How to Apply for the United Nations Pensions Programme (UNPP) in Malta

Are you a former United Nations employee looking to secure your financial future and enjoy the benefits of retirement in Malta? We will explore the process of applying for the United Nations Pensions Programme in Malta, uncovering the key steps, requirements, and benefits associated with this important transition in your life.

The beginning of UNPP in Malta

The UNPP was introduced through the Maltese Parliament on June 5, 2015, under Legal Notice 184 of 2015. It serves as a valuable addition to several special Malta tax residence programs offered to applicants. As Authorised Mandatories (ARM00905), Papilio Services Limited are equipped to assist clients in obtaining this Malta tax residence program by arranging a residence planning consultation and initiating the application process for the UNPP.

Understanding the United Nations Pensions Programme (UNPP) in Malta

The United Nations Pensions Programme (UNPP) is a unique opportunity that offers a special tax status to non-Maltese beneficiaries receiving a pension from the United Nations Joint Staff Pension Fund. The UNPP grants a special tax status to individuals who are neither permanent residents nor long-term residents of Malta, and who receive a UN pension or a Widow’s/Widower’s Benefit, at least 40% of which is received in Malta. Any such person may hold a non-executive position on the board of a company resident in Malta or partake in activities related to any public institution, trust or foundation, as well as any other similar organization or body of persons, also of public nature, that is engaged in educational, philanthropic or research and development work in Malta.

Qualifying Conditions for the United Nations Pensions Programme (UNPP) in Malta

Before delving into the application process, it's crucial to understand the eligibility criteria for the United Nations Pensions Programme. Generally, eligibility for UNPP benefits is determined by a few pertinent factors.

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.

An individual who is not a Maltese national may qualify for the programme if he or she meets the relevant eligibility criteria (hereinafter a ‘beneficiary’).  A beneficiary cannot benefit from any other special tax programme in Malta but may renounce rights under such a programme prior to submitting an application for status under the UNPP.  A beneficiary will lose his or her status as a beneficiary if he or she becomes a permanent (EU nationals) or long-term (third country nationals) resident in Malta under the relevant regulations.

Finally, a beneficiary must produce evidence that he or she is in receipt of stable and regular resources sufficient to maintain himself or herself and his or her dependents, and that he or she can communicate in one of the official languages of Malta (English being one of them) and that he or she is a fit and proper person.

The application process for the United Nations Pensions Programme in Malta involves several key steps. To initiate the process, eligible individuals are required to apply for the benefits they are entitled to. Applicants are encouraged to seek professional advice, carefully review the instructions and provide all the necessary documentation to Authorised Mandatories in order to facilitate the process. Additionally, the application package should include all of the relevant supporting documents, such as proof of birth, marriage, or death certificates, to support the claims being made.

Property Requirement for the UNPP in Malta

In addition to the qualifying conditions, applicants must hold a qualifying property for a minimum of 5 years. They have the option to either rent or purchase a property in Malta or Gozo.

Owned property

The qualifying property must be situated in Malta and purchased for a consideration of not less than €275,000.  If the property is situated in Gozo or the south of Malta, the minimum consideration is €220,000.

Rented property

The property must be situated in Malta and taken on lease for not less than €9,600 per annum (i.e. €800 per month).  If the property is situated in Gozo or the south of Malta, the minimum consideration is €8,750 per annum (i.e. approx. €730 per month).  The lease needs to be taken out for a period of not less than 12 months evidenced by a certified lease agreement.

No person other than the beneficiary and his or her dependents (or household staff) may reside in the qualifying property at any time, and the qualifying property may not be let or sub-let.

Other

Household staff may be included on the application of the beneficiary if they have been providing services to the beneficiary for at least 2 years prior to the application (unless recently employed to replace staff that has left).  The services may reside with the beneficiary in the qualifying property.  Household staff must be covered by a contract of service.

Dependents and household staff who want to work in Malta must be covered by a relevant work license obtained through regular channels.  The status under the UNPP does not give rights to an employment license. 

Special tax status of UNPP beneficiaries

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.

What happens if you combine it with other foreign income remitted to Malta?

The UNPP is highly beneficial for persons who are receiving additional income arising outside Malta. Here is how. I.e., If an individual receives €50,000 United Nations Pension in Malta and also receives an annual income of €100,000 from sources outside of Malta, under the UNPP the tax would apply as follows:

● 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%.

Important to note that should a beneficiary (or his or her dependents) derive any income arising in Malta (e.g. dividends from a company registered in Malta), such income is subject to tax in Malta at the rate of 35%. 

A beneficiary will need to pay a minimum tax in Malta of €10,000 per annum.  Should the spouse of a beneficiary also receive a UN pension, the minimum tax will increase by an additional €5,000 per annum.  The minimum tax is payable each year not later than 30 April.  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 tax at the rate of 15% in Malta has suffered tax outside Malta, relief for double taxation may be claimed in Malta, reducing the tax payable in Malta on such income (but the minimum tax will still need to be paid).

How much will it cost you to apply for the United Nations Pensions Programme in Malta?

Applying for the UNPP involves a non-refundable application fee of €4,000 (If a qualifying property is already in place and is situated in Gozo or the south of Malta, the application fee is reduced to €3,500) payable to the Commissioner of Inland Revenue. Additionally, there is a minimum tax obligation of €10,000 per annum.

The procedure

The application must be submitted through Authorised Mandatories who shall file the application on behalf of the individual with the Commissioner of Inland Revenue in regard to the special tax status. One such Authorised Mandatory is Papilio Services Limited (ARM00905), which holds a full license to handle and submit applications for the UNPP in Malta.

The qualifying property need not be in place at the application stage (unless the applicant wants to benefit from the reduced fee as per above).

A letter of intent is issued if the due diligence checks yield positive results and a face-to-face meeting held with the authorities is successful.  The letter of intent is valid for 12 months and the applicant must submit a completed notice of primary residence (together with evidence of the qualifying property) and pay the first year’s minimum tax.  Once this has been done, the Commissioner for Revenue will issue a determination in writing that the beneficiary qualifies for special tax status under the UNPP.

With the written determination, the beneficiary (and any dependents) will be able to go to the relevant office (in person) and apply for residence documentation.

Annual compliance obligations

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.

Considering the implications of Malta’s UNPP Programme

Applying for the United Nations Pensions Programme in Malta is a significant decision that can have far-reaching implications for your financial future and retirement lifestyle. It's important to carefully consider the various aspects of the programme, including the eligibility criteria, and the application process, and the benefits available. Additionally, applicants should take the time to review the official guidelines and regulations provided and ensure they have a comprehensive understanding of their rights and obligations as participants in the programme.

Why retire to Malta?

● Exceptional weather with 300 days of sunshine annually

● A stable social, political, and financial landscape.

● Ideally situated with excellent maritime and international aviation connections.

● Packed with history and culture that is present everywhere you look.

● World-class medical facilities are located in Malta and are open to all citizens.

● English as one of the official languages.

● Low crime rate.

● Tax structure that makes sense so you can maximize your pension income.

The United Nations Pensions Programme in Malta is a pivotal step in securing your financial well-being during retirement. By understanding the eligibility requirements, navigating the application process, and exploring the benefits available, eligible individuals can make informed decisions about their participation in this important programme.

As you embark on this journey, it's essential to seek guidance from Authorised Mandatories such as Papilio Services Limited who are ready to guide and assist you in navigating the process of obtaining the UNPP in Malta. Contact Papilio Services HERE, and arrange a FREE residence planning consultation to initiate the application.