Taxation in Malta

avro698 wrote:

I have two important pieces of advice for expats new to Malta, concerning purchasing property here and paying tax

It would be prudent to register with the Maltese Inland Revenue and to find out about what you need to do, whether you owe tax in Malta or not. The place to do this is:

Inland Revenue Department, Block 1, Expatriate Section, Floriana (tel: 2296 2296) - just outside Valletta

Everyone resident in Malta is required by law to register with the Maltese Inland Revenue and to submit a tax return, this is well known to all who bother to read the Residency 'sticky' posted at the top of this forum. It is also posted many, many times on this forum that tax is liable on monies brought into the country from sources other than capital.

F0xgl0ve wrote:

avro698 wrote:

I have two important pieces of advice for expats new to Malta, concerning purchasing property here and paying tax

It would be prudent to register with the Maltese Inland Revenue and to find out about what you need to do, whether you owe tax in Malta or not. The place to do this is:

Inland Revenue Department, Block 1, Expatriate Section, Floriana (tel: 2296 2296) - just outside Valletta

Everyone resident in Malta is required by law to register with the Maltese Inland Revenue and to submit a tax return, this is well known to all who bother to read the Residency 'sticky' posted at the top of this forum. It is also posted many, many times on this forum that tax is liable on monies brought into the country from sources other than capital.

Just checking but I assume they send notification that you need to fill in the tax return at some point ?

robpw2 wrote:

F0xgl0ve wrote:

avro698 wrote:

I have two important pieces of advice for expats new to Malta, concerning purchasing property here and paying tax

It would be prudent to register with the Maltese Inland Revenue and to find out about what you need to do, whether you owe tax in Malta or not. The place to do this is:

Inland Revenue Department, Block 1, Expatriate Section, Floriana (tel: 2296 2296) - just outside Valletta

Everyone resident in Malta is required by law to register with the Maltese Inland Revenue and to submit a tax return, this is well known to all who bother to read the Residency 'sticky' posted at the top of this forum. It is also posted many, many times on this forum that tax is liable on monies brought into the country from sources other than capital.

Just checking but I assume they send notification that you need to fill in the tax return at some point ?

I took the registration forms into the tax office in Gozo in  April in 2013 and heard nothing for nearly a year so sent new forms direct to Malta.
As far as I recall the Tax Returns are due to be returned around the end of June, our forms which were the first ever contact from the tax office arrived about 10 days before the due date!
If you have records of money drawn down in Malta (excluding drawn from capital) then the form is very simple.

Hope this helps
Ray

UK forms arrive late because of the issue of P60's from the UK in April/May as the UK tax year is different to Malta's. It's a deliberate thing by Malta Tax and designed to help the UK resident complete and evidence their tax returns.

https://www.enemalta.com.mt/notifications/
Sign up to here so you know when your power is due to go off

F0xgl0ve wrote:

avro698 wrote:

I have two important pieces of advice for expats new to Malta, concerning purchasing property here and paying tax

It would be prudent to register with the Maltese Inland Revenue and to find out about what you need to do, whether you owe tax in Malta or not. The place to do this is:

Inland Revenue Department, Block 1, Expatriate Section, Floriana (tel: 2296 2296) - just outside Valletta

Everyone resident in Malta is required by law to register with the Maltese Inland Revenue and to submit a tax return, this is well known to all who bother to read the Residency 'sticky' posted at the top of this forum. It is also posted many, many times on this forum that tax is liable on monies brought into the country from sources other than capital.

"Residency 'sticky' posted at the top of this forum"
I have followed FOxglOVe's advice and looked for the 'sticky' but cannot find it, nothing at the top of this Forum that I can see that mentions Residency. Can FOxglOVe please point out where it is

I have emailed the Maltese Inland Revenue, asking them to explain where the law about submitting a tax return is stated; as yet, I have had no reply

The relevant part to which I am referring concerning the Double Taxation Agreement between Malta and the UK is covered by Articles 18 and 19, headed "Pensions" and "Government Service", of the Treaty. It can be found on the HMRC Website: hmrc.gov.uk/taxtreaties/in-force/index

https://www.expat.com/forum/viewtopic.php?id=370643

avro698, what are you on about? The requirement for tax registration is clear in my article https://www.expat.com/forum/viewtopic.php?id=370643  and I quote from that:

Registration for Income Tax.

Everyone is required to register for Income Tax if you are resident on Malta.  In general, individuals are considered to be resident in Malta if they spend more than 183 days in a calendar year in Malta. (Whether you are liable to pay any tax will depend upon your circumstances.)

Quote:
An individual, who is either resident in Malta or domiciled in Malta, but not both, is subject to tax on income arising in Malta, on income arising abroad but received in Malta, and on capital gains arising in Malta. Individuals who are neither resident in Malta nor domiciled in Malta (temporary residents) are subject to tax only on income and capital gains arising in Malta.
This includes the use of Credit/Debit cards connected with any bank outside Malta.

Transfer of savings does not (usually) attract tax.

Registration may be done by attending either of the two offices in Floriana, Malta or Rabat (Victoria) Gozo.

Malta:    Block 4, Vincenzo Dimech Street, Floriana.

Gozo:    Enrico Mizzi Street, Victoria.

See here for detailed information:

http://www.ird.gov.mt/default.aspx

I do not know why you seem to be overcomplicating this.
Taxation and tax returns are very straightforward out here but thank you for restating that UK pensions taxed at source, i.e in the UK (for UK expats) and where there is no choice are exempt here.

redmik wrote:

avro698, what are you on about? The requirement for tax registration is clear in my article https://www.expat.com/forum/viewtopic.php?id=370643  and I quote from that:

Registration for Income Tax.

Everyone is required to register for Income Tax if you are resident on Malta.  In general, individuals are considered to be resident in Malta if they spend more than 183 days in a calendar year in Malta. (Whether you are liable to pay any tax will depend upon your circumstances.)

Quote:
An individual, who is either resident in Malta or domiciled in Malta, but not both, is subject to tax on income arising in Malta, on income arising abroad but received in Malta, and on capital gains arising in Malta. Individuals who are neither resident in Malta nor domiciled in Malta (temporary residents) are subject to tax only on income and capital gains arising in Malta.
This includes the use of Credit/Debit cards connected with any bank outside Malta.

Transfer of savings does not (usually) attract tax.

Registration may be done by attending either of the two offices in Floriana, Malta or Rabat (Victoria) Gozo.

Malta:    Block 4, Vincenzo Dimech Street, Floriana.

Gozo:    Enrico Mizzi Street, Victoria.

See here for detailed information:

http://www.ird.gov.mt/default.aspx

I do not know why you seem to be overcomplicating this.
Taxation and tax returns are very straightforward out here but thank you for restating that UK pensions taxed at source, i.e in the UK (for UK expats) and where there is no choice are exempt here.

I am simply pointing out that, from my experience, quite a lot of expats do not know they have to complete annual Tax Return Forms in Malta, so I am trying to alert newcomers to Malta about this ruling. I am asking where is this ruling declared? Malta Inland Revenue will not answer my question about that. The Inland Revenue Officer I dealt with told me she is dealing with expats who have not filed Tax Return Forms for up to 15 years

Your reply was very helpful with the attachment you posted.

But the important issue is this: UK expats living in Malta who receive their income in the UK and are taxed by HMRC in the UK do not pay tax in Malta. The Inland Revenue Officer I dealt with here confirmed this. Yet she insisted that  whenever an expat withdraws money from their UK bank account and spends that money in Malta, it becomes income received in Malta. That is not the case. Malta Inland Revenue is manipulating the definition of where income is received and is thus trying to find ways to circumvent the Double Tax Treaty signed by both Malta and the UK. HMRC refutes Malta Inland Revenue's definition of money from an income received in the UK which is spent in Malta then becomes income received in Malta.

I am simply alerting expats in Malta, old and new, to what the Malta Inland Revenue is doing

You wrote...............Yet she insisted that  whenever an expat withdraws money from their UK bank account and spends that money in Malta, it becomes income received in Malta.

But it is income remitted to Malta.

That person is correct. What else can it be? It's money and it's received in Malta!!

We know that one cannot simply decide not declare money remitted to Malta because it is tax liable in UK.
The individual should not make that decision.

It should be declared, its source evidenced by P60, which is why tax returns for UK ex pats are issued late, then the tax officer will apply the tax agreement.
They are NOT trying to circumvent the treaty. They are simply applying their due process.
I also suspect that there is some form of 'pay back' between countries that do subscribe to double taxation treaties so authorities will have to evidence any claims made to other countries. They can only do so by applying due process.

the problem Redmik is that the money that comes in may not be taxable as it may not even be income as it could be savings capital......

further to declare it as income one needs to declare the source

thus

if its not income no need to declare it  - is that not correct?

Agreed. Savings are exempt tax.

The savings issue is mentioned in my article as being exempt tax. I also interpreted avro698's post as relating to money drawn from an ATM as he wrote 'an expat withdraws money from their UK bank account and spends that money in Malta'. I had to assume this related to the use of a debit or credit card.

Another issue is to do with literal interpretation by Maltese officials and semantics. A lot of misunderstanding can arise. from both sides, due to these factors when discussing issues, particularly when discussing in an 'official' capacity.
Many professions use 'jargon' and some terms may be misinterpreted.

of course lets not forget interest income from savings is of course declarable and thus potentially taxable

If held in an interest earning account 

Also money taken from a credit card is technically a loan (albeit short term) not money from income or savings !

Terry

tearnet wrote:

Also money taken from a credit card is technically a loan (albeit short term) not money from income or savings !  Terry

I wonder if anyone has ever argued that point (and won) with the powers that be?

an interesting point for sure

redmik wrote:

You wrote...............Yet she insisted that  whenever an expat withdraws money from their UK bank account and spends that money in Malta, it becomes income received in Malta.

But it is income remitted to Malta.

That person is correct. What else can it be? It's money and it's received in Malta!!

We know that one cannot simply decide not declare money remitted to Malta because it is tax liable in UK.
The individual should not make that decision.

It should be declared, its source evidenced by P60, which is why tax returns for UK ex pats are issued late, then the tax officer will apply the tax agreement.
They are NOT trying to circumvent the treaty. They are simply applying their due process.
I also suspect that there is some form of 'pay back' between countries that do subscribe to double taxation treaties so authorities will have to evidence any claims made to other countries. They can only do so by applying due process.

It is not income remitted to Malta

Income can only be received once and is taxed where it is received. The Double Tax Treaty is very clear about that. The same income cannot subsequently be re-received elsewhere.

You would be right if the income earned or paid in the UK is paid straight into a Maltese bank account, then the Inland Revenue would be able to claim tax on it because it means that income is being received in Malta. But that is not the case with income received in the UK and taxed in the UK, then spent in Malta

The tax official I dealt with specifically told me that money withdrawn by an expat from their UK bank account and then spent in Malta is income received in Malta, even though it has been received in the UK and taxed in the UK.

I explained this tax official's definition to the HMRC and they rejected it

i would suggest that it is possible to be taxed twice hence anyone who is caught "between islands" invokes their Double taxation treaty rights...... and by doing do will protect you from that potential issue

A lot of confusion here, particularly regarding terminology but I know what I have done and what I declared and what I was not taxed on, which was my income remitted to Malta but tax paid in the UK.

Hello everyone,

It would be nice if we could come back to the subject of this discussion that is Top 5 tips to live in Malta.

Thank you
Yuveshen

We are and one of them is taxation and how to manage it.

Yuveshen wrote:

Hello everyone,

It would be nice if we could come back to the subject of this discussion that is Top 5 tips to live in Malta.

Thank you
Yuveshen

just because only one of five items is quoted doesnt mean its not one of somebodys top five - tax and complaince in Malta is an important consideration to many people

Reference to the 'Double Taxation' query and discussion.
This is my understanding of the Agreement between Malta and the UK regarding this issue.
The Agreement was 'signed off' by Vincent Galea, Commissioner of Inland Revenue, Malta so should be read from that perspective. I.E this is a response from Malta to UK.

In that document it is stated that:

Which states:(1) Subject to the provisions of paragraph (2) of Article 19 of this Convention, pensions and other similar remuneration paid in consideration of past employment, or any annuity paid, to a individual who is a resident of a Contracting State shall be taxable only in that State.

However Para (2(b)) of Article 19 states: (b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

It appears to me that the representative of Malta Tax has misunderstood this paragraph which is clear ''AND a national of''

However, relevant income derived from or remitted to Malta should be declared in the tax return and that includes pensions. Attach a copy of the relevant P60's and let the office apply the convention.

As for HMRC applying a 'stealth tax' that is, to me, not correct; they are not. They are applying the UK tax rate which is applicable. In my case MoD & Local Gvt pensions must be taxed in the UK so I complete a self assessment, submit it and pay my tax to UK. (This is VERY easily done using the relatively new online tool available.)

I then submit my Malta return with copies of my P60's and wait for a while, then I am informed that no tax is liable to Malta.

(It is also for this reason that I do not transfer any income derived from my letting in the UK to Malta. That is separate and taxed in the UK.)

It seems to me that avro has got his thoughts the wrong way round, that if anyone is paying taxes out here on pensions derived from the UK , then it is Malta officials which have it wrong, not the UK (irrespective of what any of them may say).

The Convention is available here: https://www.gov.uk/government/uploads/s … ta-dtc.pdf
Last edited by redmik (Today 05:52:14)

I am really confused regarding the tax, we are coming to Malta early next year ( Jan or Feb 16 ) I receive a private pension from the NHS here in the UK, which is taxed before it goes into my bank account, we will be renting out our property here in the UK and the rental will go into our bank account here in the uk, we still have 3yrs to go before we receive our state pensions, we are not planning on working in Malta, Will we have to pay tax on anything in Malta, and should we put our saving into a current account or a savings account,

Basically, any money remitted to Malta has to be declared, unless it's savings, which may be transferred tax free.

You do not pay tax on Malta for any UK Government pension payments (or State Pensions) that are taxed in the UK but you will have to declare them on the tax return. The above Double Taxation Agreement applies.

So, if your only income, whilst on Malta, that is remitted to Malta is from your Gvt Pensions, you should not have to pay tax but it must be declared. You declare your source of income by a copy of your P60's, which will tell them you have already paid tax in the UK so then not liable here.

You will also have the Malta Tax Allowance so if your declared income is below that, then you won't pay anything (ignoring the Double Taxation Agreement completely)

I always send a letter of explanation along with the Tax Return and my P60.

That is my interpretation and my practice BUT I am NOT a financial advisor.

Hello everyone,

I have created a new discussion from your posts on the Malta Forum so that you can easily share your views about Taxation in Malta.

Regards
Yuveshen

I had already done that.  https://www.expat.com/forum/viewtopic.php?id=460237

So, I will repost that here:

I am NOT a Financial Advisor, I am just another expat. If in doubt seek professional advice.
This is my interpretation on Malta tax liability and double taxation.
This is a practise, as a UK Expat, that I follow and I do not pay tax, in Malta, on any of my pensions.

Information.

Everyone is required to register for Income Tax if resident on Malta. 

In general, individuals are considered to be resident in Malta if they spend more than 183 days in a calendar year in Malta.
(Whether you are liable to pay any tax will depend upon your circumstances.)

Quote:
An individual, who is either resident in Malta or domiciled in Malta, but not both, is subject to tax on income arising in Malta, on income arising abroad but received in Malta, and on capital gains arising in Malta. Individuals who are neither resident in Malta nor domiciled in Malta (temporary residents) are subject to tax only on income and capital gains arising in Malta.

This includes the use of Credit/Debit cards connected with any bank outside Malta.

Transfer of savings does not (usually) attract tax.

Registration may be done by attending either of the two offices in Floriana, Malta or Rabat (Victoria) Gozo.

Malta:    Block 4, Vincenzo Dimech Street, Floriana.

Gozo:    Enrico Mizzi Street, Victoria

https://ird.gov.mt/

Double Taxation Convention.

Malta has Double Taxation agreements with many other States to prevent taxes being imposed twice in many and various situations but for most people on this forum, the biggest area of concern is pensions.

A list of all States with which Malta has agreements may be found here:
http://www.financemalta.org/double-taxation-agreements

Reference to the 'Double Taxation' query and discussion.  (UK only)

This is my understanding of the Agreement between Malta and the UK regarding this issue and should be read from the perspective of being on Malta, paying taxes to Malta and what Malta has agreed with the UK. (If one was in the UK then obviously the perspective would be reversed.)

Specific reference is made to

UK/MALTA DOUBLE TAXATION CONVENTION
SIGNED 12 MAY 1994
Entered into force 27 March 1995
Effective in United Kingdom from 1 April 1996 for corporation tax and from 6
April 1996 for income tax and capital gains tax
Effective in Malta from 1 January 1996

Available here:
https://www.gov.uk/government/uploads/s … ta-dtc.pdf

Article 18 Pensions.

(1) Subject to the provisions of paragraph (2) of Article 19 of this Convention, pensions and other similar remuneration paid in consideration of past employment, or any annuity paid, to a individual who is a resident of a Contracting State shall be taxable only in that State.

Para (2(b)) of Article 19 states: (b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

This means to me that in regard of income sourced from pensions, one can only be taxed on Malta if one is a Maltese National and resident here. If one is not both then this does NOT apply.

Also and according to UK  HMRC:

most pensions - most UK government (eg civil service) pensions are only taxed in the UK

See: https://www.gov.uk/tax-uk-income-live-a … axed-twice

Process.

All relevant income derived from or remitted to Malta should be declared on the Malta tax return and that includes pensions. Attach a copy of the relevant P60's and let the office apply the convention. It is advisable to attach a letter to any tax return further explaining the circumstances. It is important to attach copies of P60s because that proves income and tax already paid.

Hi
Out of interest, if a resident non dom has income from a Dubai company which is paid into a Jersey a/c which then becomes savings and then uses a debit card to say buy groceries in Malta then surely this is drawing down savings and does not need to be declared anywhere.

that depends on the definition of how income becomes savings, which isnt clear in Maltese tax law, but it cetainly requires going from one calendar year to another, quite possibly the passing of 12 months, maybe even longer