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United Nations Pensions Programme of Malta

The United Nations Pensions Programme Rules, 2015 (UNPP) contemplate the granting of “special tax status” to UN Pensioners.
 
The UNPP provides for the granting of a special tax status to individuals who are neither permanent residents nor long-term residents of Malta and who are in receipt of a UN pension or a Widow’s/Widower’s Benefit of which at least 40% is received in Malta. Any such individual 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 any other similar organisation or body of persons, which are also of a public character, that is engaged in philanthropic, educational or research and development work in Malta
 
WHO IS ELIGIBLE?
 
An individual who meets all of the following criteria is eligible to submit an application in terms of the UNPP:
 
- is in receipt of a UN pension or a Widow’s / Widower’s Benefit, of which at least 40% is received in Malta;
- 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, the Global Residence Programme Rules, the Residence Programme Rules, the Malta Retirement Programme Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules;
- is not a Maltese national;
- owns or rents a qualifying owned property or qualifying rented property;
- 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;
- is in possession of a valid travel document;
- 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;
 
Beneficiaries under this programme may also have household staff providing a service in their qualifying property, as long as all the requisite procedures are satisfied.
 
WHAT IS A QUALIFYING OWNED PROPERTY OR QUALIFYING RENTED PROPERTY
 
A qualifying property may be rented or purchased, however it is fundamental that the qualifying property is in fact established as the beneficiary’s primary residence. 
 
The Rules stipulate that an owned qualifying properly must be purchased in consideration of not less than:
 
- € 275,000 if such property is located in Malta (excluding the South of Malta); or 
- € 220 000 if the property is located in Gozo or in the South of Malta. 
 
In terms of a rented Qualifying Property, the Rules stipulate that the immovable property must be leased out for a rental value of not less than either € 9 600 per annum for property located in Malta (excluding the South of Malta) or € 8,750 per annum for property located in Gozo or the South of Malta. 
 
WHO IS CONSIDERED TO FALL WITHIN THE DEFINITION OF A DEPENDANT?
 
The legal notice establishes that any dependant must be residing together with the beneficiary of such special tax status.
 
The following is a list of individuals considered as dependants:
 
1. The spouse or person with whom the beneficiary is in a stable and durable relationship with;
2. Minor children including adopted minor children and children who are in the care and custody of the beneficiary;
3. Children who are under the age of 25, including adopted children and children who are in the care and custody of the beneficiary 
4. provided that such children are not economically active; 
5. Children including adopted children and children who are in the care and custody of the beneficiary, who are not minors by who because of circumstances of illness or disability of a serious gravity, are unable to maintain themselves;
6. Dependant brothers, sisters and direct relatives in the ascending line of the beneficiary;
 
THE PROCEDURE
 
The individual must be represented by an authorised registered mandatory, duly registered with the Commissioner of Inland Revenue to act on behalf of an individual, who shall file an application on his behalf with the Commissioner in regard to the special tax status. 
 
The Commissioner shall have the authority to request from the individual or his authorised registered mandatory to produce information and documents that the Commissioner would consider as necessary.  Such request shall be made to ensure that the individual’s rights entitled through these rules and their proper application is ensured.  
 
Once reviewed by the Commissioner and if the application process is successful then the Commissioner shall grant in writing such special tax status to the applicant who shall become the beneficiary of such special tax status.  One should note that any authorised registered mandatory may be removed from the list upon a request being made to the Commissioner.
 
THE BENEFITS
 
The scheme entitles the beneficiary to enjoy a tax rate of 15% for income which arises outside of 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 with the possibility to claim relief of double taxation. 
 
The Rules stipulate a minimum tax payable in respect of the income arising outside Malta which is received in Malta excluding UN pension income or Widow’s / Widower’s Benefit of ten thousand euro (€10,000) in respect of the beneficiary and an additional five thousand euro (€5,000) in the event that both spouses are in receipt of a UN pension.
 
Under Maltese tax laws, individuals are subject to tax in Malta on the basis of their residence and domicile. Individuals who are deemed to be both resident and domiciled in Malta are subject to income tax on a worldwide basis. Income earned, accrued or derived in Malta or elsewhere is subject to tax in Malta irrespective of whether the foreign source income is remitted to Malta or not. 
 
Due to the strict interpretation of domicile which our law adopts, it is legally difficult for an expatriate who has taken up a Maltese residence, to also attain a Maltese domicile. Hence expats who have taken up a Maltese residency are usually not taxed on a worldwide basis - but only on income and capital gains arising in Malta (unless exempt) and on foreign sourced income which is remitted to Malta.  Foreign source income which is not remitted to Malta is not subject to Maltese tax and capital gains earned abroad are not taxable even if they are remitted to Malta.
 
This makes Malta an attractive jurisdiction for people looking to set up a residence in a tax effective jurisdiction.
 
The Minimum tax shall be payable by not later than 30th April of the year immediately preceding the relevant year of assessment.  Which payment shall be accompanied by a return made to the Commissioner as proof that the requisites established for the beneficiary continue to be satisfied.  The return does not need to be submitted in the year in which the special tax status is granted. During the year when the special tax status is granted, if it is evident that the status will not be given before April 30th, then the minimum tax amount payable shall be paid at any time after the status is granted. Moreover, the tax paid is not refundable.
 
HOW CAN WE HELP?
 
As registered authorised mandatories, this office can assist applicants throughout all stages of the application process.