With 7,000 years of history behind it, Malta is a modern country with an open market economy, excellent economic track record, stable currency, low inflation and enjoys a high standard of living at relatively low cost.
The Maltese islands comprise an archipelago in the Mediterranean, occupying 316 square kilometres approximately 100 kilometres south of the Italian Island of Sicily. Only the three largest islands Malta, Ghawdex (Gozo) and Kemmuna (Comino) are being inhabited, however development schemes in Manoel Island are in the pipeline. Malta's picturesque charm and historic appeal, enhanced by its strategic position in the heart of the Mediterranean make the island a remarkable tourist destination offering modern five star hotels, numerous beaches and a typical Mediterranean climate with mild, rainy winters and hot, dry summers.
Malta is an independent republic and a member of the British Commonwealth. Since the mid-eighties Malta has transformed itself into a freight transhipment hub and a first class financial centre with reciprocal insurance and investment legislature regulations. Malta boasts an independent Financial Services Authority based on the British system. The islands have a hi-tech manufacturing sector and at present are working on an advanced system of e-government aimed at creating the first e-government state supported by one of the world's first fully digital telecommunications network.
Malta became a member state of the European Union on 1st May, 2004. Malta is well paced to reap the benefits from EU accession and embark on a path of rapid growth. Its human capital and geographical location place it in a favourable position in this regard. Corporate law in Malta is in full conformity with European requirements; accounting and auditing standards are based on International Accounting Standards.
1. PURCHASING PROPERTY IN MALTA
As a matter of policy the Government of Malta encourages non-Maltese Residents to purchase property for use as a residence or holiday home. To this end, successive Governments have implemented schemes, which make Malta an attractive destination. Financial advantages of owning a property and/or taking up residence in Malta include the following:
Property in Malta is exceptionally good value for money and residents enjoy a relatively low cost of living.
There are no property rates or taxes in Malta.
Malta has a Double Taxation Agreement with most Western Countries and these generally ensure that a move to Malta results in tax advantages. Pensions are freely transferable to Malta.
Besides these Double Taxation Agreements, there exist Reciprocal Health Agreements with a number of countries resulting in treatment at nominal cost.
Residency requirements are modest and offer appreciable tax advantages.
There is a sizable community of foreign residents who are warmly welcomed by the Maltese people, most of whom speak English. Integration in the local social and cultural scene is easy.
Death duties have been abolished with effect from 24th November 1992, however, on immovable property, a transmission tax of 5% is payable by the estate on the share of the deceased. Some exemptions may apply.
Conditions of Purchase
NON-MALTESE RESIDENTS MAY OWN A PROPERTY IN MALTA FOR USE AS A HOLIDAY HOME OR PERMANENT RESIDENCE, UNDER FOLLOWING CONDITIONS.
The purchase price of the property must be in excess of €92,546 for an apartment and €154,200 for any other type of property, the funds for the purchase must originate from outside Malta.
The property may be used as a holiday home or residence by the purchaser or his immediate family. Guests may be accommodated in the property when the owner or a member of his family is in residence. Only villas with their own swimming pool and properties in “special designated areas” may be granted a renting license.
Proceeds of property sales are freely transferable from Malta after payment of Capital Gains Tax on the net profit, i.e., after deducting purchase cost and expenses, agents fees, and cost of improvements. One’s sole and principal residence in Malta, that is if permanent residency is obtained, if owned for a minimum of three years, is tax exempt.
Mortgage facilities are available in Malta usually up to 90% and currently at an interest rate that can be as low as 5% per annum.
Procedure and Cost
A preliminary or a promise of sale agreement is signed binding the vendor to sell and the purchaser to acquire the property under the terms and conditions agreed upon and subject to good title and issue of all relative permits. A 10% deposit is usually lodged with the Notary or property owner, on signing of this agreement. An additional deposit of 1% is also paid upon signing the preliminary agreement in order for it to be registered. This will serve as a part payment for government stamp duty, which in total is 5%. Refund will be obtained if the deal does not materialize. All agreements may be written in English.
The Preliminary Agreement is usually valid for three months or longer if agreeable to both parties. During this term, the notary public will undertake searches to prove clean title, as well as submit applications to the relative Government departments.
The final contract is entered into by the parties or their attorney once researches have proved satisfactory and permits are issued. The fully price is paid and vendor gives vacant possession on contract.
Expenses payable on contract:
Government stamp duty – 5% (1% on the preliminary agreement, and 4% on contract)
Ministry of Finance fee – € 233
Legal Fees : between 1% and 1.5% which include all contract registration and search costs.
Estate agent’s brokerage fees are paid by the seller
2. LETTING PROPERTY IN MALTA
There is a large selection of property available for both short and long term rentals in Malta and Gozo, including apartments (seafront or inland), maisonettes, villas, town houses and houses of character.
SHORT LETS
A short let is usually based on a minimum period of 1 week. Rental prices are always higher for short lets, and usually decrease as the rental period increases.
Terms – The rent is usually paid in advance on commencement of the rental and in most cases a short let would include all utility consumption rates.
Agency Fees – The standard commission paid by the lessee to a property agency on short lets is 10% or the total rent, but this is not always applicable.
LONG LETS
A long let is usually based on a minimum period of 6 months and can run up to a number of years. In most cases the rent can be negotiated on long periods (2 years or more). Any foreigner can rent a property for long let as long as he/she is working in Malta.
Security Deposit – A refundable security deposit equivalent to one month’s rent is usually paid on signing of the lease. This deposit is refunded to the Lessee at the end of the lease, provided that all outstanding bills have been paid and that the property after having been inspected by the Lessor or his agent is found to be in the same condition as it was when occupation was effected.
Rent – The rent is usually paid monthly, quarterly or in some cases even yearly in advance, depending on the agreement between the Lessor and the Lessee. In most cases the rent excludes water, electricity and any other utility bills.
Agency Fees – The standard agency commission is the equivalent to half a month’s rent from both Lessor and the Lessee.
3. RESIDENCY STATUS & TAX
NON-RESIDENTS
Persons who visit Malta as tourists whose stays do not usually exceed 3 months. These are not subject to local tax conditions. Property purchased must exceed the values mentioned above.
PERMANENT RESIDENT PERMIT HOLDERS
This is primarily of interest to the high-income group due to the unusually low tax rate of 15%. To qualify for a permit one must have a proven capital of Lm150, 000 (held anywhere in the world) or an annual income of more than Lm10, 000 of which Lm6, 000 (plus Lm1, 000 per dependent) must be remitted to Malta. Tax payable is at 15% with minimum of Lm1, 000. Accumulated unspent income and capital may be repatriated.
In most cases Double Taxation Agreement ensure that no income is chargeable twice and a move to Malta should result in appreciable Tax savings. There are no property rates or taxes in Malta.
Maltese Residency Application
Documents required :
photocopy of passport of applicant and spouse and children if any (certified by a qualified witness).
3 colour passport photos for applicant, spouse and children if any
birth certificate of applicant, spouse and children if any – originals or official copies issued by a state authority. If document is not in English, an official translation is required.
Marriage certificate (if applicable) – original or official copies issued by a state authority. If document is not in English, an official translation is required.
Banker’s statement that applicant has an income in excess of Euro 25,000 or capital assets in excess of Euro 375,000 – original document is required. The income of €25,000 is to consist in business profits, rents, investment income, pension, or a combination thereof. The capital assists are in the form of bank account holdings, real estate, investments and other assets situated in any country outside Malta. In any case, the whole amount is not required to be brought into the country, and the value of the property purchased in Malta is also taken into account as part of the capital requirement if purchased prior to the issue of the permit.
Police conduct certificate for applicant and spouse, and children over 14 years if any – originals or official copies issued by a state authority. If document is not in English, an official translation is required.
A declaration by applicant, spouse and children over 14 years if any, that they have no previous convictions or ongoing criminal proceedings. This must be signed before a Commissioner for Oaths or Justice of the Peace.
Apart from these there is an applicant details form which is to be filled in when these documents are in hand, apart from the application form itself.
Please note the following:
if the applicant is living with a woman but they are not married, two separate applications must be filed and both parties must satisfy the income requirements;
if any one of the applicants has been divorced, a marriage certificate and a divorce certificate is to be provided – originals or official copies as issued by state authority. If document is not in English, an official translation is required.
British citizens, instead of a Police Conduct Certificate, should obtain a Personal Access Enquiry Form from the police station of their place of residence
Where police authorities do not issue conduct certificates, the applicant must send three character references from his bank, lawyer, accountant, employer or ex employer or similar and the reference should state that the applicant has a sound financial position, and where possible, that he has an income of more than Euro 25,000. This requirement applies also to British citizens.
A correctly submitted application is approved in about four months.
Fiscal & Other Benefits of Maltese Residence:
Low tax rate
Exemption from Customs Duty/VAT
Freedom of Movement
Vehicle Registration Fees
Repatriation of your capital and income
Rental of Property
No death duties are payable in Malta
Low Tax rate: A flat rate of 15% is chargeable on all income (less personal allowance) received in, or remitted to, Malta from either local or foreign sources. This is subject to a minimum payment of Lm 1,800 per annum. This means that, thanks to Malta’s 34 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%. Overseas capital funds invested locally are only taxed on any interest or dividends generated thereon, again at 15% flat rate. Permanent residents also benefit from double taxation agreements existing between Malta and most European Countries and others, ensuring that tax is never paid twice upon the same income. The minimum tax of Lm 1800 is to be paid within 30 days of approval of the permanent residency. The Residence Certificate will only be issued upon presentation of a tax receipt confirming payment.
Exemption from customs duty/vat:
All household and personal effects (except weapons) may be imported free of import duty imported within 6 months of arrival in Malta. No licences are required.
mplte freedom of movement: there are no annual minimum stay requirements and permanent residents may tavel to and from Malta without need of applying for extension of stays or visas.
Vehicle registration Fees: permanent residents are allowed to register their imported vehicle at preferential rates.
Repatriation of capital and income : Proceeds from sale of property, encashment of investments, local income, and excess income brought into Malta may be freely repatriated by permanent residents, provided that any tax due has been settled.
Rental of property : owners of properties with swimming pools or properties enjoying the use of swimming pools are allowed to rent them out, provided such properties are licensed as holiday accommodation by the Hotels and Catering Establishments Board. All income thereon, is of course, subject to the 15% tax rate.
No death duties are payable in Malta: Though no death duties are payable in Malta, Transfer Duty at the rate of 5% on the value of the property is paid on immovable property and shares in locally registered companies unless these are listed in the Stock Exchange. No death duties are payable on bank deposits, investments and moveable property.
GENERAL INFORMATION
Importation of Pets. The quarantine period for dogs and cats originated from UK is three weeks while the quarantine period from other rabies free countries is six months. The quarantine kennels are excellent.
Yachting. The Island is fast becoming a sought after Yachting center and Marinas offer the usual facilities including water, electricity and telephone. The annual berthing fees range from Lm300 up to 8 linear meters 25% on duty paid boats and 30% on non-surveyed quays.
Health Care. Health care facilities are up to international standards and treatment is available in modern hospitals and polyclinics, as well as private doctors’ clinics. Pharmaceutical drugs are freely available. As a result of reciprocal health agreements, British and some E.C. Nationals are only subject to nominal charges.
Electricity. The supply is 240 volts, single phase 50 cycle. Square fitting standard three pin British plugs and sockets are used.
Driving Licenses. International driving licenses are endorsed free by local police. Driving is on the left.
Language. The official languages are Maltese and English and 90% of the population speaks both.
Religion. Malta is Roman Catholic but the Constitution guarantees freedom of worship. Anglican Church of Scotland, Baptist and other Protestant Churches, a Synagogue and a Mosque are also available.
