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Malta has introduced a new set of rules (the 'HNWI Rules') which are intended to attract high net worth individuals to take up residence in Malta

As such, individuals eligible to benefit under the HNWI Rules would be taxable in Malta on foreign source income which is received in Malta at the favorable flat rate of 15% (such persons would not be chargeable to tax in Malta on foreign source capital gains). Local source income and gains would be taxable in Malta at the higher rate of 35%.

The HNWI Rules have not, strictly speaking, replaced the Malta Permanent Residents Scheme (although no new permits shall be issued under the said scheme). Still, whilst individuals currently in possession of Permanent Residents Permits shall continue to benefit under the latter scheme, they shall additionally be required to:

Be in receipt of stable and regular resources which are sufficient to maintain him/herself and his/her dependents without recourse to the social assistance system in Malta;

Be in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for him/herself and the members of his/her family.

In addition, the property declared as the Permanent Resident Permit (PRP) holder's place of residence cannot be occupied by any person other than the holder of the certificate and his/her family members. Furthermore, should the permit holder transfer that property, s/he would be required to acquire a new property having a value at least equal to the minimum value prescribed under the new scheme in respect of qualifying immovable property.

Finally, any individual who applied for a Permanent Resident Permit prior to 14 September, 2011, but who was not issued with such a permit before 1 January, 2011, would be entitled to apply to benefit under the HNWI Rules - should s/he satisfy the eligibility criteria prescribed under the HNWI Rules. Property purchased prior to 14 September, 2011, by any such person for consideration of not less than €116,000 shall still be treated as a qualifying immovable property for the purposes of the HNWI Rules.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.

Published on our website on October 24, 2011