The High Net Worth Individuals (HNWI) Rules were launched towards the end of 2011 as part of the revamp of the permanent residence regulations. The aim of the HNWI rules is one of many sets of regulations enacted in a bid to attract persons to Malta. Under these Rules, the aim is to attract not only people who simply want to invest in property in Malta but those who would also contribute to the local economy. Two separate sets of regulations have been enacted within the realm of high net worth individuals, one which applies to EU nationals (excluding nationals of Malta), EEA nationals and Swiss Nationals and the other set of regulations which applies to Non-EU nationals, Non-EEA nationals and Non-Swiss Nationals. It is the former set of regulations that will form the scope of this article.
The regulations require that an individual must prove to the satisfaction of the Commissioner of Inland Revenue that the requirements as laid out in the regulations have been satisfied. These requirements include:
- The applicant holds a Qualifying Property Holding., which in
order to do so the applicant must:
- Own an immovable property in Malta, purchased after the 1st January 2011, for a consideration no less than €400,000.00; or
- Rents an immovable property in Malta for not less that €20,000.00 annually as lessee;
- The applicant and his/her family members would need to declare that he/she occupies the qualifying property as his/her principal place of residence worldwide.
Certain criteria may differ for applicants who had already registered under the Residents Scheme Regulations, who would like to fall within the ambit of the HNWI Rules.
An applicant need not be the owner or lessee of a qualifying property at the time of the application. Such application would still be valid if a copy of the final deed of sale, promise of sale or lease agreement is not attached to the application form. However, individuals who would have acquired or rented a Qualifying Property by the date of application are required to attach a certified true copy of the relevant contract with the application form.
- The applicant does not benefit from either the Residence Scheme Regulations or the Highly Qualified Persons Rules.
- The applicant needs to be an EU citizen (but not a citizen of Malta), a citizen of Iceland, Norway or Liechtenstein, or a citizen of Switzerland.
- The applicant is in receipt of stable and regular resources that are sufficient to maintain himself/herself and his dependents without recourse to the social assistance system in Malta.
- The applicant is in possession of a valid travel document.
- The applicant is in possession of sickness insurance which covers himself and his dependents in respect of all risks across the whole of the EU normally covered for Maltese nationals. The health insurance cover must be procured by a company licensed in Malta or by an international reputable health insurance company.
- The applicant is not domiciled in Malta and does not intend to establish his domicile in Malta within five years from the day of the application for special tax status.
- The applicant must satisfy the "fit and proper person" test, that is to say, an individual must prove to be of good conduct and good morals, has no criminal record or disqualifications or censorship by professional or regulatory bodies, is not adjudged bankrupt by a competent Court of authority, amongst other criteria.
An application for special tax status under these Regulations can only be submitted to the Commissioner of Inland Revenue through the services of an Authorised Registered Mandatory (ARM). An Authorised Registered Mandatory is a person who holds a warrant to practice as an advocate, legal procurator, has been appointed notary public, or holds a warrant to practice as an accountant, all in accordance with the relevant laws. Members of certain Maltese institutions may also be appointed as ARMs. A legal person which is at least 75% owned (directly or indirectly) by persons who meet the necessary criteria to be appointed ARMs, may also act as an Authorised Registered Mandatory. The ARM is tasked with submitting the form, and making certain declarations on behalf of the applicant, such as those stating that the applicant is in receipt of stable and regular resources, that the applicant is not domiciled in Malta, etc. The acknowledgement or request for more information of the application will be sent to the Applicant's Authorised Regulatory Mandatory.
From the date of confirmation of the special tax status under the HNWI Rules, an applicant will be subject to a rate of fifteen per cent (15%) on income that is received in Malta from foreign sources. The individual still retains the right to request a claim for double taxation relief, provided that, the minimum amount of tax payable by such individual is €20,000.00 for any year of assessment, and such individual with dependents must pay an additional €2,5000.00 for any year of assessment per dependent. The minimum amounts of tax payable are not refundable, and the minimum tax for the first year will be payable by not later than the tax return date and will not be subject to provisional tax payments. Income arising in Malta from any trade, business, profession or vocation will be subject to a flat rate of tax at 35% on all the income derived therefrom.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.