Overseas Pensions
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Overseas Pensions

Last Updated: 12/04/2021

​Pensioners receiving an overseas pension (including British Ex Servicemen ) must submit a tax return and attach a statement for  each separate pension income received . If individuals/pensioners receive the AF mismatch in respect of British Pension or  employment income  they are to fill the AF accordingly with the correct pension or employment income and attach the respective FS3’s. If the amounts indicated on AF are correct they do not need to submit an FS3.

 

US Pensions

There is a Double Taxation Relief Treaty between Malta and the United States of America that regulates how income earned by residents of both states should be taxed. With regards to pensions from the USA received by residents of Malta, Articles 17 18 and 19 of the Treaty provide as follows:

  • Social Security Pensions are taxable only in the USA
  • Pensions for past government service are taxable only in the USA. However, if the recipient is both resident and national of Malta, such pensions are taxable only in Malta.
  • All other pensions received by a resident of Malta are taxable in Malta only.

 

British Pensions

According to the Malta-UK Double Taxation Relief Agreement, any pension received from UK due to past government service is to be taxable only in the country from where it originates, hence the UK. However there is a provision which stipulates that according to this agreement if the individual is a resident and national of Malta then s/he shall only be taxable in Malta on such pensions. All other pensions from the UK received by a resident of Malta are taxable only in Malta. In this case the UK Tax Authorities do not have a right to withhold/charge any tax. That’s why a British Pension received by a Malta resident individual has to be declared in Malta for taxation purposes. If, for some reason, tax is withheld in the U.K., the individual concerned cannot claim double taxation relief (DTR) in the Malta tax return.  They should  contact the UK Tax Authorities and ask to be exempted from any U.K. withholding tax. They will be given a form on which to request such exemption. They can also claim a refund, in the UK, for the tax incorrectly withheld by the U.K.​

Data from British Pensions regarding pensions received by residents in Malta is no longer available to the CFR. Up to YA 2011, amounts received from such source where being reported through FSS system so non-filer statements for such pensioners were possible. As a result, Non-filer individuals/pensioners who in previous years had income from British Pensions (PE 740008) as of YA 2012  started receiving a mismatch notification. As of YA2012 such individual/pensioners have the possibility of sending this British pension “FS3” with an AF in which they  insert the amount of pension received, without the need of sending a tax return. A return will have to be sent, however, if this “FS3” is not available. If this type of statement is not available then a self-assessment return should be filed accompanied by whatever documents the individual/pensioner deems adequate to confirm the amount of pension received (e.g. bank statements). Individuals/Pensioners who are in receipt of UK Pension and have received their Pension Statement, are to await their tax statements (mismatch letter)/returns as usual. There is no need for them to send their British Pension statements to the Office of the Commissioner for Revenue  beforehand.

 

Australian Pensions

Any pension received from Australia by a resident of Malta is taxable only in Malta.

These are in most circumstances given because one used to live in Australia and not due to past employment in Australia. Therefore these pensions cannot be  computed separately using the single rates in case of married individuals/pensioners. For pensions to be computed on the separate single rates for married individuals/pensioners, they have to be pensions arising from past employment.

Australian pensioners only know what amount of pension they have received from Australia by the amounts credited on their bank statement. Therefore copies of these are to be attached to the return.

Pensions received from Australia by Maltese residents should be declared in their Malta tax returns. Since tax is not withheld at source, there is no question of double taxation relief.

Those individuals who have failed to declare their Australian pensions in the past years will have to adjust their tax declarations (or file a tax return where applicable) for the last five years. The interests for late payment of tax, which are normally applicable in such cases, will be waived off, while the additional tax will be capped at €20.

 

Canadian Pensions

Canadian pensions are taxable in Malta, but tax may also be withheld in Canada.

When these pensions are received by residents of Malta, they should be declared in Malta and be eligible for double taxation relief.

Canadian pensioners receive a slip with the amount of pension received and the amount of tax deducted from their pension. This is to be attached to the tax return.

 

Pensions from other countries

As a general rule, pensions received by a resident of Malta from another EU country or from any other country with which Malta has a Double Taxation Relief (DTR) Treaty, are taxed as follows:

  • Pensions received from a country, a political sub-division or a local authority thereof in respect of services rendered to that country, political sub-division or local authority, shall be taxable in that country unless the recipient of the pension is a national and resident of Malta, in which case the pension would be taxable only in Malta.
  • Other pensions are normally taxable only in Malta.

Please note that some Double Taxation Relief Treaties diverge from the foregoing. For example, according to some treaties, a pension issued from an EU country under its Social Security system is taxable only in that country, and not taxable at all in Malta, even if the recipient is resident in Malta.

Therefore, for an exact information about the taxability of pensions from an EU country or from a non-EU country with which Malta has DTR Treaty to a resident of Malta, it is best to consult with the relative Treaty.

Pensions from a country with which Malta does not have a DTR Treaty that are received in Malta by an individual resident in Malta are taxable in Malta.

Eu and other pensioners living in Malta may also benefit from the special Tax Rebates given to pensioners.

 

Pensions from the United Nations

The United Nations Pensions Programme Rules, 2015 (UNPP) contemplate the granting of “special tax status” to individuals in receipt of pensions from the United Nations and who satisfy a number of conditions.