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The Nomad Residence Permit enables non-EU nationals to legally reside in Malta whilst maintaining their employment or business activities in another country. Under this programme, individuals who have the possibility of working remotely using telecommunications means, can enjoy the benefits of Malta’s advanced technology infrastructure. The permit is initially issued for one year but can be renewed upon application, allowing a maximum stay of up to four years.
In recent months, the Maltese Government has also introduced the ‘Nomad Residence Permits (Income Tax) Rules 2023’ to regulate and clarify the tax obligations of Nomad Residence Permit holders. According to these rules, permit holders are eligible for a 12-month income tax exemption, commencing from the date of issuance of the Nomad Residence Permit or 1 January 2024, whichever is later. To avail of this exemption, applicants are required to submit a written declaration to the Residency Malta Agency, affirming that their residence over the past year is not merely temporary.
Following the initial exemption period, i.e. upon a renewal of the permit after the first year of residency, such individuals will be subject to a reduced income tax rate of 10% on their income earned from ‘authorised work’, regardless of whether this income is remitted to Malta. This is in view that such work is deemed to have been performed in Malta. Any other income not derived from authorised work and taxable in Malta will be considered as the second component of the individual’s total taxable income and will be taxed under the standard provisions of the Income Tax Act.
The term ‘authorised work’ refers to services provided by a main applicant in line with an employment contract with a non-resident employer who does not operate a business in Malta through a fixed place of business, or work performed on a self-employed basis for clients who do not reside in Malta, provided via telecommunications technology. Any additional income not derived from authorised employment, such as dividends and interest, will be subject to the general taxation rules stipulated in Malta’s Income Tax Act.
The Rules also stipulate reporting requirements for nomad residence permit holders earning income from authorised work. Digital nomads are required to register for tax purposes, declare their taxable income in Malta from authorised work or other income taxable in Malta, file an annual income tax return, and make the necessary tax payments. Digital Nomads can also avail double taxation relief under Malta’s double tax treaties. In such cases, individuals could be exempt from the 10% income tax in Malta if they can demonstrate that they paid taxes at a rate of at least 10% on their income outside of Malta.
Embarking on the Nomad Residence Programme in Malta? Seize the opportunity to live and work in Malta with ease. Let us be your guide in making this journey seamless and tax-efficient. Our advisory services are designed to ensure you maximise the benefits of this unqiue opportunity. Contact us today to embark on your journey or read more abour our Nomad Residence Programme Services.
