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PERMANENT RESIDENCE SCHEME Tax Savings on European & other Pensions remitted to Malta - no tax chargeable at source - 15% tax in Malta
1. Low Taxation of Pensions Income A flat rate of 15% is chargeable on all income (less personal allowances) received in, or remitted to, Malta from either local or foreign sources. This is subject to a minimum payment of Lm1,800 per annum. This means that, thanks to Malta's 34 double tax treaties, persons who take up residence in Malta can receive their pensions in Malta free of tax at source and subject to a mere 15% income tax in Malta. Thus by obtaining a Permanent Residence Permit, a foreign national may start enjoying savings of as much as 25% in tax particularly where the pension originates in a state that taxes pension income at 40%. If you are considering taking up residence in Malta, you are advised to discuss the matter with us prior to making the move, since, under some double tax treaties, the tax benefits discussed above may not apply to some government pensions, civil service pensions and similar state pensions. Overseas capital funds invested locally are of course only taxed on any interest or dividends generated thereon, again at a 15% flat rate. - See
Malta's Double Tax Treaty Network
The qualifications: To qualify for a Permanent Residence Permit, one must be able to provide a clean criminal record and must be in receipt of an annual income (business profits, rents, investment income, pension, or a combination thereof) amounting to at least €24,000. [Permanent Residence Conditions] The Costs: The yearly minimum costs of maintaining a Maltese residence permit consists of the required minimum annual property rental of €4,400 and a minimum income tax liability of €4,400, i.e. a total of €8,800. The Benefits: For your convenience, we have illustrated the cost-benefit aspect of a PR permit in the form of a table with sample figures:
The above illustrates the significant cost-saving realised in the case of annual pension benefits in excess of €50,000 otherwise taxed at 40%, upon taking up residence in Malta.
Proceeds from the sale of property, encashment of investments, local income and excess income brought into Malta may be freely repatriated by permanent residents, provided that any tax due has been settled. 3. No death duties are payable in Malta 1. If a property is purchased in one name, the heirs of the deceased have to pay 7% provisional tax on the value of the property declared. This value will in turn be verified by an appointed architect. 2. If a property is bought jointly and one of the parties passes away, provisional tax of 7% is only paid on half the estate, i.e. half the value as stated in (1). Though no death duties are payable in Malta, Transfer duty (according to the Duty of Documents and Transfers Act, 1993) is charged on:
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