Malta - Tax Authorities - Malta Digital Nomads Subject To New Tax Rules As Of 2024 (2024)

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The Government ofMalta has established clarity for Malta's nomad residencepermit holders though the introduction of new tax rules for digitalnomads residing in and working from Malta. Under the legal notice,'Nomad Residence Permits (Income Tax) Rules2023', individuals with a valid nomad residence permitissued by Residency Malta Agency (RMA) will be subject toa flat income tax rate of 10% on income derived from"authorised work", subject to certain exemptions.

In terms of the new rules, "[a]uthorised work" isdefined as services provided by an eligible main applicant throughemployment with an employer who is not a resident of Malta and doesnot conduct business in Malta through a fixed place of business. Italso includes services rendered by self-employed individuals for clients who arenot based in Malta and do not operate through a fixed place ofbusiness in Malta, with their services being conductedremotely.

Income derived from authorised work will be consideredthe initial part of the individual's total chargeable incomefor a specific assessment year in Malta, although digital nomadssubject to these new rules will also be eligible for double taxation relief as long as certainconditions are satisfied. Furthermore, the new rules also providean exemption period of 12 months, starting either from the issuancedate of the nomad residence permit, or January 1, 2024, whicheveris later. During this initial 12-month period, eligible applicantsare exempt from the requirement to register for income tax purposesin Malta, and are also exempt from paying income tax on incomederived from authorised work. On the other hand, if the applicantsubmits a written declaration to the Residency Malta Agency thattheir presence in Malta during the initial 12-month period is notmerely of a casual nature, then the applicant would notqualify for such exemption and would be required to register inMalta for tax purposes, and also declare their income arising fromauthorised work in their Maltese tax return for such period.

Individuals who are not eligible for the aforementionedexemption are required to register for tax purposes in Malta,aggregate their total income from authorised work for reportingpurposes, and pay a 10% income tax rate on the gross amountreported. Any other income generated by the individual that doe notclassify as authorised work shall be subject to Malta's general taxationrules.

Notwithstanding the above, if an eligible applicant has paid arate of at least 10% tax on income arising from authorised workoutside of Malta, and can prove with both official and writtendocumentation to the Residency Malta Agency that such tax has beenpaid, there is no requirement to report that income for Maltese taxpurposes. Subject to the the documentary evidence provided beingvetted and approved by the Residency Malta Agency, the applicantwould not be required to report such income for Maltese income taxpurposes since it shall be deemed to have been settled throughdouble taxation relief.

In conclusion, the rules also provide for anti-abuse provisions,whereby if any eligible main applicant utilises such rules to gainan undue advantage that reduces their liability to tax, theMalta's Commissioner for Revenue may determine theindividual's liability to tax in a manner and amount that wouldnullify any undue benefit or advantage.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.

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