Ordinary Residence - Malta

malta
europe

(Lukas) #1

Hey guys,

I am currently looking into two countries that seem like decent choices for tax residency: Estonia and Malta.

I am from the EU so moving there shouldn’t be an issue at all, however I am still a bit confused as for what I’ve to do to gain tax residency there.

Every website I came across so far stated that you’ve to live on Malta for at least 183 days a year to gain ordinary residency. In other forums I often read that people only spend like 3 month there and travel the rest of the year without having issues. I read a comment by @tkrunning who said that the 183 days thing makes you an Ordinary Resident by default, in terms of you got no other choice. Following him you could still be an Ordinary Resident even tho you spend less time on the island.

So my plan right now would look like that:
-Leave home country and fly into Malta
-Rent an AirBnb there for 2-3 Month
-Register as an Economically Self-Sufficient Resident (Which makes me an ordinary resident, right?)
-During my 2-3 month stay I’ll look for the cheapest apartment I can find and rent it for a year
-Leave Malta and come back next Winter for 3 months

Would that work? Is renting an apartment for the entire year necessary?

On a different page, I heard that it’s recommended to bring at least some of your income to Malta and pay tax on it. Is there a recommended amount?

Thanks a lot guys!


(MaNiaC) #2

Isle of Man?


(Thomas K. Running) #3

Hi @lukas!

I think that sounds like a good plan!

One thing to note is that it might take a bit more than 4 weeks to get your residency card in Malta, particularly when you register as self-sufficient. So I’d recommend registering ASAP upon arrival.

Which makes me an ordinary resident, right?

There’s a difference between being a legal resident (meaning you have a right to remain in the country), vs being a tax resident. Registering as self sufficient will make you a legal resident of Malta, but it does not confer tax residency. “Ordinary resident” isn’t exhaustively defined in Maltese law, but it’s my understanding that it means you’re living and spending time there in the “regular course of your life”. If you spend more than 183 days there per year, then that requirement is definitely/automatically considered true. But by spending every winter in Malta, that could very well mean you’re “ordinarily resident” as well, it’s just not as black and white.

As long as you’re not spending more time in any other country than Malta (say you spend the rest of the year traveling)—or that if you do spend more time in another country, that country does not consider you a tax resident—then it is very unlikely that you’d run into any issues.

Note that you could still have limited tax liability to other countries. Say you spend two months (or a single day, for that matter) in Country X while doing freelance work from your laptop, then that country could ask you to pay tax on your income for those two months. In practice, the chance of most countries caring about you registering and paying tax there in such a situation is slim to none. Still it is a theoretical possibility, and could in many cases be required if you follow the letter of the law. You can read more about that in Streber’s The Permanent Traveler. PwC’s tax summaries can also be of help when doing quick research for requirements and laws of the various countries you spend significant time in.

Is renting an apartment for the entire year necessary?

In practice not really, as long as someone living on the address they have on file for you is willing to open or forward mail to you.

On a different page, I heard that it’s recommended to bring at least some of your income to Malta and pay tax on it. Is there a recommended amount?

There’s not really any “minimum” or specific recommended amount. It depends on among other things how much time you’re claiming to spend in Malta and how you are supporting yourself.

Are you living off investment income which would not be taxed in Malta even if you bring it in to the country, then why not bring in all of it? At the very least, I’d recommend bringing in enough to cover your rent and basic living costs like groceries for the time you are claiming to spend in the country.

Note that if you do spend e.g. 2-3 months per year in Malta and do work (say freelancing, consulting, writing, or any other type of work) even if it’s for a client outside of Malta, the income it generates is still considered Maltese source, and should be taxed in Malta.

Leave home country and fly into Malta

If you are currently resident where you are a citizen and grew up, then that country might have certain requirements in order to let you become a non-resident for tax purposes. So just make sure that’s not the case, or alternatively that you fulfill them all by doing what you outline above. PwC’s tax summary might have some useful information for your home country in this regard, but it might be better to do some additional Googling or checking with a local tax adviser to be sure.


(Lukas) #4

Thanks a ton for your reply Thomas, really helps me out a lot! It’s incredibly hard to find decent information on this topic.

One thing to note is that it might take a bit more than 4 weeks to get your residency card in Malta, particularly when you register as self-sufficient. So I’d recommend registering ASAP upon arrival.

Alright will do. As I understand you too went through this process. Did you already have place rented when you signed up? I think your guide says that it isn’t really necessary to show a contract, right? Was the process smooth, did they ask a lot of questions?

In practice not really, as long as someone living on the address they have on file for you is willing to open or forward mail to you.

At the moment I hope I get lucky with the people I rent the AirBnb room from. Plan B could be a post box or something. Any recommendations?

Note that if you do spend e.g. 2-3 months per year in Malta and do work (say freelancing, consulting, writing, or any other type of work) even if it’s for a client outside of Malta, the income it generates is still considered Maltese source, and should be taxed in Malta.

I guess that’s why most people get some sort of company in a different country? I gain most of my income passively, through affiliate and ad type of stuff. It’s impossible to say how much money I earned/ will earn from the work I did in a specific month. One might actually argue it’s some sort of investment income. I’d probably just bring a reasonable amount in to pay costs of living and pay at least some tax.

So just as an example: I spend 3 month on the island and bring ~2k Euro in for every month. As soon as I leave for traveling I’ll stop bringing money into the country and at the end of the year I get an accountant and file taxes for the 6k I brought onto the island. Does that make sense?

Thanks again!


(Simon Lindh) #5

I’ve done exactly what you stated in your list. But what’s recommended is letting an apartment where you could be the one registered in your name on the utilities bills. In Malta there is a agency called ARMS where you will register yourself as the resident of the apartment. This way you can get proper KYC papers for use in the future, to prove your residency with banks, debit cards and stuff. But it could take 2 month to get the first bill. Often the real owner will just continue to get the bills and you pay for him. Anyhow the letting market in Malta is extremely quick, dynamic and flexible, you can get an apartment the same day basically.


(Lukas) #6

I’ve done exactly what you stated in your list.

So AirBnB is the way to go for start?

But what’s recommended is letting an apartment where you could be the one registered in your name on the utilities bills.

So where did you find a cheap apartment for a yearly let? Did you go with the cheapest you could find?

This way you can get proper KYC papers for use in the future, to prove your residency with banks, debit cards and stuff.

I was planning on opening a bank account as soon as I am on Malta. So that wouldn’t work since they require KYC papers?


(Simon Lindh) #7

I just stayed in an airbnb for 3 days, because the day I started looking for long lets (6 months) I got one instantly. You just seek out a property dealer like QuickLets and they provide you with all the current available apartments ready to move in right away.

I didn’t go for the most cheap, but I avoided Sliema/St Julian/Gzira which have the most expensive rent and instead went for St Pauls Bay where I got a nice apartment with sea view for half the price compared to the ones mentioned above.

I believe all banks require proof of residence, and they prefer utility bills.

I was planning to go back to Malta this summer to get new KYC proof of residency papers, in order to get Bitcoin debit cards and a bank account.


(Thomas K. Running) #8

While having utility bills to use for KYC is absolutely killer, I’ve personally never had issues using only bank or credit card statements (occasionally with a cell phone statement thrown in for some US banks).

If you’re actually going to live on Malta most of the year (or want to sublet when not in the country), then having utilities in your own name makes sense anyway. But if not I’d say it’s more of a nice to have than a need to have. If you run into a bank requiring it in the future, you can deal with it then. My two cents.


(Lukas) #9

I just stayed in an airbnb for 3 days, because the day I started looking for long lets (6 months) I got one instantly. You just seek out a property dealer like QuickLets and they provide you with all the current available apartments ready to move in right away.

Very helpful thanks!

So just to get an idea, currently you don’t rent anything on Malta? Who opens your mail then?


(Lukas) #10

While having utility bills to use for KYC is absolutely killer, I’ve personally never had issues using only bank or credit card statements (occasionally with a cell phone statement thrown in for some US banks).

So my credit card statements all show my current German address. In order to get one showing a Maltese address I would need to open a bank account on Malta filling in a Maltese address, providing KYC, right? So I still need KYC papers for the beginning, or am I missing something?

So you too only rent part of the year on Malta as I understand, so if you don’t mind me asking, who opens you mail in the time you aren’t on the island?


(Simon Lindh) #11

I moved out. Cannot receive mail atm.


(Thomas K. Running) #12

So my credit card statements all show my current German address. In order to get one showing a Maltese address I would need to open a bank account on Malta filling in a Maltese address, providing KYC, right? So I still need KYC papers for the beginning, or am I missing something?

That depends. Check with your current banks if you can simply update your address with them, or perhaps supply an additional “mailing address abroad”. That’s what I normally do when I need bank statements for KYC, which is great since I can pick any address anywhere in the world.

Alternatively, you could open accounts with online banks that don’t require KYC documents as proof of address. E.g. Leupay will send you your card to the specified address, and that’s how they verify it (you need the card to activate your account). It has been a while since I signed up for Revolut, but I believe that worked the same way. I think Bunq did ask for some KYC documents to verify address, but that might have been because I wanted to change my address on file from Norway to Denmark.

So you too only rent part of the year on Malta as I understand, so if you don’t mind me asking, who opens you mail in the time you aren’t on the island?

For now, my previous Airbnb landlord, since he’s a great guy. Note that I don’t receive much mail at the address, and I will probably look for a better long-term solution.


(Lukas) #13

Thanks a lot you two, really helped me out a lot!


(Carl K.) #14

Thanks for the great thread guys.

I have a similar setup but I’m registered on Malta as an employee instead of as a “self-sufficient” person. My own company is employing me, and for this I have to pay some income tax and national insurance every year. The big benefit is that I get a European health insurance card, payslips and so on that I can show to banks, the tax authority in my own (previous) country and so on.

As for post and mail, many of the company formation agents on Malta provide a postal forwarding service when you register your company address at their office. This is pretty standard, but mine also allows me to forward my personal mail there. When it arrives, they scan and email it straight to me.

As long as you have a residence card it is easy and very cheap to go to Malta Post and arrange a forwarding for your personal address to your company address. You can forward post for up to four years at a time!


(Thomas K. Running) #15

Thanks for the insights, @calleh! :slight_smile: I am assuming that your company is Maltese then, or did you register a branch of a foreign company?


(Carl K.) #16

Yes, the company is Maltese and I enlisted one of the many agents/lawyers for the company formation.

It’s solely owned by me for now until revenue is large enough to make the 6/7 corporate tax refund profitable at which point I will form a holding company in Cyprus or UAE and transfer the dividends there. The corporate tax in Malta is a high 35 % but with the refund goes down to a very attractive 5 % which I’m sure is well known around here.


(Wissem ) #17

Can be applied for all people?


(Thomas K. Running) #18

The ordinary residency scheme described here is for EU/EEA nationals only. There are options for non-EU citizens as well, including work permits and investment options. For more info, see the official website.


(Enid Lasfargues) #19

Hi Thomas,
I’m new to this forum and I have been doing a lot of research on Malta Ordinary Residence.
My partner is a french citizen and I am a NZ citizen. We are taking the self sufficiency route.
My questions relate to the application for e-resident card:

  1. can we submit the application as soon as we arrive Malta (this is after we have prove of long term address in Malta eg. rental agreement)?
  2. Can the evidence of capital/funds be in a bank account outside Malta, eg. in France and NZ?
  3. What is the processing time for the e-resident card?
  4. Will a temporary card be issued pending receipt of the e-resident card?
  5. Are we allowed to seek employment and be employed while waiting for the e-resident card?
  6. Are we allowed to travel out of Malta while waiting for the e-resident card?
  7. Does the e-resident card allow the Non-Eu dependent to seek employment and be employed?

Apologies for so many questions. I would really appreciate your help.

Thank you very much.
Enid


(Thomas K. Running) #20

Hi Enid, and welcome to the community!

  1. Yes, as long as you can demonstrate that you’re planning on staying longer than 3 months (with e.g. a rental or work contract)
  2. Yes, it does not need to be in Malta. However it is useful if you’re able to get the required statements or at least a printout in English. French might be OK as well, but you’d have to check with the Identity Malta office.
  3. Normally about 4 weeks. It can take longer for self-sufficiency applicants, however.
  4. No.
  5. Im not sure about the situation for you as a non-EU citizen. But if you’re planning on taking up employment in Malta, why are you going the self-sufficiency route? If you’re planning on taking some time before starting to work, I guess it’s fine. But if you’re likely to start working almost immediately, I’d recommend getting the employment permit right away. That way you don’t have to deal with proving funds and getting health insurance, etc.
  6. For EU citizens at least that wouldn’t be a problem. Not sure in your case however, but I’d imagine it would be fine as long as you’re able to return before your visa/visa waiver for the Schengen Area lapses.
  7. Again, I’m not familiar with how this works for non-EU citizens (including dependents). Perhaps someone else here can provide more info?