Tax-friendly retirement/tax residence scheme for UK retirees
Under the Double Taxation Relief (Taxes on Income) (United Kingdom of Great Britain and Northern Ireland) Order, 1995 (Articles 18 and 19(2)), UK citizens receiving a pension in the UK and who who take up residence in Malta, can have their pensions remitted to them in Malta free of any UK income tax.
The scheme is not available to pensions paid by, or out of funds created by the UK government and paid to an individual in respect of services rendered to the UK. Therefore civil service pensions and similar state pensions are excluded.
UK pension benefits are remitted net of any UK tax to Malta are then taxed at 15% in Malta, provided the pensioner holds a Maltese Permanent Residence Permit. Since UK income tax on pensions stands at 40%, it is clear that UK citizens taking up Maltese residence and remitting their pension to Malta will make a tax saving of 25% on his or her entire pension and this become particularly favourable for higher pensions.
A quick calculation will therefore show that any UK citizen in receipt of a pension in excess of 15,000 annually, will begin saving on his tax liability once he or she takes up residence in Malta.
[Refer to our page on Conditions for Residence]
Below is a calculation of the potential savings based on a pension being paid to a single person under 65 years of age; savings for elder and married people can be greater.
|
Pension |
UK tax |
Malta tax and PRP costs |
Net savings |
|
50,000 |
12,952 |
10,380 |
2,572 |
|
60,000 |
16,952 |
11,880 |
5,072 |
|
70,000 |
20,952 |
13,380 |
7,572 |
|
80,000 |
24,952 |
14,880 |
10,072 |
|
90,000 |
28,952 |
16,380 |
12,572 |
|
100,000 |
32,952 |
17,880 |
15,072 |
|
150,000 |
52,952 |
25,380 |
27,572 |
|
200,000 |
72,952 |
32,880 |
40,072 |
|
300,000 |
112,952 |
47,880 |
65,072 |
For more information about the Malta Residence Scheme, click on the links on the left hand menu of this page.
