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Residency Pages |
Tax Relocation |
Malta Permanent Residence
Scheme | Taxation of Pension Income
 Malta Residency
. Taxation of Pension Income
1. Low Tax Rate on Remitted Income Only
A flat rate of 15% is chargeable only
on income (less personal allowances) received in, or remitted to, Malta from
either local or foreign sources. The minimum tax payable to permanent residents
stands at Lm1,800 per annum. No tax is chargeable on foreign source
income that is not received in Malta.
This means that, thanks to Malta's 41
double tax treaties, persons who take up residence in Malta can receive their
pensions in Malta free of tax at source and subject to a mere 15%
income tax in Malta. Thus by obtaining a Permanent Residence Permit, a foreign
national may start enjoying savings of as much as 25% in tax particularly where
the pension originates in a state that taxes pension income at 40%. (A
list of
Malta's Double Tax Treaties can be found
here).
If you are considering taking up
residence in Malta, you are advised to discuss the matter with us prior to
making the move, since, under some double tax treaties, the tax benefits
discussed above may not apply to some government pensions, civil service
pensions and similar state pensions.
Overseas capital funds invested
locally are of course only taxed on any interest or dividends generated thereon,
again at a 15% flat rate.
2. A cost-benefit analysis
The qualifications: To qualify
for a Permanent Residence Permit, one must be able to provide a clean criminal
record and must be in receipt of an annual income (business profits, rents,
investment income, pension, or a combination thereof) amounting to at least
€24,000. [Permanent
Residence Conditions]
The Costs: The yearly minimum
costs of maintaining a Maltese residence permit consists of the required minimum
annual property rental of €4,400 and a minimum income tax liability of €4,400,
i.e. a total of €8,800.
The Benefits: For your
convenience, we have illustrated the cost-benefit aspect of a PR permit in the
form of a table with sample figures:
|
Pension |
National tax @ 40% |
Malta tax + PRP Costs |
Net savings |
|
60,000 |
24,000 |
17,676 |
6,324 |
|
80,000 |
32,000 |
20,676 |
11,324 |
|
100,000 |
40,000 |
23,676 |
16,324 |
|
200,000 |
80,000 |
38,676 |
41,324 |
|
300,000 |
120,000 |
53,676 |
66,324 |
The above illustrates the significant
cost-saving realised in the case of annual pension benefits in excess of €50,000
otherwise taxed at 40%, upon taking up residence in Malta.
Cost of Living: The cost of
living in Malta is considerably lower than its European counterparts if one
avoids shops in tourist zones. Most international brands have set up shop
in Malta so that the Malta provides a good shopping experience at lower or
comparable prices.
Residency Pages |
Tax Relocation |
Malta Permanent Residence
Scheme | Taxation of Pension Income
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