HIGH NET WORTH INDIVIDUALS SCHEME
This tax scheme eliminated the Permanent Resident Scheme which was applicable before the introduction of such scheme. Under this scheme any EU national may apply to this special tax rate save the following conditions:
a) The applicant holds a Qualifying Property Holding. An applicant holds a Qualifying Property Holding if:
i. he owns an immovable property in Malta purchased after 14th September 2011 for a consideration of not less than €400,000; or
ii. the said applicant, having already filed an application under the Residents Scheme Regulations, which application has been duly received and acknowledged by the Commissioner of Inland Revenue, either:
- owns an immovable property in Malta which was purchased before the 14th of September 2011 for a consideration of not less than €116,000, or
- has entered into a contractual commitment before the 14th of September 2011 to purchase an immovable property for a consideration of not less than €116,000 and actually purchases the property to which the contractual commitment refers by not later than the 31st March 2012; or
iii. rents an immovable property in Malta for not less than € 20,000 annually as lessee.
In all cases, the applicant and his family members have their habitual residence in such property as their principal place of residence.
It is important to note that no person other than the beneficiary and his / her family members may reside in the Qualifying Property Holding, and such property may not be leased or sub-leased. Where the applicant has already acquired a Qualifying Property Holding by the application date, an authenticated copy of the contract providing evidence of such ownership or lease needs to be attached to the application.
b) the applicant is in receipt of stable and regular resources that are sufficient to maintain himself and his dependents without recourse to the social assistance system in Malta. The Authorised Registered Mandatory needs to make a declaration on the applicant’s behalf in Part 6 of the Application form in relation to this requirement.
c) the applicant is in possession of a valid travel document. The applicant needs to provide a copy of his / her main passport page or national official identity card to the application.
d) the applicant is in possession of sickness insurance which covers himself and his dependents in respect of all risks across the whole of the EU normally covered for Maltese nationals. The health insurance cover must be procured by a company licensed in Malta or by an international reputable health insurance company. The applicant needs to provide a copy of such insurance policy.
e) the applicant is not domiciled in Malta and does not intend to establish his domicile in Malta within 5 years from the date of the application for special tax status. The applicant needs to provide a declaration wherein it is declared that he is not domiciled in Malta and has no intention to establish his domicile in Malta so as to prove this condition in Part 6 of the Application form.
f) the applicant is not a long-term resident. The individual therefore needs to provide a declaration stating that he / she is not a long-term resident of Malta in Part 6 of the application form.
g) the applicant is a fit and proper person. Where the applicant is aware of any circumstance that affects this condition, the applicant needs to identify such circumstances in Part 6 of the Application form.
Once the special tax status has been acquired the relevant person would be taxed at the rate of 15%. A claim for double taxation would also be available under Articles 74 (a) and (b) of the Income Tax Act provided that the minimum amount of tax payable is €20000 for any year of assessment and if such person has any dependents €2500 have to be paid for each dependent.
Other chargeable income would be charged at the rate of 35%. It is important to note that the 15% tax would only apply to income arising outside Malta.
An individual who benefits from special tax status must submit the Annual Tax Return. Any material changes that affect the persons’ special tax status must also be indicated in the said Return.
Procedure for Application
An application for special tax status under the High Net Worth Individuals Rules may only be submitted by a person that qualifies as an Authorised Registered Mandatory. The applicant needs to authorise such mandatory to carry out these services by completing Part 5 of the Application form. The latter must then submit the application to the Commissioner of Inland Revenue.
A non-refundable fee of €6,000 must be paid for every application submitted. The said fee needs to be paid by bank draft payable to the ‘Commissioner of Inland Revenue’ and attached to the Application form.
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