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Highly Qualified Persons Rules

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The Highly Qualified Persons Rules, which came into force in 2010, would serve to create a scheme to attract highly qualified persons, not domiciled in Malta, to occupy 'eligible office' with companies licensed and/or recognized by the Malta Financial Services Authority offering preferable tax incentives.

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.

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.

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;
  • employment contract is subject to the laws of Malta and proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services) and the Lotteries and Gaming Authority (in the case of Gaming Services) that the contract is drawn up for exercising genuine and effective work in Malta;
  • 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) 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);
  • he resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;

'Eligible office' comprises employment in one of the following positions:
  • Actuarial Professional;
  • Chief Executive Officer;
  • Chief Financial Officer;
  • Chief Insurance Technical Officer;
  • Chief Investment Officer;
  • Chief Operations Officer;
  • Chief Risk Officer;
  • Chief Technology Officer;
  • Chief Underwriting Officer;
  • Head of Investor Relations;
  • Head of Marketing;
  • Portfolio Manager;
  • Senior Analyst (including Structuring Professional); and,
  • Senior Trader/Trader.

Exclusions from the Scheme

People will not qualify for the 15% reduced tax rate if their income is paid by an employer who receives any benefits under business incentive laws or is paid by a person who is related to the employer who received any benefits under any business incentive laws or if the individual holds more than 25% (directly or indirectly) of the company licensed and/or recognised by the Malta Financial Services Authority or if the individual is already in employment in Malta before the coming into force of the scheme either with a company not licensed and/or recognised by the Malta Financial Services Authority or not holding 'eligible office' with a company licensed and/or recognised by the Malta Financial Services Authority.

There are specific requirements and exclusions which one should inform on to ensure that a prospective applicant qualifies for the above scheme. For further detailed information visit the following link of the Malta Inland Revenue department showing the Tax Guidelines on Highly Qualified Person Rules.
http://www.ird.gov.mt/taxguides/qualifiedpersons.aspx

Source

All the above information is an extract from Malta's Inland Revenue Department.

For further information click here to visit the official Inland Revenue Department - Tax Guidelines on Highly Qualified Persons Rules Webpage.

Downloads

Application Form - Financial Services

Application Form - Financial Services (abridged)

Application Form - Gaming Services

The above file is in Acrobat pdf format. Click here to download the pdf reader for free.


Relocate Malta is neither a tax consultancy body nor an authorised Registered Mandatory for the Malta Retirement Programme. For further information kindly contact your preferred Registered Mandatory.