Personal Tax

Tax Guidelines on Highly Qualified Persons Rules


Since joining the EU in 2004, Malta has been modernizing its economy. and is becoming recognized as a highly functional, low cost, well regulated jurisdiction with the underlying theme being availability of trained staff through investment in education and training.. However, the expansion of the financial services and the gaming services since joining the EU and the aviation services in recent years, is showing a significant need for additional highly qualified workers. Therefore, the need is being felt for the importation of knowledge particularly in those areas of the financial services sector, the gaming sector and the aviation sector where local expertise is lacking.

The objective of Legal Notices 106 of 2011, 428 of 2011 and 306 of 2012 Highly Qualified Persons Rules, is the creation of a scheme 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.

• "Eligible office" comprises employment in one of the following positions:
• Actuarial Professional
• Aviation Accountable Manager
• Aviation Continuing Airwothiness 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

• The rules for the scheme came into force with effect from 1 January 2010 and apply to income which is brought to charge in year of assessment 2011 (basis year 2010) and apply to individuals not domiciled in Malta.

Scheme Rules

a) Employment Income
• Individual income from a qualifying contract of employment in an “eligible office” with a company licensed and/or recognised by the Malta Financial Services Authority is subject to tax at a flat rate of 15% provided that the income amounts to at least €75,000 (seventy five thousand euro) 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.

• In practice this means that the minimum income (based on the Retail Price Index published by the National Statistics Office) must exceed the following thresholds:
• €75,000 for basis year 2010
• €76,136 for basis year 2011
• €78,207 for basis year 2012
• €80,100 for basis year 2013

• The 15% tax rate applies for a consecutive period of five years for European Economic Area (ie EU countries plus Norway, Iceland and Liechtenstein) and Swiss nationals and for a consecutive period of four years for third country nationals. 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 means that a national of the EEA and Switzerland who has a qualifying contract of employment in an "eligible office" starting in 2008 (basis year) will benefit for three years from the scheme, ie basis years 2010, 2011 and 2012, while a third country national will benefit from one less. This "grandfathering" only applies for eligible offices in the financial services and gaming sectors.

b) Qualifying Contract of Employment

• An individual may benefit from the 15% tax rate if he satisfies all of the following 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
(Note: where an individual receives salaries from different companies in the same group and the group relationship of such companies is of 100% ownership, he will still be eligible if the aggregate salaries (excluding fringe benefits) are higher than the minimum thresholds as specified above).
• 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 (under article 6 of the Income Tax Act);