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Money matters

Savings in Malta - interest rates and guarantees

No, really... it does!
But does it matter more in Malta than at home?

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Postby UK Escape » Sun 11 Oct 2009 23:59 GMT

How is income from savings taxed in Malta and what sort of interest rates can you get?

Is there a scheme that guarantees deposits to a certain amount in a Maltese bank like the UK's financial services compensation scheme for £50k?
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Postby gozomark » Mon 12 Oct 2009 00:46 GMT

Hi UK Escape, and welcome to the forum :D

With Malta in the Euro zone, interest rates tend to be low. Current accounts pay close to 0%, savings accounts 1%, 1 year fixed 2%


Savings tax is 20% I believe, but you can elect to receive it gross, and then declare it on your tax return. UK expats tend to keep savings offshore, or in the UK, where they can receive interest tax free, and normally better interest rates.

There is a deposit insurance in Malta - it changed in August, and is now € 100,000 -full details
http://www.compensationschemes.org.mt/

my concern is whether Malta could afford to actually backup this guarantee if a major bank went under
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Postby UK Escape » Mon 12 Oct 2009 08:23 GMT

gozomark,

Thanks for the info.

"UK expats tend to keep savings offshore, or in the UK, where they can receive interest tax free"

Surely you have to pay tax on it either in the UK or Malta?
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Postby gozomark » Mon 12 Oct 2009 08:39 GMT

Non-Maltese citizens only pay tax in Malta on anything earned in Malta, or on earnings you bring into Malta. This is one of the big financial reasons for living in Malta.

If your savings are offshore, you can receive the interest gross by telling the bank thats what you want - you might need to provide evidence that you are not liable to taxation on a worldwide basis, which the Maltese Tax authorities will give you on request.

If your savings are in the UK, you need to fill in a form (R85) to receive your savings gross. Not all banks offer this facility.
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Postby UK Escape » Mon 12 Oct 2009 13:01 GMT

gozomark,

Thanks again.

The tax situation sounds interesting.

I was thinking it false economy to have savings in the UK to chase an extra couple of percent interest on sterling if your living costs were in Euros. This given how sterling has dropped by about 7.5% in just the last 3 months. Obviously if you aren't liable to the 20% tax it becomes closer to viable if living costs are similar. I suppose people moving to Malta in 2007 have already had the whole 20% tax free advantage wiped out by the drop in sterling..... and more to follow?

Is Malta one of the "tax havens" the various governments want to clamp down on?
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Postby gozomark » Mon 12 Oct 2009 13:55 GMT

You are mixing up location of your savings with currency. You can open both £ and € accounts in the UK, in Malta and offshore, so your choice of currency isn't a deciding issue as to where you keep your savings, so
if you think the € will be strong against the £ going forward, you can open a € account in any of the locations.

The 20% tax is on interest income, not capital

Malta isn't one of the tax havens
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