Ordinary Residence
Nationals of the EU, EEA, and Switzerland
A person who resides in Malta for over 3 months is obliged to obtain a residence permit under a specific reason. There are different options for a person who is a national of the EU, EEA, and Switzerland to obtain an Ordinary Residence permit in Malta, depending on the purpose of taking up residence. In order to obtain ordinary residence, the applicant is required to own or rent a residential immovable property in Malta with no minimum value requirements.
Residence - Employment
A person may take up residence in Malta for the purpose of employment and such residence permit is applicable for as long as such person is employed and is valid for 5 years after which it has to be renewed,
Residence - Self-employment
Any EU citizen or a national of the EEA and Switzerland may take up residence in Malta to pursue activities as self-employed in Malta as long as such person is a bona fide self-employed person, operating for a registered office in Malta and satisfy all the requirements in terms of registrations and taxation and other matters like a Maltese national self-employed person.
Residence - Study
Any EU citizen or a national of the EEA and Switzerland who are in Malta for educational purpose may obtain a temporary residence permit covering the entire period of education, provided that the individual is enrolled in a Private School, College or the University of Malta.
Residence - Economically self-sufficient
A person who is economically stable, without the need for employment or to carry out any economic activity in Malta, can apply for residence through economic self-sufficient. Such person would need to prove that he/she has a minimum capital of €14,000 or earning weekly income of €92.32, if single and minimum capital of €23,300 or €108.63 weekly income, if a married couple.
Family Members
Family members of persons with a residence permit in Malta, including partners who can prove that they have been in a stable relationship for at least 2 years, of persons with a residence permit in Malta, whether they are EU citizens or nationals of the EEA and Switzerland or not, have the right to accompany the main applicant, provided that they are economically dependent on him/her.
Under the ordinary residence regulations, the following are considered as family members of the main applicant:
- The spouse;
- The children of the main applicant and those of the spouse who are under the age of 21 or who are over 21 years and are dependants of the main applicant;
- The main applicant direct relatives in the ascending line and those of the spouse;
- The partner who has a durable relationship of at least 2 years with the main applicant;
- A person who, irrespective of his nationality, in the country from which he/she has come, is a dependant or a member of the household of the main applicant;
- A person who, for serious health reasons, strictly requires personal care by the main applicant.
Third country nationals (Non-EU, EEA and Switzerland Nationals)
A person who resides in Malta for over 3 months is obliged to obtain a residence permit under a specific reason. In order to obtain ordinary residence in Malta, the applicant is required to own or rent a residential immovable property in Malta without any minimum value requirements. There are the following different options for third-country nationals to obtain an Ordinary Residence permit in Malta, depending on the purpose for taking up residence. A person who has the ordinary residence permit in Malta is allowed to travel within the Schengen Area without the need of a visa.
Residence - Employment
A third country national may take up residence in Malta for the purpose of employment through a work permit which needs to be renewed on an annual basis. Prior to starting the process for the application for a work licence, the applicant would need a job offer from a business in Malta.
Residence - Self-employment
Non-EU, EEA and Switzerland nationals who would like to carry out an activity in Malta through self-employment would need to satisfy at least one of the following criteria:
- Invest in Malta capital expenditure of at least Eur 500,000 within 6 months from the date on which the employment license is issued. The capital expenditure shall solely consist of fixed assets (such as immovable property, plant, and machinery) used for business purposes as reflected in the business plan submitted with the application;
- Be a highly-skilled innovator with a sound business plan (to be submitted with the application), who commits to recruiting at least three EEA/Swiss/Maltese nationals within eighteen months of establishment;
- Be a person leading a project that has been formally approved by Malta Enterprise.
Residence - Owner of Malta Company
A third country national may also opt to take up ordinary residence by being a shareholder or the ultimate beneficial owner of a Malta company. In this case, one or more of the following criteria must be met:
- Every Third country national shareholder must have a fully paid up share capital of at least Eur 500,000 which may not be redeemed, reduced or transferred to a third party during the first two years following the issuing of the Employment Licence;
- Have made a capital expenditure of at least Eur 500,000 that is to be used by the company. The capital expenditure shall solely consist of fixed assets (such as immovable property, plant, and machinery) used for business purposes as reflected in the business plan submitted with the application. Rental contracts do not qualify. Such expenditure needs to be supported by receipts in the company’s name;
- The company is leading a project that has been formally approved by Malta Enterprise.
Tax Treatment of Ordinary Residence in Malta
Persons who are ordinarily tax resident but not domiciled in Malta are not taxed on their worldwide income and capital gains but are taxed on a source and remittance basis.
This means that such persons are subject to tax in Malta on:
- Income and capital gains arising in Malta;
- Foreign income which is remitted to Malta.
They are not taxed on:
- Foreign income not remitted to Malta;
- Foreign capital gains even if remitted to Malta.
Foreign income remitted to Malta and taxed in Malta is subject to any double taxation relief which he/she may be entitled to, in terms of the double taxation treaties which Malta has concluded. Persons who are ordinary residents but not domiciled in Malta deriving foreign income or capital of not less than €35,000 which is not remitted to Malta are subject to a minimum tax liability of €5,000.
Taxable income is charged to tax at the progressive tax rates:
Tax rates applicable to single persons (and to married persons who opt for a separate computation)
Tax rates applicable to married couples living together
Tax rates applicable to parents who, subject to certain conditions, maintained a child under their custody during the year
The above tax rates are also applicable to nationals of the EU and EEA who are not tax residents in Malta but derive at least 90% of their worldwide income in Malta.
Employment
Employment exercised in Malta is taxed by means of the Final Settlement System (FSS), whereby tax and social security contribution on the gross emoluments is deducted at source by the employer and paid by the employer on behalf of the employee on a monthly basis. Every year the employer must provide the employee with an FS3 Form duly filled in indicating the gross emoluments, the income tax and social security contributions deducted therefrom and the resulting net emoluments for that particular year.
The social security contribution in Malta is partly deducted from the salary of the employee and partly incurred by the employer. The amount of such contributions varies depending on the weekly salary of the employee, however, capped to a maximum amount which increases slightly every year.
Self Employment
Tax
Self-employed profits are chargeable to tax after computing; the revenues earned during a calendar year, deducting the allowable deductions incurred in the production of the income during the respective year. The resulting profits are subject to tax at the above progressive tax rates (mentioned above).
Social Security Contribution
Social security payments for a self-employed individual, in relation to the activities carried out in Malta, are to be paid on the last day of April, August and December in arrears. The amount varies depending on the annual profits earned, however, the amount is capped to a maximum amount which increases slightly every year.
VAT
Persons carrying out a commercial activity in Malta should be registered for VAT purposes and submit VAT returns accordingly.
Persons whose annual turnover does not exceed €20,000 can be registered under article 11 and be exempt from charging VAT on their supplies. Under such registration, the registered person is not allowed to claim back any input VAT incurred.
Persons whose annual turnover exceeds €20,000 have to be registered under article 10 and charge VAT on their supplies. Under such registration, the registered person has the right to recover the input VAT incurred.