In 1988 a permanent residence scheme was designed to attract high net worth individuals to take up permanent residency status in Malta. This scheme was most attractive to retirees and anyone looking for an alternative residence within their tax profile.
However this scheme’s minimum tax requirement had not been revised since 2003, and no periods of stay were imposed, so those participating in the scheme did not necessarily spend money in Malta. Moreover, foreign companies selling the old scheme considered Malta as the cheapest option, so it didn’t exactly have a positive impact on the country’s economy and reputation. Due to these factors a new scheme was needed and in fact it the scheme was initially suspended altogether and was replaced by a new permanent residency scheme.
The government in 2011 introduced a new scheme that replaced the Permanent Residency Scheme as the old one was designed 25 years ago and one of the biggest problems was the ‘permanent residence’ status, which created confusion under EU law. The new scheme was named ‘Special Tax Status for High Net worth Individuals’. One of the big changes is in the name itself as there was a certain level of contradiction. Although there was a reference to ‘permanent residency’, beneficiaries were not allowed to work here. The new scheme was designed in such a way that it really targets and accepts high net worth individuals who pass a ‘fit and proper’ test. The scheme is intended to attract individuals who leave proper value to the country and limit social cost liabilities to future generations. Moreover, the new permanent residency scheme ensures that tax residency is managed in line with Malta’s international obligations and current international tax norms. The first set of rules (for EU/EEA/Swiss nationals) state that to be eligible for participation in the scheme one must have purchased property for at least €400,000 or rented property for €20,000 per annum. This is only one of the requirements and the law is complex in itself and every case has to be taken for its own merits.
For detailed personal advice on your situation regarding permanent residency visit Sultana Legal and make an appointment with our team.