High Net Worth Individuals (HNWI) Tax Residence Scheme
The 2011 HNWI Residence Rules regulate the issue of Malta residence permits to EU-EEA-SWISS nationals. Persons eligible under this scheme will be subject to Malta tax at a flat rate of 15% on a remittance basis, that is, only on foreign source income if remitted to Malta.
Who is eligible to apply?
To apply under the HNWI Rules, am individual must primarily not be domiciled in Malta and must have no intention of establishing his domicile in Malta within 5 years from the date of the application for this tax status.
Furthermore, the particular individual must also satisfy certain criteria which are applicable to all applicants irrespective of their nationality.
- The applicant must own an immovable property in Malta for a consideration of not less than EUR 400,000 OR Rents an immovable in Malta for not less than EUR 20,000 annually as lessee.
- The property must not be shared with other individuals, apart from his family members (beneficiary’s ascendants, descendants, brothers, sisters and spouses with whom the beneficiary is in a stable and durable relationship);
- The applicant must be in possession of a health insurance which covers himself and his dependants in respect of all risks across the EU as are normally covered for Maltese nationals;
- The applicant must be a fit and proper person (an international due diligence exercise is carried out by the Inland Revenue Department prior to granting the special tax status);
- A non-refundable one- off registration fee of EUR 6,000 must be paid.
An individual who has been granted HNWI status must comply with the following obligations:
- The 'Qualifying Property Holding' must be retained;
- The applicant must retain the health insurance and continue to have stable resources;
- The applicant must not become domiciled in Malta;
- The applicant must reside in Malta for a minimum of 90 days and not reside in any other jurisdiction for more than 183 days in any calendar year;
- Special reporting obligations (the filing of an annual return together with the annual tax return) and notifications must be complied with.
Once HNWI status has been acquired, the person is deemed to be resident for in Malta and is chargeable to tax on his income as follows:
- Foreign source income, which is in Malta is taxable at the rate of 15% with the possibility of claiming double tax relief on such income subject to the minimum annual tax liability referred below;
- The applicant must pay a minimum tax of €20,000 (EU/EEA/ Swiss) per annum or €5,000 (others) per dependent;
- A beneficiary and his spouse cannot opt for a separate tax computation;
- Other chargeable income of the beneficiary is charged at the rate of 35%.