The Nomad Residence Permits (Income Tax) Rules have undergone significant revisions as of December 7, 2023. Third Country Nationals (TCNs) who hold a valid Maltese Nomad Residence Permit can now take advantage of a reduced tax rate of just 10% on the income that they charge for their “authorised work.” When compared to the prior progressive taxation structure, this reduction is astounding.

To Whom Does This Benefit?

The most significant modification concerns income tax for residents of Malta who possess Nomad Residence Permits a.k.a. Digital Nomads. Digital Nomads used to pay progressive income taxes, which could reach up to 35%. They will now just be required to pay a fixed rate of 10% on their income from “authorised work,” nevertheless, as a result of the new legislation. This advantageous tax rate took effect on January 1st, 2024, for the forthcoming tax year.

What Kind of Work is Authorised?

Self-employed services rendered to clients who neither live in Malta nor conduct business there through a fixed location are included in authorised work. Employment with non-resident employers who do not run their operations through fixed locations in Malta is also included. It’s crucial to remember that any additional income streams, such as dividends and interest, that are unrelated to work permits will be governed by general tax laws included in Malta’s Income Tax Acts. These updated rules also require specific reporting requirements. In addition to filing the required annual income tax returns and paying the required taxes, Digital Nomads are required to register for income taxes and reveal their earnings. Since Malta grants renewable residency permits to Digital Nomads, you can carry on living this amazing lifestyle for many years to come. Another significant benefit for the Nomad Residence Permit holders is that Malta’s double tax treaties still shield Digital Nomads from double taxes. In certain circumstances, the 10% income tax in Malta will not apply to anyone who can show that they paid taxes at a rate of at least 10% on their income outside of Malta.

The Real Digital Nomad Lifestyle

The rules pertaining to Nomad Residence Permits are intended for people who frequently visit Malta. Still, a lot of digital nomads like having the flexibility to work from any location in the world. Thus, you may be asking how to benefit from Malta’s tax laws without relocating there. Malta provides digital nomads who adhere to EU standards with a range of business alternatives. These include establishing foundations, trusts, and trading and holding corporations that provide superior tax efficiency and flexibility. With the help of Papilio Services, you can become a digital nomad and complete the requirements for registering a company in Malta with the help of seasoned experts. Note that every organisation has unique needs, so it’s critical to comprehend what has to be done to comply. It’s critical to precisely outline the administration and management of the business while setting up a business in Malta.

To sum up

To sum up, the new revised income tax rules in Malta are groundbreaking for Digital Nomad residents. Living the real Digital Nomad lifestyle is now more feasible than ever thanks to the recently changed income tax rates, the double tax treaties, and a variety of Digital Nomad company choices. Is the digital lifestyle in Malta lucrative enough for you?