HIGH NET WORTH INDIVIDUALS - NON-EU/EEA/SWISS NATIONALS RULES

SUBSIDIARY LEGISLATION 123.130

HIGH NET WORTH INDIVIDUALS -

NON-EU/EEA/SWISS NATIONALS RULES

1st January, 2011 *

LEGAL NOTICE 403 of 2011, as amended by Legal Notices 42 and 319

of 2012, and 178 of 2013.

The title of these rules is the High Net Worth Individuals -

Non-EU/EEA/Swiss Nationals Rules.

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 mandatory" 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

leg a l p r oc ur a t or un de r t he C od e of O rga ni z a t io n a n d C iv il

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 mandatory;

"authorised registered mandatory" means an authorised

mandatory who is registered with the Commissioner under these

rules;

"Commissioner" means the Commissioner for Revenue;

"dependent" means the beneficiary’s spouse, 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

*See rule 1(2) of these rules, as originally promulgated.

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;

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

Norway and Liechtenstein;

"family members" means beneficiary’s ascendants in the direct

line, descendants in the direct line, brothers, sisters, spouse/s or

persons with whom beneficiary is in a stable and durable

relationship;

"high net worth individual" means a beneficiary in terms of rule 4;

"lease" includes sub-lease;

"long-term resident" means

(a) a person who has long-term resident status in terms of

the Status of Long-term Residents (Third Country

Nationals) Regulations;

(b) a person who applies for long-term resident status

under the Status of Long-term Residents (Third

Country Nationals) Regulations; or

(c) third country nationals who have resided legally and

continuously in Malta for five years. Periods of

absence from Malta shall not interrupt the aforesaid

period and shall be taken into account for its

calculation where they are shorter than six consecutive

months and do not exceed in total ten months within

the aforesaid five-year period;

"Minister" means the Minister responsible for Finance;

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

of eighteen years;

"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 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 contract" means a contract in a form approved by the

Minister;

"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;

a n d , i n e i t h e r c a s e , o cc u p i e s s u c h p r o p e r t y a s h i s p r i m a r y

residence

Provided that the persons who reside in the qualifying

property are not persons other than the beneficiary and his family

members;

"qualifying owned property" means a property purchased after 1

January 2011 at a consideration of not less than four hundred

thousand euro (€400,000), or a property purchased before 14

September 2011 for a consideration of not less than one hundred

and sixteen thousand euro (€116,000) by a person who filed an

application under the Residents Scheme Regulations which was

duly received and acknowledged by the Commissioner before 14

September 2011

Provided that, for the purposes of this definition, the

Commissioner shall have the discretion, upon good cause being

shown, to treat a property covered by a promise of sale in respect of

which notice thereof under the Duty on Documents and Transfers

Act has been given to the Commissioner before 14 September 2011,

and the relative deed of transfer in respect of which is published by

31 March 2012, as a property purchased by an applicant as

aforesaid before 14 September 2011;

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

lease of not less than twenty thousand euro (€20,000) per annum

Provided that, for the purposes of this definition, the

Commissioner shall have discretion, upon good cause being shown, to

treat a property covered by a lease agreement entered into prior to 14

September 2011 for an amount of not less than €4,150 per annum, by a

person who filed an application under the Residents Scheme

Regulations which was duly received and acknowledged by the

Commissioner before 14 September 2011, as a leased property by an

applicant as aforesaid if a copy of the relative lease agreement, attested

by a notary or advocate, is deposited with the Commissioner by not

later than 31 March 2012;

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

reduced rate of tax contemplated in article 56(23) of the Act and

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 who is not a long-term resident, as duly

represented by an authorised registered mandatory, may apply to the

Commissioner for special tax status under these rules in such form

as the Commissioner may require and by paying the fee that the

Minister may prescribe

Provided that the Commissioner shall not receive any

applications for special tax status under these rules after 30th June,

2013. (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

Provided that the Commissioner shall not issue such

determinations in writing after 30th June, 2013.

(3) A beneficiary in possession of special tax status granted

under these rules may request the Commissioner to grant him

special tax status under the Global Residence Programme Rules.

Upon receipt of such request, the Commissioner shall issue a

determination in writing that such beneficiary has been granted

special tax status under the Global Residence Programme Rules.

Such a request is to be made through the services of an authorised

registered mandatary and shall make reference to this rule

Provided that in those cases where an application for

special tax status has been made under these rules, and the

Commissioner had not yet issued a determination in writing

confirming such status as at 30th June, 2013, the applicant may

request the Commissioner to consider such an application to have

been made under the Global Residence Programme Rules. Such a

request is to be made through the services of an authorised

registered mandatary and shall make reference to this rule.

A beneficiary is an individual who proves to the

satisfaction of the Commissioner that

(a) he holds a qualifying property holding;

(b) in the case of a person who declares that he does not

intend to become a long-term resident, he does not spend

more than nine months in Malta in any calendar year;

(c) in the case of a person who declares that he intends to

become a long-term resident, he is a party to a qualifying

contract;

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

Scheme Regulations or the Highly Qualified Persons

Rules;

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

are sufficient to maintain himself and his dependents

without recourse to the social assistance system in

Malta;

(f)

he is in possession of a valid travel document;

(g) 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;

(h) 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;

(i)

he is a fit and proper person;

(j)

he is fluent in one of the official languages of Malta;

and

(k) he is a third country national and is not a Maltese

national.

For the purposes of these rules and under the powers

conferred upon him by the delegation issued by the Minister

responsible for immigration in terms of article 26 of the

Immigration Act, the Commissioner may issue a certificate which

shall be deemed to constitute a residence permit issued in terms of

article 7 of the Immigration Act, to a person who is a party to a

qualifying contract

Provided that any rights conferred upon a person who is a

party to a qualifying contract under article 7 of the Immigration Act

or through a certificate issued under these rules shall not extend to

any other person except the person’s dependants as defined in these

rules.

(1) In these rules, the rate of fifteen cents (0.15) on every

euro shall apply 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 twenty-

five thousand euro (€25,000)

Provided further that a beneficiary with dependents shall, in

addition to the minimum amount of tax payable of twenty-five

thousand euro (€25,000), pay another five thousand euro (€5,000)

per year of assessment for every dependent.

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

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

be charged to tax at the rate of thirty-five cents (0.35) on every

euro.

(3) A beneficiary and his spouse shall be precluded from opting

for a separate computation for the purposes of article 50 of the Act.

(4) 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 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 holding;

(b) if the individual is not in receipt of stable and regular

resources which are sufficient to maintain himself and

his dependents without recourse to the social

assistance system in Malta;

(c) if, after the appointed day, he is not in possession of

sickness insurance in respect of all risk normally

covered for Maltese nationals for himself and his

dependents;

(d) if he establishes his domicile in Malta;

(e) if such person had declared that he does not intend to

become a long-term resident and spends more than nine

months in Malta in a calendar year;

(f)

if he becomes a Maltese national, an EEA national or a

Swiss national;

(g) if the beneficiary’s stay is not in the public interest; or

(h) if he 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 ten thousand euro (€10,000).

(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

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 Tax

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

rules, include such form as the Commissioner may require.

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

authorised registered mandatory to act on his behalf in respect of

all applications, correspondence, submissions, filings, declarations

and notifications contemplated under these rules. All such acts are

to be filed by the said authorised registered mandatory.

(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 authorize more than one authorised mandatory.

(4) Registration as an authorised registered mandatory 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 mandatory 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.