International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Malta: Amendment to the highly qualified persons rules

vella.jpg

galea-salomone.jpg

Donald Vella


Mark Galea Salamone

The Maltese Parliament has recently passed Legal Notice 225 of 2015, amending the highly qualified persons (HQP) rules as promulgated in 2010. A qualifying EU, EEA or Swiss beneficiary who, before the recent amendment could benefit under the rules for a maximum qualifying period of five years, may now benefit for an additional period of five years. Beneficiaries, therefore, now have the possibility of benefitting from the rules for an extended period of up to 10 years. The rules aim to attract HQPs to occupy an eligible position with companies licensed and/or recognised by the Malta Financial Services Authority, companies licensed by the Malta Gaming Authority, and undertakings holding an Air Operators' Certificate or an Aerodrome Licence issued by the Authority for Transport in Malta. Examples of eligible roles include: chief executive; financial, commercial or investment officer; head of investor relations, marketing or research and development; and senior analyst or trader, among others.

Under these rules, income from a qualifying contract of employment received by a beneficiary is subject to tax at a flat rate of 15% provided that the income amounts to a minimum of €75,000 ($84,000). The Inland Revenue's tax guidelines on the rules provide that the minimum income for basis year 2015 must exceed €81,457. The 15% tax rate applies up to a maximum income of €5,000,000. One of the advantages of the rules is that any income over and above the latter threshold is exempt from tax. As mentioned above, this tax rate originally applied for a consecutive period of five years for EU/EEA/Swiss nationals, and a consecutive period of four years for third country nationals.

However, through LN 25/2015, EU/EEA or Swiss beneficiaries may now apply for a one-time extension of five years to his qualifying period, as long as the individual has not been residing in Malta prior to the January 1 2008.

There are a number of criteria that must be satisfied before a taxpayer can benefit under the rules. The applicant must:

  • be an individual in receipt of income subject to tax under a qualifying contract of employment received in respect of work carried out in Malta which is fully disclosed for tax purposes;

  • have an employment contract subject to the laws of Malta and prove – to the satisfaction of the relevant authority under which the company employing the said beneficiary is licensed – that the contract is drawn up for exercising genuine and effective work in Malta and that he has the required competence to do so;

  • prove to the satisfaction of the relevant authority that they are in possession of qualifications relevant to the profession attested by evidence of education qualifications or by at least five years' professional experience of a level comparable to educational qualifications;

  • not have benefitted under the investment services and insurance expatriates provisions as detailed in the Income Tax Act;

  • prove to the satisfaction of the relevant authority that they perform activities of an eligible office; and

  • prove to the satisfaction of the relevant authority that:

they are in receipt of stable and regular resources which are sufficient for his maintenance and that of his family without recourse to social security in Malta; they reside in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta; they are in possession of a valid travel document; they are in possession of sickness insurance for themselves and their family for all risks across the whole of the EU normally covered for Maltese nationals; and they are not domiciled in Malta.

An otherwise qualified individual will not benefit from the special tax rate under this scheme if the income is received from an employer who receives any benefits under business incentive laws or is paid by a person who is related (as defined in the rules) to the employer who received any benefits under any business incentive laws. A third country national who physically stays in Malta for more than 1,460 days in the aggregate, or acquires real rights over immovable property situated in Malta or holds a beneficial interest over such rights, will suffer from a claw-back of the benefits availed of under the rules.

The rules now provide that no determination under the rules will be issued after December 31 2020 and any determination issued must refer to employment commencing by December 31 2021 and terminated by December 31 2025. This is a welcome amendment, in line with Malta's firm commitment to continue attracting highly qualified persons to Malta.

Donald Vella (donald.vella@camilleripreziosi.com) and Mark Galea Salamone (mark.galeasalomone@camilleripreziosi.com)

Camilleri Preziosi

Tel: +356 2123 8989

Website: www.camilleripreziosi.com

more across site & bottom lb ros

More from across our site

A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.
Industry groups are concerned about the shift away from the ALP towards formulary apportionment as part of a common consolidated corporate tax base across the EU.
The former tax official in Italy will take up her post in April.
With marked economic disruption matched by a frenetic rate of regulatory upheaval, ITR partnered with Asia’s leading legal minds to navigate the continent’s growing complexity.
Lawmakers seem more reticent than ever to make ambitious tax proposals since the disastrous ‘mini-budget’ last September, but the country needs serious change.
The panel, the only one dedicated to tax at the World Economic Forum, comprised government ministers and other officials.
Colombian Finance Minister José Antonio Ocampo announced preparations for a Latin American tax summit, while the potentially ‘dangerous’ Inflation Reduction Act has come under fire.
The OECD’s two-pillar solution may increase global tax revenue gains by more than $200 billion a year, but pillar one is the key to such gains due to its fundamental changes to taxing rights.