Taxation of Resident Non-Doms in Malta

Central to the Maltese personal tax system for persons resident but non-dom in Malta is the source and remittance basis of taxation.

Key Tax Issues

• Establishing and Evidencing Res Non Dom status in Malta under domestic Rules.
• Evidencing Tax Residency in Malta under International Tax instruments (Double Tax Treaties)

Res Non Dom Definition

Under Maltese law, the concepts of ‘domicile’ and ‘residence’ are distinct and should not be conflated. Domicile, rooted in Anglo-Saxon legal traditions, is a status acquired at birth following one's paternal side and is known as the domicile of origin. Upon reaching legal age, an individual may establish a domicile of choice, in another jurisdiction.  However, altering one's domicile of origin requires a clear intention and deliberate actions; without these, it is improbable that a person would unintentionally acquire a new domicile of choice.

Origins of Malta’s Tax System of Non-Doms

Since the introduction of Malta’s Income Tax Act in the 1940s under British colonial governance, the personal tax framework of Malta has imposed taxation on non-domiciled resident individuals, known as Res Non Doms. This system taxes such individuals solely on income sourced within Malta and foreign income that they remit to Malta, that is to say only on the portion of their foreign income brought into Malta. Unlike the UK’s equivalent system, Malta’s remittance basis regime charges a nominal minimum annual tax of €5,000 for those claiming Maltese Res Non Dom status and does not include the intricate statutory residence and deemed domicile rules that the UK has enacted. The absence of deemed domicile regulations in Malta’s Res Non Dom system means individuals are not restricted by the duration they can benefit from this tax advantage. Additionally, Malta’s tax regime does not require individuals to have previously not been tax residents of Malta to take advantage of the remittance basis of taxation.

Establishing Malta’s Res Non-Dom Tax Status

To benefit from the Res Non Dom status, one must establish tax residency. Residency for tax purposes can be achieved through various immigration pathways tailored to the applicant's specific situation. EU and EEA nationals have two primary options for residency: The Residence Programme (TRP) and Ordinary Residence (OR).  For non-EU/EEA nationals, the Malta Global Residence Programme (GRP) and the Malta Permanent Residence Programme (PRP) offer a viable route. Given Malta's full implementation of the Schengen Area Treaty, a Maltese residence card allows the holder to travel freely within the Schengen area for up to 90 days within any 6-month period. Tax residence in Malta is determined either by a physical presence of 183 days within a given fiscal year or by circumstances suggesting a habitual intent to reside in Malta.

Taxation of Res Non Dom individuals in Malta

Res Non Dom individuals are subject to income tax in Malta on the following:

• Income sourced locally, meaning any income generated within Malta.
• Capital gains from local sources, which refers to gains from the transfer of capital assets situated in Malta.
• Foreign-sourced income, but only to the extent of its remittance to Malta.

It is important to note that gains from the transfer of capital assets located abroad remain outside the scope of Maltese taxation, even if such gains are remitted, whether partially or fully, to Malta.

Personal tax rates in Malta are progressive rates ranging from 0% to 35%, with the possibility for non-doms qualifying for a special tax status benefiting them for a flat rate of tax at 15% on foreign source remitted income.

Evidencing Res Non-Dom Status in MT

Res Non-Dom individuals who need to evidence their residency status in Malta to foreign authorities, financial institutions or other professional bodies, should obtain a Tax Residence Certificate (TRC) from Malta.   The certificate is issued by the Commissioner for Tax and Customs upon submitting an application along with requisite documentation to the Maltese tax authorities. Affirming the tax residency status of the taxpayer under Maltese tax laws, it is essential for availing benefits under Malta’s taxation system. The primary purpose of the Tax Residency Certificate is to provide proof of tax residency to foreign tax authorities, thus enabling the applicant to claim relief under the applicable Double Tax Treaties (80+) and avoid the occurrence of double taxation on the same income.

In the event that the taxpayer is taxpayer is considered tax resident under the domestic legislations of more than one jurisdiction at the same time, the provisions of the applicable Double Tax Treaty should determine the taxpayer’s residency status at international level.

What does Non-Dom Taxation mean for you?

Beyond the direct tax benefits, Malta’s strategic location, robust legal framework, and EU membership make it an ideal hub for business and lifestyle. The Res Non-Dom system complements these advantages, ensuring individuals can optimize their tax liabilities while enjoying Malta’s Mediterranean charm. This holistic approach to residency and taxation reinforces Malta’s reputation as a leading destination for financial planning and quality living.

By integrating Malta’s taxation benefits with lifestyle perks, the country offers an unparalleled proposition for globally mobile individuals.

Our Non-Dom Tax Services

Our Tax Lawyers holds extensive expertise in advising private clients as well as companies registered outside of Malta but resident for tax purposes in Malta therefore subject to the same tax system described above, on Malta Res Non-Dom Taxation matters For further details on how we can assist with Malta Res Non-Dom Taxation, please feel free to reach out to us.

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