool and garage) will cost from US $300,000 upwards. The legal costs and taxes for buying property are also relatively low and usually will be in the region of 10% of the purchase price. Once the property is purchased, there are no further payments or expenses to be made. There are no rates, contributions or any other sort of payment. Electricity and water are not cheap (around US $300 per month). The cost of living is quite low and a couple can expect to spend around US $750 per month on food etc. Telephone calls are cheap (local calls US $0.025 per minute / international calls US $2 per minute on average) and Internet is cheap and widely available - a permanent 24-hour connection costs around US $50 per month.

The Permanent Resident would also have a bank account in Malta into which account, he must deposit US $15,000 plus US $2,500 for his wife and each dependant. The Permanent Resident can freely use this money for any purpose whatsoever.

A Permanent Resident cannot take part in politics and cannot vote at elections, though a Resident is entitled to vote for Local Council elections. More importantly, a Permanent Resident cannot work in Malta.  This general statement however is subject to the following clarification:  the Permanent Resident cannot be employed by a Maltese person or Maltese registered company and cannot offer freelance services to Maltese persons or Maltese registered companies.  However a Permanent Resident may use Malta as a base to work from, provided that he does not offer his services on the local market.  A Permanent resident may also be employed by or offer his freelance services to persons or companies outside Malta. A Permanent Resident may also be a director of an International Trading or Holding Company (offshore company) registered in Malta.

The Permanent Residence permit is usually issued to the husband (where the applicant is married) and the permit extends to his wife, children under 21 years of age and even parents if necessary. Should the Resident die, the permit will pass on to the wife but not subsequently to the children. Children who attain the age of 21 will also have to submit an application for a Residence Permit to be issued to them separately.

A Permanent Residence Permit will be issued if the applicant submits a banker’s declaration that the applicant has an income in excess of US $25,000 or has capital assets in excess of US $375,000. The applicant would also have to submit a Police Conduct Certificate from his place of residence. Beyond this, no other documentation is necessary.

The Department for Citizenship and Expatriate Affairs in Valletta does the processing of applications and usually an application is approved in about two months.