The expansion of the financial services and gaming industry since joining the EU, together with the flourishing of the aviation services in recent years, has prompted the Maltese government to recognise the increased need of highly qualified professionals in the aforementioned target sectors.
The objective of the Highly Qualified Persons Rules, is the creation of a particular incentive to attract highly qualified persons to occupy “eligible office” with companies licensed and/or recognized by the Malta Financial Services Authority, companies licensed by the Lotteries and Gaming Authority and companies holding an Air Operators’ Certificate.
An eligible office comprises employment in one of the following positions:
- Actuarial Professional
- Aviation Accountable Manager
- Aviation Continuing Airworthiness Inspector
- Aviation Operations Inspector
- Aviation Ground Operations Manager
- Aviation Training Manager
- Chief Executive Officer
- Chief Financial Officer
- Chief Commercial Officer
- Chief Insurance Technical Officer
- Chief Investment Officer
- Chief Operations Officer
- Chief Risk Officer (including Fraud and Investigations Officer)
- Chief Technology Officer
- Chief Underwriting Officer
- Head of Investor Relations
- Head of Marketing (including Head of Distribution Channels)
- Head of Research and Development; (including Search Engine Optimisation and Systems Architecture)
- Portfolio Manager
- Senior Analyst (including Structuring Professional)
- Senior Trader/Trader
- Odds Compiler Specialist
An individuals’ income from a qualifying contract of employment in an eligible office with a company licensed and/or recognised by the Malta Financial Services Authority, The Lotteries and Gaming Authority or an aviation undertaking licensed by the Aviation Directorate at Transport Malta, is subject to tax at a flat rate of 15%. The income ought to amount to at least €75,000 adjusted annually in line with the Retail Price Index. The 15% flat rate is imposed up to a maximum income of €5,000,000 (five million euro), the excess is exempt from tax.
The 15% tax rate applies for a consecutive period of five years for EEA (that is EU countries including Norway, Iceland and Liechtenstein) and Swiss nationals and for a consecutive period of four years for TCNs. Individuals who already have a qualifying contract of employment in an “eligible office” two years before the entry into force of the scheme may benefit from the 15% tax rate for the remaining years of the scheme. This “grandfathering” solely applies for eligible offices in the financial services and gaming sectors.
The four or five year period, as the case may be, commences from the year when the individual concerned first becomes taxable in Malta.
Qualifying Contract of Employment
An individual may benefit from the 15% advantageous Malta tax rate if he/she satisfies the following cumulative employment conditions:
- derives employment income subject to income tax in Malta;
- has an employment contract subject to the laws of Malta and proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services), the Lotteries and Gaming Authority (in the case of Gaming Services) and to Transport Malta (in the case of Aviation Services) that the contract is drawn up for exercising genuine and effective work in Malta;
- proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services); or the Lotteries and Gaming Authority (in the case of Gaming Services) or Transport Malta (in the case of Aviation Services) that he is in possession of professional qualifications and has at least five years professional experience;
- has not benefitted from deductions available to investment services expatriates with respect to relocation costs and other deductions;
- fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his/her employer paying out income from a qualifying contract as chargeable to tax in Malta;
- proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services) or the Lotteries and Gaming Authority (in the case of Gaming Services) or Transport Malta (in the case of Aviation Services) that he performs activities of an eligible office; and
- Proves that:
- he/she is in receipt of stable and regular resources which are sufficient to maintain himself/herself and the members of his family without recourse to the social assistance system in Malta;
- he/she resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
- he/she is in possession of a valid travel document in terms of Maltese Immigration Law;
- he/she is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family.
Provisions in respect of split contracts have been introduced. An arrangement in terms of which a beneficiary receives a payment from a person related to his employer and such payment is not declared for tax purposes in Malta is considered to be an artificial arrangement.
Qualifying Employment in Innovation and Creativity
The Qualifying Employment in Innovation and Creativity (Personal Tax) Rules allow for eligible persons to benefit from a 15% income tax rate. For an employee to qualify under these rules, the employee ought to occupy an eligible office and have a minimum salary of €45,000 (adjusted annually in line with the Retail Price Index). Eligible offices include: Chief Executive Officer, Chief Technical Officer, Chief Creative Officer, Head of Writing, Lead In-World Writer, Lead Game Programmer, among others. Any income exceeding €5,000,000 would be exempt from tax. This option is available for a period of 3 consecutive years for EEA (EU countries, Norway, Iceland and Liechtenstein), Swiss Nationals and third-country nationals. However, third country nationals ought not to physically stay in Malta, in the aggregate, for more than 1,460 days. For the incentive to apply, the individual must not be a shareholder of the company that he works with nor domiciled in Malta, and the individual must be self-sufficient. In order to benefit from these rules, applicants are to request a formal determination from the Malta Enterprise Corporation.
Reparation of Maltese Persons established in a Field of Excellence
These rules grant a qualifying beneficiary a reduced rate of tax amounting to 15% on employment income derived from duties exercised in Malta. The contract of employment must provide for a minimum gross salary of €75,000. A person would qualify under these rules if he/she is established in a field of excellence and returns as an ordinary resident in Malta provided that he/she had been ordinarily resident in Malta for at least 20 years, but has not been ordinarily resident in Malta for the 10 consecutive years prior to his/her return to Malta. A field of excellence means an area of professional competence in which an eligible person has excelled and which area is relevant for the manufacturing and research and development sectors. These fields are determined by Malta Enterprise.