Personal tax planning for expats in Malta
MALTA RESIDENCY AND TAX
Generally speaking, foreigners taking up Malta residency tend to benefit
from a number of tax planning opportunities, given that, more often
than not, they would be resident but not domiciled in Malta.
The so called, “non-doms” are therefore not domiciled in Malta, and it
is precisely this lack of Maltese domicile which gives rise to various
tax planning opportunities.
Domicile is a legal concept which is hard to explain, especially to people coming from the continent who tend to equate domicile to residence. Domicile is, in fact, very different. Everyone has a domicile of origin attributed to the country in which he is born, though this may change to a “domicile of choice” by clear proof that the person has established his roots in another country. In the absence of such proof, a domicile of origin is retained. Moreover, unlike with the case of residence, a person can only be domiciled in any one country at a given time.
Probably the biggest tax planning opportunity for persons not domiciled in Malta arises from the fact that they are only taxable in Malta on a source and remittance basis. That is, the only Malta taxable income is that which arises in Malta and/or that which is remitted (or sent) to Malta. Therefore foreign income which is not sent to Malta is not taxed in Malta.
There are many other advantages for non-doms. They are usually able to benefit from specific schemes such as the 15% Flat Malta income tax option for high income foreign workers in certain sectors and the rules for EU nationals retiring in Malta.
Last but not least, by using the Malta tax-refundable system, we regularly provide tax advice on the creation and continued operation of structures for non-doms resident in Malta where the effective tax leakage in Malta would be of approximately 5% , as long as the ultimate beneficial owner does not remit his dividends to Malta. This advantage is not available for persons who are both ordinarily resident and domiciled in Malta (i.e persons who are taxed in Malta on a worldwide basis)since a number of claw back provisions would kick in making claims for refunds unfeasible. Thus, persons who are resident but not domiciled in Malta are usually in a fiscally advantageous position when compared to persons who are both ordinarily resident and domiciled in Malta