Tax Obligations in Your Home Country vs. Malta: Understanding the Differences for International Tax Residents – Tax Residency Rules

When I first started thinking about Malta tax residency three years ago, my thoughts were: Six months of sunshine, lower taxes – it cant be that complicated. Spoiler alert: Oh yes, it can. Very much so. But don’t worry, today I’ll break down everything I’ve learned about Maltese tax residency – minus the usual tax advisor jargon.

The Malta Tax Residency Rules are actually much more complex than most online articles suggest. While your home country might still consider you taxable, Malta dangles its famous Non-Dom Status (Non-Domiciled Status – a special status for non-Maltese) as an incentive. Sounds tempting, right? It is – if you know what you’re doing.

Tax Liability Malta vs. Home Country: What You Really Need to Know

This is where it gets interesting: Your tax liability depends not just on where you register, but also on how your home country defines international tax liability. Germany, for example, recognizes extended limited tax liability – a clunky term for a simple matter: Even after you move away, under certain conditions you remain taxable in Germany.

An Overview of the Different Residency Models

Malta Non-Dom Status: The Difference to Regular Resident

This is the catch: Malta differentiates between ordinarily resident and domiciled. As a Non-Dom, you only pay tax in Malta on income you remit to Malta or earn there directly. Sounds too good to be true? Almost.

Take Dr. Mara, our retired physician from Zurich: She opted for the Malta Non-Dom status and now pays no Maltese tax on her German rental income – as long as the money stays out of Malta. Her Swiss pension? It stays in Switzerland, only taxed in Malta if she transfers it to her Maltese account.

What Does This Mean for You?

Before you decide on Malta as your tax residency, you need to run the numbers honestly. I recommend answering the following questions:

• How much income do you earn outside Malta?
• How much of it do you need for your cost of living in Malta?
• What exit costs will you incur in your home country?
• How complex is your current tax situation?

Malta Tax Residency Rules: 183-Day Rule and Other Criteria

The famous 183-day rule is just one element of Malta’s Tax Residency Rules. Yes, you need to spend at least 183 days in Malta to be considered a resident. But – and it’s a big but – you also need a valid Residence Permit or an EU passport.

The Three Routes to Malta Tax Residency

Malta has three main ways you can become a tax resident:

1. EU Citizen Route: Live at least 183 days in Malta and prove your main center of life is there
2. Global Residence Programme (GRP): For non-EU citizens with a minimum annual income of €20,000
3. Malta Permanent Residence Programme (MPRP): The expensive route, requiring an investment of at least €300,000

The 183-Day Rule in Practice

This is where it gets tricky: Malta doesn’t simply count calendar days. A presence test also considers where you sleep, work, and where your family lives. Luca, our Italian UX designer, discovered that his frequent trips back to Milan for clients endangered his Maltese tax residency.

The Maltese tax authorities look closely at:

• Where is your primary residence registered?
• Where do you generate most of your income?
• Where does your family and social network live?
• Where do you mainly work?

Trap: Allowing the Home Country to Count You as Resident

The tricky part: While Malta may view you as a resident, your home country might still consider you taxable. Germany, for instance, applies its own rules for extended limited tax liability. In short: It’s possible to be taxed in both countries.

The solution is Double Tax Treaties – complex international agreements that determine where you ultimately pay tax. More on that soon.

What Does This Mean for You?

Plan your 183 days strategically. For three years now, I’ve kept meticulous records of my stay in Malta – not just flight data, but also hotel bookings and leases. Why? Because Maltese authorities may request evidence at any time.

Malta Non-Dom Status: Tax Advantages and Requirements

The Malta Non-Dom Status is at the heart of Malta’s tax strategy for foreigners. But beware: Non-Dom doesn’t mean no tax. It means different taxes – and those can be steep if you’re not careful.

How the Non-Dom Status Works

As a Non-Dom, you are subject to Malta’s limited tax liability under the Remittance Base System. Specifically, this means:

• Malta-source income: Fully taxable (rates between 15–35%)
• Foreign income: Taxed in Malta only if and when remitted to Malta
• Capital gains: Taxable in Malta only if transferred there

The Minimum Tax: The Hidden Catch

Heres what many guides omit: the Minimum Tax. Since 2015, as a Non-Dom you must pay at least:

Worked Example: Dr. Mara from Zurich

Dr. Mara’s income situation:

• German rental income: €60,000 (remains in Germany)
• Swiss pension: €45,000 (remains in Switzerland)
• Malta living costs: €35,000

As a Malta Non-Dom, she pays:

• Maltese tax: €5,000 minimum tax + tax on the €35,000 transferred to Malta
• German tax: On rental income (reduced under double tax treaty)
• Swiss tax: On her pension income

All in all, she still saves substantially compared to full German tax liability.

When Does Non-Dom Status End?

Heads up: the Non-Dom status is not permanent. It ends automatically if you:

• Become a Maltese citizen
• Have lived in Malta 15 out of the past 20 years
• Establish a Maltese domicile (a complex legal decision)

What Does This Mean for You?

The Non-Dom status is best for people with high foreign income and moderate Malta living costs. If you need to spend your whole income for living in Malta, your savings will likely be minimal.

Double Tax Treaties: How to Avoid Being Taxed Twice

Double tax treaties (DTAs) are your best friend in the world of international tax. Malta has such agreements with over 70 countries, but each is different. And here’s where the puzzle begins.

How Double Tax Treaties Work

A DTA essentially regulates three things:

1. Tie-breaker rules: Who gets to tax you if both countries lay claim?
2. Credit mechanism: How are taxes paid abroad offset?
3. Information exchange: What data do tax authorities share?

The Most Important DTAs for Malta Residents

The Automatic Exchange of Information (AEOI)

Since 2018, Malta automatically exchanges tax data with other EU countries. This means your home country is informed about your Maltese accounts and income. The myth of the secret Maltese bank account is long dead.

Anna, our remote project manager from Berlin, had to find out the hard way. Even though she was correctly registered in Malta, a year later she received a letter from the German tax office – listing all her Maltese bank details.

Applying a DTA in Practice

This is how to correctly benefit from a DTA:

1. Request your residence certificate: from the Malta tax authority
2. Fill in the form: Each home country has its own paperwork
3. Gather documentation: Lease agreements, utility bills, bank statements
4. Apply: Generally to your home country’s tax office

What Does This Mean for You?

Allow at least 6–12 months for the full DTA process. Expect questions – from both Malta and your home country. I strongly recommend working with a tax adviser experienced in Malta before taking the plunge.

Practical Steps: How to Become a Malta Tax Resident

Let’s get down to the details. Here’s a step-by-step guide to establishing tax residency in Malta – based on my own experience and that of other expats I’ve worked with over the years.

Step 1: Preparation in Your Home Country

Before you even set foot in Malta, tidy things up at home:

• Check your tax liability: What exit conditions does your home country require?
• Understand deregistration procedures: In Germany, for example, you must deregister officially
• Calculate exit tax: Substantial costs can arise on shareholdings of more than 1%
• Notify banks: Some banks automatically close accounts if you move abroad

Step 2: Apply for Malta Residence Status

As an EU citizen, you don’t need a special permit initially, but you should still register officially:

Step 3: Establishing Your Center of Life

The 183-day rule on its own is not enough. You need to prove that Malta is your true center of life:

• Long-term lease: At least 12 months, ideally longer
• Utility bills: Electricity, water, internet in your name
• Bank account: Maltese account for everyday expenses
• Local ties: Memberships, subscriptions, local contacts

Step 4: Apply for Non-Dom Status

You apply for Non-Dom status directly with the Maltese tax authorities:

1. Fill out Form TR01: Detailed information on your situation
2. Provide evidence: Birth certificate, lease agreement, bank statements
3. Declaration of Non-Domicile: A written statement of intent
4. Pay the processing fee: €150

Step 5: Inform Your Home Country

Now comes the crucial part: properly deregistering at home. A lot of people mess this up:

• Deregister in time: Not after the move, but before
• Notify all authorities: Tax office, registration office, health insurer
• Submit DTA application: Using the Maltese residence certificate
• Final tax assessment: Often results in an additional bill

Timeline: How Long Does the Process Take?

Plan for a realistic 12–18 months for the full transition:

• Months 1–3: Preparation and Malta trial period
• Months 4–6: Establishing residence, initial applications
• Months 7–12: Non-Dom status, DTA process
• Months 13–18: Finalize procedures, submit first tax returns

What Does This Mean for You?

Don’t underestimate the bureaucracy involved. Luca, our UX designer, first planned three months for everything – in the end, it took 16 months. Build in buffers and get professional support, especially for the tax aspects.

Common Mistakes with Malta Tax Residency

With three years of Malta experience and countless conversations with other expats, I can tell you: Most problems stem from avoidable mistakes. Here are the biggest pitfalls – and how you can avoid them.

Mistake 1: Misunderstanding the 183-Day Rule

The classic rookie mistake: I’m in Malta for 184 days, so I’m a tax resident. Wrong! Maltese tax authorities don’t just look at calendar days, but at your actual center of life.

Anna from Berlin thought she could simply spend 184 days in Malta and keep her Berlin apartment. She got a rude awakening at tax time: Malta didn’t accept her as a resident, since her center of life was clearly still in Germany.

How to Get It Right:

• Provide proof of terminating your apartment in Germany
• Sign a Maltese rental contract of at least 12 months
• Collect utility bills and bank statements
• Keep a detailed log of your days spent in Malta

Mistake 2: Underestimating the Minimum Tax

Many calculate their theoretical tax savings, forgetting about the Maltese minimum tax of €5,000 for Non-Dom residents. Dr. Mara from Zurich originally planned on zero Maltese tax – an expensive mistake.

Mistake 3: Ignoring Double Tax Treaties

This one’s a killer: Many believe Malta residency automatically means no more tax in Germany/Austria/Switzerland. That’s an expensive misconception.

Luca had to learn that Italy continued to tax his Italian income despite his Malta status – until he finally processed the DTA procedure correctly.

Critical Points for German Nationals:

• Extended limited tax liability can last 5–10 years
• Exit tax applies to shareholdings over 1%
• Automatic information exchange with German authorities

Mistake 4: Not Collecting Documentation

Many assume, Malta is in the EU, so everything will be digital. Wrong! The Maltese tax authorities love paper and will ask for documentation for everything:

• Proof of residence: Flight tickets, hotel bills, rental contracts
• Proof of center of life: Utility bills, bank statements, memberships
• Proof of income: Documentation of all foreign income
• Transfers: Evidence for every transfer to Malta

Mistake 5: Saving on Professional Help

I get the temptation: Why spend €3,000–€5,000 on a tax adviser when you could do it yourself? Because a single mistake could cost you far more.

The cost of professional advice is usually recovered in the first year alone, through avoided penalties and better tax planning.

Mistake 6: Ignoring Social Security

Tax is only part of the picture. Don’t forget about Maltese social security:

• If you’re employed: Mandatory social security contributions
• If self-employed: Voluntary contributions possible
• EU coordination: A1 certificate required for temporary assignments
• Health insurance: Often you’ll need private supplementary insurance

What Does This Mean for You?

Every single one of these mistakes is preventable – if you know what to watch out for. Plan carefully, keep all your documentation, and don’t be afraid to invest in professional advice. Malta tax residency is a marathon, not a sprint.

Costs and Effort: What Malta Tax Residency Really Costs

Let’s get honest about the numbers. After three years of documenting every expense for my Malta tax residency, I can tell you: It’s a lot more expensive than most guides claim. But it’s also much cheaper than making a costly tax mistake.

One-off Costs for Changing Residency

Ongoing Annual Costs

Ongoing costs are often underestimated. Malta is not particularly cheap, and as a Non-Dom you still pay significant tax:

• Minimum tax: €5,000 (for EU citizens with foreign income)
• Maltese tax: 15–35% on all Malta transfers
• Tax advice: €2,000–€4,000 annually
• Residence certificate: €25 annually
• Compliance costs: €1,000–€2,000 (documentation, translations)

Worked Example: Luca, UX Designer from Italy

Luca earns €80,000 per year as a freelance UX designer. Here are his real costs in his second year in Malta:

For comparison: In Italy, Luca would have paid about €32,000 taxes and social security on €80,000 income. His savings: €17,100 per year.

At What Income Level Is Malta Worthwhile?

Based on my calculations and those of other Malta residents:

• Below €50,000: Usually not worthwhile (minimum tax too high)
• €50,000–€100,000: Might be worthwhile, depending on home country
• Over €100,000: Significant savings possible
• Over €300,000: Malta becomes very attractive

Hidden Costs: What’s Often Forgotten

Don’t forget these hidden costs:

• Dual households: Many keep their home apartment at first
• Travel costs: More flights home and for business
• Currency risk: If your income isn’t in euros
• Private health insurance: The Maltese system has gaps
• Higher cost of living: Malta is pricier than you might expect

Return on Investment: When Does Malta Pay Off?

Dr. Mara from Zurich did an interesting calculation:

Setup costs: €22,000
Annual savings: €28,000
Break-even: After 10 months

But watch out: This only works because Dr. Mara has high foreign income and doesn’t need to transfer much to Malta.

What Does This Mean for You?

Malta tax residency isn’t a bargain, but with the right income mix, it can be highly profitable. Run the numbers honestly, be generous in your planning, and don’t forget soft factors like quality of life and personal preferences. Tax savings are useless if you end up miserable.

Frequently Asked Questions on Malta Tax Residency

Do I have to deregister in Germany to become a Malta tax resident?

Yes, for full tax exemption in Germany, you must officially deregister and demonstrably move your center of life to Malta. Simply registering in Malta is not enough. Germany checks your actual center of life very thoroughly.

Can I keep German health insurance as a Malta resident?

No, deregistering in Germany ends your mandatory health insurance there. You must get coverage in Malta or take out private international health insurance. Many Malta residents choose a combination of Maltese basic health insurance and private top-up insurance.

How does Malta’s Non-Dom status work for digital nomads?

The Non-Dom status only works if you are truly resident in Malta, with 183+ days per year. True digital nomads without a fixed address cannot qualify. You need a Maltese lease, utility bills, and proof that your center of life is there.

How are cryptocurrencies taxed as a Malta resident?

Crypto gains are taxed in Malta as regular income (15–35%) or as capital gains. As a Non-Dom, you only pay Maltese tax on crypto profits if you transfer them to Malta. Watch out: If you trade crypto from Malta, it may count as Malta-source income.

Can I lose my Malta Non-Dom status?

Yes, Non-Dom status ends automatically if you become a Maltese citizen or have lived in Malta for 15 of the last 20 years. Malta may also withdraw your status if you establish domicile or no longer meet the requirements.

How long does the Malta tax residency process take?

Expect a realistic 12–18 months for the full process. The Malta applications themselves take 2–6 months, but coordinating with your home country and going through the DTA process can take much longer. Many people massively underestimate the bureaucracy.

Do I have to work in Malta to become a tax resident?

No, you don’t have to work in Malta. Pensioners, investors or people with foreign income can all become Malta tax residents. The key is living there at least 183 days per year and moving your center of life demonstrably to Malta.

What happens to my German pension as a Malta resident?

German pensions are usually still taxed in Germany, even if you become a Malta resident. This is regulated by the double tax treaty. As a Non-Dom, you only pay Malta tax on your pension if you transfer it to Malta.

Can I work in Malta without restriction as an EU citizen?

Yes, as an EU citizen you automatically have the right to work in Malta. You don’t need a work permit, but you must register for Maltese social security and will be assigned a Maltese tax number.

How much does a good Malta tax adviser cost?

A specialized Malta tax adviser charges €1,500–€3,000 for initial setup and then €2,000–€4,000 annually for ongoing support. It sounds like a lot, but it usually pays for itself quickly through avoided errors and optimized tax planning.