Malta - British Expat Forum

Good day everyone,

I have been following Malta PR and OR schemes for some time and have had discussions with real users of the schemes. I am no expert on the subject, but I know the basics. I have been eagerly awating the new High Net Worth Individuals scheme and as I suspected, it is rather unattractive, especially for EU citizens. Introduction of this new scheme begs for several questions/observations:

1. Why would EU citizens want to go for this scheme, especially if their income arises outside of Malta? Ordinary Residence appears to be better choice, unless one remits very large amounts of money into Malta and HNWI's 15% becomes better option mathematically. I would think that HNWI is now almost exlusively attractive to non-EU citizens only.

2. I would think that HNWI makes OR look very appealing. No taxation of income that arises outside of Malta (that is not remitted into the country) is quite a good deal. This makes me a bit nervous that Malta will eventually (soon?) amend OR scheme and trim its benefits (specifically tax exemption of foreign sourced non-remitted income). Malta taxes on worldwide basis only on persons both resident and domiciled in Malta (whereas us expats are non-domiciled in Malta and thus different rules apply). This gives non-domiciled a tremendous tax edge over the domiciled, that is if one's income is derived outside of Malta.
Anyone has any insider information or valid reason to believe that OR will change in the near future? Such impuls could possibly come from Brussels, especially in light of what has been happening in Europe lately, i.e. gradual loss of sovereignty and push for "harmonisation" of tax regimes.

Thank you in advance for your feedback!

Petr

Hi Petr, and welcome to the forum

1. agree
2. change in OR - that could come about from 2 sources, Malta and EU

Malta - change in govt to labour looks very likely, in about 18 months time - the labour party has said very little about its likely policies on anything, and not on OR. If Malta got into Greece type trouble, then tax on worldwide income for foreigners would be an easy way of raising revenue, at least in the short term, although in the longer term it may actually reduce its tax take as foreigners leave Malta, or don't move here - if worldwide taxation was introduced I would leave


EU - possibly yes, but other countries have similar schemes - eg UK and Ireland


In reality, I believe the HNWI scheme will be a flop, and Malta will see practically nobody taking it up, and it will have to be substantially adjusted.

petr1029 wrote: I have been eagerly awating the new High Net Worth Individuals scheme and as I suspected, it is rather unattractive, especially for EU citizens.

Its even less attractive for non-EU citizens, with the 500K deposit and 25K min tax. EU citizens will choose OR (*), non-EU citizens will choose another country.

* - atleast 90% of them did anyway

I thought it could be useful to resurrect this thread to see if anyone has any news on the possibility of changing OR scheme, in particular its worldwide income tax regime. If they changed it, a lot of people (including me) would choose another country, I think.
I believe there are two main reasons why it could remain unchanged:
- Malta has some links with UK, so it could follow UK - which doesn't seem to be going to change its schemes - more than Europe direction
- Malta is still rated quite well by agencies even after downrating, so it's not in need of raising money fast. It should be in a different situation than Greece
Of course, locals could confirm / deny what I said on better information than I have.

no news I've heard

Moody cuts Malta rating from A2 to A3 which now equals Italy and Spain, on the Eurozone uncertainty.
Malta prime minister noted that Malta was the only one to cut its deficit in 2010, getting praise for this action.
Anyone sees any danger for worldwide income taxation in OR scheme?
Thanks Mark and everyone

Changes are in the pipeline re the definition of overseas income v capital brought into Malta by foreigners - I recommend people contact their accountant to see how it impacts them. I'm seeing my accountant in a few days, and will post on the private boards what he has to say.

If anyone needs an accountant, there is one listed in the recommended suppliers forum who I and several other members use.