On 17 March 2020, Legal Notice 69 of 2020 was issued amending the Malta Retirement Programme effective 1st January 2020. Prior to these amendments, this programme was only applicable to EU, EEA and Swiss nationals but by virtue of this legal notice, the programme is now pertinent to all nationalities without any discrimination, including third-country nationals but not including Maltese nationals.

Since 3rd country nationals may now also apply and become beneficiaries of the said programme which grants a 15% taxation flat rate on any income sourced outside Maltese shores and income received in Malta, this legal notice has enabled to accommodate for long-term residence for 3rd country nationals, analogous to the permanent residence available for EU, EEA and Swiss nationals, provided that the minimum tax is of €7,500 p.a. Hence, in simpler terms, the salient feature of the programme is a 15% flat tax rate on foreign source income remitted to Malta, consisting of at least 75% of a pension, subject to a minimum annual tax of €7,500 plus an additional €500/dependent or household staff.

Furthermore, any beneficiary or dependent is precluded from being a beneficiary of any other particular programme which similarly grants a tax reduction on a remittance basis or specific types of qualifying employment income. In relation to household staff, the definition has been altered and no longer requires the aforementioned to have been employed by the beneficiary for at least two years prior to the application for the Malta Retirement Programme as it was before.

In addition, there was the removal of the requirement that the service had to be provided in whole or in part within the qualifying property. Of course, this requirement has been removed subject to conditions which the Commissioner for Inland Revenue may impose in the future.

The legal notices hold that individuals who apply for or qualify for long term residence or permanent resident status no longer benefit from the remittance basis of taxation and the 15% flat tax rate and would switch to progressive rates, which will be applicable to the individual’s worldwide income.

Following the death of a beneficiary, the programme special tax status shall be granted to a dependent of that deceased beneficiary who has inherited the property that was the primary residence of such beneficiary, or who rents a qualifying rented property immediately after the death of the said beneficiary and satisfies all the other criteria set out in the Rule 4 of the programme. This shall only be transferred once the said dependent provides proof to the Commissioner that all the requirements of rule 4 are satisfied in such manner as the Minister for Finance may determine further to consultation with the Commissioner. Rule 4 mainly requires that the beneficiary is not a person who benefits under;

• The Global Residence Programme Rules;
• The High Net Worth Individuals – EU / EEA / Swiss Nationals Rules;
• The High Net Worth Individuals Rules – Non-EU / EEA / Swiss Nationals Rules;
• The Highly Qualified Persons Rules;
• The Qualifying Employment in Aviation (Personal Tax) Rules;
• The Qualifying Employment in Innovation and Creativity(Personal Tax) Rules;
• The Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules;
• The Residence Programme Rules;
• The Residents Scheme Regulations
• or the United Nations (“UN”) Pensions Programme Rules; and
• is not a Maltese national.

Following this is the fact that now, the 15% tax rate has been restricted to apply only to income derived by the beneficiary or his/her spouse or child and is no longer applicable to a dependent with whom is in a stable and durable relationship, therefore, it is probable that this does not apply between couples who co-habit.

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