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Taxation of Resident Non-dom Individuals in Malta

Malta's tax system is renowned for its benefits, making it a favorable destination for expatriates and foreign investors. Understanding how Malta taxes resident non-domiciled individuals is crucial for anyone considering residency in the country.

This article will help you understand the taxation of resident non-domiciled individuals in Malta and why it is one of the main factors of your residency.   

"Residence" and "Domicile" 

Before delving into Malta's taxation of "non-dom residents," it's essential to distinguish between "residence" and "domicile."

“Domicile” is a concept inherited from the British legacy on Malta’s system. Typically, it refers to the place where a person has their permanent and indefinite home. An individual takes the domicile of the birthplace of his father. Unlike residence, you can have only one domicile at a particular point in your life.   

To change a domicile, a person must sever all ties with other countries. Domicile can also change under the operation of the law, e.g. an expat who married a domiciled person in Malta will automatically be considered domiciled in Malta. 

On the other hand, any place a person lives in is considered their “residence.” It is the place where they intend to live. The residence gives you the legal right to live, work, set up a business, travel, or study in the country. Fundamentally, a resident in Malta for more than 183 days is considered a tax resident of Malta by default. Moreover,  a person may still be considered ‘ordinarily resident’ of Malta if residing for fewer than 183 days but is present in Malta for a consistent number of days over several years.   

Given these two statuses, how does Malta tax non-dom residents in the country?   

Malta’s Remittance Basis of Taxation 

Individuals who are both ordinarily resident and domiciled in Malta are taxable on their worldwide income and certain capital gains in Malta. However, Malta taxes individuals who are ordinarily resident but not domiciled on their local source income and certain capital gains. Moreover, foreign source income that is remitted to Malta is also taxable. Therefore, any foreign source income not received in Malta will not be subject to tax. Foreign source capital gains will not be subject to tax whether received in Malta or not.    

Resident individuals are taxed in Malta according to the progressive rates of tax ranging from 0-35% depending on the income bracket. In addition, certain residents may benefit from a Special Tax Status and be taxed on the remitted income in Malta at a flat rate of 15%.   

The following programmes provide for a special tax rate for remitted income in Malta:  

Malta as a Choice for Non-Dom Residents

Malta welcomes foreign nationals who want to reside in the island nation. In effect, Malta’s programmes are very attractive for investors and entrepreneurs since Malta is deemed the ‘gateway to Europe.’ Additionally, Malta's attractive tax regime, including the flat 15% rate on remitted income for non-domiciled residents, makes it a preferred destination for investors and entrepreneurs seeking access to Europe.

If you are a non-dom resident, let Endevio's team of experts be your guide in this process.