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UK Deemed Domicile Rules – Is Malta a Viable Alternative?

01 June 2016   (0 Comments)
Posted by: Author: Pierre Buttigieg
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Author: Pierre Buttigieg (CSB Group)

What changed?

The UK has announced significant changes to the basis of taxation of individuals who are resident but not domiciled in the UK (also known as res-non-doms).  These changes will primarily affect those long term res-non-doms who have been benefitting from this status for at least 15 out of the previous 20 years.  On the commencement of the 16th year of residence, such individuals will acquire a deemed domiciled status, effectively losing their res-non-dom status.

In simple terms, UK res-non-doms benefit for the remittance basis of taxation, such that most foreign income and gains are only chargeable to tax in the UK the extent they are remitted or received in the UK.  The UK also imposes remittance basis charges of £30,000, £60,000 or £90,000, depending on the number of years the individual has been benefitting from the res-non-dom status, with the latter becoming redundant following these changes, and is consequently being abolished.

When these individuals become deemed domiciled whilst maintaining their residence in the UK, they will become taxable on the worldwide basis of taxation.

Malta and UK res-non-dom status – similar but different

Most of the principles applied in Maltese tax legislation, are ‘borrowed’ from the old UK tax system, including the principles of residence and domicile.  Similarly to the UK, Maltese res-non-dom individuals are subject to tax on a source and remittance basis.  This makes such individuals taxable on any income earned in Malta and whatever income is earned outside of Malta to the extent of the amount that is received in Malta.  Foreign source capital gains would not be taxable in Malta even if these gains are received in Malta.

However, differently to the UK, Malta does not impose any remittance basis charges (unless the individual opts to register for one of the Residency Programmes which impose a minimum amount of taxation – see below), as well that there are no deemed domicile rules.

Malta’s Options

The concept ordinary residence allows individuals obtain residence merely[1] through the setting up of one’s regular course of life in Malta, which when combined with the duration of time spent in Malta show that those individuals have become residents of Malta in the ordinary course of their lives.  Individuals who are ordinarily resident but not domiciled in Malta are subject to tax on the basis of source and remittance as aforesaid.

However, Malta also offers other specific residency programmes which provide a special tax status to the individual.  Such programmes are the Global Residence Programme (or ‘GRP’)2 and The Residence Programme Rules (or ‘TRP’)[2].  These programmes are intended to attract individuals to take up residence in Malta.  As such, individuals eligible to benefit under these programmes would be taxable in Malta at the favourable flat rate of 15% on a source and remittance basis.  Local source income and gains would be taxable in Malta at the higher rate of 35% (flat rate).  It is important to note that under both programmes the individual would be subject to a minimum amount of tax €15,000.  Both programmes also require the individual to maintain a property in Malta[3] as well as be in possession of a health insurance issued by a locally licensed or a reputable foreign health insurance company.

Why Malta?

As outlined above, fiscally, Malta is an extremely valid alternative to set-up one’s residence for fiscal reasons.  However, over and above the fiscal advantages, Malta has a lot more to offer.

  • Connections – Malta is well connected via a good number of airlines operating regular daily flights to the major European airports, as well as Dubai. Malta also offers a daily high speed (circa 1Hr 30 mins) ferry to mainland Europe (via Sicily) for land travel;
  • Malta is a Safe country to live in. Malta constantly ranks as one the safest 15[4] countries in the world, with a very low criminality rate.
  • Luxury property increased; luxury lifestyle developments emerged as carefully planned and purposefully designed projects to accommodate the needs and requirements of the high-end buyer[5];
  • English is one of the two official languages of the Maltese islands, and the vast majority of Maltese speak both Maltese and English;
  • The Climate is warm with generally mild winters and dry hot summers;
  • Schooling – Malta offers free state schooling, however there is a good selection of private schools to choose from with school fees being extremely reasonable;
  • Similarly free Healthcare is available at the Public Hospitals and other Facilities for EU citizens depending on the entitlements established by the Ministry of Health. A good choice of private hospitals and healthcare facilities are also available against payment.

[1] Residency permits and other registrations may be required.

[2] The rules and requirements applicable for both the TRP and GRP are quasi identical, however the GRP is applicable to Non-EU, Non-EEA and Non-Swiss Nationals, whereas the TRP is designed for EU, EEA and Swiss Nationals.

[3] Purchased at a minimum of between €220,000 and €275,000 or rented at a minimum of between €8,750 and €9,600 per annum.
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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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