Residence & Relocation

General Principles on the Taxation of Individuals in Malta.

There are around 40,000 expatriates working and living in Malta. This number has doubled over the last 10 years. Half of these expatriates are employed and the majority of expatriates come from the UK. The population of foreigners living in Malta is more or less evenly split between those above and below the retirement age. Malta has managed to attract a substantial amount of qualified individuals. The government of Malta sees the relocation of qualified employees or entrepreneurs to Malta as a means of attracting Foreign Direct Investment with the consequent injection of of funds into the Maltese economy.

Malta’s resident non-domiciled tax rules and its 70 strong Double Taxation Treaty (DTT) network results in taxation levels that are advantageous whilst in full compliance with international tax rules. Moreover Malta operates a transparent tax regime and has, additionally to its DTT network, also signed another 5 Tax Information Exchange Agreements. The tax environment in Malta is not punitive and supports business growth, personal wealth and innovation.

The underlying concept that determines the extent to which a person or income is subject to tax in Malta is the presence in, or connection to, Malta. The key factors here are Residence (and Ordinary Residence) and Domicile. The rules are not strictly defined. An individual may be considered resident if their absence from Malta is reasonable and not inconsistent with a residence claim. On the other hand, residing in Malta for six months in any year may cause an individual to be held to be resident and in this case the individual’s intent and possible residence in another country would be critical issues to be considered.

Domicile and Ordinarily Resident are concepts inherited from the United Kingdom as a result of Malta’s colonial past. Domicile is established either paternally or by choice or by intent. In brief a person may be considered domiciled in the country where he would  intend to spend his last days. Owning a grave in a particular country could establish domicile in that country. Ordinary Residence can be defined as habitual residence. Being resident in Malta year after year would make a person Ordinarily Resident in Malta.

Malta resident and domiciled individuals are taxed on their worldwide income, subject to DTT relief.

Individuals who are not ordinarily resident or domiciled in Malta are taxed on the value of income remitted to Malta at the rate of 15% and on Malta Source income at resident rates.

Resident rates of tax in Malta range from 15% increasing to the top rate of 35% for income over €60,000. Non Resident tax rates for income arising in Malta or Malta source income range from 20% increasing to 35% for income over €7,800.

Persons not resident or domiciled in Malta are taxed on Malta Source income only at non resident rates. A person who receives employment income and who is neither resident nor domiciled in Malta may be taxed in on his remuneration if the locality and source of the income is connected to Malta. In the case of employment income in the hands of resident non domiciled individuals, the locality and source of the income is also important in order to establish whether or to what degree a person would be taxed at resident rates or at the reduced remittance based rate of taxation.

As from 1 January 2014 non Malta resident EU and EEA nationals may be taxed in Malta at single resident rates on their entire income if 90% of their worldwide income is derived from Malta. Additionally non Malta resident or Malta resident EU and EEA nationals and their non Malta resident spouse may be taxed in Malta at married resident rates on their entire income if 90% of their combined worldwide income is derived from Malta. Special rules apply where the 90% criteria is not met.

Any individual who during any year preceding the year of assessment:

(i) is ordinarily resident in Malta but not domiciled in Malta (hereinafter “the non-domiciled individual”) and to whom provisos (i) and (ii) of article 4(1) apply, and who is not taxable in accordance with any scheme under the Act effectively establishing a minimum tax payable; and

(ii) derives income (including, in the case of a married couple whose income is chargeable to tax in terms of article 49 of the Act, the income derived by both spouses) amounting to not less than thirty five thousand euro (€35,000) or its equivalent in another currency, or such other amount as may be prescribed, arising outside Malta and referred to in proviso (i) to sub-article (1) of article 4 of the Act, but which is not received in Malta, shall, for any year of assessment, be subject to a tax liability on his income amounting to not less than five thousand euro (€5,000) per annum (hereinafter “the minimum tax”), and should the income (excluding capital gains chargeable in terms of article 5A of this Act) chargeable to tax in the hands of such individual for any year of assessment result in a tax liability (before taking into account any relief granted in terms of articles 76 to 89 of the Act) amounting to less than the minimum tax, he shall be deemed to have received in Malta additional income arising outside Malta as shall result in a total tax liability on his total income, wherever arising, amounting to the minimum tax:

  • Provided that in computing the minimum tax, account shall be taken of tax paid under this Act, whether by withholding or otherwise, in respect of all income (excluding tax imposed in terms of article 5A of this Act), whether arising in Malta or outside Malta:
  • Provided further that if the non-domiciled individual can prove to the satisfaction of the Commissioner that if he had been subject to tax without taking into account the provisions of provisos (i) and (ii) to sub-article (1) of article (4) of the Act, the total tax payable by him would have amounted to less than the minimum tax, his tax liability shall be capped accordingly at the said lower amount.”

Moreover Malta’s tax rules provide for the following programmes that target expatriates seeking employment or residence in Malta



If you are thinking of relocating to Malta to work, to set up business or to retire do contact us and we can assist you to obtain the best advantage from local regulation.