Last Updated on 29th July 2024 Malta is a highly desirable European destination, with advantageous visa programmes, beautiful island scenery and a near-perfect climate. Foreign nationals often choose Malta in preference to other destinations owing to the excellent security, healthcare and affordable living – and because English is one of the official languages.
This Chase Buchanan guide collates some tips and suggestions to ensure that you have the retirement funds to live the aspirational lifestyle you expect following your international move.
It’s equally important to protect and safeguard your wealth, whether you are moving to retire somewhere peaceful and warm or want to take your pension fund with you when you travel with your family.
Applying for a Maltese Residency Visa
Several visa categories may apply, but one of the common options for expatriates is to use one of the permanent residency schemes. If you are a citizen of another EU country such as Spain or France, of course, you have the freedom to travel and retire as you wish.
For non-EU nationals, some of the potential solutions include the schemes outlined below.
Maltese Permanent Residence Visa
This scheme is open to non-EU applicants and grants an annual permanent residence permit that you need to renew every year.
Foreign nationals with this visa can live in Malta but not work – so it’s suitable for retirees rather than professionals.
Requirements include an investment in property or paying a minimum annual rent, and demonstrating a sufficient net worth and yearly income stream (through investments, pension benefits or other activities) above a threshold.
Maltese Citizenship by Investment
Another opportunity is to consider the investment initiative, offering a naturalisation certificate (equivalent to citizenship) for a qualifying investment.
Foreign nationals outside the EU can obtain a Maltese passport if they wish and need to meet several prerequisites. They include alternatives, from direct investment, property investment or donations to an approved governmental recipient.
This scheme can be beneficial for applicants with a high net worth, with advantages such as tax exemptions on foreign-sourced income and capital gains.
We would advise you to seek professional advice to ensure any investment you make complies with the entry criteria and is the best course of action to support your broader investment portfolio and retirement plans.
Managing Pensions Funds on Retirement to Malta
Once you’ve chosen the most appropriate entry route, you will also need to consider your pension fund, including:
- How you access your wealth.
- Whether you retain or transfer existing pension products.
- The tax implications of every outcome.
Income taxes in Malta are lower than in most nearby countries, with a maximum tax band of 35% – compared to 45% in the UK and France, 47% in Spain and 48% in Portugal. Although the recommended course of action will depend on many variables and circumstances, it is almost universally preferable to pay income tax as a Maltese taxpayer than continue paying income tax in your home country.
A complication is that there is a range of solutions:
- Retaining your pension fund as-is and claiming from abroad – with the caveat that some funds will only remit to a domestic bank account and that you will be exposed to currency fluctuations.
- Transferring your pension to a qualifying ROPS scheme – and possibly paying the 25% Overseas Transfer Charge if you are a UK citizen.
- Opting for a Self-Invested Personal Pension, which does not attract the transfer charge, and acts as a pension wrapper with autonomy over how you invest and manage your fund.
- Reinvesting your pension wealth in a different investment structure, noting the significance of understanding cross-border tax declarations and offshore interest income.
Each route carries pros and cons, requiring an assessment of each option to make an informed decision that will protect your pension benefits without eroding the value of your retirement fund.
Choosing the Right Way to Manage a Pension Fund in Malta
Every foreign national living in Malta will have different requirements, but a starting point may be to work through the following considerations:
- Which tax regimes you will be exposed to, in which location, according to each proposed conclusion.
- How easy your wealth will be to access, and whether conditions (such as age limits) conform to your retirement plans.
- Whether you can continue making contributions and whether that may trigger a further levy, such as the Lifetime Allowance if you maintain a pension in situ in the UK.
- The anticipated fund performance and whether the projected returns are consistent with your risk appetite and expected returns on your investments.
- How much control you have over your pension or investment fund – and whether you have the right to amend or rebalance your pension investments if they are not meeting your expectations.
Don’t hesitate to contact our experienced expatriate wealth management team in Malta, or the closest Chase Buchanan office, if you would like support working through this assessment process to ensure your pension funds are secure.
Understanding the Maltese Tax Regime
We’ve mentioned the upper tax bands, but one of the differences in Malta is that if you’re a taxpayer, your exact rates depend on whether you are a couple (married or in a civil partnership) and whether you have dependent children.
Personal Allowances start from €9,100 and extend up to €12,700, so it’s important to register correctly and make any necessary declarations by 30th June every year to ensure you claim eligible entitlements. Please visit our downloadable Guide to Expat Taxes on Malta for further information.
These same rates apply to pension income, and you may qualify for an income tax rate of 15% as a flat rate. Qualification criteria vary, but certain taxpayers relocating under the Global Residence Programme or working in specific roles are liable for a low 15% flat rate against all income remitted to Malta – with a minimum tax per year of between €2,325 and €15,000.
We hope this overview gives you some clear direction to help plan for your Maltese retirement and ensure that your pension fund is protected and profitable. Please get in touch if you would like further information about the taxation regime, taxpayer status, investing in Malta, or the competing pension transfer options.
*Information correct as at April 2022