Residence status and tax implications

Permanent Residency, Ordinary Residency or Temporary Residency? It depends on your financial circumstances, not on how much time you will spend in Malta. Getting it wrong could cost you dearly!

Postby Chasd » Wed 04 Jul 2007 12:41

Thank you again. My current plans are to move at the beginning of April next year with one or more visits before then. In the mean time I shall check into the forum regularly.
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Residence, ID and Tax ID - today's experience in Gozo

Postby Mr Kriss » Wed 18 Jul 2007 15:10

Collected residence application forms (one of rme, one for spouse) from Police immigration office behind fire station in Gozo. Queuing in heat whilst workers on other side of window relax in air conditioned environment shows government centric view of dealing with citizens but police lady very friendly and helpful. I will update when I submit the forms.

Next on to ID card office. Polite but brusque gentleman informs me that I cannot take form away I have to come with wife, passports and marriage certificate. They will take photos on my next visit. I cannot do this today because I have to collect ID cards it in two weeks time and I will be off island for a few weeks. I will update when I am back and try again.

Next on to Tax office where I want to register for Tax ID - on Gozo this is a few doors down from the health centre opposite the Seminary sports club doors, and upstairs. Ignore the cash office windows and walk down the passage to the left to office number 9 where there are three offices and no people. A few minutes later three poeple appear carrying tea - well everyone's entitled to a cuppa! I am given a photocopied form and asked to come back when it's filled in - no supporting documents required - and ask for help if I need it when I return.

Thanks to those who wrote before (especially PeterJ and Mark) as I would not otherwise have had a clue where to find these places and have been putting this off for far too long.

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residency

Postby Troika » Thu 19 Jul 2007 06:55

Hi Tim

I just want to clear things up a bit. When applying for residency are there separate forms for permanent and ordinary. If I want to be permanent resident then I have to apply. But If I buy a house then I'm assuming that by doing so then I'm regarded as ordinary/temporary. What do I have to do with regard to ordinary residence after house purchase.

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Postby gozomark » Thu 19 Jul 2007 07:02

Hi

buying a house and residency are different things - you do not have to be resident to buy a house, and you don't have to buy a house to be considered resident

Ordinary residency is "achieved" by telling the authorities that you wish to be considered so, by filling in a form

Permanent residency is a much more complicated system, and you are requesting the authorites to grant you permanent residency. They can refuse you without giving a reason
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Residency

Postby Martin2007 » Mon 03 Sep 2007 09:02

Hi,

I'd like some clarification please.

My situation is as follows:

I hold duel Nationality British and Israeli, thus have passports for both counties.

All my assets are off shore.

I am registered as UK non Resident and am presently making myself non resident in Israel.

I have no assets in either country except for bank accounts which hold small amounts

I am interested in being shown for tax reasons to be paying or more precisely liable for tax but not paying any in a country and from what I have read in the threads of this forum it is possible in Malta.

I plan to travel most of the year staying not more than three months in any one country in the EU and Israel.

I would like to be able to rent on a permanent basis an apartment without it causing me any problems of time of being in the country. If I were to do so where I am presently, Italy I need to take out residency and register with the police, apply for identity card and also the financial police. By staying in registered accommodation the owners register me with the police and if I leave the country for a few days I can return for another 3 months.

My question is what is the best status for me in Malta especially as it seems to one of the few places i can pay taxes only on what I transfer there and not on my global income which is the case if were in the UK or Israel.

yours comments and advice will be very much appreciated

Martin
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Best residency

Postby billy » Mon 03 Sep 2007 09:59

The best residency option for you would be "Ordinary Residency" because you have a UK passport and you would be spending only 3 months in Malta and also spending not more then 28000 Euros a year I would think. As long as you're not being considered Resident in another country. You will be fine. You can remit only capital to Malta so you have to pay zero tax in Malta. However to prove to other countries that you pay tax in Malta I would always pay some tax in Malta thus also remitting income as well. I would recommend to use an triple A accounting firm for easy process. It cost you something but if your always travelling its a good thing somebody is taking care of business for you in Malta.
KPMG I would recommend.
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Postby peterj » Mon 03 Sep 2007 17:13

Talking to an accountant would certainly be recommended, but a couple of things come to mind based on personal experience.

If you are looking for a "piece of paper" that says you are a Maltese resident, my experience last year was that the Immigration Police would not accept an application for "Ordinary Residence" until you had been resident for at least 3 months. In my case, I was cought up in a period when no new applications were being received, and I had been here for almost 6 months before I got them to accept an application. I have a vague memory that applications must be made in person, but I am not 100% sure of this. Once you apply, all you will receive is a receipt for your application. As of January this year there was apparently a several (three?) years backlog in actually processing applications.

If you don't need any "proof" of "residence", you actually don't need to apply for anything, as EU citizens may come and go as often as they want, as long as they don't stay for more than 3 months.

As far as tax goes, I was informed by the tax office that I couldn't (I didn't want to, and hence didn't press this) register for tax unless I had been, or intended to remain, in the country for over 6 months total during the tax year. Usual rules regarding verbal (well actually email this time) info from tax officials apply!!

I don't think that you will have any problem with renting a property whether resident or not. I doubt whether many (any?) leases are (are required to be?) registered with any government agencies.
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Ordinary Residency

Postby billy » Mon 03 Sep 2007 20:17

Yes one has to be present to register for Ordinary Residency.
One takes:

1 Rental contract valid allready for 3 months
2 Birthcertificate
3 Bank account statement from Maltese bank
4 Proof of Private Medical insurance for Malta
5 EU Passport

One receives proof of registration and gives address of accountant for future corespondence.

You register by the Tax department where one receives a tax number and you file once a year.

The reason that its so slow is because they have planned a moving of offices and one might have to register again in the future.

Next year one will get the new electronic Residency card.

One has not to be present in Malta because having a usual abode in Malta is sufficient for the residency rules.

Ususal abode: a place where one will return frequently and is available to one the whole year.

Interesting to know is that the EU savings directive is not valid for Residents of Malta because of the remittance based tax. If you have your funds offshore this will be a big plus for privacy.

As long one is not considered resident of another country (Italy staying more then 183 days a year or having an usual abode) you'll have no problems from the Tax department because every tax that is paid is welcome in Malta.
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Re: Ordinary Residency

Postby gozomark » Mon 03 Sep 2007 20:29

billy wrote:Interesting to know is that the EU savings directive is not valid for Residents of Malta because of the remittance based tax. If you have your funds offshore this will be a big plus for privacy..


only true for residents who are not citizens...
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Re: Ordinary Residency

Postby peterj » Mon 03 Sep 2007 20:54

billy wrote:One takes:

1 Rental contract valid allready for 3 months



Hi Billy,

from memory this wasn't a required piece of information for the application. Does this persuade the Immigration Police to accept applications from folk who haven't already lived here for 3 months?

I do suspect that the "office upheaval" last year may have had something to do with the repeated refusal to accept my application last year. At least three different "reasons" were tendered on three separate occasions, before the Gozo officer told me what was actually happening, or at least admitted that no applications were being accepted.

On "getting a tax number" I delivered the tax registration forms to the Gozo office about 6 weeks ago. Haven't received a response, or a tax number yet. Maybe the Malta office are a little more prompt.

Is the "proof of registration" you mention just the tear off slip which says

"Receipt is acknowledged of the request for a residence permit in terms of the Immigration Regulations"?

In my case I have neither need nor wish to claim residence of Malta to an overseas tax authority, but if I did, I wouldn't feel that comfortable trying to do so on the strength of a receipt like this one.
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Malta overload

Postby billy » Tue 04 Sep 2007 08:37

Hi Peterj,

Malta has a overload of work to register new Immigrants, so they are trying to keep the ones that are intending to stay in Malta out of the procedure for the moment. Persons who have a rental contract for 3 months they must accept according to EU rules.

This receipt is vital and the only to proof Residency in Malta and later the Residency card and your yearly tax report.

Within the EU, tax administrations will want a proof of Residency and will share information about whereabouts of persons, thats why persons from outside the EU will not have this check.

The main problem for Malta in this respect is the small offices it has. and they have to wait for overseas Police information on the new immigrants.

With the Permanent Residents it takes only 3 months because they will have to give a Police report allready by registering.

Many Permanent Permit Residents will not spend any days in Malta and this is one of the main selling points for this Permit. For EU passports holders it makes no sense to go for this Permit because of the 1800 tax one has to pay. As long as one is not considered Resident in another EU country. EU countries are very strict in residency rules and will allways inquire where one pays tax. Its not possible for an EU passport holder to live inthe EU and not pay taxes in any country.

Good to hear Peterj that you have sorted out your situation however where do you pay tax?
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Postby peterj » Tue 04 Sep 2007 08:56

Hi Billy,

Much useful info there. I only wanted to ensure that folk didn't think it was easy to get instant action from the Maltese authorities.

We are remaining tax residents of Australia, where most of our assets are based. Most of our income is based on capital gains, which are favourably taxed, and the remainder is helped by fairly generous personal allowances and income splitting. Total tax for us is around 4.25% including medicare levies this year, although this is on a fairly modest income.

Non-resident taxation on Australian based income is pretty unfavourable, for us at least, and for this reason we will be heading back there for at least 6 months next year in order to maintain resident status.

We live comfortably below the threshold for tax in Malta, so Maltese taxation is not an issue.
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Re: Malta overload

Postby gozomark » Tue 04 Sep 2007 09:00

billy wrote: Its not possible for an EU passport holder to live inthe EU and not pay taxes in any country.


not quite true - as long as you are registered for tax purposes thats enough - you don't have to pay tax if you are below the limits in the country you reside in
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Re: Best residency

Postby valetta » Sun 09 Sep 2007 19:15

billy wrote:KPMG I would recommend.


Why do you recommend KPMG? Price, level of service, other reasons? Pls be specific. Thx. I can use a good accountant.
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Accountant

Postby billy » Tue 25 Sep 2007 07:15

They get things done and the pricelevel (High) is not different then other firms.
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