Malta as an Offshore Tax Haven

Over the coming years there's forecast to be a pretty large exodus of people leaving the UK to establish new lives overseas. Many of these will be looking to also try and obtain residence in an offshore tax haven environment that offers low or no taxes. One such country that is often overlooked is Malta. In overseas tax terms it offers some very attractive benefits. The main benefit is that you can establish yourself as a permanent or ordinary resident there, and only be subject to the remittance basis. This means that you're only actually taxed in Malta on the income that you bring into Malta. So provided you retain a large part of your income overseas there is no local tax. Therefore if you're a UK domiciliary and can't benefit from the remittance basis in the UK, you can move to Malta and get the benefits there. In actual fact though the treatment is much more beneficial than the UK non domiciliary rules. Firstly the income tax rate for permanent residents is set 15%. So anything that you do remit is taxed at 15% (rather than up to 40% in the UK). However there is a minimum amount of tax payable of around LM1800. So the bottom line for most expats in Malta is that you pay 15% flat rate tax with a minimum LM1800. Secondly there is no Capital Gains Tax Thirdly they have a very attractive way of treating income and capital. We'll be looking at this in an article soon but essentially income becomes capital on 1 January annually. There is no tax on remission of capital so if you have an account in the UK say called your capital account and you put income into it all year. On 1 Jan it is all capital - transfer to Malta tax free. Therefore, you need only ever pay LM1800 annual income tax in Malta if you remit your spending money as capital and can prove that it was capital! Fourthly there is no Inheritance tax When you add all this together and also take account of the fact that obtaining a residence permit for UK nationals is very straightforward you'll see why Malta can be ranked highly as one of Europe's best low tax offshore havens. We'll be covering this in a lot more detail in an article for site members shortly. Check out this article on tax implications when you leave the UK