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Retired
Offshore Resident: Malta
Due
to the local-source taxation rules for
a non-domiciled Maltese resident, retired
residents of Malta have a favourable tax
situation and are free to make investments
in other offshore locations with very
few adverse tax consequences.
Individuals who are domiciled elsewhere, and who are
resident but not ordinarily resident in Malta pay tax on their income
arising in Malta, or remitted there (but not capital gains, whether
remitted or not). The six-month test is likely to be definitive
in establishing residence.
Capital gains are included in taxable income; but
the capital gains tax on real estate has been replaced by a withholding
tax of 12% on the proceeds of disposal.
The rates of income tax are as follows for residents:
| Married |
Single |
| Income,
Euros |
Tax
rate |
Income,
Euros |
Tax
rate |
| 0
- 11,900 |
nil |
0
- 8,500 |
nil |
| 11,901
- 21,200 |
15 |
8,501
- 14,500 |
15 |
| 21,201
- 28,700 |
25 |
14,501
- 19,500 |
25 |
| over
28,700 |
35 |
over
19,500 |
35 |
There is a 'final' withholding tax of 15% on income from certain
types of investment and income from part-time employment or self-employment,
also at 15% (subject to various rules).
NB:
Maltese tax rules are considerably more
complicated than the above simplified
summary, and professional advice on the
situation of any particular individual
is advisable.
After
the EU finally agreed its Tax Directive
in June, 2003, Malta announced that it
would implement the 'information sharing'
provision of the Directive on entry to
the Union in 2004. This means that information
about savings returns received in Malta
by nationals of other EU countries is
now being passed to the tax authorities
in the individuals' home countries.
Until
2005, Maltese trusts, having by definition
non-resident settlors and beneficiaries,
were exempt from income tax, except that
they paid an annual amount of Lm 200 to
the Government. Under The Trusts and Trustees
Act 2004, Maltese residents can also form
trusts, and income distributed to a beneficiary
is free of tax at the level of the trust;
but the trust is a taxable entity in respect
of undistributed income, unless both the
beneficiaries and the income are foreign,
in which case the trust remains exempt
from tax.
American
citizens, and nationals of the very few
other countries that tax world-wide income
on the basis of citizenship, won't be
able to take advantage of the low-tax
environment in Malta, but for all other
nationals, it is available.
www.lowtax.net
contains extensive information on the
investment, tax and legal regimes in 50
of the main offshore jurisdictions. Further
information is available in our Investment
Information Providers Section, and
the four main types of offshore investment
are described in the Guide
to Offshore Investment on this site.
NB: The suggestions given above do not
constitute investment advice. They are intended
only to assist individuals in finding appropriate
professional advice, which is essential
for anyone planning offshore investment.
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