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Mark Galea Salomone |
Kirsten Cassar |
On June 5 2015, the Maltese Parliament passed Legal Notice 184 (2015) introducing the United Nations Pensions Programme rules. Under this programme, qualifying beneficiaries in receipt of a pension paid out of the United Nations joint staff pension fund would be able to benefit from a special tax status in Malta. Through this programme, a beneficiary's UN pension income or widow's/widower's benefit remitted into Malta will be exempt from income tax, provided that 40% of the income in question is received in Malta. The beneficiary will then be taxed at a rate of 15% on any other form of income arising outside Malta that is remitted to Malta, with the possibility of claiming relief from double taxation. Capital gains derived from outside Malta and remitted into Malta will be taxed in accordance with the general Maltese tax rules, that is, they will not be taxed in Malta. To benefit under this programme, the minimum amount of tax payable on income remitted into Malta is €10,000 ($11,000) in respect of the beneficiary, and €5,000 if both spouses are in receipt of a UN pension. Tax on income that is sourced from or within Malta is to be taxed at the rate of 35%.
There are a number of conditions that must be satisfied to benefit under the programme. The applicant must:
not be or become a permanent or long-term resident of Malta, nor a Maltese national;
own or rent a 'qualifying property'. This means that the beneficiary must either acquire immovable property situated in Malta at a consideration of not less than €275,000, or not less than €220,000 for property situated in Gozo or in the south of Malta; or leasing or sub-leasing immovable property situated in Malta for not less €9,600 per annum, or €8,750 per annum for property situated in Gozo or the south of Malta;
be in receipt of sufficient resources for his maintenance and that of his dependants without recourse to social security in Malta;
be in possession of a valid travel document;
be in possession of sickness insurance for all risks across the whole of the European Union normally covered for Maltese nationals for himself and his dependants;
be able to adequately communicate in Maltese or English;
be deemed to be a fit and proper person; and
must not benefit from any other special tax scheme.
The programme also allows a beneficiary to hold a non-executive post on the board of a company registered in Malta.
A qualifying beneficiary may apply for special tax status to the Commissioner for Revenue through an authorised registered mandatory, paying upon application a non-refundable administrative fee of €4,000 or €3,500 dependent on where the immovable property is situated.
If particular criteria are no longer satisfied, or if the individual stays in any other jurisdiction for more than 183 days in a calendar year, the beneficiary will no longer be able to avail of the special tax status. An individual who ceases to benefit under the programme must notify the Commissioner no later than four weeks from when he becomes aware of such disqualifying event, or be liable to an administrative penalty of €5,000.
The UN Pension Programme departs from the Malta Retirement Programme rules, which is a similar programme that prescribes stricter conditions in order for a beneficiary to benefit from a 15% rate of tax on pension income remitted into Malta. The latter rules only apply to EU, EEA, or Swiss nations that are not domiciled in Malta and who must have no intention of establishing his/her domicile in Malta within five years from the granting of the special tax status. Although under the latter programme the minimum amount of tax payable is lower than under the UN Pension Programme (€7,500 for the beneficiary and €500 for every dependant) the eligible applicant must be in receipt of pension income in Malta that constitutes at least 75% of the beneficiary's chargeable income – this is substantially higher than the 40% threshold under the UN Pension Programme.
A final positive point regarding the UN Pension Programme is that the rules provide for the possibility of the special tax status being extended to pensioners of other specified international or regional organisations.
Mark Galea Salomone (mark.galeasalomone@camilleripreziosi.com) and Kirsten Cassar (kirsten.cassar@camilleripreziosi.com)
Camilleri Preziosi
Tel: +356 2123 8989
Website: www.camilleripreziosi.com
