Over the years, Malta has introduced several incentives to help boost the Maltese economy through the employment of specialised individuals.
One of these incentives is the Highly Qualified Persons rule which aims to attract highly professional expatriates looking to relocate and occup "eligible office" with companies licensed or recognised by the Malta Financial Services Authority or the Malta Gaming Authority or Transport Malta (i.e. the competent authority).
The Rules state that expatriates in receipt of income arising from qualifying contracts of employment in Malta may opt to pay tax at a reduced flat rate of 15% on such income. This flat rate applies to income earned after 1 January 2013 and to employees of companies licensed or recognised by the Malta Financial Services Authority or the Malta Gaming Authority or Transport Malta (i.e. the competent authority).
The individual concerned must satisfy a number of conditions in order to benefit from this scheme, namely that:
- The employment activity must constitute an eligible office;
- The income must be derived by means of a qualifying contract of employment; and
- The qualifying contract of employment of the eligible office is in respect of the employment of a qualifying beneficiary.
Applicability
Individuals who meet the requirements set out in the Rules and who would wish to avail themselves of the 15% tax rate should:
- Apply to the relevant competent authority in order to obtain a formal determination of their eligibility as beneficiaries;
- Attach a declaration form, duly endorsed by the competent authority, to their income tax return;
- Include in their income tax return all emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to the payer of such income chargeable to tax in Malta, irrespective of where the duties have been performed.
In addition, the Rules stipulate that the individuals’ employment income must have been earned on or after 1 January 2010 for the benefit to apply. However, any individuals who were under a contract of employment which:
- Preceded the 1 January 2010; and
- Required the performance of duties in Malta for a period of less than two years;
May also benefit from this reduced rate of tax.