The great benefit of Malta as a location for Retirement Schemes is the comprehensive network of Double Taxation Treaties Malta has with other countries. The current list of treaties can be found at www.mfsa.com. The basic provisions relating to pensions are that benefits from the pension scheme are to be taxed in the country of residence of the member. Therefore, if Malta has a Double Taxation Treaty in force with your tax residence state, and the provisions so allow, we will not deduct any tax from payments made to you. If there is no Double Taxation Treaty between Malta and where you are tax-resident we may have to withhold Malta tax on payments made from the scheme.
The taxation of private retirement schemes for non-Malta residents is broadly as follows:
- No Malta income tax on pension income, subject to the provisions of an applicable Double Taxation Treaty
- No Malta income tax on capital lump sums paid by way of commutation of pension
- No Malta wealth tax
- No Malta capital gains tax on pension fund gains
- No Malta inheritance tax (Stamp duty may be paid on certain non-pension assets owned in Malta)
Malta pension fund benefits will usually be assessable to tax by the jurisdiction where you are a tax resident.
If you are resident in Malta, you must declare benefits received from the Schemes on your Malta Tax Return.
Benefits taken as capital sums paid by way of commutation of pension will not be taxed in Malta; these are specifically exempted by law. For example, cash lump sums up to 30% and further lump sums under Programmed Withdrawal.
Income will be subject to tax in Malta, subject to Double Taxation Treaties. For more information, please see this document from PricewaterhouseCoopers. Click here.
In all circumstances you are required by Malta Law to submit annual income tax returns to the Maltese Tax authorities, even during years when you are not receiving benefits. We will deal with this on your behalf, register you for tax reporting and report any benefits you have derived from the retirement schemes to the Malta Inland Revenue Department.
US Residents and Taxpayers
The following information is relevant for US residents, citizens, tax payers, green card holders and those thinking of moving to the USA.
We welcome applications from US residents into the MCT Malta Private Retirement Scheme.
On application, we shall ask you to complete various forms to confirm your US Status and seek written confirmation that you will undertake all relevant reporting on your retirement scheme, its assets and any benefits you take. This may include forms 3520, 3520A, 8938 and an annual tax return with Foreign Bank Account Reporting. Our advice is that the Malta Scheme would be regarded as a Foreign Grantor Trust for US purposes.
MC Trustees (Malta) Limited and the MCT Malta Private Retirement Scheme are registered with the US authorities under FATCA and will comply with the Malta/USA Intergovernmental agreement on tax information exchange. MC Trustees reports to the Malta Tax authorities, who in turn pass information to the US Inland Revenue Service.
The valuation of your scheme assets is prepared at the end of each calendar year and sent to you in Quarter two in the following year.
If you are in any doubt as to your obligations to the US Authorities, we strongly recommend that you consult your US tax adviser.
The above information should not be construed as financial advice and has been compiled from information within the public domain. The information is believed to be correct as at 1st January 2021.