Following on from our recent article about the Malta Digital Nomad Visa, let's take a closer look at the tax benefits that digital nomads can expect when they are approved for this visa.
Although not often the primary motivation to be a digital nomad, people often consider a benefit of the digital nomad lifestyle as being able to take advantage of a better tax rate.
Especially if their country of origin has a high tax level that doesn’t allow them to fully enjoy the benefits of their hard work and earnings.
The Malta Nomad Residence Permit is the official name of the Malta Digital Nomad Visa. Once approved, it lasts for one year but can be extended three times for a total of four years.
The Nomad Residence Permit isn’t available to European Economic Area countries as EU citizens already have freedom of movement. This means they can already move to Malta if they wish with no obstacles.
One requirement for applying for the visa is that your source of income is from outside Malta, and if you are successful, Malta offers 0% tax for the first year and then a flat 10% tax for each year after that.
Malta also has a number of agreements with other countries so that you can avoid double taxation! There is more about this below.
After the first year, where digital nomads benefit from 0% tax, the tax rate for those under the Maltese Digital Nomad Visa has been set at 10%, which has to be one of the most attractive reasons for applying for the visa.
For comparison, if you live in the UK, after your £12,500 tax free personal allowance, you are expected to pay 20% income tax in the UK on everything in between £12,571 to £50,270.
So, the minimum required amount to qualify for the Malta Digital Nomad Visa is €42,000, if you consider just those earnings the total tax paid over two years in Malta and in the UK is as follows:
Malta: Year 1: €0, Year 2: €4,200 for a total tax of: €4,200
UK: Year 1: €5,490, Year 2: €5,490 for a total tax of: €10,980 (more than 2x Maltas taxes)
And Malta only looks more beneficial as the time frame and amount of earnings increase.
If you increase the time frame to three years and the earnings to €62,000 per year then the total tax over three years in Malta is €12,400, and the total tax over three years in UK is €35,700.
This obviously makes Malta’s 10% tax rate a very attractive proposition as you will be able to retain at least two times, even three times as much earnings, which can make a real difference to your lifestyle.
Being able to potentially cut in half or even quarter (at the higher earnings) the taxes you pay for up to four years could provide a massive boost to your financial situation, and it definitely renders the digital nomad visa an attractive option for those who have the flexibility and meet the requirements.
Additionally, if you stay in one of the number of private rooms at Evolve Coliving, you will be surrounded by likeminded people in their 30's, all living the good life in a huge villa with a pool, gym, jacuzzi, coworking and premium wifi ❤️ It's worth nothing our leases are also suitable for the digital nomad visa!
There are a number of accommodation options for people who qualify for the Malta Digital Nomad Visa, but Evolve Coliving provides an unmatched offer for digital nomads.
Being new to a country can be hard, but living in an amazing villa with other digital nomads, remote workers, and entrepreneurs can really help you feel right at home.
We have provided leases for many digital nomads who have successfully applied for the digital nomad visa, and we have an in-depth guide to applying.
And considering the excellent facilities, including a beautiful pool, outdoor gym, rooftop hot tub, shared coworking, premium wifi and 1268m2 of shared space at Evolve’s accommodation in San Gwann, this is a no brainer.
So feel free to fill out the form for more info!
One of the things that sometimes puts people off changing where they are resident for tax purposes is the potential for being charged tax twice by different countries and being liable to pay both. Thankfully, Malta has reciprocal taxation agreements with many countries that avoid double taxation on the same income.
Malta has agreements with the UK and many other countries, 60 of which are currently in force and 10 to be enacted shortly. It is advisable to check whether your home country has agreements with Malta and to take advice from an accountant on how best to proceed.
Nothing on this website constitutes financial advice and professional advice should be taken to help you navigate your situation. But here is a list of Malta's double taxation conventions to get you started.
The USA is one of the most difficult countries when it comes to its citizens working abroad, so special care should be taken by those coming from the USA to ensure that they are abiding by the tax regulations.
The US Government expects its citizens to file US taxes, even if they no longer live there, and this can make life difficult for those who have moved abroad. There are accountants and tax advice services that can help to ensure you are getting this correct.
You will be happy to know that we have curated a tell all Ultimate Insiders Guide To Malta!
This goes deep into everything we recommend on the beautiful little rock off the boot of Italy.
But for an overview, Malta is full of rich history, UNESCO sites, beautiful beaches, great bars and restaurants, lots of lively nightlife, and some great festivals.
Also, being an English-speaking country with 300 days of sun, the beautiful, warm, crystal clear Mediterranean sea, great taxes and home to a vibrant community of amazing digital nomads make Malta a very exciting choice.
When you come, be sure to check out Valetta, The Three Citys, Mdina, the beaches around Mellieha, Gozo and the Blue Lagoon in Comino. But more than anything, Malta is all about the laid back, chilled out lifestyle, so be sure to take a breath and enoy the experience ❤️
There are several ways to relocate to Malta, whether you do so without a visa or whether you want to come under a different visa that allows you to work in Malta. Below are a few great tax systems you can benefit from if you do it either of these ways instead.
A Maltese company's corporate tax is 35%, but the tax refund system effectively reduces this rate to just 5%. How does it work?
Profit Distribution: After your company pays the 35% corporate tax on its profits, you need to declare a dividend distribution to the shareholders.
Tax Refund Application: Your accountant will prepare and submit the necessary forms to the Maltese tax authorities to claim the 6/7ths refund on behalf of the shareholders.
Refund Processing: Once the application is submitted, the tax authorities will review it, and if everything is in order, the refund is processed and paid out to the shareholders.
This means you can pay just €5,000, or 5%, on €100,000 profit. This system, combined with Malta's extensive double taxation treaties, makes the country an attractive location for international businesses.
Another amazing benefit of Maltas taxation system isthat there is no inheritance or gift taxes. That means if you are looking to retain as much wealth as possible within your family, then Malta becomes a desirable destination to those who are approaching the later stages of their lives and are thinking along these lines.
Because Malta is a small country, it can be nimble in targeting grants and tax incentives to encourage business development. It is very competitive in the gaming, technology, and finance sectors. Much of its effort is focused on attracting this valuable foreign inward investment. This is great news for any nomads who may have companies that undertake work in these areas.
Malta has opted to take a modest share from a larger pool, making it an attractive location for many businesses and high net-worth individuals.
The philosophy is that collecting small contributions from many sources will yield more in the long run than trying to take a bigger share from fewer opportunities.
This approach enhances Malta’s appeal as a business-friendly environment where many can thrive while contributing to the country's economy.
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