How Employees Can Save Taxes in Malta: The Global Residence Programme

At Dr. Werner & Partners, my goal is always to find the best legal way to optimize your tax situation. For entrepreneurs, this is usually achieved through a Malta Limited, which can reduce the effective tax rate to just 5%. But what if you are an employee or living off passive income? There is a great option for you to save on taxes as well: the Global Residence Programme.

Tax Incentives Through Investment

If you meet specific criteria, you can apply for special tax status under the Global Residence Programme (GRP). The government's intention here is pretty clear: they want to make investing in the Maltese property market attractive by offering tax incentives in return.

It follows a similar logic to the corporate tax system: just as only foreign shareholders can benefit from the 6/7 tax refund with a company structure, only non-Maltese nationals (specifically non-EU/EEA/Swiss nationals, though similar programs exist for EU nationals) can apply for the Global Residence Programme.

15% Tax Rate for Employees

Let me break down the requirements you need to meet to qualify for the Global Residence Programme:

• Residency: Malta must be your tax base, and you cannot spend more than 183 days a year in any other single jurisdiction.
• Income Source: Your income must be remitted from outside Malta.
• Property Investment: You must purchase a property for at least €275,000 (or €220,000 if located in the South of Malta or Gozo).
• Rental Alternative: Alternatively, you can rent a property for at least €9,600 per year (or €8,750 in the South of Malta or Gozo).
• Citizenship: You are not a Maltese national.
• Insurance: You hold valid health insurance.

If you meet these criteria, your income tax rate drops to a flat 15%. When you compare this to Malta's standard top tax rate of 35%, the difference in your pocket is substantial.

Why the GRP is Ideal for High Earners

There is one catch to the Global Residence Programme, however: there is a minimum tax liability of €15,000 per year, regardless of your actual income.

To give you a practical example: if your annual remitted income is €90,000, you pay the minimum €15,000 tax. That works out to an effective rate of 16.6% – which is still significantly better than the standard 35% top rate. This makes the program particularly attractive for high-net-worth individuals.

So, yes, employees can absolutely save taxes in Malta too. The Global Residence Programme is doubly interesting because apart from the tax optimization, it allows you to establish a new base in a Mediterranean country or view the property purchase as a solid capital investment.

If this sounds interesting, I'd like to point you toward the relocation services at Dr. Werner & Partners. We advise you on everything regarding moving to Malta and the specific tax opportunities that come with it.