Looking to safeguard your financial future and take advantage of retirement benefits in Malta as a former United Nations employee? We will go over how one can qualify for the United Nations Pensions Programme (UNPP) in Malta, outlining the necessary procedures, prerequisites, and advantages of this significant life change.

The introduction of UNPP in Malta

On June 5, 2015, the UNPP was put forward to the Maltese Parliament in accordance with Legal Notice 184 of 2015. It is an excellent addition to the several special Malta tax residence programmes that are available to applicants. As Authorised Mandatories (ARM00905), Papilio Services Limited, we are equipped to assist you in obtaining this Malta tax residence program by arranging a residence planning consultation and initiating the application process for the United Nations Pensions Programme (UNPP).

Comprehending the United Nations Pensions Programme (UNPP) in Malta

Beneficiaries who are not Maltese and who receive a pension from the United Nations Joint Staff Pension Fund can take advantage of a special tax status under the United Nations Pensions Programme (UNPP). Individuals who receive a UN pension or a widow's/widower's benefit, at least 40% of which is received in Malta, and who are neither long-term residents nor permanent residents of Malta are granted a special tax status by the UNPP. Any such individual may participate in activities associated with any public institution, trust, or foundation, as well as any other comparable organisation or body of individuals, also of a public nature, that is involved in educational, charitable, or research and development work in Malta. They may also hold a non-executive position on the board of a company that is based in Malta.

Requirements to Apply for the UNPP in Malta

It's important to comprehend the United Nations Pensions Programme qualifying requirements before beginning the application procedure. In general, a few relevant elements determine one's eligibility for UNPP benefits.

To be eligible for UNPP in Malta, applicants must meet specific conditions, including:

  • Receiving at least 40% of their United Nations pension income in Malta.
  • Not being in an employment relationship, but having the option to hold non-executive posts on the board of a Malta resident company.
  • Not benefiting from any other Malta residence or employment program.
  • Having stable and regular resources to support themselves and their dependents without relying on the social assistance system in Malta.
  • Holding a valid travel document, sickness insurance, and the ability to communicate in English or Maltese.
  • Being a fit and proper person with no criminal record.

If a non-Maltese citizen fulfils the necessary requirements, they may be eligible for the scheme (referred to as a "beneficiary"). A recipient is not eligible to receive benefits from any other special tax programme in Malta; however, they may give up their rights under such programmes before applying for UNPP status. If a beneficiary, as defined by applicable rules, becomes a long-term resident of Malta (for citizens of third countries) or a permanent resident of Malta (for EU nationals), they will no longer be considered beneficiaries.

Proof must be provided by the beneficiary to demonstrate that they are a fit and proper person, that they can communicate in one of Malta's official languages (English being one of them), and that they receive steady and consistent resources sufficient to support themselves and their dependents.

There are several important steps involved in the UN Pensions Programme application procedure in Malta. Eligible persons must apply for the benefits to which they are entitled in order to start the procedure. To speed up the procedure, applicants are advised to consult a professional, thoroughly read the instructions, and send Authorised Mandatories all required paperwork. The application package should also contain all necessary supporting documentation for the claims being made, such as marriage, death, or birth certificates.

The UNPP's property requirements in Malta

Applicants must possess a qualifying property for a minimum of five years in addition to meeting the qualifying requirements. They are able to choose between buying or renting real estate in Gozo or Malta.

Property that is owned

The eligible property must be bought for a minimum consideration of €275,000 and be located in Malta. The minimal consideration is €220,000 if the property is located in Gozo or in the southern region of Malta.

Property that is rented

The property must be leased for a minimum of €9,600 per year (or €800 per month) and be located in Malta. The minimum consideration for a property located in Gozo or the southern region of Malta is €8,750 per year or roughly €730 per month. A documented lease agreement must be signed, attesting to the lease's duration of at least 12 months. The eligible property may not be rented out or subleased, and no one else can reside there at any time except the beneficiary and his or her dependents (or household personnel).

Additional observations

If household employees have been servicing the beneficiary for at least two years previous to the application, they may be listed on the beneficiary's application (unless they were hired lately to replace departing employees). The recipient may live with their service provider in the eligible property. Household personnel need to be protected by a service agreement. If a household employee or dependent wishes to work in Malta, they must have a valid work permit that was obtained through official procedures. The UNPP status does not grant the right to a work permit.

UNPP beneficiaries' special tax status

Many clients have had different interpretations of the minimum tax requirements of Malta's UN Pension Programme, which states that "Beneficiaries of special tax status granted in terms of the UNPP will need to pay a minimum tax in respect of the income arising outside Malta which is received in Malta excluding UN pension income or Widow's / Widower's Benefit of ten thousand euro (€10,000) in respect of the beneficiary and an additional five thousand euro (€5,000) in the event that both spouses are in receipt of a UN pension." But to put it in simple terms, your UN pension will be taxed at a fixed tax rate of €10,000 if no other foreign income is remitted into Malta.

UNPP provides substantial gains combined with foreign income remitted to Malta

For individuals who are receiving additional income from sources outside of Malta, the UNPP is very advantageous. For example, if a person receives a €50,000 United Nations Pension in Malta and €100,000 in annual income from sources outside of Malta, the following tax would be imposed under the UNPP:

  • If at least 40% of the United Nations pension is received in Malta, then it is exempt from income tax.
  • Income earned outside of Malta is subject to a flat tax rate of 15% in Malta. However, the minimum tax payable is €10,000, which is applicable even if the tax calculated on the foreign income at a rate of 15% is less than €10,000 (i.e. if the foreign income is approximately €67,000 or less).
  • If you receive a UN pension that is non-taxable in Malta, and also have additional foreign income, your total income may be subject to an effective tax rate lower than 15%. For example, if you bring €50,000 of UN Pension to Malta and earn an additional €100,000 in foreign income, your total income will be €150,000. However, you will only be taxed at a rate of 15% on the €100,000 earned outside of Malta. This means your tax bill will be €15,000, which is equivalent to an effective tax rate of 10%.

It is noteworthy that any income derived from a company registered in Malta, such as dividends, that a beneficiary or their dependents receives is subject to 35% taxation in Malta.

The beneficiary must pay a minimum of €10,000 in taxes annually in Malta. If a beneficiary's spouse is also receiving a pension from the UN, the minimum tax will rise by an extra €5,000 a year. No pro-rata deduction is possible for years the beneficiary has not been a beneficiary for the full year and the minimum tax is still payable in full.

If income subject to 15% Maltese tax has paid taxes outside of Malta, it may be possible to claim relief from double taxation in Malta, which will lower the amount of tax due there (minimum tax still due).

How much does it cost to apply for the United Nations Pension Programme in Malta?

A non-refundable application fee of €4,000 (or €3,500 if a qualified property is already in place and located in Gozo or the southern region of Malta) must be paid to the Commissioner of Inland Revenue in order to apply for the UNPP. Furthermore, there is an annual minimum tax obligation of €10,000.

The procedure to apply for the UNPP

The application for the special tax status must be made through Authorised Mandatories, who will submit it to the Commissioner of Inland Revenue on the individual's behalf. Papilio Services Limited (ARM00905) is one such Authorised Mandatory that is fully licensed to manage and submit UNPP applications in Malta.

At the time of application, the qualifying property is not required to be in place (unless the applicant wishes to take advantage of the previously mentioned reduced fee).

If the results of the due diligence inquiries are satisfactory and the in-person meeting with the authorities goes well, a letter of intent is issued. The applicant must pay the first year's minimum tax and submit a completed notice of primary residence, along with proof of the qualifying property, for the letter of intent to remain valid for a full year. Following this, a written finding that the recipient is eligible for special tax status under the UNPP will be made by the Commissioner for Revenue.

The recipient (as well as any dependents) will be able to apply in person for residence documents at the relevant office after receiving the written determination.

Annual Requirements for Compliance

An annual declaration must be submitted, together with the beneficiary's annual income tax return, evidencing that the beneficiary still satisfies the conditions of the special tax status.

In light of Malta's UNPP Program's implications

Making the big decision to apply for the UN Pensions Programme in Malta might have a big impact on your retirement lifestyle and financial future. It's crucial to carefully weigh all of the program's features, such as the requirements for eligibility, the application procedure, and the advantages offered. Applicants should also make sure they fully comprehend their rights and responsibilities as programme participants by carefully reading the official guidelines and regulations that have been issued.

Why is Malta a preferred location for retirees?

  • Remarkably good weather with 300 days of sunshine a year
  • A stable social, political, and economic environment; " A prime location with good access to international aviation and the maritime industry.
  • Rich in culture and history, evident everywhere you turn.
  • Malta has top-notch medical facilities that are accessible to all residents.
  • One of the official languages is English.
  • Minimal rate of crime.
  • A sensible tax structure that will allow you to optimise your pension income.

An essential step in guaranteeing your financial security in retirement is enrolling in the United Nations Pensions Programme in Malta. Eligible persons can decide whether to participate in this significant programme by knowing the prerequisites for eligibility, navigating the application process, and investigating the benefits offered.

It is imperative that you obtain advice from Authorised Mandatories before beginning this new endeavour. Our team of experts is geared up to help you through the UNPP application procedure in Malta. To start the application process, get in touch with us and let's set up a free consultation for residential planning.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.