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subject: Malta: a mediterranean tax-haven isle -- within the european union [print this page]


Malta: a mediterranean tax-haven isle -- within the european union

Like many good things in this world, Malta is a tax-haven but not very well known. Also, Malta is a member of the European Union. To begin, we need to give a little background information before we get into the tax advantages an intriguing subject these days.

Malta , sitting in the heart of the Mediterranean Sea , is actually the largest island(122 sq. miles, about 195 sq. km) of an archipelago of 6 islands, of which only 3 are inhabited.The total population is about 350,000, making it the most densely populated European Union nation. Being a Mediterranean isle it is naturally sun-drenched, thus becoming a tourist haven for sun-loving northern Europeans.

When speaking of its historical background it is almost endless.It is mentioned in Ancient History, Biblical History ( St. Paul 's shipwreck), Crusader History, and boasts of everything in between from pirates to the modern-day Order of St. John.

Because Malta has excellent harbors and has been located in the center of world power, maritime, shipping lanes, she has always been dominated by the world power of its day Phoenicians, Greeks, Romans, etc.Even British maritime power controlled Malta for a period, but finally Malta received her independence in 1964, was declared a Republic in 1974, and entered the European Union in May 2004.Therefore, today, Malta is an English speaking country, and is one of the newer members of the European Union with the Euro as its currency.

Though Malta is free of currency controls, has a stable banking system, and you can open accounts quite easily in various currencies, it cannot be considered a sound offshore financial center.Why?Offshore corporations expect their banking operations to be private, but Malta has seen fit not to be a provider of this privacy service.

Regardless of the banking privacy issue, many European tax exiles are still investigating Malta as a possible long-term residence.Since Malta is considered European, is relatively affordable place to retire, and is a sun-drenched haven, it has caught the attention of quite a number of potential retirees.

When speaking of housing, the cost of a studio apartment in Monaco could probably buy you a delightful house with a pool in Malta .Surely, this gives Malta an appealing touch.Also, Malta being a member of the European Union is very important to many European exiles, whereas Andorra and Monaco , though excellent retirement havens, are not EU members.An additional drawing card for Malta is it does not have minimum stay requirements for official residents.

Though it must be considered that Malta is not tax free, she does offer some enticing tax incentives.An immigrant can effectively cap their tax at 4,192 (about $US 5,700) per year. Those who apply under the Maltese Retirement Program (Residents Scheme Regulations, 2004) and can satisfy a few other conditions will be given a certificate issued by the Maltese Commissioner of Inland Revenue. This certificate has two purposes: First, it acts as a Malta Permanent Residence Permit when issued in terms of Article 7 of the Immigration Act. Secondly, it grants a special Maltese tax status, which entitles the new Resident considerable income tax benefits.

When Residents receive this special tax status they must pay a flat rate of 15% on their local Maltese income (including capital gains) and on their foreign income remitted to Malta . There is a minimum tax of 4,192 (about $5,700) as mentioned above.On the positive side, foreign source income not remitted to Malta , that is the Resident's entire worldwide income, be it earned, unearned, capital gains, etc. is not taxable.

Moreover, this particular tax incentive becomes more attractive.Why? Persons granted this type of Malta Residence Certificate can also claim "double taxation relief" in respect of tax paid outside Malta on any income remitted to Malta , which is subject to tax in Malta . Applying this particular tax benefit becomes increasingly available, in that Malta is participating in an increasing network of double taxation treaties.

Who is eligible to apply for Maltese residency?Any non-Maltese citizen, whether they are or not an EU citizen, may apply for the Residence Certificate by providing documentary evidence that they:

1. Can bring into Malta an annual income of not less than 13,950 (about $US 18,900) in this respect and a further 2,300 (about $US 3,700) for each dependent, and

2. Have either an annual income of not less than 23,000 (about $US 31,300) arising from outside Malta or have in his possession a capital amount of not less than 349,000 (about $US 475,000), and

3. Will take up residence within one year of being an approved Resident

Therefore, by law, within one year of receiving residency approval, the individual must purchase or rent a home in Malta . If a residence is bought, it should cost at least 69,000 (about $US 93,800) for a flat, or at least 116,000 (about $US 155,000) if it is a house. If the applicant decides to rent instead of buying, the rent paid must be at least 4,150 (about $US 5,600) per annum.

The bottom-line: If you are considering changing your residency in order to free yourself from burdensome taxation, Malta , certainly, is a most interesting place to live and has a lot to offer.

By Jack Godwyn REWRITE#11 Malta A Med.Tax-Haven Isle Within The EU




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