The Residence Programme Rules, 2014

L.N. 270 of 2014

INCOME TAX ACT

(CAP. 123)

The Residence Programme Rules, 2014

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

the Income Tax Act, the Minister for Finance has made the following

rules:-

(1)

The title of these rules is The Residence Programme

Rules, 2014.

(2) These rules shall be deemed to have come into force with

effect from 1st July, 2013.

(Rule 2)

Localities for the purposes of the definition of "south of Malta"

Birżebbuġia

Cospicua

Fgura

Għaxaq

Gudja

Kalkara

Kirkop

Luqa

Marsascala

Marsaxlokk

Mqabba

Paola

Qrendi

Safi

Santa Luċija

Senglea

Siġġiewi

Tarxien

Vittoriosa

Xgħajra

Żabbar

Żejtun

Żurrieq

€0.99

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 is granted 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 but who is

not a Maltese national who has been granted special tax status in

terms of these rules;

"Commissioner" means the Commissioner for Revenue;

"dependant" means

(a)

the beneficiary's spouse or person with whom the

beneficiary is in a stable and durable relationship;

(b) minor children including adopted minor children

and children who are in the care and custody of the beneficiary

or the person mentioned in paragraph (a) above;

(c)

children who are under the age of twenty-five,

including adopted children and children who are in the care and

custody of the beneficiary; or the person mentioned in

paragraph (a) above, provided that such children are not

economically active;

(d) children including adopted children and children

who are in the care and custody of the beneficiary or the person

mentioned in paragraph (a) above, who are not minors but who

because of circumstances of illness or disability of a serious

gravity, are unable to maintain themselves;

(e)

dependent brothers, sisters and direct relatives in the

ascending line of the beneficiary or the person mentioned in (a)

above;

and in any case -

(i)

is not a beneficiary under the Residents Scheme S.L. 123.79

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

Swiss Nationals Rules, the High Net Worth Individuals - Non- S.L. 123.130

EU / EEA / Swiss Nationals Rules, the Malta Retirement S.L. 123.134

Programme Rules, the Global Residence Programme Rules, the S.L. 123.148

Qualifying Employment in Innovation and Creativity Rules or S.L. 123.141

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;

"household staff" is an individual who has been in an

employment relationship, as evidenced by a contract of service, with

the beneficiary for at least two years prior to the application in terms

of Rule 3: provided that the Commissioner is satisfied that the service

is required to be provided in whole or in part within the qualifying

property;

"lease" includes sub-lease;

"Ministers" means the Minister responsible for Finance and the

Minister responsible for the Economy, Investment and Small

Business;

"minor" is a person of either sex who has not yet attained the

age of eighteen years;

"not economically active" means a person who is not working

and not seeking work or not available for work;

"permanent resident of Malta" means

(a)

a person who has right of permanent residence in

terms of article 6 and is in possession of a permanent residence

certificate issued in terms of article 7 of the Free Movement of

European Union Nationals and their Family Members Order; or

(b) a person who applies for right of permanent

residence in terms of article 6 of the Free Movement of

European Union Nationals and their Family Members Order;

"primary residence" means the dwelling house in which an

individual habitually resides in 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 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 (a) the beneficiary; and (b)

persons that qualify as his dependants or household staff provided

that the Commissioner has been notified that such dependents or

household staff will be so residing;

"qualifying owned property" means an immovable property

purchased at a consideration of not less than

(a)

subject to the provisions of paragraph (b) below, two

hundred and seventy-five thousand euro (€275,000) for a

property situated in Malta; or

(b) two hundred and twenty thousand euro (€220,000)

for a property situated in Gozo or in the south of Malta;

Provided that an immovable property purchased before the

date of publication of these rules 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 are delivered to the

Commissioner upon application;

Provided further that where the Commissioner, or any

officer authorised by him in writing, architect or surveyor 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 property taken on at lease

of not less than

(a)

subject to paragraph (b) below, 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 or in the

south of Malta;

"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;

"south of Malta" means the areas within set boundaries as

designated in the Second Schedule to the Local Councils Act of the

localities listed in the Schedule to these Rules;

"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 a non-refundable administrative fee of six

thousand euro (€6,000) upon application

Provided that in applications in respect of which the

qualifying property is a qualifying owned property situated in the

south of Malta, the non-refundable administrative fee shall be that of

five thousand and five hundred euro (€5,500) to be paid 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 is granted special tax status

under these rules.

(3) Following the death of a beneficiary, the special tax status

granted in terms of sub-rule (2) shall be granted to a dependant of that

deceased beneficiary who has inherited the property that was the

primary residence of such beneficiary, or who rents a qualifying

rented property immediately after the death of the said beneficiary

and satisfies all the other requirements set out in rule 4. Such status

shall only be transferred once the said dependant provides proof to

the Commissioner that all the requirements of rule 4 are satisfied in

such manner as the Commissioner may determine.

A beneficiary is an individual who is not a permanent

resident of Malta and who proves to the satisfaction of the

Commissioner that

(a)

he is an EU, EEA or Swiss national but is not a

Maltese national;

(b) he is not a person who benefits 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 Individuals - S.L. 123.130

Non-EU / EEA / Swiss Nationals Rules, the Malta Retirement S.L. 123.134

Programme Rules, the Global Residence Programme Rules, the S.L. 123.148

Qualifying Employment in Innovation and Creativity (Personal S.L. 123.141

Tax) Rules or the Highly Qualified Persons Rules;

(c)

he holds a qualifying property holding;

(d) he is in receipt of stable and regular resources which

are sufficient to maintain himself and his dependants without

recourse to the social assistance system in Malta;

(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 dependants;

(g) he can adequately communicate in one of the official

languages of 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 in the

year immediately preceding the year of assessment which is received

in Malta (including income arising outside Malta and received in

Malta during the whole of the year in which the special tax status was

granted) by the beneficiary, the beneficiary’s spouse and children

referred to in paragraph (b) and (d) of the definition of the term

“dependant” in Rule 2, 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 the income arising outside Malta of the

persons referred to in this sub-rule shall be fifteen thousand euro

(€15,000) for any year of assessment. Such minimum amount is

payable in full in both the year when the special tax status was

granted and in the year when the individual ceases to possess the said

special tax status.

(2) Income of a beneficiary, the beneficiary’s spouse

and children referred to in paragraph (b) and (d) of the definition of

the term "dependant" in rule 2 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) Notwithstanding any provision in the Income Tax Acts -

(a)

subject to the provisions of paragraph (b), the

minimum tax referred to in the proviso to sub-rule (1) shall be

payable by not later than the 30th April of the year immediately

preceding the relevant year of assessment. Such payment shall

be accompanied by a return made to the Commissioner that

provides proof that all the requirements of rule 4 continue to be

satisfied. The said return, which shall be in such form as the

Commissioner may determine, does not need to be submitted in

the year in which the special tax status is granted;

(b) in the case of the year in which the special tax status

is granted, where, it is evident that the special tax status will not

be granted before the 30th April, the minimum tax referred to in

the proviso to sub-rule (1) is to be paid before the special tax

status is granted;

(c)

any tax paid under the provisions of sub-rule (1)

shall not be refundable.

(4) (a)

Notwithstanding any provision in the Act, an

individual who falls under the definition of "permanent resident of

Malta" in rule 2, will be taxable on any income accruing in or derived

from Malta or elsewhere, and whether received in Malta or not in

respect of income mentioned in article 4 of the Act and subject to tax

at the rates mentioned in article 56 of the Act.

(b) In the case where the individual referred to in paragraph

(a) is a beneficiary, dependent or household staff, the relevant

authorised registered mandatary shall -

(i)

enquire and obtain information from the relevant

beneficiary as to whether the beneficiary any of his dependants

falls under the said definition of "permanent resident of Malta"

as at the 31st December of each year from the year of the

appointed date onwards; and

(ii) notify the Commissioner of any individual that is a

beneficiary dependent that falls under the said definition of

"permanent resident of Malta" by not later than the 30th April

following the 31st December referred to in paragraph (a) on

such form as the Commissioner may determine. Where the

authorised registered mandatary is not able to obtain such

information, he is to notify the Commissioner by the said 30th

April of this state of affairs and provide proof that at least two

attempts at enquiry were made. Where such notifications are not

made within the time specified, the authorised registered

mandatary shall be charged an administrative penalty of ten

thousand euro (€10,000).

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

status.

day, cease to possess special tax status under these rules

(a)

if the individual becomes a Maltese national or a

third country national;

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

individual does not hold a qualifying property holding,

including in the case where the said individual lets or sublets the

qualifying property holding;

(c)

if, at any time, after the appointed day, such

individual becomes a permanent resident of Malta;

(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 his dependants;

(e)

if the individual’s stay is not in the public interest, or

(f)

if the individual stays in any other jurisdiction for

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

(2) 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.

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 Ministers shall jointly 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 Ministers of such

failure; and

(c)

such individual has exercised his best efforts to

remedy the failure.

(1) 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 or the relevant authorised registered mandatary 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.

(2) Notwithstanding any other provision in any act, the

Commissioner and the competent authority in relation to the Free

Movement of European Union Nationals and Their Family Members

Order may exchange information that is in their possession

concerning an individual -

(a)

making an application in terms of rule 3;

(b)

that is a beneficiary; or

(c)

that has right of permanent residence in terms of the

Free Movement of European Union Nationals and their Family

Members Order.

Such information may be exchanged for the purposes of

these rules and for the purposes of the right of permanent residence in

terms of the Free Movement of European Union Nationals and their

Family Members Order.

If an individual benefits under these rules where that

person was not so entitled, the Commissioner may issue an

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

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.

(8) Where an authorised registered mandatary repeatedly fails

to carry out a function required under these rules, he shall cease to be

an authorised registered mandatary. For the purposes of this

paragraph, "repeatedly" means more than two failures of carrying out

functions required under these rules.