Digital Nomad Tax

Digital Nomad Visa Malta: Tax Exemptions Confirmed

In this article we’ll dive deeper into the digital nomad visa Malta. This digital nomad visa is a favorite of many digital nomads. Yet, some uncertainty existed about its tax consequences. Therefore, that’s one of the elements we’ll have a closer look at.

Why Malta?

Malta has attracted many digital nomads over the years. As it is an island in the Mediterranean Sea, it offers sun, sea and plenty of outdoor activities year round. Furthermore, the official language is English which makes communicating easy. And, not to forget, the internet infrastructure is great. A must have for people working remote.

Also, if you like nice food or are into culture, Malta is definitely a good place to be!

Malta island

Requirements

The first thing you need to know about the digital nomad visa Malta is that it’s only open to people who don’t have a passport from a Schengen country. That’s logic because if you do have a passport from a Schengen country, you don’t need a visa to enter Malta given the freedom of establishment.

If you do need a visa to spend a longer time in Malta, you need to meet some conditions.

The first condition concerns the work you perform, you must either:

  • Work for a foreign employer;
  • Work as a freelancer for foreign companies;
  • Be a partner or shareholder of a foreign business and conduct business on its behalf.

If you in any way perform services for Maltese companies, you are excluded from the digital nomad visa Malta.

Apart from this condition, you must also have a gross salary of at least €32.400 per year.

Next to these specific requirements, also more general conditions apply. You must have a valid passport and a health insurance covering you in Malta. Furthermore, you need to rent or own a place in Malta and pass a background check.

Digital nomad visa Malta: taxes

Income taxes

Now the interesting part: if you obtain the digital nomad visa Malta you can get some tax benefits. Although, the digital nomad visa Malta claimed from its launch in 2021 that it offered you a tax free stay in the country, this wasn’t true. With the introduction of the digital nomad visa Malta, no specific tax exemptions were provided. Hence, the normal tax rules applied. Consequently, a lot of nomads got a unpleasent surprise when they were contacted by the Maltese tax authorities after staying in Malta for a while.

In order to resolve this, Malta finally adjusted its legislation in accordance with what they promised. Now nomads get an exemption from income tax for the first twelve months after receiving their digital nomad visa. After this initial exemption, a fixed rate of 10% will apply. This is a nice improvement compared to the general progressive tax rates.

Nevertheless, it is important to note that the exemption and reduced rate only apply to ‘authorised work’. Authorised work is the work based on which you applied for the digital nomad visa and is thus the income from your remote job or business. For other income, the general rules apply. Yet, if you are not domiciled in Malta, you won’t pay taxes on foreign income unless you bring it back into Malta.

Social contributions

If you receive professional income in your own name, you don’t only need to think about personal income taxes but also about social contributions. In Malta these amount to 15% for self-employed individuals. This isn’t a bad rate for a European country but what makes it better is that these contributions are limited. The maximal contributions are around €75 per week or €3.900 on a yearly basis.

If you are an employee, both you and your empoyer need to pay social contributions. Each at a rate of 10% with a maximum contribution of around €50 per week. Thus, the total maximum contribution will be around €5.200 per year.

digital nomad visa Malta

Conclusion on digital nomad visa Malta

If you are eligable for the digital nomad visa Malta this could come with some nice tax savings. Nevertheless, it’s important to have a good understanding of the (tax) laws before moving ahead. Therefore, you should consult with a tax advisor before making the jump. If you want to know more about the digital nomad program in Malta, you can visit the official website from the Maltese government.

If you are interested in exploring other digital nomas visas, you can always have a look at this article where you can find the best digital nomad visas in Europe.

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