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Pensions in Malta
If you are committed to moving to Malta and are therefore prepared to make the necessary financial investment required of one of the residency programs, then you will want to ensure you are benefitting from the favourable Maltese tax system as much as possible.
One aspect of this is what happens with your UK pensions. This will depend to a large extent on what type of pensions you possess, who does the UK/Malta Double Tax Treaty given the taxing rights in respect of those schemes and what tax will therefore be payable. In some cases, the interaction between two tax systems and how the Double Tax Treaty deals with this can deliver positive or negative results.
Leaving your pension in the UK
If you have a ‘Defined Contribution’ (DC) pension, you have many ways to access your pension funds – one lump sum, across numerous withdrawals, receive a regular income until it runs out (all forms of drawdown) or purchase a lifetime income (annuity).
‘Defined Benefit’ (DB) pensions, on the other hand, are company pensions, dependent upon your final salary and length of service. They provide a regular income for the whole of retirement. You cannot access benefits as cash, should never run out of funds, and lifetime payments usually pass to your spouse (where applicable) on death.
Government service pensions for UK purposes include civil service, local authority, police, fire, armed forces, most teachers pensions, etc.
Transferring pensions overseas
If you are planning on moving to Malta, you can also move any non-government pensions to a Qualifying Recognised Overseas Pension Scheme (QROPS) without generating a tax charge if the conditions of the QROPS are satisfied. However, this is a specialist area, and you should take advice specific to your situation.
A QROPS can be used to consolidate several UK pensions (though this can also be achieved through a UK SIPP). Funds would be sheltered from UK taxation on income and gains and are immune to future changes to UK pension rules that may adversely affect you.
Maltese tax on UK pensions
The basis of Malta’s personal tax system is the same as the UK – whether you are resident and/or domiciled.
Whilst there is not a formal definition of the former, you would generally be regarded as resident if you spent 183 days of a calendar year in Malta. Domicile is too complicated to explain here but suffice to say if your origins are the UK, and you are moving to Malta from there, then it is likely you will be considered non-domiciled from a Maltese perspective.
The general position under the Double Tax Treaty is that pensions and annuities are taxable in the country of your residence which in this case will be Malta (exceptionally, government service pensions remain taxable in the UK).
But a Maltese resident, non-domiciled individual benefits from the ‘remittance’ basis of taxation, where non-Maltese source income is only taxable if it is remitted into Malta.
This could mean UK pensions might not be taxed at all if they were not remitted, so a clause in the Double Tax Treaty states if a resident of Malta does not remit the full amount of their UK pension income, that income remains taxable in the UK.
A Qualifying Recognised Overseas Pension Scheme (QROPS) can overcome the issue of having to remit all the income to Malta to avoid UK tax on the income. A pension transferred out of the UK into a QROPS is not liable to any personal UK income tax if the conditions of QROPS are satisfied.
Residence programs
UK nationals wishing to retire to Malta can now do so only by way of three of Malta’s residence programs.
Some of these offer a flat rate of tax - normally 15% - but with a minimum tax payment each year. All require you purchase a property for a minimum value or rent for a minimum annual cost.
Whilst the Permanent Residency Program does not impose a flat rate of tax (you will be liable at the normal scale rates in Malta), it is more expensive in terms of the administration fee, requires the largest investment in terms of renting or acquiring property and that you also have to make substantial other investments.
There is a lot to take in and be aware of and these are really only examples. Good planning can ensure you minimise the tax that impacts you and it helps to do so with specialists in this area.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.
FAQs: Pensions in Malta
How is pension income taxed in Malta?
Pension income in Malta is taxed using progressive income tax rates. However, individuals aged 61 or over benefit from tax exemptions under recent rules: as of 2025, a high proportion (around 80%) of pension income may be exempt from tax, subject to caps.
What are the pension tax exemption rules for those aged 61 and over?
Malta has introduced phased pension income exemptions starting 2022. Each year the exempt portion increases. For example, in 2025 roughly 80% of pension income is exempt, up to a specified cap. Eventually, under the rules, pension income for qualifying older persons may become fully exempt (subject to legislative caps and thresholds).
Do overseas pensions need to be declared in Malta?
Yes. If you receive a pension from abroad and you are a Malta resident, you generally must declare foreign pension income in your Maltese tax return. Whether that income is taxed in Malta or also taxed abroad depends on your country of source and whether there is a Double Taxation Treaty (DTT) in place.
What is the Malta Retirement Programme and how does it affect foreign pensioners?
The Malta Retirement Programme is a special tax scheme for foreign pensioners (non-Maltese nationals) who make pension income their regular source of income and meet certain conditions. Under this scheme, foreign-sourced income remitted to Malta can be taxed at a flat rate (often 15%), provided specific residency and income share requirements are met.
Are there tax rebates available for pensioners in Malta?
Yes. Malta provides pensioners with tax rebates that reduce their tax liability on pension income. These rebates depend on your age (you must be at least 61), tax status (single, married, etc.), and the amount of pension income. Even after applying progressive tax rates, these rebates can significantly lower the payable tax, or in many cases result in a minimal or zero-tax outcome on pension income under the exemption rules.