Malta

Tax residency

Under the Income Tax Act and guidance issued by the Malta Tax and Customs Administration (MTCA), tax residence is a question of fact and does not depend on nationality or civil status. An individual may also be resident for tax purposes in another jurisdiction.

These concepts (ordinary residence and domicile) should therefore be distinguished: tax residence determines whether an individual is resident in Malta, while ordinary residence and domicile together determine whether the worldwide basis or the remittance basis applies. An individual who is resident and ordinarily resident, but not domiciled in Malta remains a Malta tax resident, but is generally subject to the remittance basis.

• 183-day rule: an individual who is present in Malta for more than 183 days in any particular year is considered tax resident in Malta for that year, regardless of the purpose or nature of the stay.
• Residence from arrival: an individual who comes to Malta to establish residence becomes resident from the date of arrival, regardless of the duration of the stay in Malta during that particular year.
• Ordinary residence: a person who lives in Malta on a permanent or indefinite basis is ordinarily resident in Malta. Ordinary residence may also arise where a person develops a sufficiently long-term pattern of presence in Malta together with personal and economic ties.
• Domicile: domicile is separate from tax residence and is relevant to the basis of taxation in Malta. A person acquires a domicile of origin at birth and may later acquire a domicile of choice by taking up residence in another country with the intention of making it their permanent home. A domicile of origin is not lost merely because an individual lives abroad, it generally continues until a domicile of choice is acquired.

Day counting

• 183-day rule: physical presence in Malta for more than 183 days in any particular year establishes tax residence for that year. The rule is not dependent on the purpose or nature of the stay. MTCA does not set out a separate arrival/departure-day convention in its tax-residence guidance. physical presence in Malta is the relevant factor. For tracking purposes, a conservative approach is to count both the arrival and departure days as days of presence in Malta.
• Residence from arrival: where a person comes to Malta specifically to establish residence, residence starts from the date of arrival, so the 183-day threshold is not required for that year.
• Ordinary residence: there is no separate fixed day-count threshold for ordinary residence. The assessment considers the individual's longer-term pattern of presence and the personal and economic ties established with Malta. Temporary absence does not automatically terminate ordinary residence. The circumstances of the absence and the ties retained with Malta are relevant.

Tax consequences

Tax year in Malta is the calendar year. Individuals who are ordinarily resident and domiciled in Malta are generally taxed on a worldwide basis. Individuals who are either not ordinarily resident or not domiciled in Malta are generally subject to the remittance basis.

Under the remittance basis, Malta-source income and income remitted to Malta are generally taxable in Malta. Foreign-source capital gains are generally not taxable in Malta merely because the proceeds are remitted to Malta, whereas Malta-source capital gains remain taxable.

Migration / EU residence

EU/EEA and Swiss nationals may reside in Malta under the applicable free-movement rules. For stays exceeding three months, the applicable registration and residence formalities must be followed. Third-country nationals generally require the appropriate visa and/or residence permit depending on the purpose and duration of their stay. A residence document does not by itself determine Malta tax residence.

Orientation references

• Malta Income Tax Act, statutory framework governing individual residence, domicile and the taxation of income and gains.
• Malta Tax and Customs Administration (MTCA), “Tax Residence”, official explanation of the 183-day rule, residence arising on arrival, ordinary residence, temporary absence and the interaction of ordinary residence and domicile.
• MTCA, “The Remittance Basis of Taxation for Individuals under the Income Tax Act”, official guidance on domicile, domicile of origin and domicile of choice, ordinary residence, remittance basis, foreign-source income and foreign capital gains.
• Malta immigration framework / Identità, rules governing residence rights and formalities for EU/EEA/Swiss nationals and third-country nationals.