To work as a digital nomad all you need is your laptop with internet connection and your credit card. You can travel and work from any place in the world. While you travel and enjoy the world and keep earning money, you might think that simply because you are away from your country of citizenship, then you do not have to pay any taxes back home. This is a typical scenario in which a digital nomad gets caught and typically ends up with a huge tax bill.
To avoid this tax trap you would need to:
- Become a tax resident of another country. Being a resident of Malta give you access to the “resident but not domiciled” regime. Then you pay taxes only on income remitted to Malta and on income arising in Malta. If you are an EU/EEA national you can get your residence in Malta either on the basis of self-sufficiency or on the basis of self-employment.
- Digital nomad from outside the EU/EEA then the Malta Residence & VISA program can not only optimize your tax situation but also grant you VISA free travelling within the Schengen area.
- If the sea and sun of Malta combined with the resident and not domiciled option are not enough of a good reason for you to move to where you are treated best, then you should consider setting up a Company in Malta. Which, if properly structured, can get you a net effective tax rate of 5%in Malta. Through a company in Malta, you can do business anywhere in the world.
- Make sure that the country in which you are resident has a favourable tax on capital gains. In Malta, only capital gains on certain assets are subject to tax. Provided that you are a resident and not domiciled in Malta then any capital gains arising abroad are not subject to any tax in Malta. Furthermore, if you buy a property and use it as your main residence for a period of three years, an eventual sale of the mentioned property would be exempt from any tax on capital gains.
- Finally, you must ensure that you have the appropriate health insurance coverage in place.
If the tax optimisation is not enough to tip your decision, check what else Malta has to offer:
- A full member state of the European Union and part of the Eurozone. That means they provide Malta-based businesses with instant access to the EU’s internal market of over 500 million people.
- Advantageous geographical location, being within three hours direct flight from other European financial centres.
- Part of the Schengen area, which allows travel between member states without internal border controls
- A network of double tax treaties with around 80 countries.
- Political stability coupled with unanimous political support for the country’s position as an international financial centre.
- An educated, dedicated and multi-lingual workforce and incentives to attract foreign professionals.
- A banking sector, composed of a combination of solid and reliable Maltese banks and major international banks, providing the highest standards of service to corporate and private clients.
- State-of-the-art telecommunications infrastructure and support services by professionals with a ‘can do’ attitude.
- High quality of life in a Mediterranean island environment with English as one of Malta’s official languages. On top of that with 300 days of sunshine and very reasonable cost of living.
How can M.Meilak & Associates help you as a digital nomad:
Our specialist in Expat taxes will assist in delivering a tailor-made solution to optimise your tax position bearing in mind your current situation and needs. If you are a digital nomad coming from a non-EU country, there is a new Nomad Residence Scheme intended exactly for you!
Assist in getting residence permits in Malta.
Assist with the setting up of Companies.
Act as introducers to local banks in order for you to get a local bank account.
Managing all necessary compliance with local legislation whether you set up as a sole trader or as a company.
If you would love to have some more plain examples with a hypothetical calculation; feel free to contact us.