Moving to Malta & Other EU Countries: Residence Requirements, Part 1

It may be easier to get yourself moved into Malta than your pets! There are lots of rules, regulations and requirements, but it's pretty straightforward. Here are your options: (Many European Union nations have similar residence requirements, but you should always check the rules for the specific nation you're interested in moving to.)

Tourist Visa

The standard tourist visa allows you stay for 90 days without being hassled. When the three months are up, you can extend your stay by either getting an extension from the police department--or by leaving Malta for a day or two and then returning for another 90 days.

Ninety days go by quickly. This is what you should do if you're going to try Malta out for a short time. If you're planning to really try to live here, you should plan on becoming a permanent resident.

Maltese Residency: The Benefits

The first good thing is that once you become a resident, you can generally live in Malta without the fear of a visa running out all the time. The second good thing is that there's a flat 15 percent tax on income you bring into Malta. Since Malta has double-taxation treaties with many countries, you will most likely not have to pay any tax to your country of origin. If you're wealthy, this is probably very desirable. If you're not so wealthy, this tax scheme may still benefit you because it's a simple tax scheme. If you're from America, it's a significantly simpler tax scheme.

If you become a resident, you can come and go as you please. You don't have to live in Malta all the time. (Please be aware that you will not become a Maltese citizen by becoming a resident. You won't be able to vote.)

Residency: The Differences

There are actually two types of residency you can seek, all depending on where you are emigrating from. They are Ordinary Residence and Permanent Residence. The only true difference between the two schemes is the amount of taxation.

Ordinary residence is restricted to people coming to Malta from any of the EU countries. Taxes are determined by taking from 0 to 35 percent of income minus a tax credit--depending on income. For married couples, this translates into a tax credit of 0 to 5,770 Euros. Example: A couple making 22,000 Euros would be taxed at 25 percent which = 5590. Then 5590 minus a credit of 3450 = tax of 2050 Euros. There are no other deductions or exemptions allowed.

For singles, this translates into a 0 to 3,990 tax credit. For example, a single person making 22,000 Euros annually would be subject to a 35 percent taxation which equals 7700 Euros. A credit of 3990 is allowed. Therefore, 7700 Euros minus 3990 = a taxation of 3710 Euros.

Permanent residence is open to all people no matter what country they originate from. If you're not from the EU, then this is the type of residency you would apply for. If you are from the EU, you can apply for this or ordinary residence. But you should consult an attorney or lawyer to determine which scheme is more applicable to your situation. If you're from the EU and don't intend to live in Malta very long-but are using Malta to establish a fiscal (tax) residence, you might consider this option because you may incur less tax this way. Also, ordinary residence is a lot easier and faster to achieve than permanent residence.

As a permanent resident, you will be taxed a flat 15 percent on income you bring into Malta. However, there is a minimum tax of 4200 Euros-even if you remit little or no income. (This would apply to people who don't bring in income but have the required amount of assets to live in Malta.) If you're an American, you're going to suffer, unfortunately, from the weak dollar. Forty-two hundred Euros comes to about $6535, as of this writing. But, as said before, at least it's a far simpler system than the American taxation system.

Ordinary residence permits are renewable every five years, while permanent residence permits are renewable every year.

Coming Soon: Part 2--Maltese Residence: The Requirements

Sources:

Inland Revenue, Malta

www.ird.gov.mt/default.aspx

Griscti & Chetcuti, Advocates - Malta
www.malta-law.com/residence.html