In 2023, Malta introduced the Nomad Residence Permit (Income Tax) Rules, allowing individuals from third countries to work remotely from Malta while benefiting from a reduced tax rate on income earned in Malta, provided certain eligibility criteria are met.
Criteria to be satisfied to obtain such permit:
- Applicant must be a third country national
- Must be engaged in an ‘authorized work’ i.e. the applicant must have a contract of employment with an employer who is not resident in Malta and who does not have any presence in Malta. In the case of a self-employed individual, his/her clients are established outside Malta and do not have a place of business in Malta.
- A minimum gross yearly income of €42,000
- The applicant must have a valid passport, health insurance and proof of accommodation.
Tax Implications
The applicant shall be required to be registered for income tax purposes and to file the income tax return accordingly. He/she will be chargeable to tax at the rate of 10% on his chargeable income derived from authorized work instead of at the progressive rates of taxation which can go up to 35%.
The first 12 months from the date on which the Nomad Residence Permit is issued, or from 1st January 2024, whichever is the later, shall be exempt from tax and the applicant shall not be required to report such income in the tax return.
In respect of any year where an applicant has paid tax in a country outside Malta at a rate of at least 10%, he/she shall not be required to report such income for Maltese income tax purposes on the basis of the fact that the tax due on such income shall be deemed to have been settled by the double tax relief provisions. Proof of the tax paid in the foreign country with which a double tax treaty exists, must be provided to the Residency Malta Agency.
The employer of the applicant will not be deemed to derive income arising in Malta even though the employee is creating a presence in Malta. Therefore, the employer will not be subject to tax in Malta.
For more information on this matter, please contact us at:
📞 (+356) 2155 9999
📧 info@jcordina-andco.com
