In its effort to be on the forefront of the international financial services industry and attract further business, Malta has recently introduced a set of tax incentives for “highly qualified persons” holding eligible offices within the financial services sector as of January 2011.
By virtue of Legal Notice 106 of 2011 titled “Highly Qualified Persons Rules, 2011”, holders of eligible offices vide a qualifying contract of employment in terms of the Schedule to the L.N. may benefit from income tax at a flat rate of 15%, provided that the following conditions are satisfied:
• The office held by the beneficiary is eligible in terms of the Schedule to the L.N., that is: 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 (including Structuring Professional), Actuarial Professional, Chief Underwriting Officer, Chief Insurance Technical Officer, Head of Marketing, Head of Investor Relations.
• The beneficiary is under a contract of employment entitling him/her to taxable income of not less than €75,000 consisting of emoluments from an eligible office.
• The beneficiary is an individual who satisfies the following conditions (cumulative):
The individual derives taxable income being emoluments payable under a qualifying contract of employment received in respect of work or duties carried out in Malta, or in respect of any period spent outside Malta I connection with such work or duties;
The individual is protected as an employee under Maltese Law and has the required adequate and specific competence, as proven to the satisfaction of the MFSA;
He proves to the satisfaction of the MFSA that he is in possession of professional qualifications and that he performs activities of an eligible office;
He is not a person who has benefitted under Article 6 of the Income Tax Act – relating to relief from income tax on fringe benefits to investment services expatriates, insurance expatriates or their immediate family;
He proves to the satisfaction of the MFSA that he is in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
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;
He is in possession of a valid travel document;
He is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family;
He is not domiciled in Malta.
• The minimum amount of income chargeable to tax under the provisions of the L.N. shall be €75,000, adjustable annually in line with the Retail Price Index as published in the Government Gazette by the National Statistics Office;
• The income chargeable to tax under the provisions of the L.N. is capped at €5,000,000. Thus, no further tax is chargeable on income from a qualifying contract of employment in excess of €5M;
• The 15% flat rate shall apply without possibility to claim any relief, deduction, reduction, credit or set-off of any kind;
• The L.N. includes anti-abuse provisions against “artificial arrangements”.
Please contact Dr Clayton Fenech on firstname.lastname@example.org for more information.