The Qualifying Employment in Aviation (Personal Tax) Rules, 2016, (The Rules), enacted by virtue of Legal Notice 177 of 2016 is another favourable measure introduced with the aim of attracting EEA / Swiss and third country nationals to hold an eligible office in the aviation sector in Malta.
Transport Malta has been designated as the authority responsible for determining the eligibility, or otherwise, of an individual wishing to apply for the Rules and a successful applicant will be able to benefit from a beneficial tax rate of 15%, subject to receiving an annual income of at least €45,000. The Rules shall start to apply from year of assessment 2017.
Individuals eligible for the reduced rate of tax of 15% are those who:
- qualify as ‘beneficiaries’ in terms of the Rules;
- derive income from a ‘qualifying contract of employment’; and
- are engaged in employment activity constituting an ‘eligible office’.
A beneficiary is an individual who meets the following criteria:
- is not domiciled in Malta;
- derives emoluments, from a qualifying contract of employment subject to tax in Malta, received against work, or duties carried out in Malta, or in respect of any period spent outside Malta in connection with such work or duties;
- has proved to the satisfaction of the Authority that s/he performs activities of an eligible office;
- has a contract of employment subject to the Laws of Malta;
- is in possession of professional qualifications or experience; and
- proves to the satisfaction of the competent authority that s/he:
- is in receipt of stable and regular resources for him/herself and members of the family;
- resides in a normal accommodation similar to that of a comparable family in Malta;
- is in possession of a valid travel document; and
- is in possession of sickness insurance.
The activity contemplated in the contract of employment constitutes an eligible office provided the employment is exercised with companies licensed and/or recognised by Transport Malta and consists of the following senior positions:
- Chief Executive Officer, Chief Operations Officer, Chief Financial Officer, Chief Risk Officer, Chief Financial Officer, Chief Technology Officer, Chief Commercial Officer, Chief Investment Officer, Chief Insurance Officer;
- Accountable Manager, Deputy Accountable Manager, General Manager, Flight Operations Manager, Nominated Person Flight Operations, Training Manager, Nominated Person Training, Ground Operations, Nominated Person Ground Operations, Continuing Airworthiness Manager, Nominated Person Continuing Airworthiness, Compliance Manager, Quality Systems Manager, Safety Manager, Flight Dispatch Manager, Instructor Manager; and
- Head of Marketing, Head of Public Relations, Actuary, Underwriting Manager, Risk Management Officer, Key Account Manager, Product Coordinator, Material Coordinator, Engineering Reporter, Aeronautical Engineer, Head of Maintenance Operations, Aviation Systems Developer, Key Aviation Specialist.
Income shall not be construed to be income from a qualifying contract of employment if it is paid by the employer who has received a benefit, or benefits, under business incentive laws or arrangement in terms of the business incentive laws or is paid by a person who is related to the employer who has received a benefit, or benefits, under any business incentive laws or arrangement, in terms of business incentive laws.
The individual shall only be eligible to benefit from the 15% tax rate if s/he does not control more than 25% of the shares within the employment undertaking.
Exercising the option
An application should be submitted to Transport Malta by those individuals who intend to avail themselves from such option in order to be granted a formal determination of their eligibility as beneficiaries.
The option to be taxed at the rate of 15% shall be exercised by means of a declaration signed by the beneficiary and endorsed by Transport Malta and attached to the individual’s income tax return for the relative basis year.
Such option should, with respect to EEA and Swiss nationals, apply for a consecutive period of 5 years starting from the first year of assessment in which the beneficiary is liable to tax under the provisions of the Act. On the other hand, the option shall apply for a consecutive period of 4 years in the case of third country nationals.
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