Malta offers a variety of specific tax residency programs in order to attract foreigners. One of these schemes is the Malta Global Residence Program (GRP).
What Is the Malta Global Residence Program?
The Malta Global Residence Program is a special tax residency scheme for non-EU/EEA/Swiss nationals who want to reside in Malta and benefit from a favorable tax regime.
GRP holders get a residency permit that allows them to live in Malta. In addition, you can use the residency permit to travel throughout the Schengen Area for 90 out of 180 days.
Eligibility and Who Can Apply for the Malta GRP
In order to apply for the Malta Global Residence Program you need to meet certain requirements:
- Non-EU/EEA/Swiss national
- Financially self-sufficient
- Have valid health insurance with coverage in Malta
- Clean criminal record
- Not reside in any other country for more than 183 days per year
Furthermore, you need to meet the property and housing requirement.
Property and Housing Requirements
Apart from the aforementioned conditions you also need to have a qualifying property available in Malta. You have two options:
- Purchase: property with a value of at least €220.000 (in Gozo or the south of Malta) or €275.000 (rest of Malta);
- Rent: minimum annual rent of €8.750 (in Gozo or the south of Malta) or €9.600 (rest of Malta).
Tax Benefits of the Malta GRP
The Malta Global Residence Program offers three main benefits.
Minimal Physical Presence
The first benefit of the Malta GRP relates to the fact on how to become a tax resident of Malta.
In general, you need to spend 183 days in Malta in order to qualify as a Maltese tax resident.
However, under the GRP there is no minimal formal physical presence requirement. In this way you can still benefit from the tax benefits without being stuck there.
Nevertheless, the scheme prescribes you can’t spend more than 183 days in one other particular country. This to avoid that you would become tax resident in that country.
Flat Tax Rate
The flat rate you’ll pay is 15% on foreign income remitted back into Malta.
Any foreign income you don’t bring back into Malta, remains tax free.
Yet, you have to pay a minimum tax of €15.000 per year. This basically means you can bring in €100.000 without triggering any additional tax liability.
Moreover, you will have to pay the normal tax progressive tax rates on any Maltese source income. You can find more information about this in my article about tax residency in Malta.
Exemption Foreign Capital Gains
Foreign capital gains can benefit from a full tax exemption.
This is even the case when you remit those capital gains back into Malta.
Application Process
The application process for the GRP has different steps.
Appoint Authorized Registered Mandatory (ARM)
First, you need to appoint an Authorized Registered Mandatory.
This intermediary agent will help you throughout the process:
- Verify your eligibility
- Prepare the application
- Act as point of contact for the Maltese authorities
Please note that using an ARM is obligated and you can’t file an application on your own.
You can find a list of recognized ARM’s on the website of the Commissioner for Revenue.
Prepare Documentation
Next up is to prepare a whole list of documenation you need to submit. Your ARM will also assist you with this.
You’ll need the following documents:
- Application form
- Certified passport copy
- Birth certificate
- Criminal record extract of previous country of residence
- Health insurance policy
- Proof of financial resources
- Housing documentation: proof of ownership or rental agreement meeting the minimum thresholds
- Power of attorney ARM
In case any documentation is not in English you also need to add an official and certified translation.
Submit Application & Pay Application Fee
Now you are ready to submit your application for the Malta Global Residence Permit with the Commissioner for Revenue.
Upon filing your application, you’ll also have to pay the application fee. The fee is €5.500 (for Gozo and the south of Malta) or €6.000 in other cases.
You will receive an Acknowledgement Letter confirming the receipt of your application.
Background Check
Now the authorities will do their due diligence and check your application.
This takes 2-3 months. However, normally no issues should come up as they would have been tackled by the ARM in the preparatory phase.
Letter of Intent
If the Commission of Revenue approves your application you’ll receive a Letter of Intent (LOI) confirming the principal approval.
Now you need to complete the final steps of your application. The main one is that you have to prepay the first annual minimum tax of €15.000.
Issuance of GRP Certificate
If you meet all the criteria mentioned in the LOI, you will receive an Official Confirmation of Special Tax Status or the GRP certificate.
This means you can also apply for a tax residency certificate in Malta.
In addition, you’ll get a renewable Maltese residency permit valid for one year.
Compliance for the Malta Global Residence Program
In order to keep your GRP status you need to make sure you follow the annual compliance requirements.
The most important one is to file your annual tax return and pay the annual minimum tax of €15.000.
Your ARM will file the tax return for you and this needs to be done by 30 June of the following year.
Furthermore, you have to renew your residence card as it expires each year.
Obviously, you also need to make sure you keep meeting the conditions to qualify for the GRP (e.g. housing condition).
Advantages & Drawbacks of the Malta GRP
Let’s summarize the advantages and drawbacks of the Malta GRP so you can make a proper assessment if it is a good choice for you:
Advantages:
- No formal minimum stay requirement to qualify as tax resident
- Flat tax rate of 15%
- Only tax in case of foreign income remittance
- No tax on foreign capital gains even if brought back into Malta
Drawbacks:
- High annual rent / purchase price to qualify which is not interesting if you only plan to spend minimal time in the country
- Minimum tax of €15.000 per year which makes it only interesting for people with a higher income
- High application and maintenance cost
My Tax Perspective on Malta GRP
For the average digital nomad the Malta Global Residence Porgram might not be the best solution if tax optimization is your main concern.
The minimum tax and costs attached to it makes that this program is mainly interesting for people at a higher income level.
Yet, if you are looking for a way to get a residency permit in Malta as a non-EU/EEA/Swiss national, you can consider it as an option.
However, in that case I would also suggest to have a look at the Maltese Digital Nomad Visa. It’s even more beneficial from a tax point of view.
If you need help with designing your international tax strategy, you can always reach out!