The United Nations Pensions Programme Rules 2015
By virtue of a new Legal Notice, the Government of Malta has issued new rules which provide for an exemption from income tax to beneficiaries who are in receipt of a pension or a widow’s / widower’s benefit from the United Nations and to a reduced rate of tax of 15% on any other income, with the exception of income and capital gains arising in Malta. These rules will apply to both EU and third country nationals, with the exception of Maltese nationals.
A beneficiary under the programme is an individual who is neither a permanent resident nor a long term resident of Malta and who proves to the satisfaction of the Maltese tax authorities that:
he is in receipt of a UN pension or a widow’s / widower’s benefit and remits 40% of such pension or benefit to Malta;
he is not a person who benefits under the Residents Scheme Regulations, the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules, the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules, the Malta Retirement Programme Rules, the Global Residence Programme Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules;
he is not a Maltese national;
he holds a qualifying property holding;
he is in receipt of stable and regular resources which are sufficient to maintain himself and his dependants without recourse to the social assistance system in Malta;
he is in possession of a valid travel document;
he is in possession of sickness insurance in respect of all risks across the whole of the European Union normally covered for Maltese nationals for himself and his dependants;
he can adequately communicate in one of the official languages of Malta; and
he is a fit and proper person.
The rules establish that dependents shall comprise:
the beneficiary’s spouse or person with whom the beneficiary is in a stable and durable relationship;
minor children, including adopted minor children and children who are in the care and custody of the beneficiary or the person mentioned in (i) above;
children who are under the age of twenty-five, including adopted children and children who are in the care and custody of the beneficiary or the person mentioned in (i) above. Such children must not be economically active;
children, including adopted children and children who are in the care and custody of the beneficiary or the person mentioned in (i) above, who are not minors but who are unable to maintain themselves because of circumstances of illness or disability of a serious gravity;
dependent brothers, sisters and direct relatives in the ascending line of the beneficiary or the person mentioned in (i) above and who are not beneficiaries under the Residents Scheme Regulations, the High Net Worth Individuals – EU / EEA / Swiss Nationals Rules, the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules, the Malta Retirement Programme Rules, the Global Residence Programme Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules. Furthermore, the dependent brothers, sisters and direct relatives in the ascending line must reside with the beneficiary in the qualifying property.
Minimum stay in Malta
A beneficiary is not required to stay in Malta for any minimum number of days but will lose the special tax status in terms of these rules, if he / she resides in any other jurisdiction for more than 183 days in a calendar year.
If the beneficiary opts to acquire immovable property, the value must be of at least €275,000. However, if the property is situated in the south of Malta or in Gozo, the minimum value can be of €220,000.
A beneficiary under the programme has the option to rent instead of buying immovable property. This minimum annual rental payment has to be at least €9,600 if the immovable property is situated in Malta or €8,750 if in Gozo or in the south of Malta.
Beneficiaries under this programme will be exempt from tax in Malta on any UN pension income and widow’s / widower’s benefit which is received in Malta.
On the other hand, beneficiaries under the programme will be subject to a flat rate of tax of 15% on any income excluding UN pension income and widow’s / widower’s benefit, which arises outside Malta and received in Malta by the beneficiary, the beneficiary’s spouse, children and other dependents as defined, with the possibility of granting relief from double taxation in terms of the Maltese Income Tax Act.
The minimum annual tax liability payable on any income excluding UN pension income and widow’s / widower’s benefit, which arises outside Malta and received in Malta is of €10,000 in the case of the beneficiary and an additional €5,000 in the event that both spouses are in receipt of a UN pension.
The minimum tax payable is due in advance every year, and shall be payable before the 30th of April. In the year in which the special tax status is granted, where it is evident that the special tax status will not be granted before the 30th April, the minimum tax is to be paid before the special tax status is granted.
The 15% tax rate shall therefore apply on any income (excluding UN pension income and widow’s / widower’s benefit) arising outside Malta in the year immediately preceding the year of assessment which is received in Malta (including income arising outside Malta and received in Malta during the whole of the year in which the special tax status was granted) by the beneficiary, the beneficiary’s spouse and children.
Income and capital gains (with the exception of transfers of immovable property situated in Malta, where the final withholding tax would apply) of the beneficiary, the beneficiary’s spouse and children arising in Malta will be subject to a flat rate of tax of 35%.
An individual who is either a permanent resident or a long term resident of Malta will be subject to tax in Malta on his world-wide income and capital gains (including that part which is not remitted to Malta) at the progressive rates of tax applicable to resident individuals.
Submission of applications
An individual, who wishes to submit an application in terms of these rules, must be represented by an Authorized Registered Mandatory (ARM). A non-refundable administrative fee of €4,000 has to be paid upon application or €3,500 where the beneficiary has opted to acquire immovable property situated in the South of Malta.
ACT Advisory Services Limited is an ARM and can advise and assist you in the preparation and submission of the application and the pertinent documentation. At ACT, we will advise our clients with any tax planning opportunities which may be applicable as well as ensure (together with our foreign tax advisors) that there will be no negative tax implications in the departing country. Through our in-house tax specialists we will also be able to advise and assist our clients with their annual income tax compliance requirements.
For more information about the various residency schemes applicable in Malta and on the tax aspects thereof, please contact either Stephen Balzan (firstname.lastname@example.org) or Liana Falzon (email@example.com).
Maltese companies are subject to tax at the rate of 35% on their world wide income and capital gains. Malta grants various fiscal incentives to both companies and their shareholders upon distribution of a dividend. Malta is a membe...Learn More
Setting up a Company
Setting up a company in Malta is a relatively straight forward procedure and can be set up within 2 working days, provided we are in receipt of all the information, funds and due diligence documentation we need. The Act that regulates Malte...Learn More
Taking up Residence
Warm climate, friendly people, excellent communication infrastructures, low criminality and many other features of the Maltese islands have made Malta an excellent destination for people to take up residence in. Moreover low rates of taxati...Learn More
In the last few years, a large number of remote gaming operators have established themselves in Malta and the Malta Gaming Authority has to date issued over 400 licenses. The Gaming Licenses There are four (4) different gaming licenses that a prospective applicant may apply for, being:&nb...Learn More
Malta has become a destination of choice for the setting up of Payment Institutions (also referred to as Payment Services Providers or PSPs). A number of advantages has contributed to this success, mainly but not limited to the fiscal incentives granted not only to the payment institutions ...Learn More
Electronic Money Institutions
Malta has recently seen an increase in the number of Electronic Money Institutions (EMIs) looking to set up their operations in Malta. This has been largely due to the growth in the e-commerce and the i-gaming industries. Such EMIs are regulated by the Financial Institutions Act and t...Learn More
Initial Coin Offering (ICO) Services
Malta has always been on the forefront of technology and innovation. In the past months, a number of initiatives have been launched, aimed at establishing an innovative and attractive regulatory framework for entities operating in blockchain (and distributed ledger technologies), virtual cu...Learn More
Prospects – Services of a Corporate Advisor
‘Prospects’ is a new platform set up by the Malta Stock Exchange in line with its commitment to open up new capital market opportunities, create economies of scale and to afford businesses more competitiveness and sustainability. Through ‘Prospects’, SME’s wil...Learn More
Assistance to Family Businesses
Malta has recently introduced legislation to encourage good governance in the management of family businesses, to assist family businesses to operate their business in an efficient way and to assist such family businesses to transfer their business from one generation to the other. Malta is...Learn More