Malta Tax Residency for Digital Nomads

Published on 18 January, 2019

It is very important for every digital nomad to have tax residency. There are of course solutions how to avoid tax completely. In this article tough, we are focusing on those who would like to pay as low tax as possible legally.

Determining tax residency

We can determine tax residency by nationality, by place of residence or by the location of the business activity. However, if a nomad obtains tax residency in a country that does not have double taxation and where other taxes are low or non-existent,then the digital nomad can take advantage of it. Proper planning and structuring are necessary and simple or completely tax free solutions are rare. If they want to completely eliminate taxes they need to establish tax residency or tax domicile in a country where foreign income is not taxed.

Tax residency in Malta

Malta has a very interesting tax regime where foreign income is not taxed if it’s not remitted to the country. Consulting with an accountant is advisable since each case is different.

The income tax rate in Malta varies between 15% and 35% depending on earnings; EU citizens who apply for a residence programme and either rent or buy property in Malta can benefit from a flat tax rate of 15%. Corporation tax in Malta is 35%, however tax refunds can apply. For example, after distributing profits, shareholders can request a tax refund. Special tax incentives apply for financial services professionals who are not resident in Malta, with a view to attract investment in Malta.

Permanent residency in Malta is available to EU citizens as mentioned above (ordinary residence). Non-EU citizens can apply for the Malta Global Residency Programme to benefit from a special tax treatment. For that, they need to invest in Malta through buying or renting a property (minimum amounts needed for either buying or renting) and paying tax on foreign income. To maintain tax residency, one cannot live in any other country for more than 183 days a year.

Malta is also considering to offer a digital taxation scheme for digital companies without a physical presence.