Malta - A jurisdiction of choice for an increasing number South African high net worth individuals.
Malta is fast becoming a front runner as a base for wealthy South Africans.
Tax hikes drive South Africa’s wealthy to Malta
Malta, a tiny island state and EU member country set in the warm Mediterranean Ocean, is welcoming growing numbers of wealthy investors and immigrants, thanks to its attractive fiscal regime and lifestyle benefits. Among them are growing numbers of South Africans, says Steve Mercieca, CEO of Malta’s leading Zanzi Homes estate agents and Quicklets letting agents. Due to its competitive fiscal regime, highly skilled English speaking workforce and robust banking and regulatory system, Malta is becoming a gateway to Europe for investors from around the world, says Mercieca. “Growing numbers of expats are finding a home in Malta, either to retire or to serve as a base for doing business across Europe. In recent months, we’ve seen a sudden surge of interest from South Africans across the board – from people who want to retire here in Malta through to those looking to move their businesses here,” he says.
Zanzi Homes, offering properties ranging from luxury apartments in the main centres through to historic buildings in outlying areas, helps international buyers secure residential and commercial properties and buy-to-let properties, which can then be let through Zanzi’s sister company, Quicklets. Properties in Special Designated Areas (SDAs) are of particular appeal, since foreign nationals are able to buy SDA properties as a second home without requiring special permits.
“For South Africans looking to relocate to Malta, farm houses and luxury bungalows out of the main centres are also proving very attractive,” says Mercieca. These properties, typically offering four or five bedrooms, a swimming pool, large tracts of land and magnificent views, sell for around R6 million to R12 million; which compares very favourably with the prices of high-end homes in Gauteng and the Western Cape. A luxury seafront bungalow with four bedrooms and a swimming pool overlooking the Marsaskala promenade would set a buyer back in the region of R37 million.
Mercieca reports that South Africans are finding the Maltese lifestyle a particular drawcard. “We have 300 days of sunshine a year, and being an island, the sea is 15 minutes’ drive away from most places. This appeals to the South African’s love of the outdoors and of sporting activities,” he says.
English is an official language and fluently spoken in Malta and official documentation is in English; the single currency in circulation is the Euro, mobile and internet coverage is assured by multiple providers, and there are major retail outlets and malls across the island. Also, 90% of the 440,000-strong population is Roman Catholic.
From an immigration perspective, Malta’s ‘Individual Investor Programme’ (the ‘Citizenship Programme’) grants naturalisation (i.e. Citizenship) by investment to reputable foreign individuals and their eligible dependents following a thorough due diligence process. Alternatively, an individual (Third Country National) may take up residence in Malta by way of the Malta Residence and Visa programme or the Global Residence Programme. The Malta tax system applicable to individuals depends on the source of that person’s income and on their tax status. Typically a non-domiciled individual taking up residence in Malta should benefit from Malta’s ‘source and remittance’ basis of taxation, by way of which only Malta source income and gains and foreign source income remitted to Malta would be subject to tax in Malta. Any foreign source income not remitted to Malta and any foreign source capital/capital gains (whether remitted to Malta or not) should not be subject to tax in Malta. From a corporate income tax perspective, Malta’s corporate income tax rate is 35%, but the workings of Malta’s tax system generally results in an effective corporate tax rate of approximately zero to five per cent. Furthermore, Malta has over 70 double tax treaties (including tax treaties with all EU Member States). Malta’s double tax treaty with South Africa includes the following withholding taxes (5% on dividends, 10% on royalties and 0% on interest payments).
In response to the increasing South African interest, Zanzi Homes and Quicklets are set to travel to South Africa later this year to stage a series of property investor briefings.
Photo courtesy of Thomas Ellmenreich from Unsplash