In today’s globally connected world, Malta offers an attractive and strategic option for individuals seeking tax optimisation and residency solutions. A key element of Malta’s appeal is its remittance basis of taxation, which applies to individuals who are resident but not domiciled in Malta.
What Is the Remittance Basis?
Under Maltese law, individuals who are tax resident in Malta but not domiciled are only taxed on income and capital gains arising in Malta, as well as foreign income that is received (remitted) in Malta. Notably, foreign capital gains, even if remitted, are entirely exempt from Maltese tax.
This offers a significant tax advantage for internationally mobile individuals, provided they manage their remittances effectively.
Who Qualifies for the Remittance Basis of Taxation in Malta?
To benefit from the remittance basis of taxation, an individual must meet the following criteria:
- Have residence status in Malta that qualifies for this tax treatment;
- Spend sufficient time in Malta:
- Spending 183 days or more in a calendar year makes you a tax resident automatically,
- Spending fewer than 183 days may also qualify you as tax resident if Malta is your centre of vital interests and you consistently spend time in Malta throughout the year;
- Be non-domiciled in Malta.
This applies automatically. You do not need to apply for special tax status to benefit from the remittance basis, as long as these conditions are met.
What Is Taxable?
Under the remittance basis:
Taxable in Malta:
- Income and Capital Gains earned or arising in Malta,
- Foreign income that is remitted to Malta.
Not taxable in Malta:
- Foreign income not remitted to Malta,
- Foreign capital gains even if remitted to Malta
Considerations
While this regime is advantageous, there are compliance obligations:
- Annual tax returns must be submitted to the Commissioner for Revenue,
- Accurate records of remittances must be maintained,
- The minimum tax liability for non-domiciled individuals is €5,000 per annum. This amount includes any Maltese tax withheld at source but does not include any tax payable upon the transfer of immovable property situated in Malta. This minimum is reduced by any double taxation relief due to such individual.
- Double tax relief can only be claimed on income that is actually remitted to Malta on which tax has been paid abroad.
- The minimum tax liability for non-domiciled individuals does not apply to individuals whose foreign income is less than €35,000 or are beneficiaries of some of the Malta Residence programmes.
Double Taxation Relief
Malta provides relief under its network of double taxation agreements (DTAs), allowing tax paid in another country to be credited against Maltese tax on the same income, ensuring there’s no double taxation on remitted funds.
Why This Matters
The remittance basis allows HNWIs and international entrepreneurs to enjoy a favourable tax position while maintaining a Mediterranean lifestyle, residency rights, and access to quality healthcare and education. Malta is a member of the European Union.
For professionals advising globally mobile clients, understanding the non-dom remittance basis in Malta is essential in crafting holistic relocation and tax strategies.
If you would like to understand how this applies to you or your Clients, feel free to connect or send us an email – our Tax experts will be glad to assist. Malta could be the next smart move. Contact us at Vertex Alliance.
