Highly Qualified Persons Rules 2011
A Low Tax-Regime for Expatriates Working in Malta
As a result of the significant need for highly qualified persons mainly due to the expansion in the financial services industry in Malta, new regulations have come into force entitling expatriates who come to work in Malta a low flat rate of 15% instead of the progressive rates applicable to individuals which go up to 35%. Such regulations attract foreign highly qualified individuals to occupy eligible offices in Malta.
In order to benefit from the low tax rate, the individual must not be domiciled in Malta and:
- derive income from employment under a qualifying contract of employment (as defined hereunder )where the work is carried out in Malta or else outside Malta in connection with such work
- is protected as an employee under Maltese law and has the required adequate and specific competence
- correctly declares for tax purposes the income received from the qualifying contract of employment
- performs activities of an eligible office as listed hereunder
- is in possession of professional qualifications
- is in receipt of stable and regular resources , sufficient to maintain himself and his family
- resides in a place deemed as normal for a similar family in Malta and which meets the general Maltese health and safety standards
- is in possession of a valid travel document and of sickness insurance covering himself and the members of his family
- has not benefited under the Investment Services and Insurance Expatriate Scheme
Qualifying contract of employment
A qualifying contract of employment is one which covers an eligible office, in other words, an employment with companies licensed by the Malta Financial Services Authority (MFSA) and consists of one of the following: Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Operations Officer, Chief Technology Officer, Portfolio Manager, Chief Investment Officer, Senior Trader/Trader, Senior Analyst (incl. Structuring Professional), Actuarial Professional, Chief Underwriting Officer, Chief Insurance Technical Officer, Head of Marketing and Head of Investor Relations.
The annual income from such employment should not be less than Eur75,000 excluding fringe benefits.
Income that is received by an employer (or his related person) who has benefited under business incentive laws or arrangements in terms of such laws is not deemed income from a qualifying contract of employment.
Minimum Amount chargeable to tax
Should the total income from a qualifying contract of employment exceed Eur5, 000,000 no further tax will be chargeable in excess of this amount.
The low tax rate of 15% applies for 5 consecutive years for European Economic Area (i.e. EU countries and Norway, Iceland and Liechtenstein) and Swiss nationals and for 4 years in respect of third country nationals (i.e. Non-EU nationals). This scheme does not apply to individuals who were employed in Malta under a contract of employment before 1st January 2009.
EEA and Swiss nationals who were employed up to 2 years prior 1st January2011, can benefit from this scheme for a maximum of 3 consecutive years commencing on 1st January 2010. A non-EU national who was employed up to 2 years prior to 1st January 2011, can benefit from this scheme for a maximum of 2 consecutive years commencing on 1st January 2010.
Foreign Source Income
Unless remitted to Malta, foreign sourced income is not subject to tax in Malta. Offshore capital gains are tax free, even if remitted to Malta.
Withdrawal of the scheme
Any rights under this scheme can be withdrawn with immediate effect if the beneficiary is a third-country national and he either physically stays in Malta in the aggregate for more than 4 years, or directly or indirectly acquires real rights over immovable property in Malta or holds directly or indirectly a beneficial interest, consisting in, inter-alia, of real rights over immovable property situated in Malta.