Their ideal location in the centre of the Mediterranean Sea has given the Maltese islands an extremely diverse collection of cultures and traditions, stemming from the influences of the various groups who have occupied the archipelago. In today’s day and age, Malta remains a culturally diverse nation, due to the high levels of emigration (especially from continental European expatriates). In order to accommodate for all the varying cultures that call this melting pot of nations home, there are many ways to satisfy all sorts of lifestyles.
Maltese Art and Architecture
For the artistically inclined, there is an abundance of art and architecture that the island has to offer – ranging from the ancient city of Mdina with its largely baroque style of architecture, to the parallel streets of the Capital, Valletta; for such a physically small nation there are many museums housing beautiful works of art to suit anyone’s taste, regardless of artistic inclination.
The majority of artworks and traditions in Malta draw their influence from Malta’s strong religious roots. The superb architecture of the churches of Malta are a must see – each of Malta’s 365+ churches is unique in its own way and has something different to offer its visitors.
Maltese Summer Feasts
The strong religious ties are especially seen in summer, where each week a different parish hosts a feast, paying tribute to their own respective saint. These feasts feature traditional music and games, dating back hundreds of years, typical Maltese cuisine and an astounding fireworks display – with each parish competing to outdo the others.
Maltese traditions and lifestyle
Despite its geographic limitations, Malta plays host to various different cities and towns – ranging from the metropolitan town of Sliema, to the more traditional fishing villages such as Marsaxlokk. In an area smaller than most major cities in Europe, Malta plays host to many different traditions and lifestyles depending on which part of the island you’re in.
Traditionally, towards the north and south of the island you’re more likely to find people interested in relaxing and enjoying the culture that this sun-kissed island has to offer. In the centre live the more urban people, preferring to adopt a metropolitan lifestyle, engaging in work in the tertiary sectors and living more fast-paced lives than the relaxed lifestyles of the north.
Malta, the Pearl of the Mediterranean
Life in Malta can be very laid back – with its warm summers, the constant concerts by local talent such as world renowned tenor Joseph Calleja, the annual Isle of MTV music festival, the different traditions, easy access to the beach, the more exclusive areas such as Portomaso or Tigne Point – it can be seen as the ideal place to retire.
There is someone for everyone, regardless of age, nationality or lifestyle choice – everyone feels at home in the small, warm and inviting island. Language is not an issue – since Malta is a bilingual country almost 90% of the population speaks English, and other spoken languages include Italian, French and German.
No matter where you’re from, you’re almost certain to meet someone from your home country. The almost perennial sunshine, the friendliness of the Maltese people and the abundance of things to do attract thousands of visitors each year, with many choosing not to return home once they’ve had a taste of what is often called the pearl of the Mediterranean.
Its ideal strategic location in the middle of the Mediterranean sea has ensured that Malta has always been a hub for transport and transit stops. This hasn’t changed in modern times – whether it is a stop on a cruise, or a transfer stop for long international journeys, Malta plays host to hundreds of ships and planes on a monthly basis.
Travelling to and from Malta
Serviced by most major European airlines, Malta International Airport has won several international awards for its service and business management. There are direct flights from most major European cities – flights which become extremely frequent in the peak summer months. Servicing flights from major airports such as Frankfurt, Dusseldorf, Munich, Zurich and many others, it is also very easy to catch a connecting flight to Malta. Malta International Airport also hosts several low cost airlines, such as Ryanair and Easyjet – so travelling to and from Malta is now easier than ever, and there is now the option to get a low cost flight back home for the weekend.
With its many ports and harbours, air is not the only way to travel to and from Malta – the beautiful island welcomes many cruiseliners throughout the year. Several daily ferry services run between Malta and Sicily via catamaran. There is also the option to sail in on your own private yacht and berth in one of the many marinas around the island.
Do you need a Visa to travel?
Travelling to Malta is very simple. As it forms part of the European Union, people travelling from an EU member state do not require a visa. Malta also forms part of the Schengen area and as such even passports are not required for those travelling from countries forming part of the agreement– a regular form of identification such as an ID card or a driver’s licence will suffice for entry into the country. Traveller’s visas from the United States or Canada can last up to 90 days before renewal is needed.
Quality of life in Malta
Malta does not have any local diseases, and as such immunisation is not required for entry. However, it is always advisable to consult the World Health Organisation’s International Travel and Health document, which can be downloaded from here. Malta remains a relatively safe country in terms of crime rates, however it is advisable to always book travel insurance as a precautionary measure. Travellers from the European Union are also advised to have with them an European Health Insurance Card: as emergency health care is only free to residents of the Maltese islands (both Maltese, as well as permanently placed foreign nationals holding a Maltese identity card).
Read more on moving to Malta and enjoy its Mediterranean lifestyle through the Malta Key Employee Initiative (KEI) and the Malta Nomad Permanent Residence
Why Malta?
Malta is one of the few civil law jurisdictions that not only has developed its own domestic law but also recognizes the judiciary of foreign law. The act of the setting up is regulated by the Maltese Trust and Trustees Act of 2005 and which incorporates within its provisions the Hague Convention on the Law Applicable to Trusts and on their recognition, which Malta has ratified.
A trust can be created in various ways: via a unilateral decision, an oral agreement, by a judicial decision, an instrument in writing and even by operation of the law.
Setting up a Maltese Trust
A trust under Maltese law is described as a legal agreement between two parties: the settlor and the trustees. The settlor places assets (bank accounts, real estate, stocks and bounds, furniture or art) under the power of the trustee for the welfare of a beneficiary or for charitable purposes.
The main advantages of Maltese trusts are the country’s reasonable set-up and maintenance costs (50% cheaper than competing EU domiciles), the support offered by the MFSA (Malta Financial Services Authority), the flexible regulatory and legal structure, and the fiscal benefits for the fund and fund manager, the investors and the administrator to business organisations and high net worth individuals.
This distinctive structure is additionally strengthened by the widespread use of the English language in the legislation, education and business enterprises. There are currently 130 licensed trust management companies (both local and foreign) offering global trust and trustees services.
The Benefits of Malta-registered Trusts
Domestic Issues:
- Avoiding expenses and delays relating to Malta or overseas probate processes
- Conserving assets until minors reach the age of maturity
- Protection in the event of the settlor or the beneficiary’s incapability
- Allocation of assets to the settlor’s heirs without the assets being transferred immediately upon the settlor’s death
Tax Issues:
- Minimizing estate taxes
- Assets can be hidden from third parties
- Moving considerable tax burdens onto beneficiaries with more advantageous tax impositions
Practical Issues:
- To have investments under one roof and overseen by specialists
- Aiding charities
Tax Implications of a Trust
Under Maltese law the stipulated rule is that tax liability emerges when at least one of the trustees of the trust resides in Malta. The tax is determined in relation to the income attributable to the trust. This would compromise the total income tax under Maltese law, which would result from or are derived by the trustee at any stage in the life of the trust.
However, the inclusion of a transparent model in Malta’s tax laws allow in certain circumstances, for the tax authorities to inspect the trust and to either tax the transaction or absolve it, depending on the different factors that would attribute jurisdiction to tax in Malta or otherwise.
Buying Property in Malta
Property in Malta has always been a sound investment securing moderate capital growth even in the worst of times. Over the years numerous government initiatives have contributed towards various tax advantages directed at foreign businesses, professionals and retirees, making Malta a tempting destination and in turn this has had a positive effect on the demand for property be it for rental, residence or even investment. Here is an introduction to the legal process for buying property in Malta.
Procedures For Buying Property in Malta
- Together with a professional and reliable real estate agent the client’s requirements are established.
- A property is selected that reflects the client’s needs and a price is agreed with the seller.
- A legal aid is sought for the inspection of the property and contractual portion of the purchase.
- A Preliminary Agreement (locally known as a konvenju) is drawn up and signed. This agreement is typically valid for three months.
- A deposit of 10% of the value of the property is normally paid when signing the above agreement on account of the purchase price. In most cases this deposit is held by the Notary public on behalf of the buyer and transferred to the seller once the root of title of the property has been satisfactorily established.
- Both parties i.e. the vendor and the purchaser are legally bound by the agreement.
- Once the root of title has been established a final deed is signed and the new owners of the property receive the keys.
Expenses To Expect when Buying Property in Malta
Stamp duty fees in Malta, reductions and when it is not applicable:
Stamp Duty fee in Malta
Stamp duty fees amounting to a maximum of 5% of the purchase price are applicable when purchasing a property in Malta and payable by the purchaser as follows:
- An initial stamp duty equivalent to 1% of the value of the property is paid to a Notary on signing of the Preliminary agreement (konvenju). This fee is then submitted to the Inland Revenue Department and a receipt verifying payment is given.
- The final 4% of the value of the property is paid on the day of the final deed. The Notary then submits the deed to the Inland Revenue Department and a receipt from the IR Commissioner is given.
Stamp Duty on Immovable Property in Malta
Stamp duty is only chargeable on Immovable Property and is not paid on any movable items (furniture and fittings) being transferred together with the immovable property.
When the property being purchased is to be used as the purchaser’s ordinary place of residence a reduction in Stamp duty fees applies. In this case Stamp duty is charged as follows:
- 3.5% on the first €150,000 of the value of the property; followed by
- 5% on the value of the property exceeding €150,00
AIP Permit for Non-Maltese Nationals
When acquiring property in Malta, Non-Maltese nationals require an AIP (Acquisition of immovable property by a non-resident) permit. The purpose of this permit is to ensure that the applicant/purchaser is a person of good standing. This restriction does not apply to properties located in areas termed Special Designated Areas or to EU citizens when purchasing property which is to serve as their primary residence. Special Designated Areas (SDAs) are established top-end residential areas that possess no acquisition restrictions. Therefore when a property is located in a Special Designated Area both EU and non-EU permanent residents may buy property with the same rights as Maltese citizens.
Taxes when Selling Property in Malta
When selling a property in Malta the tax to be paid (if any) depends on two factors:
Main Residence factor
Capital gains taxes are not applicable if a property that is used as a primary residence is owned for at least three years, on the condition that is it sold within one year of the owner leaving the property. Or:
Investment Property
- 12% final tax of the property’s value; Or
- Where the property has been owned by the same person for less than 12 years, one may opt out of the above rule and apply tax equivalent to 35% on the profit.
Buying Property Through a Company
Buying a property through a company is done typically to use retained earnings within the company directly. Distribution from the company to the shareholder is non-existent and consequently there is no dividend tax. This may be utilized for the purpose of protecting assets. Get in touch with us to learn more about the legal process for buying property in Malta
This overview of Malta’s personal taxation of Maltese residents applies to persons taking up residence under European freedom of movement rules, under any immigration rights or residence programme as well as under the Maltese Citizenship by Exceptional Services rules.
Personal Tax Connecting Factors
Under Maltese law, the connecting factors determining the taxability of individuals are domicile and residence, remnants of Malta’s British colonial history dating back to the 1940s.
Citizenship is not a factor that effects the taxation of individuals and therefore acquiring Maltese citizenship by exceptional services does not, alone and in itself, give rise to any tax consequences. Contact us for Maltese tax advice on the tax implications of the residence required by the Maltese citizenship rules, to assess the extent to which it may result in tax residence and to plan all remittances required under the investor citizenship route.
Permanent resident status under immigration law, particularly the Permanent Residence Programme Regulations of 2021, is not equivalent to Maltese tax residence. Accordingly, Maltese permanent residence permits issued under these Regulations do not automatically result in residents being considered tax resident in Malta given that this immigration programme does not require any minimum physical presence in Malta in any given year. Contact us for a consultation on the requirements, implications and planning of tax residence in Malta.
Tax Resident Status
Tax resident status is not an automatic consequence of acquiring permanent residence in Malta. Tax resident status results from a residence in Malta of over 183 days, or where residents have spent less than the 183 days in Malta, they may demonstrate various connecting factors evidencing their intention to reside in Malta ordinarily. Permanent residents of Malta requiring formal confirmation of their tax residence status in Malta are able to obtain this through a separate procedure – prior legal advice is recommended. Contact us for a tax consultation.
Taxation of Non-Malta residents
Non-tax residents are only subject to tax on local source income, that is income arising in Malta including salaries, local business profits, rental income and pension income.
Malta Tax of Foreign Domiciled Residents of Malta
Tax residents of Malta enjoy a remittance basis of taxation, often referred to as res non-dom taxation, whereby they are only subject to Maltese tax on their foreign income only to the extent remitted to Malta. Res non-doms are not subject to Maltese taxation on their foreign source capital gains, whether remitted to Malta or not. The enjoyment of the res non-dom tax regime by persons having incomes sources abroad exceeding €35,000 are subject to a minimum annual tax of €5,000.
Taxation of Income in Malta
Income is taxable in Malta only if it arises in Malta. Income arising abroad, is only taxable in Malta if a person is tax resident in Malta and only on that portion that is remitted to Malta. Capital gains are taxable in Malta only if arising in Malta but are subject to various exemptions. Capital gains arising out of Malta are not subject to tax, nor are they reportable, whether remitted to Malta or not.
Other Maltese taxes
Malta has no wealth or capital taxes, no wealth reporting obligations, no inheritance taxation, no property taxes, no dividend taxes, and no system of rates.
Learn more on Malta Tax Domicile.
Comparing Malta to London, Berlin, Copenhagen or the sort, especially with regards to geographic size and commerce won’t get you anywhere close to measuring Malta’s worth. Malta is an island in the middle of the Mediterranean Sea, The term ‘location is everything’ was coined with Malta in mind.
Why buy property in Malta
Property in Malta has always been a good investment and a great idea for a place to live. Malta offers a vibrant lifestyle, rich in culture, great weather and a good reputation for hospitality. Malta’s relatively small size means it is accessible by all and consequently makes each part of the island a ‘good’ place to invest.
Over the years Malta has earned the reputation of being an attractive tax and cost-efficient Eurozone location attracting many individuals to take up residence and corporate entities to set up operations. In addition, a stable political situation and economy, a highly skilled multi lingual work force with English being an official language, low crime rates, high education, an established health care system and much more makes Malta an attractive place to live fueling the demand for more property. Last but not least, Malta’s cosmopolitan lifestyle, coupled with its Mediterranean climate, led to it being voted best in the world in International Living Magazine’s quality of life index for 2011.
To fully understand why Malta is an option in terms of relocation you must be aware of the benefits a business or an individual may gain by choosing Malta. If you decide to buy property in Malta we can assist with your requirements putting you in touch with the right people able to provide a valued and professional service.
What does renting residential property in Malta involve?
The steps required to rent a property in Malta are quite simple. The two most important decisions to be made are the type of property and location. It is important to work with the right agency having the right properties as well as, to have the right person to show you the right properties and not waste your precious time. Having sourced your ideal rental property the terms of the lease are established to typically include:
- Rent payment details;
- A reimbursable security deposit usually equivalent to one month’s rent;
- Agency fees (generally half of the first month’s rent plus 18% VAT)
- Maintenance agreements
- Expiration date of the lease period
Property rental prices vary depending on the type of property, whether it is furnished, its location and leasing duration. More often than not, rental properties are fully furnished, however it is possible to find unfurnished options. Short-term rentals, typically classed as being less than six months, normally include external amenities such as water, electricity and an Internet connection. Long-let renting clients usually pay for external amenities and based on their consumption, this typically amounts to €50 per month, per individual.
Where in Malta should I rent?
Where to rent depends very much on the client. Malta and the smaller island of Gozo present a good selection of rental properties, ranging from modern sea view apartments to luxuriously finished country farmhouses. The Inner Harbour region is known as being the most tourist-populated part of Malta. This region encompasses the towns of Sliema, Swieqi, St Julian’s, Balluta and Msida, offering a more modern, ‘city-like’ feel to the island.
The Southern and Western parts of the island are known for offering a more calm and laid back lifestyle. Towns include Siggiewi, Zebbug, Birzebbuga and Marsaskala. For those after a completely authentic and traditional Maltese way of life, Gozo is the place to try. All towns in Malta offer necessary amenities such as grocery shops, police stations, post offices and pharmacies.
What does Malta have to offer?
Malta’s weather is a major factor in its popularity. It has warm winters and hot summers. Typically, the temperature in winter does not fall below 10 degrees Celsius. In summer, it can rise to over 35 degrees Celsius.
The Maltese islands are a unique blend of history and festivity. There are many cultural events and sites to visit, such as Neolithic temples, ancient cities and street feasts, as well as many exclusive clubs and restaurants. Malta also offers a good selection of beaches and holiday resorts.
Malta’s health services are renown, having placed 5th in the World Health Organization’s (WHO) survey of global healthcare. Healthcare is offered free of charge to all Maltese nationals and EU citizens in possession of a European Health Insurance card (EHIC). Non-Eu citizens seeking to apply for residence in Malta are to be covered by an All-risk medical insurance policy.
Buying property in Malta
The islands of Malta and Gozo offer a wide selection of properties in varying surroundings, some encompassing sea and country views, others city residencies and even gated communities.
Types of Residence in Malta
Once the decision has been made to invest in property, the next step is to select the preferred type of residence. Property in Malta is divided into six categories: apartments, maisonettes, villas, houses of character, terraced houses and farmhouses. Other factors to be considered are location, size, property style, resources and services such as schools and proximity of entertainment, and most importantly a budget. Your local real estate agent is just as important. Seek advice to select a suitable agent able to offer a customized service and proper guidance.
Notary Public, Preliminary Agreement and Deed when Buying Property in Malta
Having selected the right property, agreed on a price and the terms and conditions of acquisition, the next step is to appoint a Notary public to draw up a Preliminary Agreement (locally known as a konvenju) to be signed by the vendor and the purchaser. At this stage the norm is for the purchaser to pay a deposit of 10% on account of the selling price to secure the eventual transfer of the property. In most cases and unless otherwise agreed the deposit is held by the Notary public on behalf of the buyer and transferred to the seller on final deed of sale once the root of title has been accurately established. A provisional stamp duty equivalent to 1% of the purchase price is also paid by the purchaser on signing of the preliminary agreement. (Learn more on Stamp Duty Fee in Malta)
Before a final deed is enacted, the notary public will verify the legal title, and confirm that there are no outstanding debts burdening the property. Once this is done and the purchaser finalizes the necessary financial requirements for the purchase and the final deed is signed.
European Union citizens do not require a permit to purchase immovable property in Malta, although in order to purchase a second immovable property, one must have resided in Malta for a minimum of five years, otherwise a permit is also required.
Non-European Union foreigners in possession of an AIP (Acquisition of Immovable Property) permit or those who will not use the property as a primary residence must abide by local regulations.
The benefits of living in Malta
Malta is appealing as a place of residence due to it is multidimensionality, as it is both immersed in history and teeming with entertainment options. It provides a substantial amount of cultural and archaeological sites, yet it is home to buzzing nightlife and numerous outdoor activities, such as water sports including sailing, paragliding, golf and horseback riding. There are hundreds of exclusive clubs and restaurants, and three modern casinos set against beautiful backdrops.
The island’s pleasant climate, favourable tax laws, renowned healthcare and education system, low level of crime and friendly English-speaking nation, make Malta an exceptional destination. Its location in the centre of the Mediterranean offers easy access to the rest of Europe and North Africa, with an assortment of airlines offering international connections.
There are the added benefits of Malta being a very small country and not being on a global radar. Its size means that nothing is too far away. It takes forty-five minutes by car to go from one end to the other. Malta’s low profile allows for it to retain its uniquely laid back lifestyle and to not be overrun by tourists all year round. The smaller island of Gozo is undiscovered to a greater extent. It makes for an even more relaxing experience than Malta, which is considered hectic in comparison.