Global Residence Programme

Global Residence Programme

The Global Residence Programme (GRP) is a program intended for those who are not nationals of the EU, EEA and Switzerland and are not long-term residents. Individuals who wish to benefit from this Programme are able to work in Malta, as long as they provide a valid work permit. The individual is allowed to have a special carer working in their qualifying property as long as all information and procedures are fulfilled.

Global Residence Programme

I. Who May Apply?
II. Procedure for Application
III. Tax Treatment
IV. Special Carer
V. Working in Malta
VI. Changes in Circumstances that have an Effect on the Minimum Tax Payable
VII. Annual Tax Return
VIII. Power to Request Information
IX. Abuse of Rights

 

I. Who May Apply?

Those who are eligible for the application must meet all of the requirements of the Global Residence Programme listed below:

1) the individual must not be:

a. an EU national (excluding a Maltese national); or
b. a national or Iceland, Norway or Liechtenstein; or
c. a national of Switzerland.

An applicant who is in possession of dual-citizenship, meaning being a citizen of one of the above countries and a citizen of another, is unable to apply for the special tax status in regards to the Global Residence Programme.

2) may not be a beneficiary of any of the below tax programmes:

a. High Net Worth Individuals Rules;
b. Malta Retirement Programme Rules;
c. Residents Scheme Regulations;
d. Qualifying Employment in Innovation and Creativity Rules; or
e. Highly Qualified Persons Rules

Although, the individual may terminate any of the above benefits prior to applying for the Global Residence Programme. An authorised registered mandatory needs to declare this termination in Part 6 of the application form.

3) Owns or rents a secure property in which the individual resides within as his primary place of accommodation worldwide. The standards of the property needed are as follows:

a. Owned:
i. a permanent property located in Malta besides from the south of Malta (see below): €275,000
ii. a permanent property located in the south of Malta (see below): €220,000
iii. Gozo: €250,000

If the property was bought before the date of publication of LN 178 of 2013 (i.e 25th June 2013) for an amount smaller than the above-mentioned then the applicant must state that the current value of the property on the date of application was not less than the amounts listed above. This statement must be submitted along with the documentation below:

A valuation of the property, carried out by an unrelated and impartial architect; and
Architect’s plan of the property.
The Commissioner may permit a surveyor, office or architect to complete and open access to the fixed property until the stated value of the property is validated.

b. Rented
i. a permanent property located in Malta besides from the south of Malta (see below): €9,600 per annum
ii. a permanent property located in the south of Malta (see below): €8,750 per annum
iii. Gozo: €8,750 per annum

A lease no less than twelve months must be obtained and confirmed by a certified rental contract.

For the purpose of the Global Residence Programme, these are the localities that are considered to be in the south of Malta:

Birżebbuġia
Cospicua
Fgura
Għaxaq
Gudja
Kalkara
Kirkop
Luqa
Marsascala
Marsaxlokk
Mqabba
Paola
Qrendi
Safi
Santa Luċija
Senglea
Siġġiewi
Tarxien
Vittoriosa
Xgħajra
Żabbar
Żejtun
Żurrieq

If the property is being rented fully furnished or otherwise, this needs to be indicated in the lease agreement. As well as any independent agreement in regards to furnishing etc and their respective amounts are to be attached in the application form.

Depending on the individuals situation, the final deed or the lease agreement, must provide complete information of the buyer or tenant, relating to the circumstances. In the instance of an individual: the full name and surname, identity card number or passport and residential address must be provided. In the occurrence of buyers / tenants that are not individuals, the details required include name, income tax registration number, relevant registration number as well as registered address. In either case, whether the property is owned or rented, the applicant needs to state that s/he resides within such property as his/her primary place of residence worldwide.

All applicants must keep in mind that:
the only people residing within the qualifying house must be either the beneficiary or his/her dependants.
letting or sub-letting of the property is not allowed.

If the property was purchased or leased by the application date, a certified copy of the contract stating the purchase and title or lease must be submitted along with the application. If it was purchased or leased after the date refer to II.C below.

4) The individual applying is in possession of a steady and constant income to sustain himself/herself and his/her dependants without relying on the social assistance system of Malta.

This must be certified by the authorised registered mandatory in Part 6 of the application form.

5) Owns a valid travel document, which should be submitted along with the application with certified proof.

6) All applicants including their dependants must submit together with their application, an EU health insurance that Malta is signatory to, the health insurance must be obtained by an organisation licensed in Malta or by an international reliable health insurance company and a legitimate copy of the policy must be submitted along with the application documentation.

7) the individual must be fluent in either English or Maltese, this must be declared by the authorised registered mandatory in Part 6 of the application. If possible, a legitimate copy of any certifications that this is sufficient must be submitted along with the application. The Commissioner also reserves the right to ask for an informal meeting with the individual in question to confirm that this requisite is fulfilled.

8) Is a respectable and healthy person. The applicant must present a police conduct certificate (along with the Apostille Certificate shown below), sent out no earlier than six months before the submitted date of the application, as well as a confirmed statement before a Commissioner for Oaths in Malta determining whether the individual does or does not have any ongoing civil or criminal proceedings. If by chance, the individual does have ongoing proceedings, details of such proceedings must be signed and submitted on a separate statement. The Commissioner is allowed the right to ask further questions.

This also goes for any dependants over the age of 18 as well as special carers that are stated within the application form.

Note:
In addition, the authorised registered mandatory must state in Part 7 of the application form that they are aware of any incidents that may affect this situation and are obliged to do so for as long as the individual remains a beneficiary.

To determine whether the applicant is a respectable and healthy person, the Commissioner must take into account several principles listed below:

  • The individual is of good morals and good conduct;
  • The individual’s character and reputation regarding whether they have a criminal record, convictions for fraud or other dishonest;
  • Being prohibited from entry to any occupation or profession by regulatory or professional bodies;
  • Being pronounced bankrupt by a qualified court or authority;
  • Offences connected to money laundering, crimes against humanity, child abuse or terrorism;
  • Whether in past instances the individual has been honest and upfront about all dealings with the Maltese Public administration.

Note:
If public documents are to be produced in Malta but are performed in a country other than Malta in regards to the Malta Retirement Program Rules, they need to be submitted with an Apostille Certificate in terms of the Hague Convention of 5th October 1961 Abolishing the requirement of Legalisation for Foreign Public Documents. Public documents are as follows:

a) notarial acts;
b) administrative documents
c) any documents from an authority or an official linked to the courts or tribunals of the State;
d) official certificates that have been signed, dated and authorised by persons in their private capacity as well as notarial authentications of signatures

In the instance that the aforementioned Convention has not been signed by an authorised person, the document must be officiated by a Notary or Lawyer (who must also declare the professional institute or association to which s/he belongs).

Any documents that are not in English be submitted along with a certified English Translation.
Only applications for the special tax status that have been signed and submitted by the authorised registered mandatory may be valid.

An Authorised Registered Mandatory is a person that:

  • Holds a warrant to practice as an advocate or legal procurator under the Code of Organisation and Civil Procedure; or
  • Has been selected notary public in regards to the necessities of the National Profession and Notarial Archives Act; or
  • Holds a warrant to practice as an accountant under the Accountancy Profession Act; or
  • Is a member of the Malta Institute of Taxation; or
  • Is a member of the Financial Services Practitioners; or
  • Is a member of the Malta Institute of Management; or
  • Is a member of the Malta Institute of Accountants;

or who is registered with the Commissioner for Revenue under the MRP of having owned at least 75% (directly or indirectly) by persons in possession of the aforementioned criteria.

NOTE: If an authorised mandatory is registered with the Commissioner in regards to the High Net Worth Individuals Rules and the Malta Retirement Programme Rules they will be seen as authorised for the intention of the Global Residence Programme. A list of Authorised Registered Mandatories may be located on the Inland Revenue Department’s website.

II. Procedure for Application

An application may only be submitted for the Global Residence Programme (GRP) to the Commissioner of Revenue once it has been passed through an Authorised Registered Mandatory (ARM), this can only be authorised once Part 1 of the application has been completed and signed.

A. Where to apply:
Applicants must submit their applications and supporting documentation to the International Tax Unit at the following address:

Commissioner for Revenue
International Tax Unit
MFSA Building
Notabile Road
Attard
BKR 3000

The envelope should state “Application: Global Residence Programme”.

B. Administrative Fee
An administrative fee of €6,000 must be paid upon application by way of a bank draft payable to the ‘Director General (Inland Revenue Department)’, this fee is non-refundable. Unless the qualifying property is located in the south of Malta, in such case, the administrative fee will be €5,500, in this instance, the property needs have been obtained on the date of submission of application.

If the individual is deciding to change his/her special tax status in terms of the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules to the Global Residence Programme Rules they will not be charged again since the non-refundable fee has already been paid.

C. Step-by-step procedure of the application process

Once the required documentation, including the Questionnaire (and it’s requisite documents) are submitted along with the application and a bank draft of the administrative fee to the Commissioner who will then check and evaluate its entirety. A letter is then sent to the ARM indicating the next step in the process. In the unfortunate circumstances that not all information or documents have been submitted, this will suspend the process until such documentation has been presented.

The applicant does not need to own or lease a qualifying property at the date of application and is allowed to submit the final dead or letting contract, depending on the circumstance, at a later date.
Although:
If the property is in the south of Malta, the final deed of purchase must be submitted with the application;
Special tax status cannot be obtained until the final deed or letting contract, depending on the circumstance, is submitted.

Once the application has been validated it can then move onto the due diligence process, once completed, the ARM will be notified of the result. If successful, a letter of intent is then sent to the ARM. This will be coincide with a notice of primary residence which needs to be signed and completed by the applicant which must be submitted in original. The applicant then has twelve months from the date of issue of said letter to submit the certified letting agreement or final deed in order for the confirmation letter to be issued.
If, in the unfortunate instance, the result is negative, the ARM is informed of the main issues of concern and together with the applicant must provide an explanation. The Commissioner has the right to refuse or proceed with the process.

Any incorrect or misleading information can delay the process and may be deemed as untrustworthy and is considered very serious. Full and accurate information is required and if in doubt as to how much detail to provide, always opt for more.

D. Applicants / beneficiaries requesting to have their special tax status regulated by the Global Residence Programme Rules

In the case of:

  • Individuals who have applied for special tax status regarding the High Net Worth Individuals – Non-EU / EEA / Swiss National Rules; and
  • Beneficiaries of special tax status granted in regards to High Net Worth Individuals – Non-EU / EEA / Swiss National Rules, and who request the Commissioner to have their special tax status changed to the Global Residence Programme Rules will not need to submit more documentation if it has already been covered in their application for the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules and as long as the documentation is still valid and has not been replaced.

If the applicant had already submitted an application to benefit for special tax status under the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules but has not been confirmed by the 30th June 2013 and would like to change to the Global Residence Programmes Rules, they may request the Commissioner to consider this new application. This needs to be processed through the applicants ARM and needs to refer to Rule 3(3) of the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules.

If the individual’s application for the special tax status under the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules has been confirmed but would like to change to the special tax status of the Global Residence Programme Rules, they must go through their ARM who will then request this change of the Commissioner who will issue a confirmation in writing. This application must refer to Rule 3(3) of the High Net Worth Individuals – Non-EU / EEA / Swiss Nationals Rules (introduced by means of LN 178 of 2013).

III. Tax Treatment

Once granted special tax status the beneficiary is liable to a rate of fifteen cents (0.15) on every euro that is classed as income received in Malta from foreign sources by the beneficiary or his dependants (see below) and begins from the date of confirmation up until the day of termination of status. This tax rate will apply from the date of confirmation or succeeding to the day of termination of status, both years included.

Dependants who will benefit from this rate are as follows:

  • The beneficiary’s spouse;
  • Minor children including minor children and children who are in the care and custody of the beneficiary or the beneficiary’s spouse;
  • Children including adopted children and children who are are not minors but are unable to maintain themselves due to illness or severe disability.

None of the above individuals may be beneficiaries under the Residents Scheme Regulations, High Net Worth Individuals – EU / EEA / Swiss Nationals Rules, the High Net Worth Individuals Rules – Non- EU / EEA / Swiss Nationals Rules, the Malta Retirement Programme Rules, the Qualifying Employment in Innovation and Creativity Rules or the Highly Qualified Persons Rules.

Any other chargeable income such as, dividends received from a company registered in Malta or a bank interest received from a local source by the beneficiary or his spouse that are not accounted to tax as separate income at the rate above can be charged to the tax rate of thirty five cents (0.35) on every euro.

Dependants who are chargeable to the Income Tax Act are charged separately in reference to the rates of Article 56 of the Income Tax Act and they must be registered for income tax purposes with the Inland Revenue Department under a independent procedure. These dependent are as follows:

  • The person with whom the beneficiary is in a steady and long-lasting relationship;
  • Children who are between the ages of 18-25, including adopted children and children who are in the care and custody of the beneficiary, the beneficiary’s spouse or the person with whom the beneficiary is in a steady and long-lasting relationship, who are not able to support themselves financially; and
  • Sisters, brothers and immediate relatives in the ascending line of the beneficiary, the beneficiary’s spouse or the person with whom the beneficiary is in a steady and long-lasting relationship.

A. Minimum Tax

A minimum tax that covers the income of the beneficiary and his/her dependants mentioned below that occurs outside Malta and is received in Malta and does not include income that occurs in Malta must be paid annually to the amount of fifteen thousand euros (€15,000). The referred to dependants are:
The beneficiary’s spouse;
Minor children including minor children and children who are in the care and custody of the beneficiary or the beneficiary’s spouse;
Children including adopted children and children who are are not minors but are unable to maintain themselves due to illness or severe disability.

Such beneficiary retains the right to request a claim for relief of double taxation under Article 74 (a) and (b), Income Tax Act, provided that the minimum amount of tax payable by the beneficiary is as provided above. If the tax payable according to the tax computation (including any credit for relief of double taxation) is such that it is less than the minimum tax required to be paid as aforesaid, the amount to be paid will be the said minimum.

The minimum tax will be paid in full in the year that the special tax status is approved or terminated.

If the special tax status is granted before 30th April 2013, the minimum tax for the first year must not be paid any later than the 30th April at the Inland Revenue Department Floriana. The confirmation of this special tax status by the Commissioner will depend upon the payment of the minimum tax in a thirty day time frame. A receipt of the payment must be shown to the International Tax Unit so that a letter will be presented to the qualified authority responsible for issuing residence permits will be released. This letter, along with the letter of confirmation of special tax status will be the foundation upon which the steady residence permit will be issued. This course of action must take place every year so that the special tax status may be renewed annually for the beneficiary.

B. Provisional Tax

A beneficiary is subject to payment of provisional tax payments in accordance with the Payment of Provisional Tax (P.T.) Rules.

Note that in the first year the beneficiary will not be subject to Provisional Tax.

C. Where the beneficiary becomes a long-term resident

  • In the case that an individual has been permitted special tax status in regards to the Global Residence Programme:
  • Is a person who has long-term resident status in regards of the Status of Long-Term residents (Third Country Nationals) Regulations; or
  • Is a person who has applied for long-term resident status under the Status of Long-term residents (Third Country Nationals) Regulations
    can no longer benefit, if at all to begin with, from the tax treatment as explained in III. above and will be taxable on a worldwide basis i.e on any income resulting in or originating from Malta or elsewhere, and whether received in Malta or not in regards of income mentioned in Article 4 of the Income Tax. This income will be liable to tax at the appropriate rates set out in Article 56 of the Income Tax Act.

IV. Special Carer

A. Who may be a special carer?
A special carer is an individual who has been providing substantial and regular, curative care and has been in service for a minimum period of two years, has been established on regular basis for an extended period of time or a new carer has been required recently. A special carer mar live with the beneficiary in the qualifying property so long as the services are provided in whole or in part within the property. This must be regulated by a contract of service.

B. Tax Treatment
In any case, the carer must register with the appropriate tax authorities in Malta and is subject to the rates set out in Article 56(1) and is unable to benefit from the 15% tax rate.

V. Working in Malta

If by chance, the beneficiary or the special carer is a third country national and is in need of a work permit, they may be issued one by the Employment and Training Corporation (ETC) in Malta. The guidelines set out by the ETC are accessed by the link below:
http://etc.gov.mt/etc-portal/page/3/ELU-Guidelines.aspx

Global Residence ProgrammeIn this case, the application for special tax status must include a letter addressed to the Department Manager (Employers Services), sent no later than fifteen days from the date of the application, with details of the individual/s requesting a work permit to be issued. This letter will then be supported by the International Tax Unit and submitted to the ETC by the ARM. A template of this letter may be found in Annex 1 to these Guidelines.
The application for special tax status must be processed and granted in regards to the Global Residence Programme before the procedure for employment is carried out.

In any case, the minimum tax as described above in III. must be paid in full and a receipt must be submitted along with a letter to be supported to the International Tax Unit.

VI. Changes in Circumstances that have an Effect on the Minimum Tax Payable

If there are any changes to the amount of dependants or carers of the beneficiary he must notify the ARM who in turn will inform the Commissioner within four weeks of the change.

VII. Annual Tax Return

An Annual Tax Return must be submitted by the individual in question as well as an annual declaration and any material changes that may affect the special tax status.

The Commissioner may request any information including certifications and declarations from the individual to ensure that they may correctly benefit from this tax treatment.

If a person creates a false declaration or statement in any documentation submitted to the Commissioner he is liable to all penal provisions in the Income Tax Management Act as well as the Criminal Code.

VII. Cessation of Special Tax Status

A. By choice of the beneficiary:
It is possible for the beneficiary to terminate the special tax status by informing the Commissioner for Revenue and such termination will take place either from the date indicated by the individual which may not be any later than three months from the date of issue or if no date is specified, termination will take effect immediately.

B. By death of the beneficiary:

  • A dependent of the beneficiary shall receive the special tax status in regards to the Global Residence Programme in the unfortunate events of the original beneficiary’s death if they have either:
  • inherited the qualifying property that was the main residence of the deceased beneficiary; or
  • rented a qualifying property straight after the death of the deceased beneficiary.

In either case, the dependent must provide all documentary proof that they have satisfied the requirements established in I. above in his/her own right to be submitted to the Commissioner who will then decide if they are liable for the special tax status.

Note – special tax status can only be transferred to one individual. Either the dependent has been stated in the will of the deceased beneficiary or submits all the complete and correct set of the aforementioned documentation. This documentation needs to be presented along with the death certificate and has to be delivered to the Commissioner within 183 days of the death, otherwise, the dependent forfeits the right to obtain the special tax status.

C. By default of the Income Tax Acts:
In the unfortunate event that the beneficiary has breached any of the conditions of the Income Tax Acts, they will forfeit special tax status with instant effect. These breaches include:

  • regular adherence to agreements are not followed, such as tax evasion and misrepresentation;
  • failure to produce information requested by the Commissioner for Revenue in time.

If the beneficiary, for any reason, is no longer represented by an Authorised Registered Mandatory, he needs to appoint another Mandatory and must advise the Commissioner for Revenue as soon as possible, otherwise the agreements under the Income Tax Acts cannot be fulfilled.

D. Where there is a failure in connection with the conditions that need to be satisfied throughout the special tax status:
If the Commissioner for Revenue deems the conditions below are no longer being met, the individual surrenders all special tax status effective from the date determined by the Commissioner in writing. The special tax status will be discontinued if the beneficiary:

a) becomes a national of Malta or of another EU Member State, Iceland, Norway, Liechtenstein or Switzerland; or
b) does not hold a qualifying property at any time after the designated day; or
c) becomes a long-term resident at any time after the designated day; or
d) if himself or his dependants are not in ownership of sickness insurance in regards to the risks usually covered by Maltese nationals; or
e) if the Minister of Justice believes the beneficiary’s stay is seen as not to be in the public interest. This includes such situations as:

  • interests of public safety;
  • national security;
  • the protection of public order;
  • public health or morals;
  • territorial integrity

f) stays in another territory for more than 183 days in a calendar year, if so the beneficiary needs to declare this in the Annual Tax Return.

If the beneficiary fails to notify the Commissioner through his/her ARM within four weeks of knowing of this event, the individual must pay an administrative penalty of €5,000.

The Minister responsible for Finance has the ability to declare a failure in regards to any of the conditions above, however, if the Minister is made aware of the failure within the four weeks, they are able to pardon the failure if the individual provides the following:
an adequate explanation that it was due to unforeseen circumstances; and
adequate proof that all efforts were used to prevent the failure.

More importantly, if the beneficiary or the ARM decides to place responsibility of the failure on another person to remedy, this is as seen as insufficient proof that all efforts were made to prevent the failure and may not be the reason for a failure due to unforeseen circumstances.

VIII. Power to Request Information

The Commissioner for Revenue has the right to request any information or documents, including certifications and declarations for the purpose of determining whether an individual qualifies for the right to pay tax at the reduced rate indicated in III. above, these documents must be presented within a time frame stated by the Commissioner in the request.

Moreover, the Commissioner and the qualified authority in relation the Status of Long-term Residents (Third Country Nationals) Regulations have the right to discuss information that they possess in regards to the aforementioned Regulations. This information concerns individuals who:
a) Make an application for special tax status under the Global Residence Programme; or
b) Is a beneficiary of special tax status under the Global Residence Programme; or
c) Has long-term residence status in terms of the Status of Long-term Residents (Third Country Nationals) Regulations.

IX. Abuse of Rights

If an individual claims the reduced tax benefits that they are not entitled to, the Commissioner for Revenue may issue an assessment in terms of Article 31 of the Income Tax Management Act.

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