Would the applicant need to be present for the full 3 weeks that the application process is said to take?

No, his physical presence is not required throughout the entire application process.

What would the minimum amount of stay on Malta be to constitute a “considerable amount of time” for an Ordinary Residence application?

There are no express guidelines as to what constitutes a considerable period of time, however such phrase generally equates with making Malta one’s habitual place of abode.

Would the above time needed to be spent before the Ordinary Residence application took place, stated as the intention when applying or reviewed upon renewal each year?

Such period would need to be spent prior to the application thereby proving one’s intention to become resident in Malta.

Would dependents with non-EU passports that have their residency visa stickers renewed in their passports each year only be renewed if a certain amount of time was spent in Malta?

These are renewed upon the basis of them having their residence based in Malta, which again equates with making Malta ones habitual place of abode.

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EU/EEA Nationals/Swiss Clients

Does the High Net-Worth Individuals Residence Scheme affect the purchase of property in Malta or Gozo?

No, nothing has changed in as far as the sale of property to foreign nationals (both EU or non EU) is concerned. The changes relate only to residency conditions.

What has changed from the previous Permanent Residence Scheme?

The new scheme is now called the ‘High Net-Worth Individuals Residence Scheme’.

Minimum purchase price of property €400,000 (no distinction between apartment or house).

Minimum rental €20,000 per annum.

Preferential rate of tax has not changed; remained at 15% with possibility to claim double tax relief.

Minimum tax has gone up to €20,000 per annum plus €2,500 for each dependent.

Must physically reside for minimum of 90 days and not stay in any other country for more than 183 days.

Applicant must have a health insurance covering himself and his dependents throughout EU territory.

Application fee of €6,000, non-refundable.

Residents will now be able to work or operate a business in Malta.

Must applicant have a minimum capital requirement?

No.  The new scheme does not require a minimum capital requirement.

Must applicants remit to Malta a minimum amount every year?

No. There is no minimum amount to be remitted to Malta. However, for an applicant to effectively benefit from the special rate of 15% tax, he has to remit a minimum of €133,300 bearing in mind the minimum tax liability of €20,000 every year.

Once applicant decides to apply for residency, when is he/she required to purchase or rent a property?

At application stage applicant is not required to submit evidence relating to the acquisition/rental of property but certificate of Special Tax Status will be released only when applicant submits evidence of qualifying property holding.

Can one show a preliminary agreement of purchase (convenium) as proof that he intends purchasing a property?

Yes. However, for the purpose of a confirmation of the special tax status, a copy of the final deed of purchase has to be submitted.

The value of €400,000 is for a finished and habitable property? What if the property is in shell form or unconverted and is being purchased for less than €400,000?

Improvements are taken into consideration.

Re the minimum rental of €20,000 per annum, does this include the cost of utilities payable by the applicant e.g. water and electricity?

Yes, as long as these are shown as forming part of the rent.

Is the special rate of 15% chargeable on all income received by applicant?

15% is limited to foreign sourced income remitted to Malta. Income generated through business activity in Malta or Local Capital Gains are charged at the normal rate of 35% (subject to certain exceptions). Overseas Capital Gains received in Malta are not subject to Malta tax.

Who is considered as a dependent?

“dependent” means the beneficiary’s spouse;

the beneficiary’s unmarried minor children;

adopted minor children of the beneficiary or of the spouse, as the case may be;

where the beneficiary or the spouse has custody and the minor children are financially dependent on him and

children of the beneficiary or of the beneficiary’s spouse who are not minors but who, because of circumstances of illness or disability of a serious gravity, are unable to maintain themselves;

What if one of the dependents is a non-EU national, does this affect the application?

Dependent can be a non-EU national.

When does applicant have to pay the €6,000? Does he receive a refund if application is declined?

The €6,000 is paid on application and it is not refundable.

Are pending applications subject to the payment of €6,000?

No applications received up to the 14^th September 2011 will have the application fee of €6,000 waived.

What other options does an EU/EEA National have to reside permanently in Malta if he does not qualify under the HNWI scheme?

Ordinary residence in Malta requires individuals to physically live on the island for a period of six months or more. The transfer of one’s residence from a high-tax jurisdiction to a lower tax overseas country is available to both EU/EEA and non-EU/EEA nationals. There is no minimum value property requirement for non-residents seeking to obtain ordinary residence in Malta, unless there is the need for an Acquisition of Immovable Property (AIP) permit, which applies in specific circumstances.

If one of the spouses or dependents is a non-EU citizen can he or she still qualify for ordinary residence and NHWI Scheme?

Yes he/she can.

On what grounds can EU/EEA nationals qualify for ordinary residency?

The main grounds on which they can apply are economic self-sufficiency, employment and education.

Economic Self-Sufficiency

This criterion requires that such individuals show that they are able to provide for themselves and for their accompanying dependants by being financially stable and not being in need of any financial support from the Maltese government. The current thresholds for EU/EEA nationals are set at a minimum capital of €14,000 or a weekly income of €84.95 for single persons, and at a capital of at least €23,300 or a weekly income of €93.10 for married couples.

Employment

Residence in Malta may also be applied for on grounds of employment. Alternatively, an individual may opt to set up a business in Malta or opt for self-employment status.

What about taxation? Are ordinary residents subject to tax in Malta?

Yes, any national who resides in Malta for more than 183 days (not continuous) every Calendar year, is subject to tax in Malta.

Do ordinary residents benefit from Double Taxation Relief?

Ordinary residents are afforded protection by double taxation agreements, which ensure that tax is never paid twice on the same income in different countries. Malta has an extensive network of double taxation treaties. Most treaties are based on the OECD Model Convention, and relief is granted under the credit method where a credit is given for any foreign tax paid. Where there is no double taxation treaty, another form of relief from double taxation available under domestic law, namely unilateral relief, largely achieves the same outcome.

On what is an ordinary resident charged tax and what are the rates of tax?

Income Tax

Individuals who are ordinarily resident, but not domiciled in Malta, are subject to income tax on income arising in Malta, on income arising outside Malta but received in Malta and on capital gains arising 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:

What is the situation with present residents? Do they have to satisfy the new requirements under the new scheme?

No. Current holders of a Permanent Residence Scheme Certificate shall continue to benefit from such rights i.e. those under the old scheme as long as the conditions of the scheme are adhered to. In addition such residents (1) must be in receipt of stable and regular income; (2) must be in possession of sickness insurance and (3) the property cannot be occupied by any person other than the Permanent Residence Permit Holder and his family.

What about the qualifying value of the property purchased or rented.

Current residents can continue to occupy their present property and still qualify under the old scheme, however, should the permit holder sell the property or terminate his present lease, he must acquire a qualifying property holding as defined under the new HNWI rules, i.e. €400,000 for purchase and €20,000 per annum for rental.

Does one need to import into Malta all the funds to be taxed the minimum charge or can one import what he requires in Malta and simply pay the minimum tax?

One does not need to import any minimum amount, as long as he/she pays the minimum tax due and has sufficient funds to cover the cost to live here for himself and his dependants.

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NON EU NATIONALS

Can Non EU nationals avail themselves of the High Net-Worth Individuals Residency Scheme and under what conditions?

Yes. Non EU nationals can benefit from the HNWI Scheme.

The conditions are basically the same as EU/EEA nationals with the exception of the annual minimum tax liability which is slightly higher at €25,000 per annum plus €5,000 per annum for each dependent.

In addition, to qualify for the new scheme and be able to stay in Malta, a non EU national has two options.

Option (1): Obtain and regularly renew visa

Option (2): Qualifying Contract

What is a qualifying contract?

A qualifying contract is an agreement that is entered into between the Government of Malta and the applicant wherein the applicant delivers to the Government of Malta a sum of €500,000 and €150,000 for every dependent (“The Bond”) which the Government of Malta holds by title of gratuitous voluntary deposit.

The Bond will be restored to the applicant if such applicant declares and proves to the Government of Malta that he/she has renounced to the special tax status granted under High Net Worth Individuals Rules, prior to the expiration of four years from the date of the qualifying contract.

If the applicant either:

Intends to become a long-term resident prior to the expiration of four years from the date on which he applied for special tax status in terms of High Net Worth Individuals Rules,

or

becomes a long-term resident prior to the expiration of four years from the date on which he applied for special tax status in terms of the High Net Worth Individuals Rules he/she will forfeit all the rights over the Bond.

At what stage is the Bond deposited if the Bond Option is taken?

On the date of application the applicant only needs to pay the €6,000 fee. At that stage (if the application is found to be duly completed and contains all the necessary documentation/information) it will be forwarded for a due diligence process. Once the Inland Revenue Department receives the outcome of the due diligence process they  will inform the Authorised Registered Mandatory (ARM) accordingly. At that stage they will issue a letter of intent, subject to a copy of the final deed of purchase/lease (as the case may be) and in the case of the Qualifying Contract, a copy of such contract together with a copy of the residence permit. Therefore it is not necessarily at date of application that the Bond needs to be paid.

Can the Bond be substituted with a Bank Guarantee?

Yes.

What is Long Term Residence?

A long term resident is:

a person who has long-term resident status in terms of the Status of Long-term Residents (Third Country Nationals) Regulations;

a person who applies for long-term resident status under the Status of Long-term Residents (Third Country Nationals) Regulations; or

(c) third country nationals who have resided legally and continuously in Malta for five years.

Periods of absence from Malta shall not interrupt the aforesaid period and shall be taken   into account for its calculation where they are shorter than six consecutive months and do not exceed in total ten months within the aforesaid five-year.

Are there any other conditions governing the Scheme?

Yes. Applicant has to be fluent in one of the official languages of Malta i.e. Maltese or        English.

What other options does a non-EU have to stay in Malta even if he/she does not take advantage of the preferential tax rate?

A non EU national may apply for a Visa to enter and stay in Malta, which need to be renewed periodically.

Would this Visa give applicant access to the Schengen area?

Depending on the type of Visa granted

For how long would the Visas normally be and where does one apply for a Visa?

Depending on the type of Visa granted. Visas may be granted with a validity of one to five years with each case being considered on its own merits.

One applies for a Visa at the relevant embassy in the applicant’s country of residence.

Can a non-EU national work in Malta and does this give him/her the right to reside in Malta?

In the case of non-EU nationals, employment in Malta requires a licence and is only granted in particular circumstances. Once an employment licence is granted, one will be given the right to reside in Malta.

How about a non-EU national who sets up his own business and works as a Self-Employed person in his own business? Could he/she apply for residency on these grounds?

Yes, one would be able to apply for residency on the grounds of self-sufficiency once the latter status is granted.  This would be possible under the following criteria:

An investment of at least €100,000 without an EU/EEA partner, or an investment equivalent to €40,000 with an EU partner. The investment must consist of fixed assets and/or capital used for business purposes. Rental contracts are not eligible;

Status of a highly skilled innovator with a sound business plan, committed to recruiting at least three EU/EEA nationals within eighteen months of establishment of business;

Status of sole representative of an overseas company (with a sound reputation and established for at least three years abroad) wishing to open a branch in Malta; or

The holding of a directorship in a company forming part of a project that has been formally approved by Malta Enterprise, and which has been formally notified by the latter to the Employment and Training Corporation.

A firm commitment regarding the engagement of EU/EEA nationals as part of their staff will assist in the favourable consideration of an application.

What about a non EU national who lives in Malta for the purpose of education?

Yes, in the case of students in any private school College, or University of Malta, applicants are granted a temporary resident permit to stay in Malta during all prepaid period of his/her education. Moreover, if the student is underage, his legal guardian (mother, father etc.) can apply for the same type of permit. Such person has to confirm that he/she has a stable and regular income plus a suitable place to live.

Is a non EU  national who lives with an EU national but is not married entitled to obtain residency on the basis of his/her partner being an EU national living in Malta?

Since one of the parties is an EU national, the non-EU national can apply for ordinary residence, as long as one can show that both persons are of independent financial means and have been together in a stable and durable relationship even though not married.

What about same sex couples?

The definition of family members includes the term ‘stable and durable relationship’, therefore same sex/co-habiting partners need not necessarily apply separately but if one of them is the beneficiary under the HNWI scheme, the other may live in the qualifying own property together with the beneficiary.

Can an EU or non EU national be able to apply for residence in Malta without taking tax advantage of the favourable 15% rate of tax under the HNWI?

Yes, by taking up ordinary residence.

What happens to applications submitted prior to the scheme being suspended at the end of last year? Do they fall under the old conditions?

Applications submitted but not approved up to the end of 2010 when the old scheme was suspended, will have to qualify under the new scheme except that such applicants do not have to pay the €6,000 application fee and the qualifying value of the property remains the same as the one under the old scheme i.e. not less than €116,000, as long as a preliminary agreement for such a property has been signed and registered by the 14^th September 2011.

What about those applications submitted during the suspension period after the first of January 2011?

Same as (38) above.

How can one apply for the special tax status under the High Net Worth Individuals Scheme?

Applications may be submitted to the Commissioner of Inland Revenue through the services of a person that qualified as an Authorised Registered Mandatory.