The United Nations Pensions Programme (UNPP) is a fund established by the United Nations in 2015 to provide benefits to eligible former staff members and their dependents. The UNPP has thousands of beneficiaries and is one of the world’s most extensive pension programmes.
The Government of Malta launched the programme to provide a special tax status for EU/EEA, Swiss and third-country nationals, excluding Maltese citizens. Among other established conditions, the applicants must be recipients of a widow’s or widower’s benefit or pension from the United Nations Joint Staff Pension Fund. To determine if you’re eligible for this programme, read more about it below.
The Special Tax Status under the United Nations Pensions Programme
Beneficiaries granted the special tax status will be exempt from taxation on their UN pension income or widow/widower’s benefit received in Malta. A special tax rate of 15% is applicable on any income (excluding UN pension income and widow’s/widower’s benefit) arising outside Malta which is remitted to Malta by the beneficiary or the dependents.
Additionally, any income or capital gains arising in Malta are taxable at a flat rate of 35%, except for transfers of immovable property in Malta, where a final withholding tax rate is applicable.
Moreover, the minimum annual tax liability payable on any income excluding UN pension income and widow’s/widower’s benefit, which arose outside Malta and received in Malta, is €10,000 in the beneficiary’s case and an additional €5,000 if applicable spouses receive a UN pension. The tax paid is non-refundable.
Notably, beneficiaries may no longer benefit from the tax treatment under the UNPP once they become permanent residents of Malta or long-term residents.
Eligibility Criteria for the Special Tax Status
The eligibility and requirements for the exemption and the special tax status are set out in the United Nations Pensions Programme Rules under Legal Notice 184 of 2015 (the Rules).
Applicants must meet all the following eligibility criteria:
1. Be a Recipient of a UN Pension or a Widow’s/Widower’s Benefit
You must receive a pension from the United Nations Joint Staff Pension Fund (UNJSPF) or a surviving spouse/partner in receipt of a survivor’s pension. This shall be supported by documentary evidence, and at least 40% of the pension is received in Malta.
2. Not a Beneficiary of Certain Programmes
The applicant must not benefit from the Residents Scheme Regulations, High Net Worth Individuals - EU / EEA / Swiss Nationals Rules, the High Net Worth Individuals - Non-EU / EEA / Swiss Nationals Rules, the Global Residence Programme Rules, the Residence Programme Rules, the Malta Retirement Programme Rules, the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules or the Highly Qualified Persons Rules.
3. Not a Maltese Citizen
Applicants for the United Nations Pensions Programme must not be Maltese nationals.
4. Own or Rent a Qualifying Property Holding
You must be an owner of immovable property in Malta for the following values:
- €275,000 – immovable properties situated in Malta other than the south of Malta
- €220,000 – immovable properties located in the south of Malta or Gozo
The Rules allow consideration for less than the above amounts for immovable properties purchased before 5 June 2015. Such properties shall still be considered qualifying properties as long as the value of an architect’s valuation as the date of application under the Rules is not less than the above values.
You may also rent immovable property in Malta for the following values:
- €9,600 annually – immovable properties situated in Malta other than the south of Malta
- €8,750 annually – immovable properties located in the south of Malta or Gozo
A list of localities identifies towns defined in the Rules as the ‘South of Malta’:
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Additionally, you must take out the lease for not less than twelve (12) months and be supported by a certified lease agreement. Additionally, applicants and their dependents must have their habitual residence in such property (owned or rented) as their principal residence. No person other than the beneficiary and their family members or household staff may reside in the qualifying property. The qualifying property may not be let or sublet.
Moreover, the term “household staff” is defined as an individual in an employment relationship, as evidenced by a contract of service with the beneficiary for at least two years before the application. The Commissioner must be satisfied that the service is required in whole, or part, within the qualifying property. The household staff will be taxed in Malta and will not benefit from the 15% special tax rate.
5. Be a Recipient of Stable and Regular Resources
The Commissioner must be satisfied that you are in receipt of stable and regular resources from abroad sufficient to maintain yourself and your dependents without recourse to the social assistance system in Malta.
6. Have a Valid Travel Document
Applicants must possess a valid travel document and shall not have been refused a visa or entry clearance to any country Malta has diplomatic relations with.
7. Own Sickness Insurance
You must have comprehensive medical insurance cover for yourself and your dependents for all risks across the whole of the EU, usually covered for Maltese nationals. The health insurance policy must be in your name or jointly with your dependents.
8. Adequately Communicate in one of the Official Languages of Malta
Applicants must have adequate knowledge of the Maltese or English language. This shall be evidenced by a certificate issued by the competent authority.
9. Be Fit and Proper
The Commissioner must be satisfied that you are a fit and proper person to hold the said license. The Commissioner may request the production of documents or information that, in his opinion, may help him ascertain whether an applicant is a fit and proper person.
Individuals benefiting under these Rules may hold a non-executive post on the board of directors of a company resident in Malta but are prohibited from being employed by the company. Beneficiaries may also participate in activities related to any institution, trust or foundation of a public character and any other similar organisation or body of persons who are also of a public character, engaged in philanthropic, educational or research and development work in Malta.
Continuing Obligations under the UNPP
All successful applicants must satisfy the following continuing obligations:
Retain holding of the qualified propertyNot become a Maltese national
Receive in Malta at least 40% of the pension indicated in the documentary evidence submitted to the Commissioner with the application form
Possess sickness insurance in respect of all risks covered for Maltese nationals for themself and dependents
United Nations Pensions Programme Application
An application for special tax status and any changes may only be submitted to the Commissioner of Inland Revenue through the services of a person that qualifies as an Authorised Registered Mandatory (ARM).
You must submit an application with a non-refundable administration fee of €4,000, to be paid by bank draft or cheque issued by the ARM payable to the Commissioner of Inland Revenue. Applications regarding the qualifying owned property situated in the south of Malta or Gozo carry an administrative fee of €3,500.
Where the application is successful, the Commissioner shall determine in writing that the applicant qualifies for the special tax status under the Rules.
Annual Income Tax Return
Every individual receiving special tax status must submit an annual income tax return through the services of an ARM, even if no income is being received during the year.
The submission deadline is 31 July following the end of the tax year, and a late Submission Penalty of €100 per month or part thereof applies in case of late submissions.
Furthermore, every person who has been granted special tax status must also submit to the Commissioner of Inland Revenue, through the services of an ARM:
An Audit Certificate issued by a Certified Public Accountant or equivalent approved by Malta Enterprise in respect of each company or partnership you beneficially ownA copy of passport pages showing the personal particulars, residence permit (where applicable) and any other pages containing entry and exit stamps
The Commissioner of Inland Revenue can request any additional information or documents deemed necessary to ascertain whether an individual continues to satisfy the conditions for being granted special tax status under the Rules.
The Commissioner of Inland Revenue may also, at any time, revoke in writing the special tax status of a person who fails to comply with their obligations under the Rules.
Cessation of Special Tax Status
The Special Tax Status under the UNPP may cease in four (4) ways.
1. By beneficiary’s choice
The beneficiary may cease the special tax status upon notification to the Commissioner of Inland Revenue.
2. By beneficiary’s death
The granted special tax status will be transferred to the dependent of the deceased beneficiary who has either inherited the qualifying property or rented the qualifying property immediately after the deceased beneficiary’s death.
3. By any defaults of the Income Tax Act
Defaults of any obligations tied to the Income Tax Act will cease the special tax status under the UNPP. This applies to default in routine compliance and failure to reply to the Commissioner of Inland Revenue when requested.
4. By failing to comply with the eligibility and continuing conditions required throughout the special tax status
The special tax status will cease with retrospective effect from the date on which the Commissioner of Inland Revenue had determined in writing the special tax status if:
The individual no longer satisfies any eligibility conditions and continuing obligations mentioned above.The beneficiary resides in Malta for less than 90 days or stays in any jurisdiction for more than 183 days in a calendar year. Their stay in Malta is deemed not in the public interest.
An administrative penalty of €5,000 applies where the individual does not notify the Commissioner of Inland Revenue through the ARM within four weeks of becoming aware of any such event. Special concessions where failure concerning any of the above conditions was due to unforeseen circumstances may be exempted.
In the latter’s case, you must prove that you exercised your best efforts to remedy the indicated failure.
