This Programme is available to third country nationals as well as to nationals of the European Union, European Economic Area and Switzerland (EU/EEA and Swiss nationals), with the latter (EU/EEA and Swiss nationals) benefiting from the reduced rate of income tax for a maximum consecutive period of five years.
By virtue of this amendment EU/EEA and Swiss nationals are now eligible, upon application, for a one-time extension of five years to their period of benefit, subject to the continued adherence to the provisions of the Rules. Such extension shall not be made available to any person who has been residing in Malta prior to the 1st of January 2008. Furthermore, the maximum qualifying period for EU/EEA/Swiss nationals undertaking the Highly Qualified Persons Programme, shall not exceed ten years of assessment.
Under the ‘Highly Qualified Persons’ Rules, tax on income received by a beneficiary under a ‘qualifying contract’ of employment in respect of activities carried out in Malta, shall be charged at a flat rate of 15%. Income that is earned by qualifying expatriates as from the 1st January 2010 will qualify from the reduced rate of 15%.
Individuals eligible for the reduced rate of tax of 15% are those who:
Those Insurance and Investment Services who already benefit from those incentives contemplated under Article 6 of the Income Tax Act do not qualify for the reduced rate of tax, as referred to above.
A qualifying contract of employment’ is considered as such if it gives rise to a minimum annual income of €81,457 for 2015 (subject to annual inflation). The annual value of any fringe benefits must be excluded for this purpose.
The activity contemplated in the contract of employment constitutes an eligible office provided the employment is with companies licensed and/or recognised by the MFSA and the Malta Gaming Authority and undertakings holding an air operators’ certificate issued by the Authority for Transport in Malta, or an aerodrome license issued in terms of the Air Navigation Order and consists of specified senior positions including:
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.
Should the income from a qualifying contract of employment exceed the sum of €5,000,000, no further tax would be charged on income from a qualifying contract of employment in excess of €5,000,000. Where a beneficiary applies for the reduced rate of tax, then no claim from any relief; deduction; reduction; credit or setoff of any kind, should be made.
An application to the competent authority should be submitted by those individuals intending to avail themselves of such option in order to be granted a formal determination of their eligibility as beneficiaries. Furthermore, a declaration endorsed by the competent authority should be attached to the individual’s income tax return.
For tax purposes, emoluments received in respect of income from a qualifying contract of employment as well as all income received from a person related to the employer, irrespective of whether this is paid in respect of the performance of duties in Malta or otherwise, should be disclosed. Both the competent authority as well as the Commissioner of Inland Revenue may request the individual to produce, within a specific timeframe, additional documents and information for the purpose of ascertaining the individual’s right to exercise the option.
The option for the income to be charged to tax at the reduced rate of 15% may be availed of as from the year of assessment 2011 (year of income 2010). For those individuals who were employed under a contract of employment where the performance of their duties was executed in Malta, for the period of more than two years preceding 1st January 2011, the option to benefit from the reduced rate of tax is not available. This does not apply to individuals employed with an undertaking holding an air operators’ certificate issued by the competent authority.
In the case of persons employed with undertakings holding an air operators’ certificate issued by the competent authority, the option as aforementioned shall not be exercised by any person who was employed prior to 1st January 2012. The option may not be exercised in respect of any year of assessment preceding the year of assessment 2011.
Following the enactment of L.N. 225 of 2015 and L.N. 192 of 2017, beneficiaries under the Rules are eligible, upon application, for a one-time extension of five years (for EU/ EEA and Swiss Nationals) or four years (for third country Nationals) to their period of benefit subject to the continued adherence to the provisions of the Rules. Such an extension shall not be made available to any person who has been residing in Malta prior to the 1st of January 2008. Furthermore, the maximum qualifying period shall not exceed ten years of assessment for EU/EEA/Swiss nationals whilst for third-country nationals undertaking the Highly Qualified Persons Programme the maximum qualifying period shall not exceed eight years.
Such individuals shall not qualify for the reduced rate if the individual either:
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