The Maltese Government introduced a new residency scheme in July 2013 to attract wealthy individuals seeking to obtain residence in Malta. To this end, the Program is termed the Global Residence Programme (GRP).

The scheme is particularly appealing to non-EU nationals who sought to obtain residence in Malta under the previous rules catering for High Net Worth Individuals (HNWI), which carried a considerably higher price tag.

The new rules confer a most advantageous tax status to qualifying TCNs, namely a 15% tax rate on all foreign income remitted to Malta! The Program seeks to attract individuals and their families, including business people, pensioners, consultants, and holders of intellectual property rights, to Malta, who can now avail themselves of a viable alternative place of residence in Europe. For the applicant to qualify as a beneficiary under the Program, several conditions ought to be satisfied, which shall be outlined hereunder.

TAX TREATMENT AND MINIMUM TAX REQUIREMENTS

Beneficiaries under the Program are entitled to pay tax at an advantageous rate of 15% on all that foreign-sourced income (arises outside of Malta) and which is, in turn, remitted or received in Malta. This is subject to a minimum amount of tax amounting to €15,000 payable by the beneficiary after considering any double taxation relief that the beneficiary may be entitled to in terms of any pertinent double tax treaty and Malta's domestic tax legislation. The minimum tax requirement is payable in respect of income arising outside Malta. Furthermore, contrary to the previous rules, no additional tax will be payable by the beneficiary's dependents. Other Maltese sourced income attributable to a beneficiary, the beneficiary's spouse, and pertinent dependants as outlined hereunder shall be taxed at a flat rate of 35%.

DEPENDANT PERSONS

The rules define dependents that have been widened from the previous HNWI rules and no longer solely comprise the wife and children under 21. To this end, the age limit attributable to children (natural, adopted, or in care) is now age 25. The definition also encompasses dependent brothers, sisters, and direct relatives in an ascending line provided that the Director-General of Inland Revenue is satisfied that these are indeed dependents of the beneficiary of the Program. Employees of the beneficiary are also provided for. The regulations include carers/butlers and other persons who may have been the applicant's employees for the preceding two years as eligible dependents. A contract of service must evidence such an employment relationship.

Consequently, the definition of dependants comprises the following parties:

• The beneficiary's spouse or a person with whom the beneficiary is in a stable or durable relationship;
• Minor children, including little adopted children, who are in the care or custody of the beneficiary or persons mentioned above;
• Persons under the age of 25, including adopted persons, who are children of, and are in the care and custody of, the beneficiary or the person mentioned in (a) above, provided that such persons are not involved in any economic activity;
• Persons, including adopted persons who are children of, and in the care and custody of, the beneficiary or the person mentioned in (a) above, and who, because of illness or disability, are unable to maintain themselves;
• Dependent brothers, sisters, and direct relatives in the ascending line of the beneficiary or the person mentioned in (a) above.

IMMOVABLE PROPERTY REQUIREMENTS

To be granted the program's special tax status, an applicant is obliged to satisfy minimum property purchase or minimum property rental requirements. To this end, the applicant ought to purchase or rent immovable property in Malta or Gozo. Furthermore, the pertinent legislation provides that the property must be solely occupied by the applicant, his/her family members, and any special carers accompanying them.

If a property is purchased in Malta, the purchase value must amount to a minimum value of €275,000. Sensitive to the property market values in Gozo and the South of Malta, the pertinent implementing legislation provides for lower property purchase thresholds in both Gozo and the southern part of Malta, with the minimum value, in this case, being €220,000.

The rules also provide a situation where the applicant is given the option of renting a property. Likewise, the legislation offers minimum rental values being €9,600 if a parcel is rented in any part of Malta except for the southern part of Malta. If the applicant wishes to rent property in the south part of Malta or Gozo, the minimum rental value decreases to €8,750.

Where the applicant has purchased a property before the introduction of the GRP at a cost that is inferior to the values mentioned above, such property will nevertheless still qualify to be considered as a qualifying property within the remit of the rules - if the value of the property, as at the date of application, is duly certified by an architect to be equivalent or superior to the minimum values indicated above.

Fundamentally the qualifying property, whether purchased or rented, ought to be the applicant's primary residence and principal place of abode worldwide. The rules also provide for an explicit prohibition about the leasing or subleasing of the qualifying property.

MINIMUM STAY REQUIREMENTS

The Programme does not impose a minimum stay requirement. Consequently, permit holders need not spend a minimum of days in Malta. Nevertheless, beneficiaries under this scheme must pay no more than 183 days in every calendar year in any other jurisdiction.

APPLICATION PROCESS

Applicants under the scheme ought to apply for beneficiary status through an Authorised Registered Mandatory (ARM). Promethean is a licensed ARM and may assist clients through pre-application tax planning the entire application process and the applicable annual compliance requirements imposed by the scheme.

A non-refundable Government fee of €6,000 must be paid and submitted with the application. The price is reduced to €5,500 where the beneficiary acquires or rents immovable property situated in Gozo or the South of Malta. The fee is payable as follows:

• At application stage - €4,000;
• From the date the person takes up residence in Malta, a different amount of €2,000 shall be payable. (Persons who take up residence in Gozo or the south of Malta can benefit from a reduction of €500 from the latter €2,000).

It is fundamental to note that applicants and their accompanying dependants must be covered by a health insurance policy covering all risks across the EU. Furthermore, applicants must receive stable and regular financial resources sufficient to maintain themselves and their dependents. Applicants are also required to satisfy a fit and proper test as provided by the Maltese Authorities and must have a valid travel document as needed by Malta immigration law.