The dust has now settled from the surprise outright Conservative victory in the UK’s general election in May and the resulting summer budget from George Osborne. The swift cutting of permanent non-dom status, however, continues to have an impact for individuals across the globe.
Non-dom status in the UK had hitherto provided a very attractive proposition for wealthy individuals able to attain that status and conferred upon them, rightly or wrongly, a number of tax benefits otherwise inaccessible to UK resident and domiciled individuals. In broad terms, the changes announced in the Budget meant that a non-dom is no longer able to remain resident in the UK for any more than 15 years before paying tax in the UK on all of their worldwide assets. The ability to previously shelter non-UK assets from UK tax coupled with all the non-tax benefits of living in the UK had made it a very attractive base for UHNWIs and their families to reside, invest and build businesses there.
So, if the tax changes erode the attractiveness of the UK as a place for non-doms to live, is there a viable alternative and where will this non-dom ‘flight of capital’ flow to?
Malta is consistently ranked as one of the best places in the World to live and offers a high quality Mediterranean lifestyle in a stress-free environment. Malta is a member of the EU and operates a low tax regime for individuals and businesses alike.
From a personal tax perspective, Malta offers an attractive non-dom regime whereby expatriates who take up residence in Malta are only taxed on foreign source income to the extent that this is remitted to Malta, whilst capital transfers into the country are not taxable at all. This is a basic feature of Malta’s tax system which was inherited from the British, albeit Malta’s non-dom regime does not carry any annual charge and provides certainty insofar as an individual being able to maintain non-dom status permanently.
Many expatriates choose one of Malta’s attractive residency schemes to benefit from the non-dom rules. As a resident of Malta, a primary residential address is required there. However, it is not uncommon for many individuals to regularly travel overseas and simply use Malta as their home base. There is no statutory, minimum limit on the number of days a person is required to be in Malta and so in general terms one simply needs to avoid spending too much time in any one other country to avoid the risk of being deemed dual tax resident.
Below is a summary of the main residence options available in Malta:
1) Ordinary residence in Malta: This is available to both EU/EEA/Swiss and non-EU/EEA/Swiss nationals, although the qualifying criteria are much easier for the former than for the latter.
2) Special residence programme (for both EU and non-EU nationals): Beneficiaries are subject to a beneficial flat tax rate of 15% on foreign remitted income, with a minimum tax liability of €15,000 p.a.
3) Malta retirement programme: Beneficiaries are subject to a beneficial flat tax rate of 15% on foreign remitted income that is received by them or any of their dependants, subject to an annual minimum tax liability of €7,500 and an additional €500 for any dependant / special carer.
4) Highly Qualified Persons programme (for senior professionals in the Financial Services, Gaming and Aviation industries, both EU and non-EU): Eligible applicants enjoy a beneficial 15% tax on their employment income for a specified number of years, and pay no income tax on any earnings exceeding €5,000,000.
5) United Nations pensions programme (for both EU and non-EU nationals): This new programme exempts beneficiaries who are in receipt of a pension or a widow(er)’s benefit from the United Nations, and offers a beneficial flat tax rate of 15% on any other foreign remitted income.
In addition to the above, Malta offers an Individual Investor Programme (IIP) which allows for the granting of full citizenship status, through a certificate of naturalisation – subject to a very strict due diligence process – to individuals who make a contribution to the economic and social development of Malta. This is an attractive proposition for wealthy non-EU citizens who wish to benefit from full EU citizenship, which confers a number of important rights, including the right to move freely in all 28 EU countries and visa-free travel to more than 160 countries.
So, whilst London may be seen as a ‘cooler’ place to live than Malta, you can still have your cake and eat it by moving there and enjoying its wonderful lifestyle and still being able to spend time in London, Paris, Milan …… Malta gives you choices that non-doms in the UK are fast running out of.
Boston is a multi-family office authorised and licensed by the Government of Malta to apply for all residency and citizenship options available to expatriates wishing to take up residence in Malta. We welcome the opportunity to discuss your personal situation with us and would be delighted to help you achieve a better lifestyle choice for you and your family.
If you would like to know more about the Malta Individual Investor Programme, take a look at our free sixteen page report, The Complete Guide to Gaining EU Citizenship Through Malta.