The Residence Programme (TRP)
Requirements For The Residence Programme Eligibility
The process has clear guidelines for applicants wanting to benefit from The Residence Programme.
The Residence Programme (TRP) In Malta – A Detailed Overview
The Malta Residence Programme is aimed at business owners in order to benefit from a favourable fixed tax rate. Instead of using Malta’s full imputation system to benefit from a low corporate tax rate, you can instead opt for this programme so you do not have to wait for refunds and therefore enjoy a greater liquidity throughout the year.
Why Malta Operates TRP
TRP provides an incentive for people from the EU, EEA and Switzerland, who do not reside permanently in Malta, to come and live here. The authorities view this as good for Malta because it brings money into the country. Reciprocally, it is good for individuals due to the tax benefits it brings them.
The conditions for acquiring special tax status are set out in The Residence Programme Rules 2014. What follows is a guide to those rules, but be warned, much of the judgments made as part of the process of determining whether a person should qualify are based on discretion exercised by the Commissioner after they have read the application and taken into account any other evidence or information held.
Who may apply
- Clarifies the rules on both owned and rented property;
- Examines other legal requirements;
- Explains the applications process; and
- Refers to how tax will be calculated.
To become eligible for TRP you need to apply. you are eligible to apply if you are a national of the EU (but not a Maltese national), Iceland, Norway, Liechtenstein or Switzerland.
Exemptions for beneficiaries of other tax programmes
If you already benefit from one of the following but want to be eligible for TRP, you must relinquish your right to the other benefit prior to applying for TRP. The benefits are paid under the following provisions:
- Residents Scheme Regulations;
- High Net Worth Individuals Rules;
- Malta Retirement Programme Rules;
- Global Residence Programme Rules;
- Qualifying Employment in Innovation and Creativity Rules; and
- Highly Qualified Persons Rules.
Part 6 of form on which you should submit your application contains space for your authorised registered mandatory to declare in writing that you have relinquished your entitlement to any of the above to enable you to pursue your application for TRP.
The property you own in Malta should be your principle residence worldwide and you will be asked to declare that is true. The property must be immovable and valued at least €275,000 in North Malta and €220,000 in South Malta and Gozo.
LN270 of 2014 was published on 1st July 2013. If you bought your immovable property in Malta prior to the publication date, for less than the amounts above, you may still be eligible to apply for TRP providing the value of the property when you submitted your application is the same or greater than the amounts above. If this applies, you will need to substantiate your application by sending in:
- An independent valuation from an architect; and
- A plan of the property produced by an architect.
In considering your application, the Commissioner may issue a written order for a surveyor or other qualified person to value the property.
In cases where you have bought or leased a property by the date you submit your application. You should also send in an authenticated copy of the contract with your application. Make sure that it cannot become detached as that would cause an unnecessary delay and you would have to obtain another verified facsimile of the contact document
If, at the time of your application, you do not yet own the qualifying property, or in the case of you renting property, you have yet to sign the lease, there is no need to delay your application but you must send in the certified deed once it has been finalised or the lease agreement as soon as it becomes available.
If, your immovable property is in south Malta and you want to benefit from the reduced administration fee for TRP, you will need to submit the deed of purchase at the application stage or special tax status will not be granted until all the documents required are received by the Commissioner.
People Renting Property
If you rent an immovable property for not less than twelve months, the annual rental should not be lower than: €9,600 in Malta and €8,750 in South Malta or Gozo.
Your lease agreement will need to be sent on along with the application form and should show clearly whether you are renting the property furnished or unfurnished. If you have a separate lease agreement for furniture or anything else you will need to send that also. The cost you are paying per year should be shown clearly on each lease document.
The final deed and any lease agreement should provide details of the vendor or the person who is leasing the property, including, for individuals:
- Full name;
- Passport or ID card number; and
- Residential address.
For vendors/lessors acting as a business
- Registration number;
- Income Tax registration number; and
- Registered address.
Other Considerations Concerning Property
The qualifying property must not be occupied by anyone other than you and your dependents. You cannot let or sub-let the property. You should also note that this information also applies to your household staff.
Additional Eligibility Criteria
You should be financially able to support yourself and any dependents without recourse to funds available for social welfare in Malta. You will, through your authorised registered mandatory, have to produce evidence that you can do this and that you will not be a drain on public funds. The authorised regulated mandatory must make a detailed declaration to that effect on the application form at part 6.
With your application, you will have to submit certified proof that you hold valid travel documents: a passport being the principal example.
You need to make sure that you and any dependents are covered by medical insurance and will have to submit a certified copy of the sickness insurance certificate you hold with your application. This should cover you and your dependents for the same risks as those of other Maltese nationals. The insurance company must be registered in Malta or be recognised as a reputable company internationally.
You must be able to communicate in Maltese or English. The authorised registered mandatory will have to assert to this in part 6 of the application form and you should submit copies of any certificates you hold that proves your claim. You should be aware that the Commissioner may chose to test what you have said by holding a short interview with you. This is nothing to worry about providing you have been truthful and it provides you with an opportunity to make a good impression on the person dealing with your application.
A Person the Maltese Authorities Would Welcome
You must be able to prove that you are a suitable person to reside in Malta by:
- Submitting a good conduct certificate from the police together with an Apostille Certificate. The certificate must be submitted within six months of the date of your application;
- Swearing a declaration before a before the necessary authorities in Malta that you are not subject to ongoing litigation for a criminal or civil matter. In addition, any dependents aged 18 or over, together with any household staff referenced on the application form also need to prove they also meet he above criteria.
An Apostille Certificate, sometimes called an Apostille Stamp was introduced as a consequence of The Hague Convention on Private and International Law. It is an official certificate which recognises and confirms that a document is genuine and can be accepted without risk in a country different to the one in which it was issued.
Obligations of an Authorised Registered Mandatory
There is an obligation on the authorised registered mandatory to document, in part 7 of the application form, any circumstances they know of that might contravene what the applicant or any other party is saying about Their suitability to live in Malta. And, so long as the applicant derives benefit from TPR, they should notify the authorities of any such derogatory circumstances should they subsequently come to light.
Commissioner’s Assessment of Fitness
In assessing whether the applicant is a person who should be welcomed to reside in Malta, the Commissioner considers whether they are:
- Of good conduct;
- By reputation, of good character? For example, whether they have a criminal record for fraud, dishonesty or other disreputable behaviour?
- Disqualified, censored or barred by a profession or trade body because of past behaviour?
- Officially declared bankrupt?
- Free from offences related to crimes against humanity, child abuse, money laundering or terrorism;
- Always candid and truthful in their dealings with the Maltese Public Administration. Past behaviour and the way the applicant is managing the application in hand are factors likely to be taken into account.
How to Apply for TRP
You can only apply under TRP provisions through an authorised registered mandatory and you will be asked to authorise their involvement at part 1 of the application form. You can contact us in order to assist you with the application and direct it to the appropriate Government Department.
You will need to pay a non-refundable administration fee to have your application processed. You can do this by obtaining a banker’s draft payable to the Director General (Inland Revenue). The value of the banker’s draft should be €6,000 unless the qualifying property is in South Malta, in which case it will be €5,500. Where this applies, you should have have purchased the property by the time you apply.
Application for extra-statutory concessions under Rule 3 (3)
If you are very rich and an attractive prospect for main residency in Malta, then providing you are from the EU/EEA or a Swiss National, you can apply for extra-statutory concessions. Because you have already paid a non-refundable fee, you will not be required to pay a second.
After You Have Submitted Your Application
Once your application, together with all supporting documentation required plus the administration fee is received in the Commissioner’s Office, a check will be conducted to make sure that all the relevant information has been submitted. An acknowledgement letter will be issued to your authorised registered mandatory. If the application is, for some reason, incomplete and cannot be processed, you will be notified.
All valid applications go through a due diligence process, the result of which will be notified to your authorised registered mandatory. If the outcome is positive the applicant, together with their authorised registered mandatory, will be invited to attend a face-to-face interview with the authorities. Following the interview, if a certified final deed or lease agreement is still pending, a letter of intent will be issued. The letter will be valid for one year from the date it was issued and the outstanding documents must be submitted within that time. Alternative, if all necessary papers are in, a notice of primary residence will be sent to you. You will need to sign and return it.
If the outcome of due diligence is against you, the issues of concern will be explained in your rejection letter. You and your authorised registered mandatory can attempt to address these. Ultimately, it is up to the Commissioner whether the application is successful or is refused.
It is for you to substantiate your application. You must make sure that the application form is fully and correctly completed. Provide as much detail as possible. If you fail to do this or it contains incorrect or misleading information, such behaviour is likely to be viewed negatively by the Commissioner and could lead to the rejection of your application.
If your application is successful this is what it will mean for you:
- You will pay tax on Income from abroad received in Malta at a rate of 15%;
- Your minimum annual tax liability will be €15,000;
- Tax on income not covered by TRP rules will be levied at 35%;
- Subject to the minimum tax liability, you will have the opportunity of claiming double tax relief;
- You will pay no inheritance taxes;
- So long as it is not paid in Malta, income you earned elsewhere is not taxable
- You will not pay net worth or wealth taxes; and
- Even if you receive the benefit in Malta, you will not pay tax on capital gains from outside Malta.
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