Last Updated on 6th September 2024
Malta is a high-demand retirement destination with a rich history, high living standards, various visa routes accessible to retirees, superb weather, and a range of stunning cities, towns, and coastal areas that provide a relaxed, tranquil lifestyle.
The small islands have a thriving expat community and provide numerous benefits, such as low crime rates, incredible architecture, and familiar aspects. Due to the island being a former British colony, Maltese residents drive on the left, just as they do in the UK.
However, before you start making solid plans, browsing properties for sale or thinking about transferring your pension, it’s essential you have full oversight of all the key factors that may impact your decisions, your retirement budget, and how to manage your financial affairs before an international relocation.
Essential Factors to Consider When Planning to Retire in Malta
Most expats who aspire to an overseas retirement pick a location based on variables like a warm climate, proximity to beaches and coastlines, living standards, and the availability of amenities, direct flights to and from the UK, and attractions or activities that appeal.
Indeed, all of these elements might influence the place you feel will be ideal for your retirement years and provide the lifestyle you have dreamed of.
That said, other aspects, such as the tax liabilities you should expect to pay against your pension income and the eligibility criteria for visas and residency permits, may be equally important. We’ll summarise a few of these factors here to help clarify the areas to include in your decision making.
Living Costs for Expat Retirees in Malta
We’ll start by looking at living costs since any retiree will want the assurance that their income, wealth, investments, and pension benefits will comfortably cover all their outgoings, including any unexpected expenses, such as healthcare treatments and planned expenditures, like supporting a child with a wedding, property purchase, or educational fees.
The good news is that living costs on the Mediterranean island compare favourably to the UK, with British citizens retiring in Malta finding that:
- General living costs are 16.6% lower in Malta, excluding accommodation.
- Rental housing costs are 18.5% more affordable than in the UK.
- Restaurant average prices are over 10% cheaper.
- Utilities such as water and electricity cost as much as 69% less.
Of course, much may depend on where you choose to live. Although most everyday expenses remain affordable, popular locations and those with strong tourism sectors tend to place a premium on some services and have higher rental charges due to sustained demand.
Affluent areas like Sliema and St Julian’s are lively coastal towns with beautiful seafronts, green spaces, ample healthcare facilities, shops, and restaurants. Retirees looking for a quieter, more tranquil spot might prefer Mellieha, on Malta’s north coast, or Gozo, the smaller island off the coast of Malta where living costs and property prices are also cheaper.
Purchasing or Renting a Property in Malta
Most retirees will prefer to purchase a home rather than commit to long-term rental costs – although this may vary based on your objectives. Some expats choose to rent for a short period while they settle in Malta and discover the specific places they’d most like to live permanently.
Property values and rental costs naturally vary between locations. As a rough guide, we’ve outlined the average costs for homes in central areas in each of the towns mentioned earlier:
Non-EU citizens require approval to buy a Maltese property, granted by the Ministry of Finance, called an Acquisition of Immovable Property Permit, or AIP. It generally takes about three months to receive approval, and expats will require assistance from a notary public.
Expats with an AIP are allowed to buy one residential property in most areas. However, there are designated zones where you might be able to purchase multiple properties if you plan to invest in a rental home.
You’ll need to budget for a 10% initial down payment, Stamp Duty, and notary fees as well as the cost of the property itself.
Taxes in Malta for Expat retirees
The next area to consider is your tax residency position, which will vary depending on whether you spend all of your time in Malta or split your year between the island and the UK.
Tax residency differs from residency status and indicates the place where you primarily live and where you are liable to pay tax on your worldwide income and assets at the prevailing rates.
Like most countries, Malta will usually consider an expat a tax resident if you spend 183 days or more there per year, which means you’ll need to budget for taxes and understand how the local tax system works.
As a quick summary:
- Income tax rates begin at 15% for earnings of €12,701 and above, with an upper tax rate of 35% for taxable incomes over €60,000.
- Non-EU expats who relocate through the Global Residence Program benefit from a 15% flat rate tax against foreign income remitted to Malta, although they have a €15,000 minimum tax obligation per year. Income arising from within Malta is taxed at a 35% rate.
- The Maltese government does not charge a wealth tax, but capital gains are payable on some property and asset transfers, and third-country citizens may remain liable for UK inheritance tax.
Double tax treaties apply, which avoids the potential for the same income or event to be taxable both in Malta and the UK, although it is important for expats to submit the appropriate declarations to ensure they claim correctly.
Understanding the Maltese Healthcare System for Expat Residents
Finally, it is worth considering healthcare since most visa schemes require applicants to provide evidence of comprehensive private health insurance covering all family members and dependents within the application.
Malta has a high-quality public healthcare system, but foreign nationals are not typically eligible for subsidised or free treatments, which are usually available only to Maltese citizens and EU nationals.
Holding private health insurance can also be beneficial, with access to faster treatments and services. However, it is essential to ensure you have sufficient coverage, understand how premiums may increase over time, and know the out-of-pocket expenses you’ll be expected to cover if you require treatment.
By working through each of these considerations and ensuring your budgets, plans, and financial affairs are well managed, you can rest assured that your retirement in Malta will be everything you expect.
For more information about any of the factors included in this guide, or to arrange a good time for a confidential discussion with one of the local Chase Buchanan Private Wealth Managers in Malta, please get in touch or book a consultation at your convenience.
*Information correct as at August 2024