Presentation eng malta residence

EMD

EMD • Dr. Pierre Mifsud • Partner • pmifsud@emd.com.mt

EMD

EMD ■ ■

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Established in the year 2000.

Six partners supported by senior consultants, associates and administrative staff – total staff complement in excess of 70 persons.

Offices located at the Valletta Waterfront in a historical building built at the height of the Baroque period in Malta. Valletta is Malta’s capital city.

EMD ■ Member of Trans European Law Firms Alliance.

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Affiliated to USLaw.

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Member of AEA (Association of European Advocates).

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Recommended as a Legal 500 firm since 2003.

EMD â– The firm and its staff are active members of industry related organisations:

EMD ■ The firm places great emphasis on continued education – all staff attend training programs and informative seminars on a regular basis.

■ A number of lawyers within the firm lecture at the University of Malta and other educational institutions.

EMD Our Organisation: â– Multi-disciplinary organisation as we believe that businesses must only concentrate on their operational side. â– Client portfolio: mainly international. â– Specialised in: legal, tax, advisory, corporate and business support services.

EMD Some past and present clients:

EMD EMD Advocates - services include: ■ ■ ■ ■ ■ ■ ■ ■

Company and Commercial Law. Tax Law – International and Local.

Financial Services Law. Real Estate Law and Property Conveyance. iGaming.

Employment Law and Industrial Relations.

Immigration Law. Intellectual Property Law.

Malta Residence

EMD This presentation shall cover the following topics: ■ Ordinary residence ■ The High Net Worth Individuals Residency Program ■ The Highly Qualified Persons Rules ■ The Malta Retirement Program ■ The Global Residence Program

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Ordinary Residence

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ORDINARY RESIDENCE ■ There is no minimum amount of time to be spent in Malta, however, in order to be considered to be tax resident in Malta, one must spend in excess of six months per calendar year in Malta.

■ There is no minimum property value requirement for nonresidents seeking to obtain ordinary residence in Malta, unless an AIP Permit is required.

■ The qualifying criteria vary according to whether the individual seeking to obtain ordinary residence in Malta is an EU/EEA national or a third country national.

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ORDINARY RESIDENCE Individuals who are citizens of the EU/EEA may apply for Maltese residence on the basis of their being economically self-sufficient. The current thresholds for income are set at a minimum capital of € 14,000 or a weekly income of € 92.32 for single persons, and at a capital of at least € 23,300 or a weekly income of € 108.63 for married couples. An extra € 8.15 is required for every added dependant.

■ Another ground on which an EU/EEA national may obtain ordinary residence is employment or self-employment.

Alternatively, an individual may opt to set up a business in Malta and work for his / her own business.

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ORDINARY RESIDENCE ■ In the case of non-EU nationals, they can only obtain a residence permit

• • • • • • •

on certain limited grounds, namely; Employment (after obtaining a work permit); Self-Employment (subject to satisfying minimum criteria); Shareholders of a Malta resident company (subject to satisfying minimum criteria); Long-Term Residence for Third Country Nationals; Temporary Residence on the basis of education; Partners (applicable for partners whose relationship has subsisted for at least two years); Family Members (reunification of family members).

ORDINARY RESIDENCE Taxation • Individuals who are ordinarily resident, but not domiciled in Malta, are subject to income tax on income and capital gains arising in Malta, and on income arising outside Malta but received in Malta. • No tax is chargeable on capital gains which arise overseas but which are remitted to Malta. Personal income tax is charged at progressive rates up to a maximum of 35 per cent, as illustrated by the following tables:

ORDINARY RESIDENCE SINGLE RATES Taxable Income €

Rate %

Deduct €

0-8 500

0

0

8 500-14 500

15

1 275

14 501-19 500

25

2 725

19 501-60 000

29

3 505

60 001 & over

35

7 105

ORDINARY RESIDENCE MARRIED RATES Taxable Income €

Rate %

Deduct €

0-11 900

0

0

11 901-21 200

15

1 785

21 201-28 700

25

3 905

28 701-60 000

29

5 053

60 001 & over

35

8 653

The High Net Worth Individuals Residency (HNWI) Residency Program

HIGH NET WORTH INDIVIDUALS High Net Worth Individuals Program – EU/EEA/SWISS ■ Property  Required to own property in Malta for a value of not less than €400,000.  Alternatively, the applicant may opt to rent property in Malta for not less than €20,000 per annum.

HIGH NET WORTH INDIVIDUALS High Net Worth Individuals Program – EU/EEA/SWISS ■ Financial resources and insurance  Applicant must be in receipt of stable and regular resources which are sufficient to support himself/herself as well as any accompanying dependants.  Both the applicant and any dependants must hold adequate health insurance covering the EU territory.

■ Individuals must satisfy a “fit and proper test” in order to be granted a permit under this Program.

HIGH NET WORTH INDIVIDUALS High Net Worth Individuals Program – EU/EEA/SWISS ■ Taxation  Beneficial flat rate of 15% on foreign source income received in Malta.  Foreign capital gains can be received in Malta tax free.  Minimum yearly tax of €20,000 and €2,500 per dependant after claiming any applicable double tax relief.  Local income and capital gains will be taxed at 35%.

HIGH NET WORTH INDIVIDUALS ■ Applicants may not spend more than 183 days in any other jurisdiction.

■ A one-time registration fee of €6,000 is payable to the Malta Government. Permit holders are also allowed to carry on an economic activity in Malta.

■ An individual who benefits from this special tax status must submit an Annual Tax Return which should include any material changes that affect the beneficiary’s special tax status.

■ On the basis of such HNWI status, one would be able to apply for the appropriate immigration documentation to reside in Malta.

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HIGH NET WORTH INDIVIDUALS Submission of applications • An application for special tax status under the High Net Worth Individuals Rules may only be submitted to the Commissioner of Inland Revenue through the services of a person that qualifies as an Authorised Registered Mandatory, registered as such with the Commissioner of Inland Revenue under the High Net Worth Individuals Rules. • EMD, as an Authorised Registered Mandatory (ARM), may assist you with your application for residency under this Program as well as with any tax and legal requirements.

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The Highly Qualified Persons Rules, 2011

HIGHLY QUALIFIED PERSONS ■ Individuals in receipt of employment income from an ‘eligible office’ will be subject to a flat rate of tax of 15 per cent on their employment income instead of the progressive rates of tax which are capped at 35 per cent.

■ The rationale behind the implementation of such rules is to attract expatriates who work within particular specialised sectors to relocate to Malta, thereby continuing to increase Malta’s attractiveness as a reputable services centre of excellence.

■ Such employment income will benefit from a reduced tax rate of 15 per cent, if it amounts to at least €75,000 per annum. In the event that the income exceeds €5 million, the excess is exempt from tax.

HIGHLY QUALIFIED PERSONS â–

An eligible office is defined, as employment with a company licensed and/or recognized by the Malta Financial Services Authority (MFSA), the Lotteries and Gaming Authority (LGA), or Transport Malta (TM).

HIGHLY QUALIFIED PERSONS MFSA

LGA

TM

(with effect as from 01/01/2011)

(with effect as from 01/01/2010)

(with effect as from 01/01/2012)

Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Operations Officer and Chief Technology Officer;

Chief Executive Officer, Chief Risk Officer (including Fraud and Investigations Officer), Chief Financial Officer, Chief Operations Officer, Chief Technology Officer and Chief Commercial Officer;

Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Operations Officer, (Including Aviation Accountable Manager) and Chief Technology Officer;

Portfolio Manager, Chief Investment Officer, Senior Trader, Senior Analyst (including Structuring Professional), Actuarial Professional, Chief Underwriting Officer, Chief Insurance Technical Officer;

Odds Compiler Specialist, Head of Research and Development (including Search Engine Optimisation and Systems Architecture);

Aviation Continuing Airworthiness Manager, Aviation Flight Operations Manager, Aviation Training Manager and Aviation Ground Operations Manager;

Head of Marketing and Head of Investor Relations

Head of Marketing (including Head of Distribution Channels) and Head of Investor Relations

Head of Marketing

HIGHLY QUALIFIED PERSONS ■ The conditions which need to be satisfied in order for the professional to benefit from the 15 per cent reduced rate of tax are the following:  The individual derives employment income which is subject to tax in Malta in respect of work carried out in Malta or in respect of any period spent outside Malta in connection with such work.  The individual is in possession of professional qualifications and has at least five years experience.  The individual has not benefitted from any other deductions available to investment services expatriates.

HIGHLY QUALIFIED PERSONS  The contract of employment is subject to Maltese law for the purposes of carrying out genuine and effective work;  The individual fully declares in his Maltese personal income tax return all income derived from his contract of employment; and  The individual is not domiciled in Malta.

■ Any rights are withdrawn with retrospective effect if the individual is a Third Country National and he either physically stays in Malta, in the aggregate, for more than four years, or directly or indirectly acquires any immovable property, including any rights thereon, situated in Malta.

HIGHLY QUALIFIED PERSONS

â–

The reduced rate of tax applies for a consecutive period of five years for EEA and Swiss nationals and for a consecutive period of four years for other nationals.

The Malta Retirement Program Rules

THE MALTA RETIREMENT PROGRAM RULES ■ The Malta Retirement Program Rules 2012, which apply to pensioners, introduce a new tax program conferring a Malta special tax status to EU/EEA/Swiss Nationals, with the exclusion of Maltese nationals.

■ Beneficiaries have the right to pay tax at a flat rate of 15 per cent on foreign source income received in Malta, by them or their dependants, subject to a minimum tax payment of €7,500, with an additional €500 per dependant and special carer, if any.

■ The Program also confers the right to claim double taxation relief.

■ Any income arising in Malta would, in turn, be taxable at a rate of 35 per cent.

THE MALTA RETIREMENT PROGRAM RULES ■ Property The said program requires its applicants, namely pensioners, to purchase or rent immovable property for a value of not less than €275,000 if in Malta, or €250,000 if situated in Gozo. The rental thresholds are set at a minimum of €9,600 per annum for a property situated in Malta, or €8,750 per annum for a property in Gozo. Such property must serve as the applicant’s habitual place of abode worldwide.

THE MALTA RETIREMENT PROGRAM RULES

■ Furthermore, in order to become eligible to apply for this program, the whole amount of the pension must be received in Malta, which pension must constitute at least 75 per cent of the beneficiary’s chargeable income.

■ Applicants and their accompanying dependants must also be covered by a health insurance policy, providing coverage for all risks across the EU normally covered for Maltese Nationals.

THE MALTA RETIREMENT PROGRAM RULES â– The beneficiaries of such program must be domiciled overseas, and should not have the intention to establish their domicile in Malta within 5 years from the date of application for such program. â– Applicants must not be in employment, or benefit under any other Malta scheme conferring a special tax status, and must hold a valid travel document. â– Beneficiaries under this program are, however, entitled to hold a non-executive post on the board of a company resident in Malta, or partake in activities related to any institution, trust or foundation of a public character, or any similar organization or body of persons, also having a public nature, engaged in philanthropic, educational or research and development work carried out in Malta.

THE MALTA RETIREMENT PROGRAM RULES

â– Beneficiaries of this program must spend in excess of 90 days per calendar year in Malta, averaged over a period of 5 years, and may not spend more than 183 days in any other foreign jurisdiction. â– Applicants must satisfy a fit and proper test set by the pertinent Maltese Authorities.

THE MALTA RETIREMENT PROGRAM RULES ■ The above-mentioned qualifying criteria must be complied with on a yearly basis. Therefore, beneficiaries must own their property or lease as per the above requirements annually, renew their pertinent health insurance policies on a yearly basis, and comply with the minimum stay and other requirements as outlined above each year of their holding such status.

■ An application fee of €2,500 is payable to the Maltese authorities, and applications may only be filed through the services of an Authorised Registered Mandatory (ARM).

The Global Residence Program Rules

The Global Residence Program Rules

THE GLOBAL RESIDENCE PROGRAM RULES

• The Global Residence Program Rules 2013 have come into force with effect from 1st July 2013. They introduce a new tax Program conferring a Malta special tax status to particular individuals.

THE GLOBAL RESIDENCE PROGRAM RULES Who is eligible for this special tax status?

Individuals who:  are not long-term residents;  are third country nationals and not EEA or Swiss nationals;  do not benefit under the Residents Scheme Regulations, the High Net Worth Individuals Rules, the Malta Retirement Program Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules;  hold a qualifying property holding;

THE GLOBAL RESIDENCE PROGRAM RULES  are in receipt of stable and regular resources which are sufficient to maintain themselves and their dependants;  are in possession of a valid travel document;  are in possession of health insurance, providing coverage for all risks across the EU, normally covered for Maltese Nationals.

Individuals must satisfy a “fit and proper test”, set by the pertinent Maltese authorities, in order to be granted a permit under this Program.

THE GLOBAL RESIDENCE PROGRAM RULES This Program also covers the beneficiary’s dependants, namely: (a) the beneficiary’s spouse or person with whom the beneficiary is in a stable and durable relationship; (b) minor children including adopted minor children and children who are in the care and custody of the beneficiary or the person mentioned in paragraph (a) above; (c) children who are under the age of twenty-five, including adopted children and children who are in the care and custody of the beneficiary or the person mentioned in paragraph (a) above, provided that such children are not economically active;

THE GLOBAL RESIDENCE PROGRAM RULES (d) children including adopted children and children who are in the care and custody of the beneficiary or the person mentioned in paragraph (a) above, who are not minors but who because of circumstances of illness or disability of a serious gravity, are unable to maintain themselves; (e) dependent brothers, sisters and direct relatives in the ascending line of the beneficiary or the person mentioned in paragraph (a) above.

THE GLOBAL RESIDENCE PROGRAM RULES These dependants: • cannot be beneficiaries under the Residents Scheme Regulations, the High Net Worth Individuals Rules, the Malta Retirement Program Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules; • need to reside with the beneficiary in the Qualifying Property.

THE GLOBAL RESIDENCE PROGRAM RULES Property • Applicants are required to purchase or rent immovable property in Malta or in Gozo, the minimum value of which should be EUR 275,000 if in Malta, or EUR 220,000 if situated in Gozo or in the south of Malta. The rental thresholds are set at a minimum of EUR 9,600 per annum, or EUR 8,750 per annum respectively.

• The Qualifying Property should serve as the applicant’s principal place of abode worldwide.

THE GLOBAL RESIDENCE PROGRAM RULES

• For property acquired before 1 July 2013, the value of the property (as certified by an architect) has to be equivalent to the above mentioned values.

THE GLOBAL RESIDENCE PROGRAM RULES

Taxation • Beneficiaries have the right to pay tax at a flat rate of 15% on all foreign income remitted to Malta, by them or their dependants, with a minimum annual tax liability of EUR 15,000.

• This program also confers the right to claim double taxation relief.

• No additional tax will be paid by the beneficiary’s dependants.

• Any income arising in Malta would be taxable at 35%.

THE GLOBAL RESIDENCE PROGRAM RULES

An individual ceases to possess his special tax status if he or she: • becomes an EEA or Swiss national; • does not hold a qualifying property holding, including cases where the said individual lets or sublets the qualifying property holding; • becomes a long-term resident;

THE GLOBAL RESIDENCE PROGRAM RULES • is not in possession of health insurance in respect of all risks normally covered for Maltese nationals for himself and his dependants; • is deemed, by the Maltese government, as being a threat to the public interest, or • stays in any other jurisdiction for more than one hundred and eighty-three (183) days in a calendar year.

THE GLOBAL RESIDENCE PROGRAM RULES Application • An application fee of EUR 6,000 (or EUR 5,500 if the applicant purchases or rents a property in Gozo or in the south of Malta) is due to the Government on application. • Applications may only be submitted through the services of an Authorized Registered Mandatory. EMD is an authorized registered mandatory and will be able to assist with applying for residency under this new program, and with complying with the ongoing obligations.

Article 18 DTT - Pensions ‘pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State’  Exclusive Jurisdiction to tax to the Country of Residence

Exception: Pensions made under the SS legislation of a CS in respect of past employment  Exclusive Jurisdiction to tax to the country of Source

Article 18 (DTT) - Pensions • Excludes pensions that are paid with respect to independent personal services • Includes pensions from a Pension Scheme, i.e. an arrangement in which the individual participates in order to secure retirement benefits payable in respect of the services rendered

THANK YOU

Thank you

DISCLAIMER This presentation has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this presentation without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy and completeness of the information contained in this presentation and the firm does not accept any liability and disclaims all responsibility for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this presentation or for any decision based on it.