This content is from: Malta

Malta: Recent developments regarding fringe benefits

Mark Galea

In August 2017, the Fringe Benefits (Amendment) Rules were passed, by virtue of which important amendments were made to the fringe benefit rules in Malta to more closely reflect the current reality of cross-border employment.

In terms of Maltese income tax legislation, fringe benefits are benefits provided or deemed to be provided by reason of employment or office, regardless of whether they are received in cash or in kind and whether they are received in terms of the normal conditions of a contract of service or by way of a special or ex-gratia allowance.

The most pertinent introduction to the fringe benefit rules relates to tax jurisdiction. Where a fringe benefit is deemed to arise, the income represented by the value of that benefit is deemed to arise in the country where the services are wholly or principally performed. Therefore, if an employee is granted a benefit, such as free accommodation in Malta, but the activities relating to such employment are carried on outside of Malta, such income is to be treated as foreign source income for Maltese income tax purposes. Moreover, with respect to benefits arising from directorships, the amendment rules also clarify that such benefits are deemed to arise in the country where the company is managed and controlled.

The amendment rules also amend the calculation of the taxable value of certain benefits, such as those relating to the use of cars and the use of property. With respect to the taxable benefit of the private use of a car with a value not exceeding €16,310 ($20,000), the percentage of private use of the car has been reduced from 20% to 0%, provided that the vehicle is used wholly or mainly for point-to-point services by an employee who is a salesman or a support person in the performance of his duties. The taxable benefit of the use of immovable property, on the other hand, is to be determined by calculating 5% of the higher of the market value and the cost of the property. Moreover, where a shareholder resides in a property owned by a company, the amendment rules provide that such provision of accommodation should not constitute a fringe benefit, provided that a set of conditions are satisfied.

Share award schemes are deemed to be provided on each date that shares are issued or transferred to the beneficiary, and the value of such a benefit is to be calculated as the excess of the price which the shares would fetch if sold on the open market on the date when the benefit is provided over the price paid/payable by the beneficiary for those shares. The amendment rules now state that the benefit is to constitute separate chargeable income and be subject to tax at 15%.

The above amendments sit alongside a number of other amendments which have each been made with the intention of clarifying, supplementing and updating the fringe benefit rules.

Mark Galea Salomone ( and Donald Vella (
Camilleri Preziosi
Tel: +356 21238989

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