Amendments made to the Malta Retirement Programme, Global Residence Programme, Residence Programme and the United Nations Pensions Programmes Rules

Amendments were made to the Malta Retirement Programme, Global Residence Programme, Residence Programme and the United Nations Pensions Programmes Rules by means of Legal Notice 69 of 2020 (hereinafter ‘Legal Notice’) which was published on the 17th of March 2020. Such amendments shall be applicable retrospectively as from the 1st of January 2020.

Malta Retirement Programme Rules (S.L. 123.134)

Who qualifies as a beneficiary in terms of the Malta Retirement Programme Rules?

Prior to the enactment of this Legal Notice, the Malta Retirement Programme Rules (hereinafter ‘MRPR’) only applied to EU, EEA and Swiss Nationals however the definition of a ‘beneficiary’ has now been widened to include all nationals. Thus, third-country nationals may now also benefit from the MRPR. An individual will not constitute as a dependent or beneficiary in terms of the MRPR if the said individual already benefits from one of the following:

  • High Net Worth Individuals – EU/EEA/Swiss Nationals Rules;
  • High Net Worth Individuals Rules – Non-EU/EEA/Swiss Nationals Rules;
  • Highly Qualified Persons Rules;
  • Global Residence Programme;
  • The Qualifying Employment in Aviation (Personal Tax) Rules;
  • The Qualifying Employment in Innovation and Creativity (Personal Tax) Rules;
  • The Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules;
  • Residents Scheme Regulations;
  • Residence Programme Rules; &
  • The United Nations Pensions Programme Rules.

Who may reside in the qualifying property in terms of the Malta Retirement Programme Rules?

A beneficiary of the MRPR must prove to the satisfaction of the Commissioner for Revenue (hereinafter ‘Commissioner’) that he holds a qualifying property. No person other than the beneficiary, dependents of the beneficiary or household staff may reside in the qualifying property.  By means of these amendments, the definition of ‘household staff’ was amended to eliminate reference to the term of employment (being 2 years) of which the said staff must have been employed for, prior to applying for this special tax status. This Legal Notice specifies that such household staff must be in an employment relationship with the beneficiary, evidenced by a contract of service and who satisfies conditions that the Commissioner may determine by means of guidelines, regardless of the duration that such household staff may have been employed for.

Transfer of this special tax status

It is possible, subject to certain criteria, that such special tax status in terms of the MRPR is transferred following the death of the beneficiary. The amendments have altered this process slightly. By means of this Legal Notice, such special tax status may now only be transferred once the dependent of the beneficiary provides proof that all requirements are satisfied in such a manner as the Minister for Finance may determine followed by a consultation with the Commissioner.

Tax payable at a rate of 15% on income received in Malta

Such special tax status regulated by the MRPR, is payable at a rate of 15% on every euro arising outside of Malta which is received in Malta by the beneficiary or dependent. This proviso has been altered and thus as at the 1st of January 2020, such income will be taxed at a rate of 15% from income arising outside of Malta which is received in Malta by the beneficiary, the beneficiary’s spouse and children (referred to in paragraph (b) of the definition ‘dependent’ in Article 2 of the MRPR).

Revocation of special tax status

One may cease to possess such special tax status in terms of the MRPR if one of the grounds outlined in Article 6 of the said Subsidiary Legislation is satisfied. Sub-article (f) of the said Article was amended to include reference to individuals who have acquired ‘long-term resident’ status. Thus, if the individual acquires either permanent residence status or long-term resident status, one shall cease to possess such special tax status in terms of the MRPR.

Request for information process

This Legal Notice has also proceeded to broaden the methods which the Commissioner can utilize to obtain information. It is now within the discretion of the Commissioner to request certain information and documents in order to ascertain an individual’s entitlement to rights acquired under the MRPR. By means of these amendments & notwithstanding any other provision in any law, the Commissioner and the competent authority in relation to the Status of Long-term Residents, may exchange certain information that is in their possession and is concerning an individual who is either making an application in terms of the MRPR or is a beneficiary or has long-term residence status. Such information in relation to the individual may only be exchanged for the above-mentioned purposes.

Global Residence Programme Rules (S.L. 123.148), Residence Programme Rules (S.L. 123.160) and The United Nations Pensions Programme Rules (S.L. 123.165)

The minor amendments brought about to the above-captioned rules are in relation to the granting of the special tax status following the death of a beneficiary.

Prior to the amendments enacted by the said Legal Notice, in the case where a beneficiary passes away, the special tax status is granted to a dependent of that deceased beneficiary who has inherited the property that was the primary residence of such beneficiary, or who rents a qualifying rented property immediately after the death of the said beneficiary and satisfies all other requirements set out in the relevant legislation. Such status however was transferred once the said dependent provides proof to the Commissioner that all requirements are satisfied in such manner as the Commissioner may determine. Following the amendments, such status will only be transferred once the said dependent provides proof to the Commissioner that all requirements have been satisfied in such a manner as the Minister for Finance may determine following consultation with the Commissioner.

Should you have any queries in relation to the above, please feel free to contact us on privateclients@gvzh.com.mt

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