The concept of ordinary residence, although not legalistic is not as challenging as domicile. Also, the term is not defined in our law and lends its definition from British judgements. In fact it has been stated that a person is ordinary resident in a country by taking into account the duration of the individual’s presence in the country, frequency, regularity and nature of visits to the country, as well as business and family ties.
A European Union citizen has the right to enter, remain and reside in Malta, however when an individual intends to reside in Malta for a period longer than three (3) months, he is obliged to apply for a residence permit with the Department for Citizenship and Expatriate Affairs. Prior to applying to the Department for Citizenship and Expatriate Affairs however, the applicant should consider leasing/ purchasing a property in Malta and after opening a bank account in Malta. This is done to enhance the link with the Maltese islands.
Holding an Ordinary Residence Permit
An individual holding a residence permit and qualifying as resident in Malta for Maltese income tax purposes, is subject to the normal income tax rules and rates applicable for every Maltese resident person. Therefore the applicant would need to submit a tax return on an annual basis.
Once the European Union national has lived in Malta for a continuous period of five (5) years he would then be entitled to apply for confirmation of permanent residence. For residence in Malta to be considered continuous, one must not have been absent from Malta for more than six (6) months each year in any given year of the said five-year period, and further must not have been absent from Malta for more than a total of ten (10) months throughout this five (5) year period.
Bespoke Malta Tax Advice
We offer clients bespoke tax advice in connection with any domestic (direct and/or indirect) tax aspects relevant to a proposed transaction or set of transactions and with a view to achieving an optimal Malta tax exposure.
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