Malta Retirement Programme Rules, 2012

L.N. 317 of 2012

INCOME TAX ACT

(CAP. 123)

Malta Retirement Programme Rules, 2012

IN exercise of the powers conferred by articles 56(23) and 96 of

the Income Tax Act, the Minister of Finance, the Economy and

Investment has made the following rules:-

The title of these rules is the the Malta Retirement

Programme Rules, 2012.

For the purposes of these rules, unless the context

otherwise requires

" Act" means the Income Tax Act;

" appointed day " means the date on which the Commissioner

shall determine in writing that an individual qualifies for special tax

status under these rules;

" application" means an application filed in terms of rule 3(1);

" authorised mandatary" means a person who is in possession of

a warrant to practise as an advocate under the Code of Organization

and Civil Procedure, a person who holds a warrant to practise as a

legal procurator under the Code of Organization and Civil Procedure,

a person who has been appointed notary public in accordance with the

provisions of the Notarial Profession and Notarial Archives Act, a

person who holds a warrant to practise the profession of accountant

under the Accountancy Profession Act, a person who is a member of

the Institute of Financial Services Practitioners, a person who is a

member of the Malta Institute of Taxation or a person who is a

member of the Malta Institute of Accountants or a person who is a

member of the Institute of Management

Provided that a person that is not an individual, having at

least 75% (directly or indirectly) of its shareholders, partners or other

members, as the case may be, who are persons in possession of the

above-mentioned warrants or being a member of the above-

mentioned institutes, shall also be considered to be an authorised

mandatary;

" authorised registered mandatary "

means an authorised

mandatary who is registered with the Commissioner under these

rules;

" beneficiary " means an EU, EEA or Swiss national, who is not

in an employment relationship and who has been granted special tax

status in terms of these rules

Provided that a beneficiary may hold a non-executive post

on the board of a company resident in Malta or partake in activities

related to any institution, trust or foundation of a public character and

of any other similar organisation or body of persons, also of a public

character, which is engaged in philanthropic, educational or research

and development work in Malta;

" Commissioner" means the Commissioner for Revenue;

" dependent" means

(a) the beneficiary’s spouse or person with whom the

beneficiary is in a stable and durable relationship; or

(b) the beneficiary’s unmarried minor children, adopted

minor children of the beneficiary or of the spouse, as the case

may be, where the beneficiary or the spouse has custody and the

minor children are financially dependent on him and children of

the beneficiary or of the beneficiary’s spouse who are not

minors but who, because of circumstances of illness or

disability of a serious gravity, are unable to maintain

themselves;

and in any case -

(i) is not a beneficiary under the Residents S.L. 123.79

Scheme Regulations, the High Net Worth Individuals - EU S.L. 123.129

/ EEA / Swiss Nationals Rules, the High Net Worth S.L. 123.130

Individuals Rules - Non-EU / EEA / Swiss Nationals

Rules, or the Highly Qualified Persons Rules; and

(ii)

resides with the beneficiary in the qualifying

property;

" EEA" means the members of the European Union, Iceland,

Norway and Liechtenstein;

" lease" includes sub-lease;

" Minister" means the Minister responsible for Finance;

" occupational retirement scheme " means a retirement scheme

established for, or by, an employer or a number of employers or an

association representing employers, jointly or separately, for the

benefit of employees and includes an overseas retirement scheme;

" overseas retirement plan " means a bona fide scheme or

arrangement, organized under the laws of a country outside of Malta,

which govern the rights and responsibilities of the parties thereto, and

under which payments are made to beneficiaries for the principal

purpose of providing retirement benefits;

" overseas retirement scheme " means a scheme or arrangement,

organised under the laws of a country outside Malta with the principal

purpose of providing retirement benefits;

" pension" means periodic payments paid to a former employee

in respect of past employment including where remunerations are

paid in respect of services rendered to a State or a political

subdivision or local authority thereof. The term " pension" also

includes remunerations paid as lifetime or temporary annuities, as

well as regular income from an occupational retirement scheme,

personal overseas retirement plan and insurance policies but does not

include a pension in the form of a lump sum payment without

periodic pension payments and any capital sum received by way of

commutation of pension, retiring or death gratuity or received as

consolidated compensation for death or injuries that are exempt under

article 12(1)(h) of the Act;

" primary residence " means the dwelling house in which an

individual habitually resides as his principal place of abode

worldwide;

" property" means any immovable property situated in Malta or

Gozo and any right over such property;

" public interest" includes the interests of public safety, the

protection of public order, national security, territorial integrity,

public health or morals;

" qualifying property" means either a qualifying owned property

or a qualifying rented property, as the case may be;

" qualifying property holding " means a holding which arises

where a beneficiary either

(a)

owns qualifying owned property; or

(b)

rents qualifying rented property as a lessee;

and, in either case, occupies such property as his primary residence

Provided that the persons who reside in the qualifying

property are not persons other than the beneficiary, his dependents

and special carers;

" qualifying owned property " means an immovable property

purchased after 1 January 2011 at a consideration of not less than

(a) two hundred and seventy-five thousand euro

(€275,000) for a property situated in Malta; or

(b) two hundred and fifty thousand euro (€250,000) for

a property situated in Gozo

Provided that an immovable property purchased before 1

January 2011 for a consideration which is less than the amounts

indicated in paragraphs (a) or (b) above shall be considered to be

" qualifying owned property " insofar as the value of such immovable

property as declared on the date of application by the applicant is not

less than the amounts indicated in paragraphs (a) or (b) above as

supported by a separate and independent architect valuation,

including architect’s plan, which documents are delivered to the

Commissioner upon application

Provided further that the Commissioner, or an officer,

architect or surveyor authorised by him in writing, shall have full and

free access to the qualifying owned property to the extent that such

access is likely to assist him in determining the value of the said

property;

" qualifying rented property " means a leased property taken on at

a lease of not less than

(a) nine thousand and six hundred euro (€9,600) per

annum for a property situated in Malta; or

(b) eight thousand and seven hundred and fifty euro

(€8,750) per annum for a property situated in Gozo;

" rights acquired under this law " means the right to pay tax at the

rate of tax contemplated in article 56(23) of the Act and these Rules;

" special carer" is an individual who has been providing

substantial and regular curative or rehabilitative health care services

to the beneficiary or dependent in a systematic manner for at least

three years prior to the application in terms of rule 3. The rendering of

such service needs to be regulated by a contract of service and such

individual shall be registered with the relevant tax authorities in

Malta;

" these rules" shall include the provisions of article 56(23) of the

Act and the rules contained in these Rules;

" third-country national " means any person who is not a citizen

of the European Union within the meaning of Article 20 of the Treaty

on the European Union and the Treaty on the Functioning of the

European Union

Provided that, for the purposes of these rules, EEA

nationals and Swiss nationals shall not be considered to be third-

country nationals.

(1) An individual, as duly represented by an authorised

registered mandatary, may apply to the Commissioner for special tax

status under these rules, in such form as the Commissioner may

require and by paying an administrative fee of two thousand and five

hundred euro (€2,500) upon application.

(2) Where it is established that the individual mentioned in

sub-rule (1) qualifies as a beneficiary, the Commissioner shall

determine in writing that such individual qualifies for special tax

status under these rules.

A beneficiary is an individual who proves to the

satisfaction of the Commissioner that

(a)

he holds a qualifying property holding;

(b) he is not a person who benefits under the Residents

Scheme Regulations, the High Net Worth Individuals - EU /

EEA / Swiss Nationals Rules, the High Net Worth Individuals -

Non-EU / EEA / Swiss Nationals Rules or the Highly Qualified

Persons Rules;

(c)

he is neither a Maltese national nor a third-country

national;

(d) he is in receipt of a pension, as supported by

documentary evidence, all of which is received in Malta and

constitutes at least 75% of the beneficiary’s chargeable income;

(e)

he is in possession of a valid travel document;

(f)

he is in possession of sickness insurance in respect

of all risks across the whole of the European Union normally

covered for Maltese nationals for himself and his dependents;

(g) he is not domiciled in Malta and that he does not,

within five years from the date of application, intend to

establish his domicile in Malta; and

(h)

he is a fit and proper person.

(1) In these rules, the rate of fifteen cents (0.15) on 15% rate.

every euro shall apply on any income arising outside Malta which is

received in Malta by the beneficiary or dependent, with the possibility

to claim relief of double taxation under article 74(a) and (b) of the

Act

Provided that the minimum amount of tax payable in terms

of these rules in respect of any year of assessment shall be seven

thousand and five hundred euro (€7,500) in respect of the beneficiary

and five hundred euro (€500) per year of assessment for every

dependent and every special carer.

(2) Income of a beneficiary or dependent that is not chargeable

to tax under these rules at the rate referred to in sub-rule (1) shall be

charged as separate income at the rate of thirty-five cents (0.35) on

every euro.

(3) Any tax paid under these rules, excluding any tax paid

under sub-rule (2), shall not be refundable.

(1) An individual shall, with effect from the appointed Cessation of

status.

day, cease to possess special tax status under these rules

(a) if, at any time, after the appointed day, such

individual does not hold a qualifying property;

(b) if the individual becomes a Maltese national or a

third country national;

(c) if the individual fails to receive in Malta all the

pension indicated in the documentary evidence submitted to the

Commissioner according to rule 4(d);

(d) if, after the appointed day, the individual is not in

possession of sickness insurance in respect of all risks normally

covered for Maltese nationals for himself and dependents;

(e)

if the individual establishes his domicile in Malta;

(f)

if the individual acquires a permanent residence

certificate in terms of article 7 of the Free Movement of S.L. 460.17

European Union Nationals and their Family Members Order;

(g)

if the individual’s stay is not in the public interest;

(h) if the individual resides in Malta for less than ninety

days a year averaged over any five year period; or

(i)

if the individual stays in any other jurisdiction for

more than one hundred and eighty-three days in a calendar year.

(2) (a) An individual who ceases to possess special tax

status for any of the reasons specified in sub-rule (1) shall notify the

Commissioner of such event by not later than four weeks from the

date when he becomes aware of such event. This notification is to be

made on such form as may be required by the Commissioner.

(b) Where such notification is not made within the time

specified, the person responsible for such event shall be charged an

administrative penalty of five thousand euro (€5,000).

(3) An individual shall, with immediate effect, cease to

possess special tax status from the relative year of assessment under

these rules if he notifies the Commissioner of his intention not to

remain in possession of special tax status on such form as the

Commissioner may require.

(4) An individual shall, with effect from the beginning of the

relative year of assessment, cease to possess special tax status under

these rules if he is in breach of the Act and, or of the Income Tax

Management Act.

(5) The Minister shall have the power to condone any failure

to satisfy any one of the conditions in sub-rule (1) if

(a) such failure was due to unforeseen circumstances

which are beyond the control of the individual;

(b)

such individual notifies the Minister of such failure;

and

(c) such individual has exercised his best efforts to

remedy the failure.

For the purpose of ascertaining an individual’s entitlement

to rights acquired under these rules and ensuring the proper

application of these rules, the Commissioner may require that

individual to produce, within the time indicated by the Commissioner

in that request, such information and documents as the Commissioner

may consider necessary, including certifications and declarations.

If an individual benefits under these rules where that Abuse of rights.

person was not so entitled, the Commissioner may issue an

assessment in terms of article 31 of the Income Tax Management Act. Cap. 372.

The return required in terms of article 10 of the Income Annual

Tax Management Act shall, in the case of a beneficiary under these reporting

obligation.

rules, include such form as the Commissioner may require.

(1) An individual shall authorise a person who is an Authorised

authorised registered mandatary to act on his behalf in respect of all registered

mandatary.

applications, correspondence, submissions, filings, declarations and

notifications contemplated under these rules. All such acts are to be

filed by the said authorised registered mandatary.

(2) The authorisation referred to in sub-rule (1) shall be made

in such form as the Commissioner may require.

(3) Unless the Commissioner specifically authorizes in

writing, a person may not authorise more than one authorised

mandatary.

(4) Registration as an authorised registered mandatary with

the Commissioner shall be made by filling in and delivering to the

Commissioner such form as the Commissioner may require.

(5) Registration as authorised registered mandatary in terms of

these rules shall be subject to such terms and conditions as the

Commissioner may from time to time determine.

(6) Acceptance of registration in terms of these rules shall be

notified by the Commissioner to the person requesting such

registration.

(7) When a person who has been registered with the

Commissioner desires to cancel such registration, he shall make a

request in such form as the Commissioner may require.

€0.81