Malta's success in securing an increasing number and quality of hedge funds, managers, insurers and similarly regulated entities depends largely on the ability of such entities to attract and recruit highly qualified, experienced and senior professionals available globally.
Tax Planning for High Income Earners
The domestic Malta Highly Qualified Persons Rules (the - Rules) relate to the tax benefits available thereunder to individuals employed to fill senior positions with companies licensed by the MFSA (Malta Financial Services Authority) the GA (Gaming Authority), and undertakings. Holding an Air Operators' Certificate or an Aerodrome Licence issued by the Authority of Transport in Malta (TM), within the positions listed hereunder.
Such senior employees may opt to pay tax at the flat rate of 15% on employment income derived in respect of work or duties carried out in Malta. The 15% flat rate is imposed up to maximum income of €5,000,000 (five million euro), the excess is exempt from tax.
The Senior Positions specified in the Malta Highly Qualified Persons Rules
- Chief Executive Officer;
- Chief Risk Officer (including Fraud and Investigations Officer);
- Chief Financial Officer;
- Chief Technology Officer;
- Chief Operations Officer;
- Chief Commercial Officer;
- Portfolio Manager;
- Chief Investment Officer;
- Senior Trader/Trader;
- Senior Analyst (including Structuring Professional);
- Actuarial Professional;
- Chief Underwriting Officer;
- Chief Insurance Technical Officer;
- Odds Compiler Specialist;
- Head of Research and Development (including Search Engine Optimisation and Systems Architecture);
- Head of Marketing (including Head of Distribution Channels);
- Head of Investor Relations
- Aviation Accountable Managers
- Aviation Continuing
- Airworthiness Inspectors
- Aviation Flight Operations
- Aviation Training Managers.
Paying Tax on Malta Source Employment Income
A senior employee would be entitled to opt to pay tax on Malta source employment income at the flat rate of 15% if the senior employee:
- is employed to fill a senior position and is in possession of professional qualifications or acceptable professional experience;
- is entitled to remuneration of at least €82,353 (exclusive of the annual value of any fringe benefits) in terms of a contract of employment for the basis year 2016, as adjusted by the retail price index;
- is in receipt of stable and regular resources which are sufficient to maintain him/herself and his/her family members without recourse to domestic social assistance;
- resides in accommodation regarded as normal for a comparable family in Malta;
- is not domiciled in Malta;
- is in possession of a valid travel document;
- is in possession of adequate health insurance him/himself and his/her family members;
- does not benefit under alternative incentives available domestically in favour of investment services and insurance expatriate employees and
- is protected as an employee under applicable Maltese laws.
The Terms of the Highly Qualified Persons Rules
An individual eligible to opt to pay tax on employment income at the reduced rate of 15% (in terms of the Rules) would be required to apply to the MFSA, MGA or TM for a formal determination confirming eligibility. The eligible individual would then be required to submit a prescribed form (MFSA, MGA or TM) to the local tax authorities together with his/her tax return annually.
Furthermore, certain additional restrictions apply in respect of EEA and Swiss nationals and citizens of non-EU Member States. Accordingly, the tax benefits under the Rules are available to EEA and Swiss nationals for a maximum consecutive period of 5 years and to non-EU citizens for a maximum consecutive period of 4 years (commencing in the year in which the taxpayer is first liable to tax in Malta). The 5 and 4 year maximum periods would be further reduced in respect of EEA and Swiss nationals and citizens of non-EU Member States who were employed under a contract of employment requiring the performance of duties in Malta up to 2 years prior to the 1st January, 2010. (2 years prior to the 1st January, 2012 for holders of an Air Operators? Certificate issued by Transport Malta.)
However, such EEA and Swiss Nationals, who avil themselves of this tax benefit, shall be eligible upon application, for one-time extension of 5 years, making their qualifying period a maximum of 10 years of assessment. The one-time extension is not applicable to individuals who have been a resident in Malta prior to the 1st of January 2008.
If you are a senior employee filling a position with companies licensed by the MFSA (Malta Financial Services Authority), the MGA (Malta Gaming Authority)and Authority of Transport in Malta (TM). Read more to find out about the tax benefits pertaining to the Highly Qualified Persons Rules.
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