Malta Nomad Residence Permit Income Tax Rules (2024)

News and developments

The Rules apply on income from “authorized work” as of 1st of January 2024 year.

The Malta Nomad Residence Permit (Income Tax) Rules in a Nutshell

Malta has recently introduced the Nomad Residence Permits (Income Tax) Rules, 2023, aimed at providing a favorable tax regime for digital nomads residing and working in Malta, subject to the applicable anti-abuse provisions. This article delves into the key provisions of these rules, highlighting the benefits for eligible individuals.

Key Legal Issues

  • Tax Exemption period on qualifying income.
  • Reduced Tax Rate on income of authorized work.
  • Application of Double Taxation Relief mechanisms.
  • International Tax Law and application of Double Tax Relief.
  • Temporary Residence.

Tax Rate in Malta for Authorised Work

An eligible main applicant engaged in authorized work will be subject to a reduced income tax rate of 10% on their chargeable income. This rate applies to only to the income derived from authorized work and is subject to any relief of double taxation as per Malta's tax treaties.TheLaw defines''Authorized Work'' as :(i) services provided by an eligible main applicant in accordance with a contract of employment with an employer who is not resident in Malta and who does not carry on business in Malta through a fixed place of business, or(ii) services performed by an eligible main applicant in a self-employed capacity for clients who do not reside in Malta and who do not carry on business in Malta through a fixed place of business, which services, in either case, are provided remotely by means of telecommunications technology as may be approved by Residency Malta Agency "

Twelve-Month Tax Exemption Period

The Nomad Residence Permits (Income Tax) Rules grant a unique tax exemption for the first twelve months for eligible applicants. During this period, individuals won't be obligated to pay income tax in Malta on the income derived from authorized work. The exemption period begins either from the date the nomad residence permit is issued or January 1st, 2024, whichever comes later.To qualify for this tax break, applicants must inform the Authority in writing, notifying the Agency about their intention to establish residence rather than merely passing through.

Taxation of Other Income

Any income, other than that derived from authorized work, will be governed by the applicable provisions of the Income Tax Act, ensuring a comprehensive approach to taxation. The employment income derived from Authorized work should not be subject to the Final Settlement System (FSS) Rules.

Exemptions for Renewed Permits

Where an individual does not renew his Nomad permit immediately after its expiry date, but applies for a new permit within a period of 2 years, the 12-month exemption period shall not apply. However, should the new permit is acquired after a period of 2 years from the date of cessation of validity of the prior Nomad Permit, the 12-month exemption period shall apply, as per the General Rule.

Personal tax compliance obligations

Nomad beneficiaries who derive income chargeable to tax in Malta are required to register for tax purposes in Malta, submit their tax return and settle the tax due, if any. This requirement applies to all Nomad beneficiaries who have acquired their Nomad status post 1stJanuary 2024.

Non-Attribution of the employer’s or client’s income to Malta.

The fact that a Nomad residence permit holder who is employed or self-employed and carries out authorized work from Malta, does notipso facto confer attribution of the employer's or clients' earnings to Malta.

Relief for Foreign Tax Payment

Nomad Residence Permit holders may qualify for relief from double taxation. Consequently, individuals can leverage the array of double tax treaties that Malta has established with other states. As a result, the potential burden of taxation on the same income by both Malta and another jurisdiction is alleviated.

What this means for you

For those considering Malta as theirtemporarybase, the Nomad Residence Permits (Income Tax) Rules provide an advantageous option. By acquiring the Nomad status, individuals couldbenefit from a reduced income tax rate on the qualifying incomewhilst working remotely in Malta.Furthermore, the Nomad Residence Permit holders enjoy the privilege of accessing the Schengen Area. This enables them to traverse freely within the Schengen Zone for the duration of their permit validity. Moreover, holders of the permit can extend this benefit to include their dependents, facilitating their relocation alongside the primary permit holder.

How we can help

Our team specialises in expert guidance on eligibilityassessment,requirements andcomprehensiveassistancethroughout theentireapplication process, including procedures for renewal. Feel free to establish contact with us for further details.In this regard our service includes:

    • Assistance in determining eligibility under this Programme.
    • Filling in the Nomad Residence Permit Application Forms and review all supporting documentation.
    • Reviewing the health insurance policy provided by the applicant. If not adequate, we assist in sourcing a standard health insurance policy that fulfils the requirements under the Nomad Residence Permit Rules.
    • Submission of the full application form and supporting documents to the Residency Malta Agency and handling all communication with the Agency. We will also accompany you to the offices of the Agency when required.
    • Upon issue of the residence permit, we will assist with the collection of the residence cards including accompanying you to collect them.
Malta Nomad Residence Permit Income Tax Rules (2024)

FAQs

Malta Nomad Residence Permit Income Tax Rules? ›

The Nomad Residence Permits (Income Tax) Rules grant a unique tax exemption for the first twelve months for eligible applicants. During this period, individuals won't be obligated to pay income tax in Malta on the income derived from authorized work.

What is the income requirement for Malta digital nomad visa? ›

Malta Digital Nomad Visa Requirements

Securing the Malta Digital Nomad Visa requires meeting certain criteria for interested individuals. Firstly, applicants must be Non-EU nationals and must be in receipt of a minimum gross annual income of €42,000. This threshold has been raised as of April 2024.

What are the tax rules for nomads? ›

The Nomad Residence Permits (Income Tax) Rules have been published on 7 December 2023. Through these rules Third Country nationals who are in possession of a valid nomad residence permit shall qualify for a reduced income tax rate of 10% of their chargeable income derived from “authorised work”.

What is the tax rate for digital nomads in Malta? ›

Income Tax Rate: Eligible digital nomads are taxed at a favorable rate of 10% on chargeable income derived from authorized work. Tax Registration: Nomads must register for income tax and file returns in Malta.

What is the tax strategy for digital nomads? ›

You're in luck — digital nomads have two ways to lower their tax bill and avoid double-taxation: The Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC). The FEIE excludes your foreign earned income from U.S. income tax, which lowers (or eliminates) your U.S. tax liability.

How do I prove my income for digital nomad visa? ›

To prove your income for a digital nomad visa, it does not have to come from one job or business. If you are a freelancer or have multiple jobs or businesses, you can prove your income with employment contracts, pay slips, bank statements, and tax returns.

How much monthly income is required for digital nomad visa? ›

Most digital nomad visas have a minimum monthly or yearly income requirement to maintain visa status. The average minimum monthly income requirement is between $2,000 and $3,500. Some countries allow investment in local businesses or deposits in local bank accounts in place of the minimum income requirement.

How do taxes work on a digital nomad visa? ›

While obtaining the digital nomad visa takes care of the immigration requirement to enter and work in a country for a specified period, it typically does not relieve the individual from income tax and/or social security exposure, or the employer from payroll considerations.

Where do I pay taxes if I am a nomad? ›

2. Where do I pay my taxes if I am a digital nomad? Typically, remote workers file taxes with their country of tax residence as determined by their place of principal residence or usual abode.

What is the nomad tax exemption? ›

A. General Description 1. The Digital Nomads Exemption provides a state individual income tax exemption for digital nomads, as defined by R.S. 47:297.18, equal to 50 percent of their gross wages, limited to $150,000, for a period of up to two taxable years during taxable years 2022, 2023, 2024, and 2025.

Does Malta tax foreign income? ›

For expatriates working in Malta, personal income tax rates are 15% on income up to €5 million. Conversely, any income sourced from outside Malta (including capital gains) is completely tax-free.

Do digital nomads pay state income tax? ›

Whether digital nomads have to file or pay state taxes will depend on the state where they were last a tax resident and the amount of time since they left. Typically, you would only need to file a State Tax return for the part of the year you lived in that state or whenever you have earned income from that state.

Is Malta a tax paradise? ›

Many people count Malta among tax haven countries. There could be several reasons for it. They could simply be uninformed and may think every tax-free or tax-friendly country is a tax haven, or may consider Malta a tax haven because of its citizenship by investment program (since several CBI countries are tax-free).

What is the foreign income tax exclusion for digital nomads? ›

Also known as the FEIE, or Form 2555, digital nomads can utilize this exclusion on their US tax return by excluding around $120,000 of foreign earned income.

What can I write off as a digital nomad? ›

Online Tools and Services. As a digital nomad, you likely rely on a variety of online tools and services to support your work. These could be project management software, virtual meeting platforms, and cloud storage solutions. The cost of these items are tax-deductible.

Which country has the best digital nomad taxes? ›

Countries with best taxes for digital nomads

Dubai: 0% income tax rate and up to 9% corporate tax, tax residency certificate with 90-120 days of stay. Estonia: approximately 20% depending on the business type.

How much do I need to make to be a digital nomad? ›

This could range anywhere from $1000 to $3000 per month, though some manage on less and others may need more. My recommendation is to start with at least $1500 USD per month to be able to have a comfortable life and digital nomad budget.

Who is eligible for Malta nomad visa? ›

Malta Digital Nomad Visa Conditions

You are a citizen of a third country. You have a monthly income of at least €2,700. You are a partner of a company registered outside Malta; or. You are an employee for a company outside of Malta and have a contract with that company; or.

What is the foreign earned income for digital nomads? ›

Foreign Earned Income Exclusion. Also known as the FEIE, or Form 2555, digital nomads can utilize this exclusion on their US tax return by excluding around $120,000 of foreign earned income. It's imperative first to convert your foreign earned income into US dollars.

What is the minimum income for digital nomad Portugal? ›

You must be a non-EU/EEA citizen. You must have a demonstrably remote job (employee or self-employed) with income from entities outside Portugal. You must meet the minimum income requirement: €3,280 per month (as of January 1, 2024) or €4,096 per month if you have dependents.

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