MALTA RETIREMENT PROGRAMME RULES

SUBSIDIARY LEGISLATION 123.134

MALTA RETIREMENT PROGRAMME RULES

28th September, 2012

LEGAL NOTICE 317 of 2012, as amended by Legal Notices 269 of 2014

and 69 of 2020.

The title of these rules is the the Malta Retirement Programme

Rules.

Added by

L.N. 269 of 2014.

(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

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

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

mandatary;

"authorised registered mandatary" means an authorised

mandatary who is registered with the Commissioner under these

rules;

"beneficiary" means an individual, 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 Global Residence

Programme Rules; the High Net Worth Individuals

– EU/ EEA/Swiss Nationals Rules; the High Net

Worth Individuals Rules – Non-EU/EEA/Swiss

Nationals Rules; the Highly Qualified Persons

Rules; the Qualifying Employment in Aviation

(Personal Tax) Rules; the Qualifying Employment

in Innovation and Creativity (Personal Tax) Rules;

the Qualifying Employment in Maritime Activities

and the Servicing of Offshore Oil and Gas Industry

Activities (Personal Tax) Rules; the Residence

Programme Rules; the Residents Scheme

Regulations or the United Nations ("UN")

Pensions Programme Rules; and

(ii) resides with the beneficiary in the qualifying

property;

"household staff" means an individual who is in an employment

relationship, as evidenced by a contract of service, with the beneficiary

and who satisfies such conditions as the Commissioner may determine

by guidelines;

"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; or

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

under the Status of Long-term Residents (Third

Country Nationals) Regulations;"

"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;

" o v e r s e a s r e t i r e m en t pl a n" m ea ns a bo n a fi d e sc h em e o r

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;

"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 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;

a n d , i n e i t h e r ca s e , o c c u p i e s su c h p r o p e r t y as 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 (a) the beneficiary, and (b)

persons that qualify as his dependants or household staff provided

that the Commissioner has been notified that such dependants or

household staff will be so residing;

"qualifying owned property" means an immovable property

purchased

(a) after 1 January 2011 up to 30 June, 2013 at a

consideration of not less than

(i)

two hundred and seventy-five thousand euro

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

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

for a property situated in Gozo;

(b) on or after 1 July, 2013, at a consideration of not less

than

(i)

subject to the provisions of paragraph (b), two

hundred and seventy-five thousand euro

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

(ii) 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 1

July 2013 for a consideration which is less than the amounts

indicated i n paragraph (b) ab ove shal l be consi dered 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 paragraph (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 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 leased property taken on at

a lease of not less than

(a) subject to paragraph (b), 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 Government 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;

(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.

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

granted in terms of sub-rule (2) shall be granted to a dependent 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 dependent provides proof to the

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

manner as the Minister for Finance may determine further to

consultation with the Commissioner.

A beneficiary is an individual who proves to the

satisfaction of the Commissioner that

(a) he holds a qualifying property holding: provided that

where two individuals are spouses or prove to the

satisfaction of the Commissioner that they are in a

stable and durable relationship with one another, both

individuals may hold jointly the same qualifying

property holding;

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

Residence Programme Rules; the High Net Worth

Individuals – EU / EEA / Swiss Nationals Rules; the

High Net Worth Individuals Rules – Non-EU / EEA /

Swiss Nationals Rules; the Highly Qualified Persons

Rules; the Qualifying Employment in Aviation (Personal

Tax) Rules; the Qualifying Employment in Innovation

and Creativity (Personal Tax) Rules; the Qualifying

Employment in Maritime Activities and the Servicing of

Offshore Oil and Gas Industry Activities (Personal Tax)

Rules; the Residence Programme Rules; the Residents

Scheme Regulations or the United Nations ("UN")

Pensions Programme Rules;

(c) he is not a Maltese 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 every

euro shall apply on any income arising outside Malta which is

received in Malta bythe beneficiary, the beneficiary’s spouse and

children referred to in paragraph (b) of the definition "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 any year of assessment shall be seven

t h o u s a n d a n d f i v e h u n d r e d eu r o ( € 7 ,5 0 0 ) i n r e s p e c t o f t h e

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

every dependent and every special carer. Such minimum amounts

are 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 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)

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 "long-term resident" or

"permanent resident of Malta" in rule 2 shall 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 or dependent, the

relevant authorised registered mandatary shall -

(i)

enquire and obtain information from the relevant

beneficiary as to whether the beneficiary or any

of his dependants has applied for or acquired the

permanent residence certificate referred to in

paragraph (a) 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 or dependent that has applied for

or acquired the permanent residence certificate

referred to in paragraph (a) by not later than the

30th April following the 31st December referred

to in sub-paragraph (i) 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 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 at any time, after the appointed day, such individual

becomes a permanent resident or long-term resident of

Malta;

(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.

(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 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 law, the

Commissioner and the competent authority in relation to the Status

of Long-term Residents (Third Country Nationals) Regulations or

in relation to the Free Movement of European Union Nationals and

their Family Members Order, as the case may be, 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 long-term residence status in terms of the

Status of Long-term Residents (Third Country

Nationals) Regulations or that has right of permanent

residence in terms of the Free Movement of European

Union Nationals and their Family Members Order as

the case may be.

(3) The information referred to in sub-rule (2) may be exchanged

for the purposes of these rules and for the purposes of the long-term

residence status in terms of the status of Long-term Residents (Third

Country Nationals) Regulations or for the purposes of the right of

permanent residence in terms of the Free Movement of European

Union Nationals and their Family Members Order, as the case may be.

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 mandatary 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 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.

MALTA RETIREMENT PROGRAMME