Highly Qualified Scheme
15% Income Tax Rate
Gaming – Financial Services – Digital – Aviation
Malta wants to attract high income individuals and why not? Positioning itself as a premier financial and commercial district, Malta employs an attractive low tax regime for businesses. On a personal front, with its Mediterranean climate and lifestyle, there are numerous options and levels in Malta for accommodation, entertainment and schools.
Individual income from a qualifying contract of employment in an “eligible office” with a company licensed and/or recognised by the Competent Authority is subject to tax at a flat rate of 15% on an income of at least €76,136 adjusted annually in line with the Retail Price Index. €78,207 for basis year 2012.
As such, Malta authorities have created a scheme to attract highly qualified persons who occupy as “eligible office” with companies licensed and/or recognized by either the Malta Financial Services Authority (MFSA), the Lotteries and Gaming Authority (LGA) or companies holding an Air Operators’ Certificate issued by Transport Malta.
The 15% flat rate is imposed up to a maximum income of €5 million – any excess is exempt from tax. The 15% tax rate applies for a consecutive period of five years for EU, EEA and Swiss nationals and for a consecutive period of four years for third country nationals.
EU. EEA and Swiss individuals who already have a qualifying contract of employment in an “eligible office” for two years (or one year for 3rd party nationals) before 2008 may still benefit from the 15% tax rate for the remaining years of the statutory period.
“Eligible office” is employment in one of the following positions:
- Actuarial Professional
- 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
- 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.
Qualifying Contract of Employment
An individual may benefit from the 15% tax rate who can prove – to the satisfaction of the MFSA and LGA – the following conditions:
- The employment income is subject to Malta income tax
- The employment contract is genuine and for effective work in Malta
- Has sufficient professional qualifications and at least 5 years 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)
- Fully discloses for tax purposes and declares all income and benefits from the qualifying contract of employment
- Performs activities of an eligible office
- Has stable and regular resources, sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta
- Resides in accommodation regarded as normal for a comparable family in Malta and which meets the general Malta health and safety standards
- Is in possession of a valid travel document
- Has adequate health insurance for him and his family
Exclusions from Scheme
There are some exclusions to the scheme that you should be aware of, the main items being:
For EU, EEA & Swiss Nationals
- Your employer cannot receive any benefits under any business incentive laws, neither can you be paid by a person who is related to the employer who received any benefits under any business incentive laws
- You cannot hold more than 25% (directly or indirectly) of the company licensed and/or recognised by the MFSA or LGA
- No claim can be made for any relief, deduction, reduction, credit or set-off of any kind except for any income tax deducted at source
- ‘Split Contract’ – an arrangement in terms of which you receive a payment from a person related to your employer, which is not declared for Malta tax purposes is considered to be an artificial arrangement
For 3rd Country Nationals
- You cannot physically stay in Malta, in the aggregate, for more than four years; or
- directly or indirectly acquires real rights over Malta immovable property or holds a beneficial interest directly or indirectly of real rights over Malta immovable property
Individuals, who claim a benefit under the scheme, when not entitled, are liable to a penalty equal to the amount of benefit claimed and if the benefit is paid, the individual is liable to repay the benefit received plus additional tax of 7% per month pro – rata.
Acumum can assist you in applying for tax benefits under the High Earner Scheme. Please contact us for further information.
High Net Worth Individuals
(Replaces Permanent Residency Scheme)
For all High Net Worth Individuals (HNWI’s) – regardless of country of origin – becoming an ordinary resident of Malta can result in receiving generous tax treatment and Special Tax Status in Malta:
- 15% tax on income arising outside of and received in Malta
- 35% tax on income and capital gains realised in Malta
- 0% tax on income arising outside and not received in Malta
- 0% tax on capital gains arising outside of Malta – event if received in Malta
In addition, Malta has 0% wealth and 0% inheritance taxes.
Double Taxation Relief
HNWIs also enjoy relief of double taxation on income arising outside of and received in Malta, in the form of unilateral relief under the Malta Income Tax Act or under the relevant double taxation treaty – Malta is currently a party to over 60 double taxation treaties and growing.
Once double taxation relief is requested an annual tax payment must be made of at least:
- For EU / EEA / Swiss nationals – €20,000 plus an additional €2,500 per dependant
- For 3rd country nationals – €25,000 plus an additional €5,000 per dependant
Other qualifying conditions
Aside from obtaining health care; having sufficient income to maintain oneself and any dependents; not being or planning to be domiciled in Malta within 5 years of application for the HNWI special status; as well as being a fit and proper, a HNWI must maintain a qualifying property holding, meaning owning property of at least €400,000 or leased for not less than €20,000 per year.
3rd Country Nationals – Additional Requirements 3rd country nationals must also satisfy additional rules under the Special Tax Status scheme:
- A €0.35 cent tax on every euro of chargeable income over €25,000
- An entry visa – requiring periodical renewal; and / or
- Enter into a qualifying contract with the Government of Malta
- Fluent in English or Maltese