No Tax Exemption under Malta Nomad Residence Permit?

What made Malta’s Nomad Residence Permit one of the most attractive programs of this type in the whole of Europe, was the 0% income tax on any income arising from remote work. Unfortunately, Malta is doing a complete u-turn on its own policy, asking Nomads to pay tax on all of their remote income. Global Nomad Guide decided to investigate & hold the government accountable to its promise. Read on for more details.

Please note we are also in the process of updating the info & the score of the Malta Nomad Residence Permit.

Was ‘0% income tax’ just a big PR stunt?

Malta’s tax exemption for Digital Nomads was a big selling point for their version of what is commonly known as ‘Digital Nomad Visas.’ It was also one of the reasons why Malta Nomad Residence Permit scored 7 out of 10 points on the Global Nomad Index^©.

When, early this year, we took a dipper look at the tax implication of the Malta Nomad Residence Permit, we had some questions about the lack of legal bases for the tax exemption. The Residency Malta Agency was quick to assure us that there is no problem, despite the tax office saying the tax exemption is not written into the law. Residency Malta Agency confirmed to us that:

• “Applicants need to declare they are paying tax abroad as Malta is not their primary residence and are non-domiciled residents.“
• “Income arising outside of Malta and not sent to Malta is not taxable when holding a Nomad Residence Permit.“
• “Nomad Residence Permit holders will not be subject to personal income tax since their employment is already taxed at origin. (…) Same goes for the company, no taxes or welfare will be paid in Malta by the company either.“

This has also been written into the original FAQs listed on the Nomad Residency Malta website. Currently, they are nowhere to be found. The recent version no.6 of the document doesn’t include any mention of the tax exemption. It’s only if you check the previous one v.4 that you can find it. See Q16 in version no.4 of the document.

Is Malta making a complete tax exemption U-turn?

Well, it definitely looks like it. And it’s not only the changes to the info available on the Nomad Residency website that proves that. We have also heard from Nomads, who already applied for the visa, who are being told by CFR (Commission For Revenue) that the 0% income tax exemptions will not apply to them.

One of those nomads, who received his permit a while ago, took to Reddit to share information he received from CFR. They say that Residency Malta Agency failed to create a lawful tax exclusion and misinformed all the permit holders about what taxes they will actually own. See the email from CFR below.

This also happen to another nomad, who this time took to Facebook saying, he is being told that the 0% income tax exemption doesn’t exist and that he will own taxes in Malta on all of his remote income. Here is what CFR said:

“Kindly note that the Residency Malta Agency have updated their details and removed the reference regarding the tax exemption, due to the exemption not being in accordance of the Income Tax Act. As per the information we currently have, the Agency is currently discussing another tax scheme to attract the Digital Nomads, which scheme should be in accordance with the tax legislation.

Furthermore kindly note the following information regarding your queries. Please note that a Nomad Residence Permit is issued for one year. The permit holder will be considered to be resident in Malta for tax purposes, if he is physically present in Malta for more than 183 days in a 12-month period. However, he will not be considered to be ordinary resident.

Moreover, the salary the Nomad Resident will earn for the work carried out remotely from Malta is considered to be income arising in Malta. Therefore, such income will be wholly taxable in Malta.“

Is it all just a scam?

Is this even real? Can a government body lie or promote a non-existing tax exemption? It should not be able to do that.

It is not only putting Malta in a really bad light but also making lives difficult for any of the nomads that trusted Malta and applied for the permit. They picked Malta out of a number of other options, have moved to Malta, and signed 12 months long leases there. Now they will either have to pay taxes (that they were not supposed to pay) or they will have to leave before 183 days runs out. Meaning they will break their rental contracts and have to pay penalty fees. Either way, they will lose a substantial amount of money.

We have spoken with another Nomad who applied for the permit. He said that he has no issues with paying taxes and is keen to do that, but those are not the terms on which he applied for the visa. He picked Malta after carefully calculating which of the Digital Nomad Visas and permits would be the best for him but now he feels it was just a scam.

Holding Governments Accountable

We also believe it is, simply put, outrageous. We worried this might happen but hoped it won’t. Now that it did, it needs to be addressed. It’s difficult to hold governments accountable if you are just one person, but together we can.

Global Nomad Guide has reached out to the #residencymaltaagency & other government bodies for comments and will keep you informed as things develop.

Last updated December 15, 2023.