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New tax on worldwide income

Last activity 06 July 2018 by Tati Tat

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mikohassing2

Hello all

A friend of mine yesterday tipped my off to a new bill apparently having been approved by the maltese parlament.

This bill means that non-domiciled EU residents living here from now on will be taxed on the 1st €35.000 of their worldwide income, meaning a minimum tax of €5.000 to Malta per calendar year.

I have provided further details below.

Does anybody have any more detailed information on this? This is obviously a very troubling development for many of us.....



https://l.facebook.com/l.php?u=https%3A … cTMPsREjrd


From the bill:

ACT No. VII of 2018

AN ACT enacted by the Parliament of
Malta.

AN ACT to implement Budget Measures
for the financial year 2018 and other
administrative measures.



(d) immediately after sub-article (26) thereof, there
shall be added the following new sub-article:
"(27) Any individual who during any year preceding the
year of assessment:

(i) is ordinarily resident in Malta but not
domiciled in Malta (hereinafter "the non-domiciled
individual") and to whom provisos (i) and (ii) of article
4(1) apply, and who is not taxable in accordance with any
scheme under the Act effectively establishing a minimum
tax payable; and

(ii) derives income (including, in the case of a
married couple whose income is chargeable to tax in terms
of article 49 of the Act, the income derived by both
spouses) amounting to not less than thirty five thousand
euro (€35,000) or its equivalent in another currency, or
such other amount as may be prescribed, arising outside
Malta and referred to in proviso (i) to sub-article (1) of
article 4 of the Act, but which is not received in Malta,
shall, for any year of assessment, be subject to a tax
liability on his income amounting to not less than five
thousand euro (€5,000) per annum (hereinafter "the
minimum tax"), and should the income (excluding capital
gains chargeable in terms of article 5A of this Act)
chargeable to tax in the hands of such individual for any
year of assessment result in a tax liability (before taking
into account any relief granted in terms of articles 76 to 89
of the Act) amounting to less than the minimum tax, he
shall be deemed to have received in Malta additional
income arising outside Malta as shall result in a total tax
liability on his total income, wherever arising, amounting
to the minimum tax:

VERŻJONI ELETTRONIKA
A 179
Provided that in computing the minimum tax,
account shall be taken of tax paid under this Act, whether by
withholding or otherwise, in respect of all income (excluding
tax imposed in terms of article 5A of this Act), whether arising
in Malta or outside Malta:

Provided further that if the non-domiciled individual
can prove to the satisfaction of the Commissioner that if he had
been subject to tax without taking into account the provisions of
provisos (i) and (ii) to sub-article (1) of article (4) of the Act,
the total tax payable by him would have amounted to less than
the minimum tax, his tax liability shall be capped accordingly at
the said lower amount.".

Dr Beth

Yes but there is tax equalization with most countries no? There is for the Netherlands, but am not certain what this new bill would me. We already pay a graduated 53 percent tax!

F0xgl0ve

Does that not read that the €5,000 tax is if you earn MORE than €35,000 not on the 1st €35,000 :-

'(ii) derives income (including, in the case of a
married couple whose income is chargeable to tax in terms
of article 49 of the Act, the income derived by both
spouses) amounting to NOT LESS than thirty five thousand
euro (€35,000) or its equivalent in another currency'

Ray

mikohassing2

My source has told me that the tax levied is on the 1st €35.000 they assume you make - it doesn't matter if you make €35000 or €500.000, they will only tax you on €35.000.

But I don't have the exact details, that is what I was hoping somebody here would help clear up.

This thing seems to have gone completely under the radar, so far I've not met 1 single person who had heard about this until now...

mikohassing2

There is for some countries and for some type on income, but certainly not for all, and that is one of the main reasons why many expats are here - to not be taxed on their wordwide income. Apparently this is going to change now...

F0xgl0ve

mikohassing2 wrote:

My source has told me that the tax levied is on the 1st €35.000 they assume you make - it doesn't matter if you make €35000 or €500.000, they will only tax you on €35.000.

But I don't have the exact details, that is what I was hoping somebody here would help clear up.

This thing seems to have gone completely under the radar, so far I've not met 1 single person who had heard about this until now...


But the wording in the extract of the Act that you quoted says over €35,000 not the first €35,000!
So are you saying that is wrong? If so why quote it?

Ray

mikohassing2

I think you are reading it wrong.

This is a condensed version:

"...is ordinarily resident in Malta and who is not taxable in accordance with any scheme under the Act effectively establishing a minimum tax payable; and derives income amounting to not less than thirty five thousand euro (€35,000) arising outside Malta, shall, for any year of assessment, be subject to a tax liability on his income amounting to not less than five thousand euro (€5,000) per annum (hereinafter "the minimum tax")"

A €5000 tax equals taxed income of €35.000

F0xgl0ve

mikohassing2 wrote:

I think you are reading it wrong.

This is a condensed version:

"...is ordinarily resident in Malta and who is not taxable in accordance with any scheme under the Act effectively establishing a minimum tax payable; and derives income amounting to not less than thirty five thousand euro (€35,000) arising outside Malta, shall, for any year of assessment, be subject to a tax liability on his income amounting to not less than five thousand euro (€5,000) per annum (hereinafter "the minimum tax")"

A €5000 tax equals taxed income of €35.000


So you are saying that I will pay €5000 tax on my €10000 pension!
The statement above say an income not less than €35000, my €10000 is less so not liable to the tax!

Ray

mikohassing2

Yes, if you are earning less than €35.000, then you will not be taxed. Obviously somehow you will have to prove to them that you are not earning €35.000, this is one of the big questions here, how exactly do you do that?

volcane

The problem with knowing what is going on is that this is amending a large existing bill inserting bits of this and that here and there.  The context is missing by just looking at it like this.

I've asked my accountant to figure it out, but inevitably each have unique circumstances, you should do the same

MarcelMarcelMarcel

It seems to me a little bit unrealistic. If you for example have 8000 pension a year from abroad then you have to pay 5.000 tax. That's about 62% But If you have a pension of 100.000 then you also pay 5.000. That's a tax of 5%. So the higher your income the lower your percentage income tax. That can't be truth I think. Is it an april fools joke maybe? :)

mikohassing2

No, you will only have to pay this tax if you make at least €35.000 abroad.

But you are correct, if you make €35.000 and have to pay €5.000, or you make €500.000 and still only have to pay €5.000, that doesn't seem fair.....

volcane

If you earn over > 35k excluding capital gains outside of malta you'll pay this, any taxes paid here or elsewhere will be deducted from the 5k total.

If you earn 10k pension or even 34k pension and remit it here you wont pay this tax.

(I asked a pro)

jackfrost42

Exactly the keyword is it will be offsetted against other taxes paid.

This is targeted at non-doms which don't remit any money to Malta and thus live tax free apart from corp taxes, scam accountants, typical maltese fraud ;) etc.

europe123

Hi everybody,
my wife and me, both German, thinking about to relocate to Malta in the near future, 2020 perhaps.
Now this new Tax (https://www.financemalta.org/sections/t … tion-2017/) is confusing me a little. We will live on my pension of less than 35K. This said pension we will recieve, remitt to , in Malta. As far as I understood the double tax relief, we have to pay tax on that pension in Malta anyway.

We also will have other income of less than 35K in Germany  as well. That is taxable in Germany only, regarding the double tax relief.

Capital gain is excluded.!?

Just the case this other income in Germany will be above 35K, of which I payed tax for in Germany, do I also have to pay that said 5K€ tax in Malta?

How do I prove how much money I remitted to Malta?

This is a little wierd and confusing . . .


Thank you

Tati Tat

Also want to know what is a New Tax?

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