Frequently asked quesions

1. Can any foreigner buy immovable property in Malta?

Yes.

2. Do they need a permit to buy immovable property?

All citizens from a non-EU country need a permit to buy immovable property.

Citizens from an EU country including Maltese citizens who have not resided in Malta for at least 5 years who are buying a holiday home (secondary residence) require a permit (AIP – Acquisition of Immovable Property Permit) from the Inland Revenue Department. This permit is granted within 6/7 weeks.

3. Are there any exceptions when a permit is not required?

Yes.

A) If an EU citizen declares on his contract of purchase that he intends to purchase the immovable property as a primary residence i.e. permanent resident.

B) If any foreigner (even non EU) purchase immovable property in a special designated area.

C) If an EU citizen has been a resident of Malta for more than 5 years.

4. Can a foreigner buy more than one immovable property?

EU citizens may only buy one property unless (1) they have been resident for at least 5 years and (2) they buy in a special designated area and (3) the second property is required for the person’s business activity or supplying of services.

Those EU citizens who have already lived in Malta for a continuous period of 5 years may purchase another property, without the necessity of a permit, immediately.

5. Can non-EU citizens buy more than one immovable property?

No, except in special designated areas.

6. Can any foreigner buy 3 immovable properties in a special designated area and one outside special designated areas?

Yes, he can. There are no restrictions on special designated areas.

7. Which are the special designated areas?

Madliena Village, Madliena
Fort Cambridge, Sliema
Pendergardens, St Julians
Portomaso, St Julians
Tigné Point, Sliema
St. Angelo Mansions, Vittoriosa
Ta' Monita Residence, Marsascala
Tas-Sellum Residences, Mellieha
Kempinski San Lawrenz, Gozo
Chambray - Gozo

8. Can an immovable property be purchased in the name of a Company?

Yes, if the property is in a special designated area.

Yes, as long as 75% of the share capital is held by persons who are citizens of the EU and who have resided in Malta continuously for 5 years. The company operates in an EU state and all directors must have 5 years residence qualifier.

In other cases, a permit will only be granted if the property is required for an industrial or tourist project or as a contributor to the development of the economy of Malta.

9. Are there any permits required if a foreigner inherits an immovable property “Causa Mortis”?

No.

10. What are the conditions in the AIP permit?

A) The value of the immovable property has to be not less than €98,000 in case of Apartments/Maisonettes and €164,000 in case of houses.

B) The property has to be used solely as a residence for applicant and his family.

11. Can a foreigner buy below the threshold of €98,000 and €164,000 if the immovable property is shell or unconverted?

Yes, he can as long as he can produce an architect’s certificate showing that the property requires additional costs, which bring it to the level of the threshold to make it habitable.

12. Can these thresholds be revised in the future?

Yes, these are linked to the property price index, which is published in the Government Gazette every year.

13. Can a foreigner rent his immovable property?

Foreigners may rent the property as long as;

A) It is in a special designated area.

B) It is a villa or house with a private pool.

C) It is issued with a licence from the Ministry of Tourism Authority under “Superior” and “Comfort” category.

14. How does one go about applying for a permit to rent his immovable property to the Ministry of Tourism Authority and what are their fees?

Submit the relevant application to the Ministry of Tourism Authority.
Download the application from here.

15. Can two couples buy one immovable property between them?

Yes

16. Can a foreigner not married but having a common law wife buy the same immovable property together?

Yes.

17. Does a Maltese with dual citizenship e.g. Canadian and Maltese citizenship, who has not resided in Malta for 5 years need a permit?

Yes.

18. Does a non-EU husband married to an EU wife require an AIP permit?

No.

19. Does an EU Citizen whose business is to develop immovable property be given permission to do so?

Yes. He will be given permission to do so.

20.. What does one need to submit with an AIP application?

A) Two passport sized photos.

B) Copy of convenium (Preliminary Agreement of Sale).

C) Photocopy of passport showing details.

21. Is the process for buying immovable property the same as for Maltese?

Yes.

22. Are the legal expenses and stamp duty the same as Maltese?

Yes, except if applicant requires an AIP permit, this attracts an administrative charge of € 233

1. Can anyone take up residence in Malta?

Yes.

2. What does one have to do to take up residence?

An individual must declare his intentions within 3 months from arrival by completing and submitting a form (EU or non EU) at the Immigration Division at the Police Headquarters.

3. Is he obliged to bring in a certain amount of income?

The main grounds on which they can apply are economic self-sufficiency, employment and education.

Economic Self-Sufficiency
This criterion requires that such individuals show that they are able to provide for themselves and for their accompanying dependants by being financially stable and not being in need of any financial support from the Maltese government. The current thresholds for EU/EEA nationals are set at a minimum capital of €14,000 or a weekly income of €84.95 for single persons, and at a capital of at least €23,300 or a weekly income of €93.10 for married couples.

Employment
Residence in Malta may also be applied for on grounds of employment. Alternatively, an individual may opt to set up a business in Malta or opt for self-employment status.

4. Does a person taking up employment need to apply for a Work Permit?

A NON-EU foreigner taking up employment would require employment permission, which has to be applied for by his employer. The individual must then regulate himself at Immigration once the work permit (employment licence) has been issued. With effect from the 1st May 2011, EU Nationals no longer require an employment licence (work permit) to work in Malta.

5. What are the chances of an EU citizen getting a work permit?

As from 1st of May 2011 EU citizens were no longer required to apply for an employment licence to work in Malta.

6. Is an EU citizen who takes up residence subject to tax and at what rate?

Yes. An individual is normally regarded as being a resident of Malta if during the year his stay exceeded an aggregate of 183 days in one calendar year. The rate of tax is the same as that for Maltese citizens and is based on any income (not capital), which the individual brings into Malta. Foreign residents in Malta are not taxed on their worldwide income. The individual may also opt to be taxed at a flat rate of 15% with a minimum tax liability of €20,000 or €25,000 per annum under the HNWI scheme.

7. Is there a special scheme for Permanent Residents?

Yes. Both EU and non-EU citizens may apply for permanent residency under the HNWI Scheme. An individual may obtain a certificate from the Inland Revenue Department, which certificate is issued for an indefinite period as long as certain conditions are satisfied on an annual basis.

8. What are the conditions?

Refer to the HNWI Scheme

9. Is Malta part of the Schengen Zone?

Malta became part of the Schengen Zone in 2007. Non-EU citizens may obtain the Uniform Residence Permit, issued on the basis of one being a permanent resident, in this case, it grants its holder the possibility to travel throughout the Schengen Zone without the requirements of a visa for at least three months.

In order to apply for the Uniform Residency Permit the applicant must have a place of residence in Malta.

10. Does the rate of 15% also apply if the applicant has to pay capital gains tax?

No.

11. Does one pay tax both in Malta and in the country of origin?

No. Thanks to a number of double taxation agreements with a substantial number of countries or through unilateral provisions, residents do not pay in both countries.

12. Does a foreigner who sells his secondary property (holiday home) pay capital gains tax?

Yes. If the property is sold within 7 years from date of acquisition, the vendor has the option to choose to be taxed (1) a capital gains tax based on gains realised after taking into consideration the cost of purchase and sale, as well as any improvements carried out on the property or (2) a final withholding tax equivalent to 12% of the sale price of the immovable property.

13. The 3-year residency exemption still applies?

Yes to the following:

A) Resident who has the certificate from the Inland Revenue Department in terms of the HNWI Scheme.

B) Residents who have declared their intention to stay in Malta whose stay exceed 183 days every year.

C) To individuals with work permits.

IMP. The exemption is only granted if the property has been owned and used as a main residence for a period of three years and has not been vacated for more than one year. The Inland Revenue Department is actually checking on this before a sale is authorised and merely having one of the above (a or b or c) does not automatically exempt the individual after three years. The department normally checks through utility bills if owner has physically been resident in the property for at least three years.

14. Do EU citizens pay VAT and Import Duties when they import their household effects (excluding car)?

No, as long as these are VAT paid in their country of origin.

15. Do non-EU citizens pay VAT and Import Duties when they import their household effects (excluding car)?

They may initially be required to pay a deposit or lodge a Bank Guarantee for the amount of duty/VAT, which will be refunded upon the expiry of 200 cumulative days in Malta.

16. Can residents import their car?

Yes, but this is always subject to full registration tax for all citizens and VAT for cars originating from outside the EU.

17. Can residents bring in their pets and are they subject to quarantine?

Yes, they can. If pets qualify under the “Pet Travel Scheme”, they do not require quarantine.

Pets from qualifying countries, which have been vaccinated against Rabies e.g. UK, Ireland require 21 days.

Pets coming from countries, which do not qualify under the pet’s scheme, six calendar months.

18. Can a foreign buyer take out a loan from a local Bank?

Yes.

19. How much can he borrow and at what rate of interest?

He can borrow up to 90% of the value of the property always depending on his income at the present lowest rate starting from 3.3775%. The loan may be repaid over a maximum period of 30 years provided age does not exceed 65 years upon last repayment.

20. What security does the Bank require?

Same as a Maltese. A charge over the property and insurances.

21. Does a foreigner have to pay any deposits for Water, Electricity and telephone?

If from EU countries there are no deposits. From non-EU € 1,164.69 for telephone and €466 to the Water Services Corporation.

22. Can foreigners make use of our Medical facilities and what are the costs?

EU citizens, resident in Malta are entitled to Free Public Health care. These have to be in possession of the appropriate E form issued from the country of origin. UK pensions may call The Medical Benefit Section in their country (+44 7044 191218 7547) they would be asked for the NI number and E121 would be sent by post. They have to apply to the Entitlement Unit with the Ministry of Health.

The Government is not responsible for costs in a private hospital or clinic.

23. Does a reciprocal health agreement still exist between Malta & UK, and if yes, do UK citizens still require the E121?

The agreement is currently superseded by EU regulations and UK citizens must also therefore be in possession of the E forms and for residents, the Local Health Entitlement Care issued by the Ministry of Health.

1.Does the High Net-Worth Individuals Residence Scheme affect the purchase of property in Malta or Gozo?

No, nothing has changed in as far as the sale of property to foreign nationals (both EU or non EU) is concerned. The changes relate only to residency conditions.

2.What has changed from the previous Permanent Residence Scheme?

• The new scheme is now called the ‘High Net-Worth Individuals Residence Scheme’.
• Minimum purchase price of property €400,000 (no distinction between apartment or house).
• Minimum rental €20,000 per annum.
• Preferential rate of tax has not changed; remained at 15% with possibility to claim double tax relief.
• Minimum tax has gone up to €20,000 per annum plus €2,500 for each dependent.
• Must not stay in any other country for more than 183 days.
• Applicant must have a health insurance covering himself and his dependents throughout EU territory.
• Application fee of €6,000, non-refundable.
• Residents will now be able to work or operate a business in Malta.

3.Must applicant have a minimum capital requirement?

No. The new scheme does not require a minimum capital requirement.

4.Must applicants remit to Malta a minimum amount every year?

No. There is no minimum amount to be remitted to Malta. However, for an applicant to effectively benefit from the special rate of 15% tax, he has to remit a minimum of €133,300 bearing in mind the minimum tax liability of €20,000 every year.

5.Once applicant decides to apply for residency, when is he/she required to purchase or rent a property?

At application stage applicant is not required to submit evidence relating to the acquisition/rental of property but certificate of Special Tax Status will be released only when applicant submits evidence of qualifying property holding.

6.Can one show a preliminary agreement of purchase (convenium) as proof that he intends purchasing a property?

Yes. However, for the purpose of a confirmation of the special tax status, a copy of the final deed of purchase has to be submitted.

7.The value of €400,000 is for a finished and habitable property? What if the property is in shell form or unconverted and is being purchased for less than €400,000?

Improvements are taken into consideration.

8.Re the minimum rental of €20,000 per annum, does this include the cost of utilities payable by the applicant e.g. water and electricity?

Yes, as long as these are shown as forming part of the rent.

9.Is the special rate of 15% chargeable on all income received by applicant?

15% is limited to foreign sourced income remitted to Malta. Income generated through business activity in Malta or Local Capital Gains are charged at the normal rate of 35% (subject to certain exceptions). Overseas Capital Gains received in Malta are not subject to Malta tax.

10.Who is considered as a dependent?

• “dependent" means the beneficiary’s spouse;
• the beneficiary’s unmarried minor children;
• adopted minor children of the beneficiary or of the spouse, as the case may be;
• where the beneficiary or the spouse has custody and the minor children are financially dependent on him and
• children of the beneficiary or of the beneficiary’s spouse who are not minors but who, because of circumstances of illness or disability of a serious gravity, are unable to maintain themselves

11.What if one of the dependents is a non-EU national, does this affect the application?

Dependent can be a non-EU national.

12.When does applicant have to pay the €6,000? Does he receive a refund if application is declined?

The €6,000 is paid on application and it is not refundable.

13.Are pending applications subject to the payment of €6,000?

No applications received up to the 14th September 2011 will have the application fee of €6,000 waived.

14.What other options does an EU/EEA National have to reside permanently in Malta if he does not qualify under the HNWI scheme?

Ordinary residence in Malta requires individuals to physically live on the island for a period of six months or more. The transfer of one’s residence from a high-tax jurisdiction to a lower tax overseas country is available to both EU/EEA and non-EU/EEA nationals. There is no minimum value property requirement for non-residents seeking to obtain ordinary residence in Malta, unless there is the need for an Acquisition of Immovable Property (AIP) permit, which applies in specific circumstances.

15.If one of the spouses or dependents is a non-EU citizen can he or she still qualify for ordinary residence and NHWI Scheme?

Yes he/she can.

16.On what grounds can EU/EEA nationals qualify for ordinary residency?

The main grounds on which they can apply are economic self-sufficiency, employment and education.

Economic Self-Sufficiency
This criterion requires that such individuals show that they are able to provide for themselves and for their accompanying dependants by being financially stable and not being in need of any financial support from the Maltese government. The current thresholds for EU/EEA nationals are set at a minimum capital of €14,000 or a weekly income of €84.95 for single persons, and at a capital of at least €23,300 or a weekly income of €93.10 for married couples.

Employment
Residence in Malta may also be applied for on grounds of employment. Alternatively, an individual may opt to set up a business in Malta or opt for self-employment status.

17.What about taxation? Are ordinary residents subject to tax in Malta?

Yes, any national who resides in Malta for more than 183 days (not continuous) every Calendar year, is subject to tax in Malta.

18.Do ordinary residents benefit from Double Taxation Relief?

Ordinary residents are afforded protection by double taxation agreements, which ensure that tax is never paid twice on the same income in different countries. Malta has an extensive network of double taxation treaties. Most treaties are based on the OECD Model Convention, and relief is granted under the credit method where a credit is given for any foreign tax paid. Where there is no double taxation treaty, another form of relief from double taxation available under domestic law, namely unilateral relief, largely achieves the same outcome.

19.On what is an ordinary resident charged tax and what are the rates of tax?

Income Tax
Individuals who are ordinarily resident, but not domiciled in Malta, are subject to income tax on income arising in Malta, on income arising outside Malta but received in Malta and on capital gains arising in Malta. No tax is chargeable on capital gains which arise overseas but which are remitted to Malta. Personal income tax is charged at progressive rates up to a maximum of 35 per cent, as illustrated by the following tables:

SINGLE RATES (as at 2011)
taxable income between €0 - €8,500 at 0%
taxable income between €8,501 and €14,500 at 15% (less €1,275)
taxable income between €14,501 and €19,500 at 25% (less €2,275)
taxable income over €19,500 at 35% (less €4,676)

MARRIED RATES (as at 2011)
taxable income between €0 - €11,900 at 0%
taxable income between €11,901 and €21,200 at 15% (less €1,785)
taxable income between €21,201 and €28,700 at 25% (less €5,3905)
taxable income over €28,701 at 35% (less €6,775)

20.What is the situation with present residents? Do they have to satisfy the new requirements under the new scheme?

No. Current holders of a Permanent Residence Scheme Certificate shall continue to benefit from such rights i.e. those under the old scheme as long as the conditions of the scheme are adhered to. In addition such residents (1) must be in receipt of stable and regular income; (2) must be in possession of sickness insurance and (3) the property cannot be occupied by any person other than the Permanent Residence Permit Holder and his family.

21.What about the qualifying value of the property purchased or rented.

Current residents can continue to occupy their present property and still qualify under the old scheme, however, should the permit holder sell the property or terminate his present lease, he must acquire a qualifying property holding as defined under the new HNWI rules, i.e. €400,000 for purchase and €20,000 per annum for rental.

22.Does one need to import into Malta all the funds to be taxed the minimum charge or can one import what

he requires in Malta and simply pay the minimum tax?

One does not need to import any minimum amount, as long as he/she pays the minimum tax due and has sufficient funds to cover the cost to live here for himself and his dependants.

23.Can Non EU nationals avail themselves of the High Net-Worth Individuals Residency Scheme and under what conditions?

Yes. Non EU nationals can benefit from the HNWI Scheme.

The conditions are basically the same as EU/EEA nationals with the exception of the annual minimum tax liability which is slightly higher at €25,000 per annum plus €5,000 per annum for each dependent. In addition, to qualify for the new scheme and be able to stay in Malta, a non EU national has two options:

(1): Obtain and regularly renew visa, or (2): Qualifying Contract

24.What is a qualifying contract?

A qualifying contract is an agreement that is entered into between the Government of Malta and the applicant wherein the applicant delivers to the Government of Malta a sum of €500,000 and €150,000 for every dependent (“The Bond”) which the Government of Malta holds by title of gratuitous voluntary deposit.

The Bond will be restored to the applicant if such applicant declares and proves to the Government of Malta that he/she has renounced to the special tax status granted under High Net Worth Individuals Rules, prior to the expiration of four years from the date of the qualifying contract.

If the applicant either:
Intends to become a long-term resident prior to the expiration of four years from the date on which he applied for special tax status in terms of High Net Worth Individuals Rules,
or

becomes a long-term resident prior to the expiration of four years from the date on which he applied for special tax status in terms of the High Net Worth Individuals Rules he/she will forfeit all the rights over the Bond.

25.At what stage is the Bond deposited if the Bond Option is taken?

On the date of application the applicant only needs to pay the €6,000 fee. At that stage (if the application is found to be duly completed and contains all the necessary documentation/information) it will be forwarded for a due diligence process. Once the Inland Revenue Department receives the outcome of the due diligence process they will inform the Authorised Registered Mandatory (ARM) accordingly. At that stage they will issue a letter of intent, subject to a copy of the final deed of purchase/lease (as the case may be) and in the case of the Qualifying Contract, a copy of such contract together with a copy of the residence permit. Therefore it is not necessarily at date of application that the Bond needs to be paid.

26.Can the Bond be substituted with a Bank Guarantee?

Yes.

27.What is Long Term Residence?

A long term resident is:
(a) a person who has long-term resident status in terms of the Status of Long-term Residents (Third Country Nationals) Regulations;
(b) a person who applies for long-term resident status under the Status of Long-term Residents (Third Country Nationals) Regulations; or
(c) third country nationals who have resided legally and continuously in Malta for five years.

Periods of absence from Malta shall not interrupt the aforesaid period and shall be taken into account for its calculation where they are shorter than six consecutive months and do not exceed in total ten months within the aforesaid five-year.

28.Are there any other conditions governing the Scheme?

Yes. Applicant has to be fluent in one of the official languages of Malta i.e. Maltese or English.

29.What other options does a non-EU have to stay in Malta even if he/she does not take advantage of the preferential tax rate?

A non EU national may apply for a Visa to enter and stay in Malta, which need to be renewed periodically.

30.Would this Visa give applicant access to the Schengen area?

Depending on the type of Visa granted

31.For how long would the Visas normally be and where does one apply for a Visa?

Depending on the type of Visa granted. Visas may be granted with a validity of one to five years with each case being considered on its own merits. One applies for a Visa at the relevant embassy in the applicant’s country of residence.

32.Can a non-EU national work in Malta and does this give him/her the right to reside in Malta?

In the case of non-EU nationals, employment in Malta requires a licence and is only granted in particular circumstances. Once an employment licence is granted, one will be given the right to reside in Malta.

33.How about a non-EU national who sets up his own business and works as a Self-Employed person in his own business? Could he/she apply for residency on these grounds?

Yes, one would be able to apply for residency on the grounds of self-sufficiency once the latter status is granted. This would be possible under the following criteria:

• An investment of at least €100,000 without an EU/EEA partner, or an investment equivalent to €40,000 with an EU partner. The investment must consist of fixed assets and/or capital used for business purposes. Rental contracts are not eligible;
• Status of a highly skilled innovator with a sound business plan, committed to recruiting at least three EU/EEA nationals within eighteen months of establishment of business;
• Status of sole representative of an overseas company (with a sound reputation and established for at least three years abroad) wishing to open a branch in Malta; or
• The holding of a directorship in a company forming part of a project that has been formally approved by Malta Enterprise, and which has been formally notified by the latter to the Employment and Training Corporation.

A firm commitment regarding the engagement of EU/EEA nationals as part of their staff will assist in the favourable consideration of an application.

34.What about a non EU national who lives in Malta for the purpose of education?

Yes, in the case of students in any private school College, or University of Malta, applicants are granted a temporary resident permit to stay in Malta during all prepaid period of his/her education. Moreover, if the student is underage, his legal guardian (mother, father etc.) can apply for the same type of permit. Such person has to confirm that he/she has a stable and regular income plus a suitable place to live.

35.Is a non EU national who lives with an EU national but is not married entitled to obtain residency on the basis of his/her partner being an EU national living in Malta?

Since one of the parties is an EU national, the non-EU national can apply for ordinary residence, as long as one can show that both persons are of independent financial means and have been together in a stable and durable relationship even though not married.

36.What about same sex couples?

The definition of family members includes the term ‘stable and durable relationship’, therefore same sex/co-habiting partners need not necessarily apply separately but if one of them is the beneficiary under the HNWI scheme, the other may live in the qualifying own property together with the beneficiary.

37.Can an EU or non EU national be able to apply for residence in Malta without taking tax advantage of the favourable 15% rate of tax under the HNWI?

Yes, by taking up ordinary residence.

38.What happens to applications submitted prior to the scheme being suspended at the end of last year? Do they fall under the old conditions?

Applications submitted but not approved up to the end of 2010 when the old scheme was suspended, will have to qualify under the new scheme except that such applicants do not have to pay the €6,000 application fee and the qualifying value of the property remains the same as the one under the old scheme i.e. not less than €116,000, as long as a preliminary agreement for such a property has been signed and registered by the 14th September 2011.

39.What about those applications submitted during the suspension period after the first of January 2011?

Same as (38) above.

40.How can one apply for the special tax status under the High Net Worth Individuals Scheme?

Applications may be submitted to the Commissioner of Inland Revenue through the services of a person that qualified as an Authorised Registered Mandatory.